Migdal Insurance and Financial Holdings (MGDL) Q2 2022 earnings summary

Executive summary

• H1 2022 net income was ₪1.354bn, up from ₪615m YoY, while total comprehensive income was a loss of ₪712m versus income of ₪567m; Q2 net loss was ₪662m.

• Market declines and updated mortality assumptions drove losses, partly offset by higher interest rates reducing insurance liabilities.

Financial highlights

• H1 revenue was ₪36.67bn versus ₪19.01bn YoY; Q2 revenue was negative ₪3.00bn versus ₪9.86bn, reflecting sharp swings in net investment results.

• H1 pretax profit was ₪2.083bn versus ₪934m YoY; Q2 recorded a pretax loss of ₪1.006bn versus pretax profit of ₪412m.

• H1 gross premiums and contributions reached ₪13.1bn, up 14% YoY, with growth across business lines.

• H1 underwriting profit was ₪330m pretax versus ₪461m YoY; excess investment losses were ₪2.6bn pretax, partly offset by a ₪2.1bn pretax reduction in insurance liabilities from higher rates.

• H1 EPS was ₪1.28 versus ₪0.58; Q2 EPS was a loss of ₪0.63 versus earnings of ₪0.26.

Outlook and guidance

• The rate-curve rise continued after June and was expected to reduce insurance liabilities; the impact of further market and rate movements on Q3 results remained uncertain.

• Post-quarter market stabilization and recovery lifted managed assets to ₪379bn near publication and improved member returns.

• Variable management fees on legacy participating life policies can resume only after cumulative positive real returns offset policyholder investment losses; estimated foregone fees were ₪1.1bn before tax at June 30.

• IFRS 17 adoption is scheduled for January 1, 2024; preparation includes systems, accounting-policy and reporting work, with 2023 pro forma disclosures planned.