Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — Q1 2024 Earnings Presentation
42 slides from Phoenix Financial's earnings presentation, 2024
Slide 1: 2024 Q1 Phoenix Holdings Financial Review
2024 Q1 Phoenix Holdings Financial Review
Slide 2: Agenda
Agenda Highlights Strategy & Targets Financial Results Segment Breakdown Appendix Glossary |2
Slide 3: Phoenix Holdings – Overview
Phoenix Holdings – Overview Leading Israeli 472 NISb TA-35 Phoenix Holdings financials group AUM1 Leading index Insurance Asset Management & Credit 19% 15% Distinctive AUM CAGR ROE P&C Retirement (Pension & Provident) performance 5-years2 5-year average2 Health & Travel Investment House & Wealth Lif
Slide 4: Economic Trends
Economic Trends Long-term positive GDP Growth 2 Q1 rebound with GDP per Capita 3 Long-Term Savings AUM 4 structural trends Percent 14% annualized GDP USD ‘000 NIS Trillion 8.6% growth, after 22% (e.g., wealth decline in Q4 due to 6.5% Sweden 56 2.4 2.4 accumulation, war/shutdowns 2.3 4.1% 4.2% 1.9 2
Slide 5: Q1 2024 Highlights – Resilient Performance
Q1 2024 Highlights – Resilient Performance 284 NISm 11.2 % 472 NISb Strong growth in Asset Management & Credit activities, including continued growth in income / EBITDA as well as organic & inorganic AUM growth Comprehensive Income ROE AUM Insurance core income stability with growth in P&C but lower
Slide 6: Growth in Core Business
Growth in Core Business Income (Comprehensive, after Tax) NISm 2,316 1,450 1,353 1,093 1,124 450 752 390 Core Asset Management & Credit Non-Operating 664 growth in fee income across segments 44 314 Core Asset Management 266 271 872 284 790 81 Core Insurance & Credit (Services) 552 100 129 stable ove
Slide 7: Investment Core Capabilities
Investment Core Capabilities Returns - Insurance Nostro / Corporate Account Asset Allocation - Corporate Account (Nostro) Percent (nominal) Percent (March 31, 2024) 10.6% Cash Alternatives & other 4% 11% 7.4% 6.5% Real estate 5.8% 12% 4.8% 4.5% Fixed income (Govt) 34% ~70% fixed 1.9% Equities 7% inc
Slide 8: Dividend Track Record & Equity Generation
Dividend Track Record & Equity Generation Building Track-Record Shareholders' Equity NISm 265 NISm dividend from 2023 earnings 10,580 10,582 10,145 distributed in April 9,653 7,970 Update of dividend policy to at least 40% payout (previously at least 30%) facilitated by 6,446 6,636 diverse cash flow
Slide 9: Agenda
Agenda Highlights Strategy & Targets Financial Results Segment Breakdown Appendix Glossary |9
Slide 10: Proven Value Creation Strategy & Catalysts
Proven Value Creation Strategy & Catalysts Value Drivers Growth Engines 1 2 3 4 Multi-line Insurance Accelerated Innovation & Active Capital Growth Efficiency Management Management P&C Health Accelerating growth Deepening client-focus Optimizing group Deploying capital Life while shifting mix to & s
Slide 11: Group: Core Income Achieving & Surpassing Targets
Group: Core Income Achieving & Surpassing Targets Updated growth targets and roadmap to be published Core Income NISm, before non-operating effects Phoenix Holdings 1,300-1,500 Core income without 1,322 1,180 non-operating 866 effects (capital 601 markets, interest 322 rates, & special items) 2020 2
Slide 12: Group: KPIs on Track to Achieve Targets
Group: KPIs on Track to Achieve Targets Group AUMs Shareholders’ Equity ROE NISb NISb 450-550 472 26.3% 433 11-13 369 371 10.1 10.6 10.6 9.7 18.5% 8.0 234 12%-15% 8.9 11.4% 10.5% 11.2% 7.6 2020 2021 2022 2023 Q1-24 2025 2020 2021 2022 2023 Q1-24 2025 2020 2021 2022 2023 Q1-24 2025 target target Annu
Slide 13: Insurance: Shifting Mix
Insurance: Shifting Mix Premiums & Contributions NISb +8% CAGR 19.7 19.1 17.5 7.3 14.5 7.8 Inflows to investment 5.2 policies (capital-efficient, 12.4 high-margin) 12.1 3.2 11.3 2.0 1.9 Shift in mix toward capital- 1.6 light P&C 4.5 5.6 5.2 5.4 4.8 5.1 5.1 3.3 3.1 4.4 4.3 3.3 2.7 HMO 2.2 2.8 LTC 0.3
Slide 14: Insurance: Surpassing Targets
