Migdal Insurance and Financial Holdings (MGDL) Q3 2022 earnings summary

Executive summary

• 9M net income was ₪1.354bn versus ₪921.5m YoY, while comprehensive income after tax was a loss of ₪855.3m versus income of ₪982.6m.

• Q3 net income was ₪209.9m versus ₪306.2m YoY; comprehensive income after tax was a loss of ₪143.6m versus income of ₪415.5m.

• Gross premiums and contributions rose 11% to ₪19.4bn; managed assets were ₪365bn at Sep. 30, with negative market returns weighing on results.

Financial highlights

• 9M gross earned premiums were ₪9.36bn versus ₪9.73bn YoY; net earned premiums were ₪8.66bn versus ₪9.14bn.

• 9M underwriting profit was ₪567m before tax versus ₪676m YoY; comprehensive income before tax was a loss of ₪489.9m, and Q3 pretax comprehensive income was a loss of ₪75.6m.

• Q3 investment losses exceeded investment income by ₪0.9bn before tax; 9M excess investment losses totaled ₪3.5bn before tax.

• Total equity was ₪7.71bn at Sep. 30, down from ₪8.56bn at year-end 2021, mainly reflecting the 9M comprehensive loss.

Outlook and guidance

• Work began on an updated long-term strategy with an international consulting firm, focused on value creation, higher returns on equity, profitable sales and underwriting improvement.

• Market gains after quarter-end reduced estimated foregone variable management fees on participating life policies to ₪1.3bn from ₪1.5bn at Sep. 30; Q4 results remained market- and rate-sensitive.

• Health-insurance reform was largely scheduled to take effect Feb. 1, 2023; IFRS 17 implementation was scheduled for periods beginning Jan. 1, 2024, with transition on Jan. 1, 2023.