Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — Q3 2024 Earnings Presentation
50 slides from Phoenix Financial's earnings presentation, December 2024
Slide 1: 2024 Q3 Phoenix Financial Investor Presentation
2024 Q3 Phoenix Financial Investor Presentation
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
Highlights Strategy & Targets Agenda Financial Results Segment Breakdown Appendix Glossary 3
Slide 4: Phoenix Financial | Overview
Phoenix Financial | Overview Leading Israeli 502 NISb TA-35 financials group AUM1 Leading index Insurance Asset Management, Agencies & Credit 19% 15% Distinctive AUM CAGR ROE P&C Retirement performance 5-years2 5-year average2 Health & Travel Investment House & Wealth Life & Savings Distribution / A
Slide 5: Israel Economy | Main Indicators
Israel Economy | Main Indicators Long-term positive GDP Growth 2 GDP per Capita 3 Long-Term Savings AUM 4 structural trends Percent USD ‘000 NIS Trillion (e.g., wealth 9.8% Sweden 55 accumulation, 2.8 6.3% Germany 54 2.4 2.4 vibrant tech 4.3% 3.8% 2.0 2.3 sector)1 Israel 53 1.9 1.9% 1.6 0.4% 0.5% UK
Slide 6: 2024 9M & Q3 | Highlights
2024 9M & Q3 | Highlights 16.1 1,284 Continued growth in core income with strong 9M/24 % NISm 5.11NIS performance across activities ROE Comprehensive Income Income per Share Resilience in face of uncertainty, maintaining strong Solvency position and credit profile Positive impact of non-operating ac
Slide 7: 2024 Q3 | Continued Growth in Core Activities
2024 Q3 | Continued Growth in Core Activities Income Comprehensive, after tax, NISm 2,316 9M Q3 1,450 1,353 1,093 1,284 1,124 Non-Operating Effects 450 515 433 Positive capital market & special item 752 390 effects, net of interest rates Non-Operating 664 338 314 617 44 Core Asset Management, Agenci
Slide 8: Investments | Core Capabilities
Investments | Core Capabilities Returns – Insurance Nostro / Corporate Account Asset Allocation - Corporate Account (Nostro) Percent (nominal) Percent (September 30, 2024) 10.6% Cash Alternatives & other 3% 12% 7.4% 6.7% 5.8% Real estate 4.8% 13% Fixed income (Govt) 4.5% 34% ~70% fixed 1.9% income E
Slide 9: Dividend | Track Record
Dividend | Track Record 2024 Execution: 176 NISm buybacks executed in Dividend & Buyback 2024 through November (126 NISm through From annual income, NISm September) out of 200 NISm program; 270 NISm Before Q4 semi-annual dividend (1.07 per share) distributed 695 buybacks & year- in September, repres
Slide 10: Agenda
Highlights Strategy & Targets Agenda Financial Results Segment Breakdown Appendix Glossary 10
Slide 11: Proven Value Creation | Strategy & Catalysts
Proven Value Creation | Strategy & Catalysts Accelerated Innovation & Active Capital & Investments Growth Efficiency Management Management in profitable & to increase competitive of people & structure to maximize performance capital-efficient activities advantages Value Catalysts Income growth Compe
Slide 12: Group Income | Growth Towards 2027 Targets
Group Income | Growth Towards 2027 Targets Core Income Phoenix Financial NISm, before non-operating effects (capital markets, 2,000 interest rates, & special items) 1,322 1,342 1,180 866 601 9M 2020 2021 2022 2023 9M/24 2027 target Core ROE 8.7% 10.7% 11.9% 12.6% 16.8% 16-18% Insurance Asset Managem
Slide 13: EBITDA Growth Engines
Asset Management Agencies & Credit EBITDA Growth Engines Growth engines Asset Adjusted EBITDA for Asset Management, Agencies & Credit Management, Agencies & NISm, consolidated including minorities Credit producing significant EBITDA from non-insurance 2027 Target businesses 102% 1.6-1.8 NISb • Mostl
Slide 14: Continued Growth in AUMs
Asset Management Agencies & Credit Continued Growth in AUMs Assets Under Management 2027 Target NISb 600-650 NISb 502 CAGR 19%+ 433 111 Retirement - Pension 369 371 92 Asset 53 67 120 Retirement - Provident Management (off balance 113 sheet) 234 117 111 215 37 128 Investment House & Wealth 178 31 35
