The Phoenix made a profit of about NIS 1 billion in the quarter – the capital market

the insurance company

The Phoenix
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Reports a transition to the profit attributed to shareholders in the fourth quarter of 2020 in the amount of NIS 860 million, compared with a loss of NIS 19 million in the corresponding quarter. For the entire year, this is a profit of NIS 1.3 billion, double about NIS 664 million in 2019. The return on capital for the entire year was about 18.5% compared to 10.2% in 2019, and Phoenix announced a dividend distribution of NIS 380 million.

Like the banks, which throughout the Corona year you read here at BizPortal many items about their convenient pricing – we estimated throughout the year that insurance companies also trade at bargain prices (e.g .: here and here). Insurance companies fell tens of percent because of the corona and traded on half of their equity. Mr. Market did go crazy. We estimated that it would not continue and that the companies would close the falls – and indeed the insurance companies have since jumped 100% and north (and there are those like Migdal who have jumped 200%). Corona’s damage to insurance companies was severe, only in the third quarter of the year did they turn a profit, and now – with the largest rally in the world markets – the companies covered the losses and closed a year with a profit of hundreds of millions of shekels. As with banks, it’s a matter of probability – and the odds were in favor of the companies. conclusion? You do not necessarily have to flee the market and the potential for increases after the falls is very high. Companies are rapidly streamlining following the Corona (including accelerating layoffs and departures) and becoming more digital. Now – it is no longer clear that these are bargain prices.

And back to Phoenix:
In the field of non-life insurance, the total profit before tax for the quarter was NIS 264 million, compared with NIS 157 million in the corresponding period; The loss from health insurance was reduced from NIS 284 million to NIS 71 million, due to an increase in insurance reserves as a result of updating actuarial discounts and other effects of NIS 118 million compared to an increase in the LAT reserve as a result of an update on cancellation rates, expenses and mortality rates. The disease and others in the amount of NIS 528 million last year.

In the area of ​​life insurance, a profit before tax of NIS 605 million was recorded in the quarter, compared with a loss of NIS 105 million, with the improvement due to income from variable management fees that increased with the increases in the financial markets and changes in the risk-free interest rate curve. As of the quarter, the long-term savings segment posted a profit of $ 25 million compared to $ 7 million in the same period last year.

Excellence Investment House’s financial services activity experienced a decrease in profit before tax to NIS 20 million in the quarter, compared with NIS 38 million in the corresponding quarter. On the other hand, the insurance agencies’ activity showed an increase in profit before tax, which amounted to NIS 115 million, compared with NIS 45 million in the corresponding period. The other profits item, which includes non-core business activities such as investments that stand against capital and investee companies (mainly Gamma Management and Clearing), has more than tripled to NIS 353 million compared to NIS 110 million in the corresponding period, mainly due to increases in markets.

In the whole of 2020, the total profit before tax from general insurance activities amounted to NIS 524 million, a decrease compared to NIS 681 million in 2019. Attributed to a decrease in investment income of NIS 86 million and a decrease in Winograd reserve of NIS 75 million. In the field of life insurance, the Phoenix presented a profit before tax of NIS 679 million, compared with a loss of NIS 149 million in 2019. The improvement was attributed to changes in the risk-free interest rate curve and the relative liquidity premium, so that the insurance reserves decreased by NIS 218 million, compared with an increase of NIS 724 million last year.

Profit before tax per year from the provident fund’s activity decreased by NIS 7 million to NIS 32 million, due to a decrease in returns in the capital market that affected the margin in the funds with the guaranteed return and the income from the damaged nostro portfolio. The effect of a decrease in investment income of NIS 10 million was also noted, and that the decrease in remuneration is mainly due to a decrease in one-time deposits.

In addition, the pension activity recorded a loss of NIS 4 million against a profit of NIS 11 million a year earlier.This is due to the declines in the markets and other marketing and acquisition expenses and general and administrative expenses as a result of updating the model for allocating expenses in the group. In this context, Phoenix mentions that as part of the acquisition of the Hellman Aldubi investment house, the latter’s pension fund included in the default arrangement will be sold to Meitav Dash for NIS 45 million.

As for the health insurance segment, Phoenix reported a pre-tax profit of NIS 219 million against a loss of NIS 311 million, a change explained by the same trend that affected the quarter’s results in the segment (see above) and at the end of the end of 2019 a group long-term care insurance agreement for members United Health Insurance Fund and as a result of an almost complete halt in travel insurance activity abroad, this effect has been partially offset by the decrease in the frequency of claims.

The insurance agencies segment in 2020 generated a pre-tax profit of NIS 237 million, compared with a pre-tax total profit of NIS 171 million last year. Most of the increase is attributed to a one-time profit of approximately NIS 62 million in respect of the revaluation of an investment in the Oren Mizrah insurance agency following its increase in control. There is also an increase in profit from activity in the field in the year of the report, mainly from growth and an increase in sales. The other annual profit was reduced by almost half to NIS 212 million, compared with NIS 411 million in 2019, also here due to declines in the markets that affected the figure for the entire year.