Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — Q2 2021 Earnings Presentation
42 slides from Phoenix Financial's earnings presentation, 2021
Slide 1: 2021 Q2 Phoenix Holdings Financial Review
2021 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 i
Slide 3: Agenda
Agenda Highlights Financial Results Segment Breakdown Investments Appendix Glossary |3
Slide 4: Phoenix Holdings at a Glance
Phoenix Holdings at a Glance Leading Israeli insurance, asset management & TA35 index 8.5 NISb financial group Since 2018 Market cap(1) Proven and recognized experience 70+ AA- / AA+ Years of activity Holding / Insurance Rating >3m Top Ranked Trusted by millions of customers Clients in leaderboard f
Slide 5: 2021 H1 Performance Highlights
2021 H1 Performance Highlights H1 29.6% 1.15NISb 329NISb 8.7NISb 186% Comprehensive ROE AUM 1 Equity Solvency II 2 Net Profit Q2 44.1% 797NISm ROE Comprehensive Net Profit • Performance driven by core business and investments • Completion of Gama IPO as planned • Continued execution of strategic pla
Slide 6: Profit from Broad Activities
Profit from Broad Activities Comprehensive Net Profit NIS millions 1,353 142 » Diverse sources of profit include 62 1,153 insurance and core fee-based businesses 51 (including agencies, Excellence 206 Investment House, and Gama) 664 583 » Investment yields above 3%, including 797 280 748 Special Ite
Slide 7: Long-Term Equity Generation
Long-Term Equity Generation Shareholders Equity 1 » Growth in shareholder NISb 9.0 equity from earnings 8.7 8.0 » Equity growth is after 0.4 6.6 dividend paid in March 6.4 7.6 based on 2020 5.7 performance, in line with 4.8 4.1 dividend policy, and after 3.8 share buyback » After the end of Q2, shar
Slide 8: Progress Toward Mid-term Targets
Progress Toward Mid-term Targets AUM Equity NISb NISb 1 8.7 9.0 329 2 300 8.0 43 234 6.6 214 7.6 252 286 Dividend 30% of profits Currently 2019 2020 H1/2021 Mid-term Target 2019 2020 H1/2021 Mid-term target assessing 4 480 3 406 67 Dividend with buyback (NISm) targets in light of performance Compreh
Slide 9: Strategy Implementation: Value Drivers
EXAMPLES Strategy Implementation: Value Drivers 1 Accelerated growth in high-ROE activities 2 Innovation and efficiency • Asset management: Growth in AUMs to 329 NISb (including • Innovation: new and follow-on investments in selected ventures; Halman corporate fund), customer acquisition in private
Slide 10: Strategic Growth Via Gama IPO
3 Strategic Growth Via Gama IPO Value Driver: Active Portfolio Management • Gama is a market leader in Israeli SME clearing and credit based on payments Business infrastructure with over 28 NISb annual transaction volume (similar to buy now pay later) Highlights • Strong position for growth with bro
Slide 11: Restricted Tier 1 Capital Issuance
4 Restricted Tier 1 Capital Issuance Value Driver: Capital Management • As part of strategic plan implementation (capital management), Phoenix Insurance Description subsidiary issued Restricted Tier 1 (RT1) subordinated bonds • First RT1 issuance by Israeli insurance company, rated A+ by S&P • 200 N
Slide 12: Looking Ahead
Looking Ahead • Implementing strategic plan to drive risk-adjusted returns Priorities • Accelerated growth for next • Innovation & efficiency quarters • Active portfolio management including Ad-120 divestment • Optimized capital deployment • Assessing medium-term targets in light of performance and
Slide 13: Agenda
Agenda Highlights Financial Results Segment Breakdown Investments Appendix Glossary | 13
Slide 14: Continued Growth
Continued Growth Premiums, Benefit Contributions, & Investment Contracts NISb +6% CAGR 21.4 Provident Growth driven by LTS 2.8 19.2 Pension and investment 18.1 Investment contracts contracts 17.5 2.3 Life 2.5 4.1 Health 15.4 2.9 • LTS: strong growth in P&C H1/21 compared to 4.5 +11% CAGR 2.3 3.5 H1/
