Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — Q2 2022 Earnings Presentation
41 slides from Phoenix Financial's earnings presentation, August 2022
Slide 1: 2022 Q2 Phoenix Holdings Financial Review
2022 Q2 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 9.8 NISb Since 2018 Market cap1 Proven and recognized experience 70+ AA- / AA+ Years of activity Holding / Insurance Rating 17.8% 15.1% Distinctive performance AUM CAGR ROE 5-year average2 5-year average2 Strong capital positio
Slide 5: Israeli Economy: Impact of Global Volatility in H1 2022
Israeli Economy: Impact of Global Volatility in H1 2022 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 6.8% in Q2 Israel 51.4 2.4 (annualized); increased inflation 4.5% 4.4% 4.0% 3.
Slide 6: 2022 H1 Financial Highlights
2022 H1 Financial Highlights Comprehensive Income H1 11.4% 537NISb 361NISb 9.7NISb Comprehensive ROE AUM Equity Income Semi-annual 160NISm 0.64NIS 56NISm dividend announced Dividend Announced Dividend per Share Buyback Q2 7.9% 184NISb Comprehensive ROE Income |6
Slide 7: 2022 H1 Highlights
2022 H1 Highlights Phoenix Holdings (PHOE) 1. Profitable growth in core businesses including benefits/contributions (+36% YOY) and comprehensive income Insurance Core Additional Core • 11.4% H1 ROE despite negative Nostro yields Businesses Businesses • Financial group resilience & diversification as
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 & 1,353 1,044 interest
Slide 9: Assets Under Management
Assets Under Management Continued positive net Assets Under Management inflows, despite market NISb performance 369 361 +18% CAGR 117 110 Provident 234 Asset Management 215 53 57 Pension 35 178 34 173 37 163 29 30 31 70 68 Investment 27 Services 21 24 56 17 52 49 45 Insurance 53 97 93 and Savings 71
Slide 10: Continued Growth Across Activities
Continued Growth Across Activities Provident Pension Savings policies Life and Savings Premiums, Benefit Contributions, & Investment Contracts Health NISb P&C 29.9 5.2 +14% CAGR Accelerated growth, including asset management and P&C 21.4 5.6 2.8 19.2 +36% 17.5 18.1 2.3 17.1 15.4 2.5 4.1 2.9 2.5 4.5
Slide 11: Equity Generation and Dividend Distribution
Equity Generation and Dividend Distribution Shareholders' Equity NISm 9,708 After dividend of 9,653 421 NISm & 7,970 buyback of 56 Dividend of 160 NISm during H1 NISm announed 6,446 6,636 5,872 August 2022, under updated semi-annual dividend policy 2017 2018 2019 2020 2021 H1/22 ROE* 16.5% 8.3% 10.2
Slide 12: 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 13: Strategy Execution: 2022 H1 Highlights
Strategy Execution: 2022 H1 Highlights 1 Accelerated growth in high-ROE activities 2 Innovation and efficiency • P&C: 21% growth in P&C premiums, driven in part by • Technology: (1) Product innovation: Launch of “Smart Travel” insurance growth in Smart direct car policies (compulsory & mobile app; (
Slide 14: Group Targets
Group Targets AUM Shareholders’ Equity NISb NISb 450-550 After 11-13 44 dividend of 369 361 9.7 9.7 8.9 421 NISm 296 8.0 7.6 & buyback 234 252 of 56 NISm • Continued strategic execution toward targets 2020 2021 H1/22 mid-term 2020 2021 H1/22 mid-term target target • Dynamic (2025) (2025) management
Slide 15: 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 2020 5.08% 5.82% 0.49% 2.0 2021 4.40% 5.50% 0.41% 1.6 H1/22 3.71% 5.12% 0.40% 3.4-3.7% 5.4-5.8% 0.27-0.30% Mid-term target (2025) 2020 2021 H1/21 H1/22 mid- ter
Slide 16: Additional Core Business Targets
Additional Core Business Targets Pension & Provident Investment Services Benefit contributions Revenues NISb NISm 18-20 700-800 463 502 10.8 353 6.8 6.2 247 4.3 2020 2021 H1/21 H1/22 mid-term 2020 2021 H1/21 H1/22 mid-term target target (2025) (2025) Agencies Comprehensive Income Revenues Without sp
Slide 17: Managing in Volatile Markets in 2022
Managing in Volatile Markets in 2022 Growth, • Continued strategic execution, driving diversification, stability, and continued growth Income, & • Investing in capabilities Resilience: • Dynamic investment management for risk- Quality adjusted returns (e.g., inflation, interest rates, capital market
Slide 18: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 18
Slide 19: H1 Income by Source
P&C H1 Income by Source Health Life Comprehensive income before tax Other Equity Returns 2022 H1, NISm Net negative 451 NISm pretax financial margin Pension and provident 925 NISm income from operations • Capital market exposure compared to 3% real annual AM (pre-tax), increase of 287 NISm returns (