Slide 15: Asset Management
Asset Management Agencies & Credit Asset Management Core Income, net NISm, before non-operating effects Investment House MF & ETFs: Focus on growth, lead market & 300-400 increased margins Trade / Brokerage: Focus on increased market share, cross-sell, trade volumes, decrease 230 interest impact (cr
Slide 16: Distribution / Agencies
Asset Management Agencies & Credit Distribution / Agencies Focused on stand-alone value creation: Core Income, net cash-generative & capital-light business Assessing NISm, before non-operating effects model, market leader but still low 7% opportunities to 250-350 market share1; value creation throug
Slide 17: Credit (Phoenix Gama)
Asset Management Agencies & Credit Credit (Phoenix Gama) Core Income, net SME Credit NISm, before non-operating effects 150-200 100% ownership following tender offer in 2023 (continues to report with publicly traded bonds); building platform for growth (e.g., balance sheet, governance, infrastructur
Slide 18: Insurance Optimization | Shifting Mix
Insurance Insurance Optimization | Shifting Mix Premiums & Contributions NISb 2027 Target 6 NISb P&C +8% CAGR 19.7 19.1 17.5 7.3 14.5 7.8 5.2 14.2 13.4 Without HMO LTC health Inflows to investment 12.1 3.2 12.4 0.9 premiums in 2024 policies (capital- 11.3 2.0 1.9 5.8 efficient, high-margin) 1.6 4.0
Slide 19: Insurance Optimization | Operational & Financial
Insurance Insurance Optimization | Operational & Financial G&A Expense Ratios2 Solvency1 Ratio P&C Health Life 2019 4.10% 5.57% 0.50% 211% 195% 2020 5.08% 5.82% 0.49% 192% 190% 194% 150-170% With transitionals 2021 4.40% 5.50% 0.41% 2022 3.53% 5.00% 0.40% 2023 3.46% 5.13% 0.39% 9M-24 2.88% 6.35%3 0.
Slide 20: Active Management | Alignment & Commitment
Active Management | Alignment & Commitment Culture of alignment & performance Equity Compensation Total grant value, NISm Equity compensation creating long-term alignment • Including shares, restricted share units (RSUs), & options • Across business units including Insurance, 34 Investment House, Ag
Slide 21: Agenda
Highlights Strategy & Targets Agenda Financial Results Segment Breakdown Appendix Glossary 21
Slide 22: Q3 2024 | Income by Source
Q3 2024 | Income by Source Breakdown Before Tax – By Segment NISm Q3-24 Q3-23 Difference P&C 194 86 108 Health 99 49 50 Core Income Breakdown (Comprehensive) Life & Savings 73 101 (28) Q3 2024, NISm Other Equity Returns 100 95 5 Core Insurance 466 331 135 Retirement (Pension & Provident) 31 28 3 Inv
Slide 23: 9M 2024 | Income by Source
9M 2024 | Income by Source Breakdown Before Tax – By Segment NISm 9M-24 9M-23 Difference P&C 631 310 321 Health 297 144 153 Core Income Breakdown (Comprehensive) Life & Savings 180 167 13 9M 2024, NISm Other Equity Returns 250 299 (49) Core Insurance 1,358 920 438 (110) 1,955 Retirement (Pension & P
Slide 24: Q3 2024 | Income by Segment
Q3 2024 | Income by Segment Segment Income Breakdown (Comprehensive) Q3 2024, NISm 929 38 10 71 92 (284) 25 (28) 617 394 64 64 171 P&C Health Life Other Retirement Investment Agencies Credit Other Income Tax Miniority Q3/24 Equity House & before Tax Returns Wealth & Minority 693 236 Insurance Asset
Slide 25: 9M 2024 | Income by Segment
9M 2024 | Income by Segment Segment Income Breakdown (Comprehensive) 9M 2024, NISm 1,955 109 9 226 (588) 243 72 (83) 1,284 273 22 323 678 P&C Health Life Other Retirement Investment Agencies Credit Other Income Tax Miniority 9M-24 Equity House & before Tax Returns Wealth & Minority 1,296 659 Insuran
Slide 26: Balance Sheet | Strong & Liquid
