Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — Q3 2023 Earnings Presentation
48 slides from Phoenix Financial's earnings presentation, November 2023
Slide 1: 2023 Q3 Phoenix Holdings Financial Review
2023 Q3 Phoenix Holdings Financial Review
Slide 2: Agenda
1. Highlights 2. Strategy & Targets Agenda 3. Financial Results 4. Segment Breakdown Appendix Glossary Disclaimer |2
Slide 3: Phoenix Holdings - Overview
Phoenix Holdings - Overview Highlights Group Activities Leading Israeli 426 NISb TA-35 Insurance Asset Distribution Credit financials group AUM 1 Leading index Management P&C Retirement Agencies SME (Gama) Health Funds/ETFs Brokers Real Estate Distinctive 20% 15% Life Portfolios Brokerage AUM CAGR R
Slide 4: Conflict – Economic Impact
EVENTS AFTER END OF REPORTING PERIOD UPDATED NOVEMBER 26, 2023 Conflict – Economic Impact The conflict is impacting Israel… …but the economy is strong… …and already shows resilience • Since October 7, Gaza conflict has impacted Israel’s • Strong macro trends include long- • Return to daily activitie
Slide 5: Conflict – Phoenix Actions
EVENTS AFTER END OF REPORTING PERIOD Conflict – Phoenix Actions Business Continuity • Fully operational immediately • Initial remote work transitioned back to offices within 3 weeks • Continuous support for clients, channels, and partners, with addition of special call centers to solve problems Acti
Slide 6: Conflict – Exposures & Mitigation
EVENTS AFTER END OF REPORTING PERIOD FIGURES AS OF PUBLICATION DATE Conflict – Exposures & Mitigation Strong capital position… …and limited impact on income Capital Core Insurance Income Core Services Income Non-Operating Income • Strong solvency position of 205% • Life and disability • Asset manage
Slide 7: Economic Snapshot
Economic Snapshot GDP Growth 2 GDP per Capita 3 Long-Term Savings AUM 4 Long-term positive Percent 2.8% USD ‘000 NIS Trillion structural trends (e.g., 8.6% expected 6.5% 2024 wealth accumulation, Sweden 57 9% CAGR vibrant tech sector)1 4.1% 4.2% 3.1% Israel 55 2.4 2.3% 2.3 1.9 2.0 Germany 49 1.6 Rel
Slide 8: 9M 2023 Highlights
9M 2023 Highlights 9M/23 515 NISm 6.9 % 426 NISb Continued growth in Core Income to 305 NISm in Q3 and 955 NISm in 9M, with 12.7% and 12.6% Comprehensive Income ROE AUM Core ROE respectively AUM growth ahead of 10.1 Shareholder Equity NISb 205 Solvency1 % expectations including completed acquisition
Slide 9: Growth in Core Business
Growth in Core Business Comprehensive Income NISm, after tax Core Income - continued growth Services Core Income growth in fees from asset management, distribution, credit (TM Insurance Core Income growth 9M YOY Non-Operating Income Impact of capital markets (above/below 2019 2020 2021 2022 9M/2022*
Slide 10: Investment Core Capabilities
Investment Core Capabilities Returns - Insurance Nostro / Corporate Account Asset Allocation - Corporate Account (Nostro) Percent (nominal) Percent (September 30, 2023) Investment performance & track record Responsible allocation & risk management Mark to market reporting Group plans based on 3% rea
Slide 11: Equity Generation and Dividend Distribution
Equity Generation and Dividend Distribution Building Track-Record Shareholders' Equity NISm 120 NISm semi-annual dividend distributed in September representing a total of 297 NISm dividends year-to-date (together with 177 NISm dividend distributed April 2023) In line with dividend policy of at least
Slide 12: Agenda
Highlights Strategy & Targets Financial Results Agenda SO NS Segment Breakdown Appendix Glossary Disclaimer ~CPhoenx 12
Slide 13: Value Creation Strategy & Catalysts
Value Creation Strategy & Catalysts Value Drivers Growth Engines Insurance Accelerated Innovation & Active Capital Growth Efficiency Management Management Accelerating growth Deepening client-focus Optimizing group Deploying capital Asset Management while shifting mix to & sustainable portfolio, man
Slide 14: Group Targets
Group Targets Comprehensive Income Core Services Income NISb Without special items, after tax, NISm Shifting group mix to 50% stable, fee based income RHP Shareholders’ Equity NISb Note: Mid-term Targets based on 5-year plan 2020-25 and assuming 3% return on investments. ROE target range assumes 3-
Slide 15: 1. Insurance | Continued Growth
1. Insurance | Continued Growth Premiums & Contributions NISb * Starting 2024, an HMO collective LTC agreement will not include insurance risk, which may reduce premiums
Slide 16: 1. Insurance | Targets
1. Insurance | Targets P&C Expense Ratios2 Premiums, including Smart direct, NISb P&C Health Life % of premiums % of AUM 2019 4.10% 5.57% 0.50% 2020 5.08% 5.82% 0.49% 2021 4.40% 5.50% 0.41% 2022 3.53% 5.00% 0.40% 9M/22 3.54% 4.97% 0.40% 9M/23 3.54% 5.24% 0.41% Mid-term target 3.4-3.7% 5.4-5.8% 0.27-
