Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — Q3 2022 Earnings Presentation
42 slides from Phoenix Financial's earnings presentation, November 2022
Slide 1: Q3 2022 Phoenix Holdings Financial Review
Q3 2022 Phoenix Holdings Financial Review
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an offer to purchase the Furthermore, the presentation includes data and assessments based Company’s securities or solicitation to receive such offers and is on external sources, the contents of which were not independently designed solely to offer in
Slide 3: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary |3
Slide 4: Phoenix Holdings at a Glance
Phoenix Holdings at a Glance Leading Israeli financials group TA35 index 9.5 NISb Since 2018 Market cap(1) Proven and recognized experience 70+ AA- / AA+ Years of activity Holding / Insurance Rating 17.8% 14.2% Distinctive performance AUM CAGR ROE Average 5-year average4 5-year average4 Strong capit
Slide 5: Israeli Economy Snapshot
Israeli Economy Snapshot Increased volatility in 2022… GDP Growth 2 GDP per Capita 3 Long-Term Savings AUM 4 Percent USD ‘000 NIS Trillion Macro trends: Continued GDP 8.1% 11% CAGR growth at 7.8% (9M growth Israel 51.4 2.4 YOY); increased inflation and 4.5% 4.4% 4.0% 3.8% 2.0 1.9 Germany 50.8 1.6 1.
Slide 6: Financial Highlights
Financial Highlights Comprehensive Income 9M 2022 8.4% 599 NISm 364 NISb 9.6 NISb Comprehensive ROE AUM Equity Income 160 NISm 0.64 NIS 56 NISm Dividend Dividend per Share Buyback Dividend distribution following H1 1 Q3 2022 2.6% 62 NISm Comprehensive ROE Income (1) See Slide 11 for dividend breakdo
Slide 7: 9M 2022 Highlights – Value Catalysts
9M 2022 Highlights – Value Catalysts 1. Continued income growth from core businesses toward strategic targets • Higher income from operations in key segments (P&C, asset Phoenix Holdings (PHOE) management, distribution, and credit) • Shifting mix toward fee-based income • 8.4% 9M 2022 ROE despite ne
Slide 8: Growth in Diversified Core Business
Growth in Diversified Core Business Special Items: Insurance core Business Special Items: Comprehensive Income (after tax) Additional Core Business NIS millions Investments & 2,316 Interest Rates 141 Insurance Core Business Special Additional Core Business 265 items Investment & 1,557 interest rate
Slide 9: Assets Under Management
Assets Under Management Growth in AUMs during Q3 due to continued positive net inflows, despite market Assets Under Management performance NISb 369 364 +17.8% CAGR 117 109 Provident 234 Asset 215 Management 53 61 Pension 35 178 34 173 37 163 29 30 31 70 68 Investment 27 Services 21 24 56 17 52 49 45
Slide 10: Continued Growth Across Activities
Provident Continued Growth Across Activities Pension Savings policies Life and Savings Health P&C Premiums, Benefit Contributions, & Investment Contracts NISb 29.9 Accelerated growth, +22% 5.2 including asset +14% CAGR management 25.1 and P&C 3.6 21.4 5.6 20.5 2.8 19.2 17.5 18.1 3.5 5.9 2.3 15.4 2.5
Slide 11: Equity Generation and Dividend Distribution
Equity Generation and Dividend Distribution Shareholders' Equity NISm • Dividend policy: at least 30% 9,653 9,611 After dividend of of comprehensive income, 7,970 160 NISm & distributed semi-annually buyback of 56 6,446 6,636 NISm during 9M 5,872 • 2022 dividends: 160 NISm in 2022 September, in addi
Slide 12: Active Solvency & Capital Management
Active Solvency & Capital Management Economic Capital / Solvency (Insurance Company) Solvency II implementation Cashflow and Liquidity (Holding Company) Solvency ratio1 • Solvency II implemented in Israel in line with international standards, with strong regulatory oversight • Phoenix Insurance divi
Slide 13: Group Strategy Value Drivers
Group Strategy Value Drivers Value Drivers 1 2 3 4 Growth Engines Accelerated Innovation & Active Capital Insurance Growth Efficiency Management Management Accelerating Deepening Optimizing group Deploying capital growth while sustainable portfolio, against strategic Asset shifting mix to competitiv