Balance Sheet | Strong & Liquid Financial Liabilities (NISm) Phoenix Holdings NISm 31/12/2023 30/09/2023 30/09/2024 Difference Bonds and Loans 30/09/2024 31/12/2023 Cash 3,053 2,464 2,387 -666 CPI Floating Fixed Intangible Assets 3,598 3,548 3,838 240 linked interest interest Total Total Deferred ac
Slide 27: Capital Management | Solvency
Capital Management | Solvency Solvency ratio (Insurance Company) Solvency II implementation Cashflow and Liquidity (Phoenix Financial Company) Solvency II implemented in Israel in line with With 211% international standards, with strong regulatory Insurance subsidiary dividend payout transitional 19
Slide 28: IFRS 17 & 9 | Basics (Forward Looking)
IFRS 17 & 9 | Basics (Forward Looking) IFRS 17 accounting changes relevant primarily to Life & Health segments IFRS 17 updates the accounting for insurance contracts to improve transparency and comparability, shifting to an economic view Principles of long-term insurance income instead of P&L focus
Slide 29: IFRS 17 & 9 | Roadmap & Guidance (Forward Looking)
IFRS 17 & 9 | Roadmap & Guidance (Forward Looking) Today November 2024 March 2025 May 2025 March 2026 Initial guidance 2024 Annual Report includes Publication of P&L in Publication of annual opening balances as of the transition IFRS-17 for Q1 2025 P&L in IFRS 17 for the date (Dec. 31, 2023) & KPIs
Slide 30: Agenda
Highlights Strategy & Targets Agenda Financial Results Segment Breakdown Appendix Glossary 30
Slide 31: Insurance P&C
Insurance P&C Comprehensive Income Before Tax NISm 678 (9) Continued growth and profitability despite challenging 93 (37) environment & high theft frequency Optimized use of machine learning for motor underwriting Positive secondary impact of interest rates 631 Core Income (Before 9M/23 Q1/24 Q2/24
Slide 32: Health
Insurance Health Comprehensive Income Before Tax NISm (30) 323 Increase in underwriting profit 79 Positive impact from LAT (23) reserves mainly due to increase in interest rates Maccabi HMO collective LTC agreement ended December 2023 297 Starting implementation of health segment reform during 2024
Slide 33: Life and Savings
Insurance Life and Savings Comprehensive Income Before Tax NISm Underwriting profit improvement Negative non-operating effects mainly due to investment profit below 3%, partially offset by interest rate 180 effects 22 (38) Variable management fee deficit of 58 NISm as of publication date (389) Conti
Slide 34: Other Equity Returns (Insurance)
Insurance Other Equity Returns (Insurance) Comprehensive Income Before Tax Positive capital market NISm effects (above 3% real yields) of 13 NISm compared to 273 250 10 negative effects in 9M 2023 13 Financial Margin Investments Special Items 9M/24 above 3% 9M/23 299 (654) (19) (374) Difference (49)
Slide 35: Investment House & Wealth (Financial Services)
Asset Management Agencies & Credit Investment House & Wealth (Financial Services) Performance improvement from Comprehensive Income Before Tax continued strategic execution NISm Growth in brokerage business 6 (9) 243 continued new client acquisition, 16 11 average revenues & higher spreads in margin
Slide 36: Retirement (Pension & Provident)
Asset Management Agencies & Credit Retirement (Pension & Provident) Continued organic growth Comprehensive Income Before Tax NISm Focus on profitability including higher margin / efficient activities (15) 72 0 87 Core Income Investments Special items 9M/24 (Underwriting) Non-Operating 9M/23 70 (2) (
Slide 37: Distribution (Agencies, Planning, Benefits)
Asset Management Agencies & Credit Distribution (Agencies, Planning, Benefits) Continued organic growth, Comprehensive Income Before Tax leading to higher core income NISm however growth rate impacted by slower pace of hiring in the (13) 226 (6) market (including in tech sector) Accelerated value cr
Slide 38: Credit (Primarily Phoenix Gama)