Slide 17: 2. Asset Management | AUM Growth
2. Asset Management | AUM Growth Assets Under Management NISb Continued inorganic growth Investment Services includes acquisitions of Epsilon (5 NISb) & Psagot activities (16 NISb) Note: AUM figures for end of period
Slide 18: 2. Asset Management | Targets
2. Asset Management | Targets Group AUMs Pension & Provident Contributions Investment Services Revenues Expense Ratio: Pension & Provident NISb NISb NISm % of AUM 2019 0.24% 2020 0.16% 2021 0.13% 2022 0.12% 9M/22 0.14% 9M/23 0.13% Mid-term target 0.11% (2025) Market leadership with full offering Mar
Slide 19: 3. Distribution (Agencies) | Stand-Alone Value
3. Distribution (Agencies) | Stand-Alone Value Agency Revenues 79.4% 20.6% Phoenix Holdings Management Assessing interest NISm from international investors to unlock Phoenix Agencies & create value Agam Shekel Oren Mizrach Quality Others 100% 100% 70% 50.5% >50% Restructuring in December 2022 to acc
Slide 20: 4. Credit | Building Group Activities
4. Credit | Building Group Activities Group Credit Activities NISb > Private client brokerage margin & shareholder loans > Under Phoenix Investment House > Real estate loans & project guarantees > Under insurance corporate account (Nostro) > Full 100% ownership following tender offer in Q3 (continue
Slide 21: Resilience, Growth & Value
Looking Ahead Resilience, Actively managing group activities and exposures during Well positioned with strong balance sheet & liquidity Assessing strategic opportunities period of conflict and uncertainty Growth & Value Creation Ongoing strategic execution, efficiency & unlocking of value Investment
Slide 22: Agenda
Highlights Strategy & Targets Financial Results Agenda Ns Segment Breakdown Appendix Glossary Disclaimer ~CPhoenx 22
Slide 23: Q3 2023 Income by Source
Q3 2023 Income by Source PBT Breakdown Q3 2023, NISm Q3/2023 Q3/2022 Difference P&C 83 42 41 Comprehensive income Health 49 71 (22) Q3 2023, NISm Life & Savings 101 76 25 Other Equity Returns 95 91 4 Core Insurance 328 280 48 Pension & Provident 28 24 4 Investment Services 71 41 30 Agencies 79 65 14
Slide 24: 9M 2023 Income by Source
9M 2023 Income by Source PBT Breakdown 9M 2023, NISm 9M/2023 9M/2022 Difference P&C 301 119 182 Health 144 227 (83) Life & Savings 167 182 (15) Comprehensive income Other Equity Returns 299 324 (25) 9M 2023, NISm Core Insurance 911 852 59 Pension & Provident 70 79 (9) Investment Services 191 113 78
Slide 25: Q3 2023 Income by Segment
Q3 2023 Income by Segment Comprehensive income before tax Q3 2023, NISm Income contribution from services 46 22 2 )92( 86 (193) (32) 217 222 65 4 87 P&C Health Life Other Equity Pension and Investment Agencies Credit Other Tax Miniority Q3/23 Returns Provident Services 162 69 110 Insurance Asset Man
Slide 26: 9M 2023 Income by Segment
9M 2023 Income by Segment Comprehensive income before tax 9M 2023, NISm
Slide 27: Strong Balance Sheet
Strong Balance Sheet Phoenix Holdings NISm 31/12/2022 30/09/2022 30/09/2023 Difference Financial Liabilities (NISm) Cash 3,282 2,343 2,464 -818 Bonds and Loans Intangible Assets 2,992 2,927 3,548 556 30/09/2023 31/12/2022 CPI Floating Fixed Deferred acquisition costs 2,453 2,451 2,723 270 linked int
Slide 28: Active Solvency & Capital Management
Active Solvency & Capital Management Economic Capital & Solvency (Insurance Company, NISb) Solvency II implementation Cashflow and Liquidity > Solvency II implemented in Israel in line with (Holding Company) international standards, with strong regulatory > Insurance dividend 30-50% of oversight com
Slide 29: Agenda
Highlights Strategy & Targets Financial Results Agenda PEP OS Niger Segment Breakdown Appendix Glossary Disclaimer CPhoenix 29
Slide 30: P&C
P&C 20% growth in premiums 9M YOY Comprehensive Income Before Tax NISm Improved performance overall and in motor (compulsory + property) in 9M, despite challenging environment including high rates of vehicle theft (76) 35 Doubling underwriting profit compared to 9M/22 despite quarterly differences N
Slide 31: Health
Health Lower underwriting profit Comprehensive Income Before Tax compared to 2022 mainly due to NISm increase in claims 65 Income from release of LAT reserves in Q3, with 213 NISm LAT reserves remaining as of 76 September 2023 10 295 Special items include gain of control in Phoenix Private, offset b
Slide 32: Life and Savings
Life and Savings Lower underwriting profit Comprehensive Income Before Tax mainly due to expenses & NISm take-up rates in 2022 Negative capital market impact including variable management fee deficit of 590 167 NISm as of report publication date (293) Lower interest rate mitigation (37) compared to