Insurance: Surpassing Targets P&C Premiums G&A Expense Ratios2 Solvency1 Including Smart direct, NISb Ratio 4.5 4.5 P&C Health Life % of premiums % of AUM 3.7 211% 3.2 2019 4.10% 5.57% 0.50% 192% 190% 194% 150-170% 2020 5.08% 5.82% 0.49% 1.3 2021 4.40% 5.50% 0.41% 2022 3.53% 5.00% 0.40% 2023 3.46% 5
Slide 15: AM&C: Continued Growth in AUMs
AM&C: Continued Growth in AUMs Assets Under Management NISb 472 +19% CAGR 433 100 Retirement - Pension 369 371 92 Asset 53 67 Management 116 Retirement - Provident 113 (off balance 234 117 sheet) 111 215 37 178 31 118 Investment House & Wealth 35 90 24 34 70 66 30 56 52 Insurance 45 97 95 102 102 In
Slide 16: Asset Management & Credit (AM&C): Growing EBITDA
Asset Management & Credit (AM&C): Growing EBITDA Adjusted EBITDA – Asset Management & Credit Continued growth of Asset NISm, consolidated including minorities Management & Credit activities producing significant EBITDA from 102%+ non-insurance businesses • Mostly fee-based income 926 • Spread income
Slide 17: AM&C: Retirement & Investment House
Targets to AM&C: Retirement & Investment House be updated Retirement (Pension & Provident) Investment House & Wealth Contributions G&A Expense Ratio Revenues NISb Percent of AUMs NISm 763 750 19.0 2020 0.16% 666 15.7 13.1 2021 0.13% 502 463 10.8 2022 0.12% 6.8 214 4.2 2023 0.12% Q1-24 0.12% 2020 202
Slide 18: AM&C: Distribution / Agencies
AM&C: Distribution / Agencies Focused on stand-alone value creation: Assessing interest Distribution Revenues cash-generative & capital-light business from international NISm model, market leader but still low 6% market investors to unlock share1; value creation through growth, 950 & create value sc
Slide 19: AM&C: Private Credit (Business and Consumer)
AM&C: Private Credit (Business and Consumer) Phoenix-Gama Group Credit Activities 100% ownership following tender offer in 2023 NISb (continues to report with publicly traded bonds); 5.6 5.6 building platform for growth (e.g., balance 5.1 0.7 0.7 Investment House sheet, governance, infrastructure, c
Slide 20: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 20
Slide 21: Core Income Q1 2024
Core Income Q1 2024 Breakdown Before Tax – By Segment NISm Q1/24 Q1/23 Difference P&C 174 112 62 Health 35 36 (1) Core Income Breakdown Before Tax (Comprehensive) Life & Savings 59 47 12 Other Equity Returns 23 109 (86) Q1 2024, NISm Core Insurance 291 304 (13) Retirement (Pension & Provident) 30 24
Slide 22: Segment Income Q1 2024
Segment Income Q1 2024 Segment Income Breakdown Before Tax (Comprehensive) Q1 2024, NISm 453 31 -0 72 )139( 72 (30) 284 31 (62) 141 (83) 251 P&C Health Life Other Equity Retirement Investment Distribution Credit Other Income Tax Miniority Q1/24 Returns House & before Tax Wealth & Minority 247 206 In
Slide 23: Strong Balance Sheet
Strong Balance Sheet Phoenix Holdings NISm 31/12/2023 31/03/2023 31/03/2024 Difference Financial Liabilities (NISm) Bonds and Loans Cash 3,053 2,268 2,729 -324 31/03/2024 31/12/2023 Intangible Assets 3,598 3,061 3,740 142 CPI Floating Fixed Deferred acquisition costs 2,686 2,594 2,752 66 linked inte
Slide 24: Active Solvency & Capital Management
Active Solvency & Capital Management Economic Capital & Solvency (Insurance Company, NISb) Solvency II implementation Cashflow and Liquidity (Holding Company) Solvency II implemented in Israel in line with Solvency ratio1 international standards, with strong regulatory Insurance subsidiary dividend
Slide 25: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 25
Slide 26: P&C
P&C P&C Health Life Other RetirementInvestment Distribution Credit Equity House Other 20% growth in earned premiums YOY Comprehensive Income Before Tax NISm Improved performance including in motor despite challenging environment & high rates of theft Mature implementation of machine learning for mot
Slide 27: Health