Asset Management Agencies & Credit Credit (Primarily Phoenix Gama) Synergetic merger of Phoenix Credit Portfolio Comprehensive Income Before Tax Construction Finance in NISm, without credit card activity NISm January 2024, following successful take-private tender 109 2,981 (5) offer for Gama in 2023
Slide 39: Other
Other Segment includes Comprehensive Income Before Tax Phoenix Financial NISm (formerly Phoenix Holdings) solo profits (including RT1 holding) as well as other items Restructured to improve (73) capital & investments 100 efficiency 0 (18) 0 9 Financial Interest Subsidiaries Other Special Items 9M/24
Slide 40: Agenda
Highlights Strategy & Targets Agenda Financial Results Segment Breakdown Appendix Glossary 40
Slide 41: Growth & Value Drivers
Growth & Value Drivers Strong market position with distinctive growth & performance through the cycle 1 Leading financial services company with over $130b AUM, delivering 5 year best-in-class 15% average ROE & 19% compounding AUM Creating and unlocking value in high-multiple activities with untapped
Slide 42: Broad Activities | Leading Financials Group
Broad Activities | Leading Financials Group Insurance Asset Management Agencies Credit Capital intensive with attractive ROE Capital light with strong organic potential Shifting mix toward high ROE activities High multiples & limited capital needs 6.5 NISb book value Over 1 NISb EBITDA run-rate Each
Slide 43: Best in Class ROE
Best in Class ROE Return on Equity 3 years average 5 years average 10 years average Phoenix 16% Phoenix 15% Phoenix 14% A 15% A 14% A 11% B 12% B 11% B 8% C 11% C 12% C 11% D 10% D 8% D 6% Data based on EY analysis taken from BI Insuretool for years 2014-23; ROE was calculated as net income devided
Slide 44: Ideally Positioned to Capture Growth Opportunities
Ideally Positioned to Capture Growth Opportunities Insurance Penetration Assets Under Management Insurance Premiums Premiums out of GDP, % 2022 Institutional investors & Mutual funds, 3/24 2023 Phoenix US 12% 16% 19% 23% 22% UK 11% 3.1 15% 11% 77 10% NISt NISb Italy 7% 16% Phoenix 11% 14% 15% German
Slide 45: Competitive Landscape | Ecosystem
Competitive Landscape | Ecosystem Banks • Banking services Distribution • Savings & loans • Insurance agents & brokers • Mortgages • Wealth management • Channels include branch network • Divested other activities (e.g., asset management, credit cards) Insurance / Diversified Groups • Insurance (P&C,
Slide 46: Distribution / Agencies | Value Creation Potential
Distribution / Agencies | Value Creation Potential Growing Market… …and highly fragmented… …with limited international presence Revenues Market Share WTW acquired specialty firm “Leaderim” in Total commissions, NISb % of total commissions, 2023 2022, focusing on commercial lines (D&O, professional l
Slide 47: Investment Returns | Explanation
Investment Returns | Explanation Reconciliation of investment returns above / below 3% real returns with financial statements NISm 9M-24 9M-23 2023 P&L Items from Financial Statements Investment income 11,992 6,748 9,910 Share in profits of equity-accouted investees 84 60 42 Total components of net
Slide 48: Agenda
Highlights Strategy & Targets Agenda Financial Results Segment Breakdown Appendix Glossary 48
Slide 49: Glossary
Glossary Adjusted EBITDA - calculated as income before finance, taxes, depreciation and amortization in the relevant areas of activity; adjustments as detailed below: Investment House - IFRS 16 adjustment and special items Adjusted EBITDA Retirement (Pension and Provident) - IFRS 16 adjustment and a
Slide 50: Glossary
Glossary LTS Long Term Services; including but not limited to Life, Provident and Pension funds Marketable Securities Liquid financial assets that can be quickly converted into cash; most are trading assets MF Management Fees; wages charged by a financial manager Moody’s A credit risk rating agency