Harel Insurance Investments & Financial Services (HARL) Q2 2023 earnings summary

Executive summary

• Shareholders’ comprehensive income after tax was NIS 93m in Q2 and NIS 126m in H1, versus losses of NIS 436m and NIS 110m in the prior-year periods.

• H1 net loss was NIS 91m versus profit of NIS 440m; Q2 net loss was NIS 46m versus NIS 181m. H1 investment and financing results swung to a NIS 4,783m gain from a NIS 4,182m loss.

• Comprehensive income before tax was NIS 128m in Q2 and NIS 180m in H1, versus losses of NIS 674m and NIS 217m; stronger underwriting supported the improvement.

Financial highlights

• Gross premiums earned, benefit contributions and investment-contract receipts totaled NIS 19.0bn in H1, up 1.4% YoY; Q2 totaled NIS 9.8bn, up 9.6%.

• H1 gross premiums earned were NIS 8,896m versus NIS 8,590m; retained premiums were NIS 7,715m versus NIS 7,513m.

• AUM reached NIS 400.6bn at June 30, 2023, up from NIS 350.8bn a year earlier and 10% from YE22.

• Overseas real-estate impairment provision of NIS 111m reduced investment yields in Q2 and H1.

• Real Nostro yield was positive in Q2 and zero in H1, improving YoY.

Outlook and guidance

• IFRS 17 and IFRS 9 adoption for Israeli insurers was deferred to periods beginning on or after Jan. 1, 2025, with a Jan. 1, 2024 transition date; preparations are underway.

• The Isracard acquisition remained subject to regulatory approvals and other closing conditions; the deadline to satisfy conditions was extended to Nov. 12, 2023.

• Revised dividend thresholds for Harel Insurance include minimum economic solvency ratios of 135% with transitional measures and 110% without them.

• Forward-looking results remain subject to risks including product demand, pricing, economic conditions, product and technology development, and accounting policies.