Slide 15: Accelerated Growth in AUMs
Accelerated Growth in AUMs Assets Under Management NISb 329 • Excellence – growth 43 Halman Corporate driven by growth in mutual +13% CAGR* funds and ETFs 61 Provident 234 • Insurance, investment +9% CAGR 215 contracts, and pensions 35 34 45 Pension – organic growth across 178 173 37 products driven
Slide 16: Quarterly Profit Breakdown – Q2 2021
Quarterly Profit Breakdown – Q2 2021 Comprehensive Net Profit NISm Continued performance across activities +151 -295 • P&C and LTS +234 797 -12 businesses continued +31 +59 to drive performance, with strong operating and investment results +401 232 -4 • Growth in agencies’ operations and results P&C
Slide 17: Quarterly PBT Breakdown – Q2 2021
Quarterly PBT Breakdown – Q2 2021 P&C CO Health AM LTS Credit Comprehensive Income Before Tax 327 NISm 1,104 +141 553 +10 +223 Significant quarterly +124 -11 -26 -7 -30 (37) +797 returns +236 • Investment income +183 contributed 553 NISm +59 +11 -32 185 +38 PBT during H1 +108 +295 +35 +42 +12 • 261
Slide 18: Profit Breakdown – H1 2021
Profit Breakdown – H1 2021 Comprehensive Net Profit NISm Continued performance +124 across activities +236 -476 +111 1,153 • 1.15 NISb profit year to +61 -23 date +691 • Driven by P&C and 410 LTS, with contributions +19 from all segments P&C Health LTS AM Agencies Credit CO Tax Miniority 1-6/21 1-6/
Slide 19: PBT Breakdown – H1 2021
P&C CO PBT Breakdown – H1 2021 Health LTS AM Credit Comprehensive Income Before Tax NISm 290 1,652 +128 938 +220 -16 -54 +230 -8 -50 Significant investment +46 -70 returns +1,153 +513 • Investment income contributed 938 NISm +149 +16 -25 PBT during H1 323 +111 +69 +180 +476 • 494 NISm profit from +7
Slide 20: Select Expense KPIs
Select Expense KPIs 2020 2020H1 2021H1 P&C Expenses / Gross Earned Premiums 5.08% 4.66% 4.57% Health Expenses / Gross Earned Premiums 5.82% 5.80% 5.51% Life Expenses / AUM 0.49% 0.53% 0.49% Pension & Provident Expenses / AUM 0.23% 0.26% 0.22% 1 Note: Expenses include general and administrative expen
Slide 21: Agenda
Agenda Highlights Financial Results Segment Breakdown Investments Appendix Glossary | 21
Slide 22: P&C
P&C P&C Health LTS AM Agencies Credit CO Comprehensive Income Before Tax (NISm) +343 (+512%) Improvement in H1 due to 410 underwriting as well as 10+ 1+ investments Compulsory motor Motor property • Total profit increase in H1 to 410 Property and others 320+ NISm Liability 12 • Driven by increase of
Slide 23: Health
Health P&C Health LTS AM Agencies Credit CO Comprehensive Income Before Tax (NISm) -207 (-92%) Decrease in comprehensive profit 226 25 -22 38 due to actuarial research -248 • Special Items during H1 include actuarial research on health and long-term care backbook, compared 19 to positive impact from
Slide 24: LTS Combined – Life & Long-Term Savings
LTS Combined – Life & Long-Term Savings AM P&C Health LTS AM Agencies Credit CO Comprehensive Income Before Tax (NISm) +751 Performance improvement driven by 691 investments +5 +17 • Significant increase in H1/21 to 691 NISm • Improvement driven by 662 NISm profit in +729 life segment, due in part t
Slide 25: LTS Breakdown: Life
LTS Breakdown: Life P&C Health LTS AM Agencies Credit CO Comprehensive Income Before Tax (NISm) 729+ 662 Performance improvement driven by 308 investments (192) 662 • Significant profit increase to 662 636 NISm in H1 • Strong results in Nostro and (67) (23) management fees compared to 2020, (67) eve
Slide 26: LTS Breakdown: Pension and Provident Funds
LTS Breakdown: Pension and Provident Funds P&C Health LTS AM Agencies Credit CO Comprehensive Income Before Tax (NISm) +22 (+314%) -15 Growth in profit during H1 +59 -42 29 • Reaching profitability with +10 initial scale before full +10 7 synergies with Halman 1-6/20 Income from Commissions G&A and
Slide 27: AM / Excellence Investment House
