The insurance sector has become one of the main engines to rise on the Tel Aviv Stock Exchange in the past six months. The sector index increased by 84 % in that period, or more than three times the rise of the 35th Tel Aviv index. The strong financial statements issued by insurance companies, which show huge profits for the past year, provide an explanation of the last rise in their stock prices.
Four of the largest insurance companies in Israel published its results 2024 last week. Migdal and Clal Insurance reported a comprehensive profit for 1 billion New, each, double and hit their profits for 2023, respectively. Menora Mivtachim has recorded a comprehensive profit of 1.25 billion pulse (an increase of 75 %), and Phoenix reported a profit of 2.1 billion pulse, or nearly twice the profit in the previous year.
But while two companies, Phoenix and Menora Mivtachim, have seen more than 5 % increase in stock prices on the day they issued their financial money, and withdrew the entire sector to the top, where Cleal and Megdal decreased by more than 6 %.
Timing, and a little luck
Why was the market excited to perform Phoenix and Menora Mivtachim, and the disappointment by Migdal and Clal? Part of the interpretation lies in the general momentum on the day when all its reports, or in other words, were published. Phoenix and Mainora Mivichim benefited from the fact that they published last Thursday and Monday, before the resumption of hostilities in the Gaza Strip, when the local market still feels optimistic and the stocks rose.
Calle, on the other hand, issued its financial statements on Tuesday, the next morning of the sudden attack of Israeli communications in the Gaza Strip, which ended the ceasefire. The Tel Aviv 90 index responded by 2.4 %, after increasing more than 35 % in the six months until then. Megdal also said on Wednesday during the Israeli Defense Army operation in the Gaza Strip. A source in the market said: “It is psychology, when you launch the financial statements in the falling market, you get a worse blow,” said a market source.
However, this interpretation is not sufficient, because other insurance companies were not “infected” with the sharp fall in the whole and Megdal. On Wednesday afternoon, for example, Phoenix and MINURA Mivichim increased by about 1 %, while Megdal fell by 7 %, and Kalal fell by 4 % after his sharp fall on Tuesday.
Megdal's dependence on the capital market
The market sources that spoke to “Globes” referred to the same reasons for enthusiasm in Menora Mivtachim and Phoenix Financial, in exchange for disappointment in those from Clal and Migdal. As one of them said, “Clal and Migdal's financial statements, which were in itself, have only highlighted the gaps in performance and the features of Phoenix and Menora, which are characterized by a higher profit, which are in the appropriate market sectors: Assistants, financial pensions, management (through excellence in the investment house, NA).
The source added: “These two are less than participation in the sectors that are a problem, such as health insurance and life insurance.” At the end of the twenties of the twentieth century, all insurance companies came out of private nursing insurance, which is part of health insurance, and the sector on the course of the flow.
Insurance of nursing care for health funds is also in difficulties. Only recently, the fear arose that those who were secured by the Clallit box were left without a cover.
Another source said: “The market realizes that in Megdal, for example, most of the fourth quarter profit derived from the high stock market. Megdal relies heavily on the returns in the capital market, and therefore if the market takes periods of inflammation, this will be damaged, and this goes to pricing.” In the case of CLAL, the source says: “Despite the good financial statements, if I have to choose between a low -price company and a company in my opinion, I am ready to pay a quality company.
Return on stocks
When we asked the sources about the gaps between the numbers of different companies, we referred the return on the shares that each of them generates, which is an acceptable measure in the financial services sector. While Cleal and Megdal achieved proceeds from property rights by 11-12 % last year, Phoenix and Mineura Mifchim informed much higher returns, 19 % for each of them, on the basis of the old accounting standard (IFRS 4), and this is a very important gap.
Phoenix instructions were also seen as better. A source in the market said: “Phoenix set back on the stock goal from 16 to 17 % under the old standard, which translates to 20-22 % under the new insurance standard (IFRS 17, NA), but in Clal will be only 12-15 % under the new standard,” said a source in the market. “Kalle was disappointed by the market, and he expected more, because it is clear that in light of the new standard, which brings recognition of profits forward, their return should jump.”
“Investors look first and foremost in the return on property rights. In this regard, Cleal and Midgal are lagging behind other large companies, because their other portfolios contain large components of executive insurance. Noting that in the financial statements of Menora and Phoenix, most of their portfolios depend on unintended insurance, The insurance premiums grew by 30 % on average last year.
The CEO of Migdal Group Ronen Agassi says he is happy with the results. “Our primary activity was much better than it was in the previous year, which is a profit of approximately 900 million New had no special reason, with a profit for normal activity in the previous year. In our planning, we planned to improve subscription profits to 950 million NIS in 2027, and for what happened so far.
However, Agassi admits that the profit was strongly affected by “the profit of investment that was positive thanks to the rise in interest rates – our assets are exposed to interest rate changes – the fourth quarter was particularly strong.” In the future, he tries to encourage investors, and declares that the company has advanced another stage towards approval to distribute profits. “We believe this will happen in 2027, according to the plan. Of course, we are pleased to be surprised if it comes sooner.”
It was published by Globes, Israel Business News – En.globes.co.il – on March 20, 2025.
© Copy Publish Publisher Itonut (1983) Ltd. , 2025.
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