Health P&C Health Life Other RetirementInvestmentDistribution Credit Equity House Other Stable underwriting profit Comprehensive Income Before Tax NISm Investment margin improvement Negative interest rate impact on LAT reserves mainly due to 41 decrease in illiquidity premium; 228 NISm LAT reserves
Slide 28: Life and Savings
Life and Savings P&C Health Life Other RetirementInvestmentDistribution Credit Equity House Other Underwriting profit improvement Comprehensive Income Before Tax NISm Negative non-operating effects mainly due to interest rates Variable management fee deficit of 302 NISm as of report publication 59 d
Slide 29: Other Equity Returns (Insurance)
Other Equity Returns (Insurance) P&C Health Life OtherRetirementInvestmentDistribution Credit Other Equity House 23 NISm financial margin, 86 Comprehensive Income Before Tax NISm decrease due to NISm changes in CPI 141 400 NISm increase in 10 investment profit above 3% compare to Q1-2023 108 23 Fina
Slide 30: Retirement (Pension & Provident)
Retirement (Pension & Provident) P&C Health Life Equity Investment Other Retirement House Distribution Credit Other Continued organic growth Comprehensive Income Before Tax NISm Focus on profitability including higher margin / efficient activities 30 31 (2) 3 Core Income Investments Special items 1-
Slide 31: Investment House & Wealth (Financial Services)
Investment House & Wealth (Financial Services) P&C Health Life Equity House Distribution Credit Other RetirementInvestment Other Performance improvement from Comprehensive Income Before Tax strategic execution NISm Higher brokerage contribution due to continued client acquisition, average 9 (6) reve
Slide 32: Distribution (Agencies, Planning, Benefits)
Distribution (Agencies, Planning, Benefits) P&C Health Life Equity House DistributionCredit Other RetirementInvestment Other Organic growth in business, Comprehensive Income Before Tax however growth rate impacted by NISm slower pace of hiring in the market 74 72 (2) 0 (including in tech sector) Acc
Slide 33: Private Credit (Phoenix-Gama)
Private Credit (Phoenix-Gama) P&C Health Life Other RetirementInvestmentDistributionCredit Other Equity House Full ownership of Gama following Credit Portfolio Comprehensive Income Before Tax successful take-private tender offer NISm, without credit card activity NISm in 2023, followed by merger of
Slide 34: Other
Other P&C Health Life Other RetirementInvestmentDistributionCredit Other Equity House Segment includes Comprehensive Income Before Tax Phoenix Holdings NISm solo profits (including RT1 holding) as well as other items (15) 25 0 (10) 0 0 Financial Interest Subsidiaries Other Special Items 1-3/2024 Mar
Slide 35: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 35
Slide 36: Phoenix Holdings – Highlights
Phoenix Holdings – Highlights Unique opportunity in a growing, underpenetrated market with barriers to entry 1 Strong long-term demographic & wealth trends with high compulsory savings rates, potential for greater penetration, and macro resilience Strong market position with distinctive growth & per
Slide 37: Investment Returns – Explanation
Investment Returns – Explanation Reconciliation of investment returns above / below 3% real returns with financial statements NISm Q1-24 Q1-23 2023 P&L Items from Financial Statements Investment income 5,769 918 9,910 Share in profits of equity-accouted investees 25 6 42 Total components of net othe
Slide 38: Agenda
1. Highlights 2. Strategy & Targets Agenda 3. Financial Results 4. Segment Breakdown Appendix Glossary Disclaimer | 38
Slide 39: Glossary
Glossary Adjusted EBITDA calculated as earnings before interest, tax, depreciation & amortization; consolidated before minority interests; adjusted for non-operating items and Adjusted EBITDA cash items relevant to specific segments (Retirement includes DAC amortization, Investment House & Wealth in
Slide 40: 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 41: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 41
Slide 42: 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