Harel Insurance Investments & Financial Services (HARL) Q1 2024 earnings summary

Executive summary

• Net profit was NIS 214M vs a NIS 45M loss in Q1 2023; pre-tax profit was NIS 336M vs a NIS 68M loss.

• Comprehensive income before tax reached NIS 366M vs NIS 52M; after-tax comprehensive income attributable to owners was NIS 233M vs NIS 33M.

• Results benefited from improved insurance underwriting and positive proprietary investment yields, partly offset by NIS 34M of war-related costs before tax.

Financial highlights

• Total income rose to NIS 7,679M from NIS 5,646M, including net investment and financing income of NIS 3,784M vs NIS 1,529M.

• Gross earned premiums, benefit contributions and investment-contract receipts rose 8.6% to NIS 9.94B from NIS 9.15B; gross earned premiums alone were NIS 3,883M vs NIS 4,217M.

• Management-fee income increased to NIS 397M from NIS 363M; commission income was NIS 119M vs NIS 125M.

• Profit attributable to owners was NIS 211M vs a NIS 48M loss; basic and diluted EPS was NIS 1.02 vs a NIS 0.52 loss per share.

• Equity was NIS 8.7B at March 31, 2024; assets under management were NIS 452.9B, up 6% from year-end 2023 and 20% year over year.

Outlook and guidance

• 2026 targets include NIS 1.5B comprehensive income and 13.5% ROE, based on NIS 500M of additional permanent after-tax improvement.

• Other 2026 targets include NIS 520B AUM, NIS 43.8B premiums and deposits, and NIS 1.91B fee income.

• Forecast assumptions include 3.0% real proprietary yield and CPI change, maintained market share and strategy execution; outcomes depend on markets, macroeconomic conditions and regulation.

• Harel 2030 strategy prioritizes core insurance execution, customer relationships and distribution, and income diversification; adjusted performance uses an assumed 3% real proprietary yield and excludes special effects.

• IFRS 17 and IFRS 9 implementation is scheduled for Israeli insurers from January 1, 2025, with a January 1, 2024 transition date; system testing was underway.