Slide 14: Strategy Execution: 9M 2022 Highlights
Strategy Execution: 9M 2022 Highlights 1 Accelerated growth in high-ROE activities 2 Innovation and efficiency • P&C: 20% growth in P&C premiums, driven in part by growth • Technology: including product innovation (e.g., travel app), in Smart direct car policies (compulsory & property together) digi
Slide 15: Group Targets
Group Targets AUM Shareholders’ Equity NISb NISb 450-550 After 11-13 44 dividend of 369 364 9.7 8.9 9.6 160 NISm 296 8.0 7.6 & buyback 234 252 of 56 NISm • Continued strategic execution toward 2020 2021 9M 2022 mid-term 2020 2021 9M 2022 mid-term targets target target • Dynamic (2025) (2025) managem
Slide 16: Insurance Targets
Insurance Targets P&C Expense Ratios2 Premiums Including growth of Smart direct NISb P&C Health Life 4.2-4.8 2019 4.10% 5.57% 0.50% 3.2 2.9 2.9 2020 5.08% 5.82% 0.49% 2.4 2021 4.40% 5.50% 0.41% Focus on: 9M 2022 3.54% 4.97% 0.40% • Growth in capital 3.4-3.7% 5.4-5.8% 0.27-0.30% Mid-term target (2025
Slide 17: Additional Core Business Targets
Additional Core Business Targets Pension & Provident Investment Services Benefit contributions Revenues NISb NISm 18-20 700-800 463 502 485 10.8 9.5 366 6.8 7.5 Accelerated growth across segments: • Asset management 2020 2021 9M 2021 9M 2022 mid-term 2020 2021 9M 2021 9M 2022 mid-term (pension & pro
Slide 18: Managing in Volatile Markets in 2022
Managing in Volatile Markets in 2022 Growth, • Continued strategic execution driving income growth and stability Income, & • Investing in capabilities Resilience: • Assessing strategic opportunities Quality • Seeking continued unlocking of value Businesses • Dynamic investment management for risk- a
Slide 19: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 19
Slide 20: Income by Source: 9M 2022
Income by Source: 9M 2022 P&C Health Life Comprehensive income before tax Other Equity Returns 9M 2022, NISm 1,338 NISm income from operations Net negative 721 NISm pretax financial margin, including Pension and provident (pre-tax), increase of 369 NISm compared negative capital market impact compar
Slide 21: Income by Source: Q3 2022
Income by Source: Q3 2022 P&C Health Life Comprehensive income before tax Other Equity Returns Q3 2022, NISm Pension and provident 412 NISm income from operations, Net negative 269 NISm pretax financial margin, including Investment Services increase of 85 NISm compared to Q3 negative capital market
Slide 22: Income by Segment: 9M 2022
Income by Segment: 9M 2022 Comprehensive income before tax 9M 2022, NISm Additional core businesses contributed 539 NISm, more than half of 841 NISm total income before tax • 8.4% ROE, 12.2 ROE normalized 496 • P&C: negative -958 48 5 capital market -180 231 -62 599 impact 182 • Health: positive 73
Slide 23: Income by Segment: Q3 2022
Income by Segment: Q3 2022 Comprehensive income before tax Q3 2022, NISm Additional core businesses contributed 131 NISm, income before tax, driving performance for the quarter • 2.4% ROE, 11.4% ROE normalized • P&C: underwriting income improvement but negative capital market impact • Health: positi
Slide 24: Strong Balance Sheet
Financial Liabilities (NISm) Bonds and Loans Strong Balance Sheet CPI linked Float Fixed interest interest Total Difference Holdings Solo’ 829 397 297 1,523 Phoenix Holdings NISm 31/12/2021 30/09/2021 30/09/2022 12/21-9/22 Insurance Cash 2,154 2,399 2,343 189 Tier 1 capital 208 208 Intangible Assets
Slide 25: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 25
Slide 26: P&C
P&C P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other • 20% growth in premiums overall, driven Comprehensive Income Before Tax Compulsory motor by agencies and Smart direct business NISm Motor property • Motor property negative impact of Property and others inc