AM / Excellence Investment House P&C Health LTS AM Agencies Credit CO Operating Profit (NIS m) 33- )35%-( Lower profitability compared to 95 volatile period in 2020 (26) • Increased AUMs drove higher (8) revenues from mutual funds and ETFs • Growth in clients and market share in private brokerage (i
Slide 28: Agencies
Agencies P&C Health LTS AM Agencies Credit CO Profit Before Tax (NIS m) 33+ (42%+) 16 (57) Growth in proprietary 77 111 (3) distribution channels 78 • Growth in profit before tax to 111 NISm during H1 • Driven by continued organic and inorganic growth 1-6/20 Income Investments Expenses Other 1-6/21
Slide 29: Credit (Gama)
Credit (Gama) P&C Health LTS AM Agencies Credit CO Comprehensive Income Before Tax (NISm) +226 236 Successful IPO of Gama • Gama IPO on the Tel Aviv Stock Exchange completed in June, 2021, +220 recording net capital gain of 220 NISm • Phoenix holds 61.6% 10 +6 • Continued growth in core activities 3
Slide 30: Corporate (CO)
Corporate (CO) P&C Health LTS AM Agencies Credit CO Operating Profit (NISm) 124 Increases profits driven by investments +323 • Total profit increase in H1/20 to -2 -10 124 NISm -158 -29 1-6/20 Subsidiaries(*) Financial Other Investments 1-6/21 Margin above 3% • Due primarily to investment income and
Slide 31: Agenda
Agenda Highlights Financial Results Segment Breakdown Investments Appendix Glossary | 31
Slide 32: Market Indices – Highlights
Market Indices – Highlights CPI / FX Stocks Bonds 19.5% 20.0% 17.8% Continued market 14.4% 12.3% 12.5% 12.5% 12.7% volatility 8.6% 8.2% 7.8% • Improved H1 markets 4.9% 6.0% 6.0% 3.8% 4.0% 3.7% 4.3% performance compared 3.0% 1.3% 1.4% 1.4% 1.8% 2.2% 2.0% 1.0% to COVID-19 impact in 0.3% 2020 )0.2%( )0
Slide 33: Phoenix Investment Yields – Highlights
Phoenix Investment Yields – Highlights Q2/20 Q2/21 H1/20 H1/21 Nostro OPM 9.5% 9.8% 8.3% 7.2% H1/21 financial market 6.4% 5.9% 5.1% 5.0% 5.5% recovery and low global 4.7% 4.1% 3.8% 4.1% 4.3% 4.9% 4.0% interest rates generated 2.8% 3.1% 3.4% improved returns 1.4% 1.9% 1.1% 0.4% • Nostro acceleration
Slide 34: Agenda
Agenda Highlights Financial Results Segment Breakdown Investments Appendix Glossary | 34
Slide 35: Appendix A - H1/2021 Balance Sheet Highlights
Appendix A - H1/2021 Balance Sheet Highlights Assets Liabilities & Equity NISb NISb 132.9 132.9 Tax & 2.1 other Cash 8.9 Total equity1 Accounts 16% payable Gama and other assets2 15.8 19% Diversified Investments 13.5 Other liabilities2 GAMA and Other 13.5 Bonds – Alternatives & Financial financial l
Slide 36: Appendix B – Profit 2020H1 vs 2021H1
Appendix B – Profit 2020H1 vs 2021H2 290 1,652 +128 938 +220 P&C CO +230 -16 -54 -8 -50 +46 -70 Health AM +1,153 H1'21: LTS Credit +513 +16 -25 +149 323 +111 +69 +180 +476 Tax +77 Miniority +66 +23 Insurance AM Agencies Credit CO Investments Interest Special items Total profit underwriting income (*
Slide 37: Appendix C – Profit Breakdown 2020Q2 vs 2021Q2
Appendix C – Profit Breakdown 2020Q2 vs 2021Q2 327 1,104 +141 P&C CO 553 0 +223 Health AM +124 -11 -26 -7 -30 +10 (37) +797 LTS Credit Q2'21: +236 +183 185 +59 +12 -33 +38 +295 +108 +35 +42 +12 Insurance AM Agencies Credit CO Investments Interest Special items Total profit underwriting income (*) +8
Slide 38: Appendix D – Profit Breakdown 2020 vs 2019
Appendix D – Profit Breakdown 2020 vs 2019 277 2,040 154 +74 +75 +62 +66 729 +218 +151 -1 -63 +56 +1,353 Agencies +298 P&C +224 +18 -30 Health 2020: +175 576 +141 LTS +300 +647 CO +151 AM +125 +40 Tax Insurance AM Agencies Credit CO Investments Interest special items Total profit underwriting income
Slide 39: Agenda
Agenda Highlights Financial Results Segment Breakdown Investments 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: 2021 Q2 Phoenix Holdings Financial Review
2021 Q2 Phoenix Holdings Financial Review Please contact us at IR@fnx.co.il