Slide 20: Q2 Income by Source
Q2 Income by Source P&C Health Life Comprehensive income before tax Other Equity Returns 2022 Q2, NISm Pension and provident AM Net negative 580 NISm pretax financial margin 586 NISm income from • Capital market exposure compared to 3% real annual Agencies operations, increase of 207 returns (-2.1%
Slide 21: H1 Income by Segment
H1 Income by Segment Comprehensive income before tax 2022 H1, NISm Additional core businesses contributed 408 NISm out of 739 NISm income before tax • 11.4% ROE • P&C: negative 478 capital market -756 24 11 167 -160 impact -42 147 • Health: positive 59 interest rate 537 impact 843 • Additional core
Slide 22: Q2 Income by Segment
Q2 Income by Segment Comprehensive income before tax 2022 Q2, NISm • 7.9% ROE • P&C: underwriting income improvement vs. negative capital market impact Additional core businesses contributed 277 NISm, driving group income for the quarter • Health: positive interest rate impact • Life: take-up rate s
Slide 23: Strong Balance Sheet
Strong Balance Sheet Difference 31/12/2021 30/06/2021 30/06/2022 Phoenix Holdings NISm 12/21-6/22 Cash 2,154 2,105 2,459 305 Intangible Assets 2,775 2,655 2,919 144 Deferred acquisition costs 2,011 1,870 2,281 270 Investments in associates 1,346 576 1,474 128 Investment property - other 1,125 1,061
Slide 24: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 24
Slide 25: P&C
P&C P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax Compulsory motor • Negative contribution of P&C due to NISm Motor property impact of capital market returns Property and others • Motor property negative impact of 77 Liabilit
Slide 26: Health
Health P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm 70 • Income growth mainly due to LAT reserves (increase in risk- free interest rates) offset by capital market effects, as well 655 843 as improved underwriting profit
Slide 27: Life and Savings
Life and Savings P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm 84 • Positive impact of increasing interest rates • Decrease in income compared to 2021 due to capital market 478 397 declines and impact on variable managem
Slide 28: 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 233 • Negative impact of financial market declines (989) • Financial margin increase (756) due to CPI index changes compared to 2021 Financial
Slide 29: Asset Management: Pension & Provident
Asset Management: Pension & Provident P&C Health Life Other PensioInnvestment Agencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm (12) 14 • Continued organic growth • Improvement in profit from operations due to synergies 57 59 from Halman-Aldubi acquisition and econ
Slide 30: 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 • Improvement in profit from operations from Excellence 75 • Segment includes growing “Phoenix Advanced 147 Investments” alternative inve
Slide 31: Agencies
Agencies P&C Health Life Other Pension InvestmentAgencies Credit Equity Provident Services Other Comprehensive Income Before Tax NISm 22 3 • Increased profit from operations driven by continued strategic execution, with strong 167 growth and scale economies 142 • Special items include profit from ob
Slide 32: 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%+ +19% +18% 103%+ 1,817 1,599 35 19 10 1,415 28 16 9 1,177 1,080 982 893 24 24 31.12.20
Slide 33: Other
Other P&C Health Life Other Pension Investment Agencies Credit Other Equity Provident Services Comprehensive Income Before Tax NISm (9) • Segment includes Phoenix Holdings solo profits (including RT1 20 holding) as well as other items 11 • Financial margin increase mainly due to CPI index changes Fi
Slide 34: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 34
Slide 35: 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 (Q2/22) 10.0% Alternatives & other Cash 10% 7% 7.9% Rea
Slide 36: 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 Strong market position with distinctive growth & performance through the
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: Agenda
Agenda Highlights Financial Results Segment Breakdown Appendix Glossary | 38
Slide 39: 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 40: 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 41: Q2 Phoenix Holdings
Investor relations email contact: IR@fnx.co.il Q2 2022 Phoenix Holdings Financial Review