Migdal Insurance, controlled by Shlomo Eliyahu, lost approximately NIS 468 million in the past year compared to a profit of NIS 1.73 million in 2021, according to reports released late last month.
In the fourth quarter of 2022, the group earned NIS 388 million, compared to a profit of NIS 747 million in the corresponding quarter last year.
The profit is mainly due to a gain of NIS 600 million in underwriting profits in general insurance, especially for cars, and the increase in interest which led to a decrease in life insurance reserves. Gross premiums and remuneration fees increased by 6% to NIS 25.7 billion.
Migdal manages assets amounting to NIS 368 billion. The investment in non-negotiable debt amounts to NIS 37 billion, the scope of investments in non-negotiable equity is NIS 28 billion and the real estate portfolio is valued at NIS 20 billion.
From the beginning of 2022, Migdal didn’t charge variable management fees due to a negative real return on profit-sharing life insurance policies. It’s estimated that management fees that won’t be collected due to negative returns amount to NIS 1.5 billion.
In the year of the report, a net positive movement of NIS 2.1 billion was recorded in the provident and continuing education sector thanks to the high returns recorded by the company as compared to its competitors.
Car insurance is still a focus for losses
Car insurance is still a focus for losses. For compulsory car insurance, a decrease in underwriting losses was recorded, and in the property vehicle sector, losses totaled NIS 50 million due to an increase in the cost of claims, including their frequency, despite the increase in the average premium.
Incoming CEO Ronen Agassi began implementing a new business strategy and hired the services of American consulting giant Boston Consulting Group (BCG), which has an office in Tel Aviv, to improve the management system and focus on investments.
Yossi Ben Baruch, chair of the board of directors for parent company Migdal Holdings, stated that the company started 2023 face forward. He doesn’t doubt that Agassi will successfully lead the company and build an infrastructure to help Migdal return to its natural position as the leading insurance group.
Agassi: “We’re finishing a year of fluctuations in the financial markets that significantly affected profitability. These are complex and dynamic days, and it’s our duty to be attentive to changes in the market and adapt ourselves to them quickly. In the medium and long term, our task is to develop in new and innovative directions with the aim of returning to a leading position and continuous growth, and we’ll work on all levels to achieve these goals.”