Slide 33: Other Equity Returns (Insurance)
Other Equity Returns (Insurance) Comprehensive Income Before Tax NISm 299 (654) (374) (19) Financial Investments Special Items 9M/23 Margin above 3% 9M/22 324 (1,282) - (958) Difference (25) 628 (19) 584 Q3/23 95 (282) (6) (193) Q3/22 91 (293) - (202) Difference 4 11 (6) 9
Slide 34: Asset Management | Pension & Provident
Asset Management | Pension & Provident Comprehensive Income Before Tax NISm Continued organic growth (2) (4) Focus on efficiency including closing of direct sales activity and focusing on higher margin / efficient 70 activities 64 Special items include claim provisions in Q3 and gain of control in “
Slide 35: Asset Management | Investment Services
Asset Management | Investment Services Performance improvement from Comprehensive Income Before Tax strategic execution NISm Higher brokerage contribution due 8 (15) to growth & margin credit rates 10 13 Completed acquisitions of Epsilon Investment House & assets from Psagot Investment House (includ
Slide 36: Agencies
Agencies Stable income with organic growth in Comprehensive Income Before Tax business, however growth rate NISm impacted by slower pace of hiring in 0 the market 20 Increase in EBITDA to 259 NISm in 9M/23 compared to 235 NISm in 9M/22 241 Implementation of holding and 221 management restructuring i
Slide 37: Credit (Gama only)
Credit (Gama only) Full ownership of Gama Credit Portfolio Comprehensive Income Before Tax following successful take-private NISm, without credit card activity NISm tender offer in Q3 (7) Continued growth in most credit categories, including business 84 77 loans and real estate financing, while proa
Slide 38: Other
Other Segment includes Comprehensive Income Before Tax Phoenix Holdings NISm solo profits (including RT1 holding) as well as other items (56) 67 (2) 5 (20) 16 Financial Interest Subsidiaries Other Special Items 9M/23 Margin expense 9M/22 76 (48) - (23) - 5 Difference (9) (8) (2) 3 16 - Q3/23 19 (16)
Slide 39: Agenda
Agenda ONS 9s Highlights Strategy & Targets Financial Results Segment Breakdown Appendix Glossary Disclaimer “CPhoenix 39
Slide 40: Phoenix Holdings – Highlights
Phoenix Holdings – Highlights Unique opportunity in a growing, underpenetrated market with barriers to entry 1 Strong demographic & wealth trends with high compulsory savings rates, potential for greater penetration, and macro resilience Strong market position with distinctive growth & performance t
Slide 41: Sustainability | 2022 Report Highlights & Examples
Sustainability | 2022 Report Highlights & Examples Group Products & Services Investments Environnent 20% #1 EV insurer 6.5 NISb Define climate change decrease in carbon footprint (2019 preferred insurer for Tesla of green investments strategy base) Social 0.5% #1 in service >0.5m Enhance commitment
Slide 42: Competitive Landscape
Competitive Landscape Comprehensive Income AUM P&C Market Share NISm, attributed to shareholders NISb, 2022 %GWP, all sub-segments, 2022 Shareholders’ Equity NISb, 2022
Slide 43: Investment Returns – Explanation
Investment Returns – Explanation Reconciliation of investment returns above / below 3% real returns with financial statements NISm 9M/23 9M/22 2022 P&L Items from Financial Statements Investment income 6,748 (6,848) (5,555) Share in profits of equity-accouted investees 60 49 - Total components of ne
Slide 44: Agenda
1. Highlights 2. Strategy & Targets Agenda 3. Financial Results 4. Segment Breakdown Appendix Glossary Disclaimer | 44
Slide 45: Glossary
Glossary AM Asset Management AUM Assets Under Management; the total market value of all the investments that are managed by the Group Bps Basis Points; 1 basis points is .01% CGU Cost Generating Unit CI Comprehensive Income CLR Combined Loss Ratio CO Corporate, Other and Consolidation Core Income In
Slide 46: Glossary
Glossary MSCI Morgan Stanley Capital International Emerging Markets Index; measures the performance in equity markets, specifically in global emerging markets Mutual Fund Open end, non-tradable basket of securities that tracks the performance of an undelaying index, sector, or security type Net Infl
Slide 47: Agenda
1. Highlights 2. Strategy & Targets Agenda 3. Financial Results 4. Segment Breakdown Appendix Glossary Disclaimer | 47
Slide 48: Disclaimer
Disclaimer This presentation does not constitute an offer to purchase the Company’s securities or solicitation to receive such offers and is designed solely to offer information as part of the Company’s explanations regarding its Financial Statements. This presentation includes information regarding