Migdal Insurance and Financial Holdings (MGDL) Q4 2023 earnings summary

Executive summary

• 2023 net profit was NIS 553m, reversing a NIS 468m net loss in 2022; total comprehensive profit/loss were also NIS 553m/NIS 468m. Q4 profit was NIS 468m vs. NIS 388m a year earlier.

• Results benefited from lower insurance liabilities, higher investment income and stronger capital-market returns; premiums and contributions rose 4% YoY to NIS 27bn.

• The “Back to Basics” multi-year strategy began implementation in 2023, targeting profitable core growth, greater efficiency and customer-focused offerings.

Financial highlights

• Full-year underwriting profit fell to NIS 440m from NIS 786m; Q4 recorded a NIS 9m underwriting loss vs. NIS 211m profit in Q4 2022.

• Special effects reduced liabilities and increased pretax profit by NIS 1,296m in 2023 vs. NIS 2,209m in 2022; Q4 impact was NIS 592m.

• Investment contribution improved by NIS 2.8bn YoY; the variable-fee deficit estimate fell to NIS 955m at year-end from NIS 1.5bn a year earlier, and was ~NIS 800m near publication.

• Gross premiums, investment-contract receipts and contributions rose 17% from 2020 to 2023; 2023 life-insurance decline reflected lower one-time receipts amid higher rates.

• Assets under management reached NIS 415bn at year-end, up 13% from NIS 368bn; general insurance premiums rose 15% to NIS 2.372bn.

Outlook and guidance

• 2027 targets include ~NIS 1bn annual representative profit, ~12% ROE, regular dividends and AUM of NIS 550bn.

• Targets depend on investment returns, AUM growth, improved net transfers, new sales and stronger core underwriting; strategy priorities include cost reduction and adapting customer value propositions.

• Targets use current IFRS 4 accounting and will be adjusted for IFRS 17; solvency assumptions include additional Tier 2 capital and implementation of a stochastic model.