In the shadow of two separations from the chairmen of the group’s insurance company, the insurance group and the finances tower Summarizes 2020 with an annual total profit of NIS 537.4 million. This profit is a decrease of about 16% compared to the annual total profit that the group controls Shlomo Eliyahu Recorded in 2019, in the sum of the corona year that caused tremendous fluctuations in the capital markets.
In fact, the fluctuations in the capital markets – with an emphasis on the low at the beginning and the high at the end – sharply affected the results of Migdal, which closed the year with a strong fourth quarter. In the last quarter of last year, the company posted a quarterly total profit of NIS 552 million, which completely eliminated a loss of NIS 14.5 million recorded by the company in the first three quarters of 2020.
In fact, Migdal’s strong fourth quarter illustrates the company’s ability to generate high profits in the world of positive returns and without significant harm from the direction of increasing reserves. “The past year has been a super challenging year that ended with a positive chord,” Migdal Insurance CEO Ran Oz said today, presenting the company’s reports without the public parent company CEO Motti Rosen, who signed them.
This happened after Migdal Insurance’s board of directors decided earlier this year that Migdal’s new chairman would be removed, due to a sharp confrontation between him and Oz. Rosen took over as chairman of Migdal Insurance earlier this year, replacing Nir Gilad, who was removed from office last year. A struggle with the board of directors of the parent company led by the controlling shareholder Eliyahu. In just two and a half months, it became clear that Oz and Rosen could not work together, and Rosen is no longer chairman of Migdal Insurance, and it is estimated that he will soon step down from his position as CEO of Migdal Holdings, although no decisions have yet been made.
Oz today referred sparingly to events with the chairman, and said today when presenting the reports that “since the events also concern me personally, this is not the place to discuss them. I just want to thank the board for the trust it has given me and the backing it has given to the company’s management. “He went on to address questions about the current events at the tower and said that I think that with all the storms, we received full backing from the board and congratulations on the achievements we made last year. ” He added: “I am confident that the board will be able to appoint the best team to march the tower forward.”
But it was not only the storms at the top of the company that affected the reports last year, when it came to replacing Gilad with Rosen. 2020 was also reflected in large fluctuations in the financial markets, which significantly affected Migdal’s results due to the high volume of assets it manages. This led Migdal to again collect variable management fees amounting to NIS 505 million before tax in profit-sharing policies, towards the end of the year. These revenues constitute a significant part of the company’s annual profit, compared to variable management fees amounting to NIS 856 million before tax collected by the company in 2019.
At the same time, Migdal’s results were affected by a series of unusual effects, including fluctuations in the interest rate curve, and other aspects related to the management of reserves, such as the adequacy of the reserve (LAT) – all of which had a much greater impact in 2019 than in 2020. In addition, in 2020 Migdal enjoyed a profit after tax of NIS 61 million as a result of the revaluation of the office buildings used by the company (in 2019 Migdal enjoyed a profit after tax of NIS 375 million thanks to the “adoption of a revaluation model for office buildings for personal use.”
Migdal also detailed that premiums and benefits have decreased by 5% in the past year from NIS 24 billion to NIS 22.8 billion, when, among other things, the company was affected by the effects of the corona on pension savings. In this context, the company’s reports state that “in 2020, there was a decrease in the total premiums, receipts for investment contracts and benefits in the group, in the areas of life insurance and long-term savings and general insurance, due in part to the Corona virus crisis. “.
Also, in the past year, the volume of assets managed by the company increased, to NIS 314 billion at the end of 2020, compared with NIS 293 billion at the end of 2019. By the way, at the end of the first quarter of 2020, the peak of the corona crisis and the low point in capital markets Migdal managed assets with a combined volume of NIS 264 billion, while as of mid-March 2021, the company manages a total of NIS 328 billion – an increase of more than 24% in almost a year.
Migdal further states that “in 2020 there was a significant decrease in underwriting profit compared to 2019 mainly in the field of life insurance and general insurance”, while “in life insurance the decrease was due to a significant increase in the provision for disability claims, and an increase in deferred purchase expenses due to increased cancellation rates” while ” In the field of non-life insurance, the deterioration was concentrated in the automotive and other property industries and was partially offset by an improvement in underwriting in the liability industries. “
In addition to Migdal Insurance, the Migdal Group also includes the Migdal Capital Markets investment house, which is managed by Sagi Stein. The annual revenues of Migdal Capital Markets increased in 2020 by 5.5% to NIS 174 million. The bottom line is that the total profit of the investment house increased in the past year from NIS 20 million in 2019 to NIS 28 million in 2020. Migdal explains that “in the field of financial services, the increase in total profit was mainly due to an increase in the volume of turnover that affected the market’s activity and an increase in the group’s nostro profits, which was partially offset by a decrease in mutual fund management fees.” When she led in 2020 the field recruitments in the entire market.
Looking to the future, the CEO of Migdal Insurance Oz said today that “we place emphasis on the digital field”, which is the “world of the future”. In addition, Oz also spoke about strengthening the direct sale of insurance by Migdal, explaining that “in the new world you can not be Only in one distribution channel. We need to be able to compete in every distribution channel. “