Slide 27: Health
Health P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm • Improvement in underwriting profit 80 • Income from release of LAT reserves (due to increase in interest rates), offset by capital market effects and excess 695 illi
Slide 28: Life and Savings
Life and Savings P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm • Higher underwriting profit mainly 39 due to increase in fixed management fees and an improvement in the historical effects as a result of a decrease in ann
Slide 29: Other Equity Returns (Insurance)
Other Equity Returns (Insurance) P&C Health Life Other Pension Investment Agencies Credit Other EquityProvident Services Comprehensive Income Before Tax NISm 324 • Negative impact of financial markets (1,282) • Financial margin increase (958) due to CPI index changes compared to 2021 Financial Inves
Slide 30: Asset Management: Pension & Provident
Asset Management: Pension & Provident P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm (20) 14 • Continued organic growth • Improvement in profit from operations due to 79 synergies from Halman- 73 Aldubi acquisition and ec
Slide 31: Asset Management: Investment Services
Asset Management: Investment Services P&C Health Life Other PensionInvestment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm • Excellence showing performance improvement • Improved margins 69 • Signed agreement to acquire Epsilon Investment House with 11 NISb AU
Slide 32: Agencies
Agencies P&C Health Life Other Pension InvestmentAgencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm 22 2 • Increased profit from operations driven by continued strategic execution, with strong growth and scale economies 231 • Continued acquisitions 207 • Special ite
Slide 33: Credit (Gama)
Credit (Gama) P&C Health Life Other Pension Investment Agencies Credit Other Equity Provident Services Credit Portfolio (without credit cards) Transaction Volume Comprehensive Income Before Tax NISm NISb NISm 22%+ +18% 1,936 117%+ 35 29 1,415 28 25 893 48 48 31.12.20 31.12.21 30.9.22 2020 2021 9M 9M
Slide 34: Other
Other P&C Health Life Other Pension Investment Agencies Credit Other Equity Provident Services Comprehensive Income Before Tax NISm • Segment includes Phoenix Holdings solo (23) profits (including RT1 28 holding) as well as other items • Financial margin 5 increase mainly due to CPI index changes Fi
Slide 35: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 35
Slide 36: Phoenix Investment Core Capabilities
Phoenix Investment Core Capabilities Investment performance & track record Responsible allocation & risk management Returns - Insurance Nostro / Corporate Account Asset Allocation - Insurance Nostro / Corporate Account Percent (nominal) Percent (Q3 2022) 10.0% Alternatives & other Cash 5% 7.9% 11% R
Slide 37: Reclassification – Explanation
Reclassification – Explanation Below is an explanation of reclassifications effecting the Health and P&C segments: • Health: As of 2022 Q1 financials, the Health segment reclassified earnings within the segment’s internal breakdown, primarily between underwriting and investment income due to the use
Slide 38: Phoenix Holdings – Investment Highlights
Phoenix Holdings – Investment 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, macro resilience during 2020-22 Strong market position with distinctive
Slide 39: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 39
Slide 40: Glossary
Glossary AM Asset Management; i.e. Excellence Nessuah 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 Con
Slide 41: Glossary
Glossary MF Management Fees; wages charged by a financial manager Moody’s A credit risk rating agency 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 sec
Slide 42: Q3 2022 Phoenix Holdings
Investor relations email contact: IR@fnx.co.il Q3 2022 Phoenix Holdings Financial Review