Harel Insurance Investments & Financial Services Ltd. · TASE:HARL
Harel Insurance Investments & Financial Services — Q1 2025 Earnings Presentation
41 slides from Harel Insurance Investments & Financial Services's earnings presentation, May 29, 2025
Slide 1: Investor Presentation Q1.2025
Investor Presentation Q1.2025 29.05.2025
Slide 2: Agenda
Agenda Key messages Results overview Strategy Appendix 2
Slide 3: Largest insurance and finance group in Israel
Harel Insurance Investments and Financial Services Largest insurance and finance group in Israel Comprehensive Income ROE Shareholders’ Equity S&P Maalot To shareholders, NIS M NIS B 543 22% 10.4 ilAA+/Stable 106% QoQ 12% Q1.24 Harel Insurance Midroog Q1.25 Q1.25 31.3.25 Aa1.il stable Harel Insuranc
Slide 4: Key Messages
Comprehensive income after tax was NIS 543 M, and ROE was 22% in Q1 2025. Continuous premiums and AUM growth Profit from insurance business was NIS 680 M, of which underwriting profit (insurance service result) was NIS 543 M and NIS 178 M was net investments and finance income Key NIS 543 M underwri
Slide 5: Increase in comprehensive income and ROE
Increase in comprehensive income and ROE Comprehensive income attributed to shareholders ROE NIS M after tax 1,619 22% 17% 12% 600 543 7% 264 (77) (1%) 2022 2023 2024 1-3.24 1-3.25 2022 2023 2024 1-3.24 1-3.25 IFRS 4 IFRS 17 IFRS 4 IFRS 17 5
Slide 6: Most of the CSM balance is comprised from growth products
Most of the CSM balance is comprised from growth products that the Company continues to market Change in CSM balance during Q1.25 NIS M/B CSM new business to CSM release – growth products 137% CSM new business to CSM release 11.3 102% Growth products \ 5.2 Run-off products CSM, net Interest Changes
Slide 7: 34% of the CSM balance expected to be released within 5 years
34% of the CSM balance – NIS 5.6 B - expected to be released to profit within 5 years CSM composition by products as of 31.3.25 Estimate of CSM balance release NIS B NIS B 5.6 growth products 5.2 • Risk of death products in run off • Medical expenses • Critical illness 11.3 Growth 4.2 3.4 3.1 produc
Slide 8: Comprehensive income by business lines Q1.25
Comprehensive income by business lines Q1.25 NIS M NIS M Q1.25 Q1.24 CSM release 400 389 RA release 82 84 Other* 34 57 Reinsurance (42) (88) Non-life, net 69 25 Underwriting profit (insurance service result) 543 467 Net investments and finance income (loss) 178 (186) Operating expenses )41( (43) Tot
Slide 9: Agenda
Agenda Key messages Results overview Strategy Appendix 9
Slide 10: Analysis of total insurance profit Q1.25
Analysis of total insurance profit Q1.25 NIS M Comprehensive income by business line NIS M Total insurance profit includes: Total insurance profit breakdown NIS M 11. Underwriting profit – Insurance service result: Total underwriting profit from insurance services, including life, health and non-lif
Slide 11: Underwriting profit mostly includes CSM and RA release
Underwriting profit mostly includes CSM and RA release in life and health and profit from non-life insurance Total insurance profit breakdown NIS M 1 2 •1 Underwriting profit – insurance service result: • Total CSM + RA release = 482. CSM and RA are central components of the underwriting profit, Com
Slide 12: Impact of interest yield curve change in Q1.25
Impact of interest yield curve change in Q1.25 Total insurance profit breakdown NIS M 1 2 2 Net investments and finance income (loss) • Investment income from nostro portfolio • Nostro returns during the reporting period were positive but lower compared to the corresponding quarter last year Composi
Slide 13: Increase in comprehensive income in Q1.25
Increase in comprehensive income in Q1.25 Total insurance profit Q1.25 vs Q1.24 NIS M Q1.25 Q1.24 change Health 307 8 299 Life 184 91 93 Change in comprehensive income in Q1.25 vs Q1.24 NIS M before tax Non-life 189 139 50 Total 680 238 442 Change in insurance profit 442 364 782 \ 411 Comp. income U
Slide 14: Health profit is driven by CSM and RA release
Health Health profit is driven by CSM and RA release Health: Comprehensive income sources Q1.25 NIS M Most of the CSM release in Health stems from growth products*: 270 147 NIS M CSM release – growth products 224 CSM release RA release Other** רווח משירותי Reinsurance Underwriting Net Operating Co
Slide 15: Underwriting profit drivers in health
Health Underwriting profit drivers in health: personal medical expenses and other Personal lines medical expenses: Results in the current quarter and the corresponding quarter last year were Health: Breakdown of underwriting profit Q1.25 vs Q1.24 NIS M positively impacted by the continued activity g
Slide 16: Life profit is driven by CSM and RA release
Life Life profit is driven by CSM and RA release Life: Comprehensive income sources Q1.25 NIS M Most of the CSM release in Life stems from growth products*: 212 151 NIS M CSM release – growth products 176 NIS M CSM release RA release Other** Reinsurance Underwriting רווח משירותי Net Operating Comp
Slide 17: Key driver of underwriting profit: growth in profit from risk products
Life Key driver of underwriting profit: growth in profit from risk products Life: Breakdown of underwriting profit Q1.25 vs Q1.24 NIS M • Results in the corresponding period last year were affected by an increase in the number of claims as a result of the Q1.24 Q1.25 258 War of NIS 30 M and by an up
Slide 18: Positive impact from underwriting and investments and finance income
Non-life Positive impact from underwriting and investments and finance income Non-life: Comprehensive income Non-life: Comprehensive income sources Q1.25 NIS M by segments Q1.25 NIS M Q1.25 Q1.24 change Compulsory motor 43 7 36 Motor property 41 38 3 Other 104 104 0 Insurance overseas 1 (10) 11 Tota
Slide 19: Improvement in underwriting profit in non-life in Q1.25
Non-life Improvement in underwriting profit in non-life in Q1.25 Compulsory motor: Results in Q1.24 were negatively Non-life: Breakdown of underwriting income Q1.25 NIS M impacted by a negative development in respect of prior years Q1.24 Q1.25 69 Motor property: Decrease in the average cost of claim
Slide 20: AUM growth continues
Asset Management AUM growth continues AM: Breakdown of comprehensive income NIS M before tax Q1.24 Q1.25 57 60 Pension and provident: Results were affected by an increase in management fees driven by AUM 22 23 growth, partially offset by an increase in marketing 16 18 14 11 and other acquisition cos
Slide 21: Diverse and growing credit activity
Credit Diverse and growing credit activity, Gamla and EMI are included Comprehensive income NIS M before tax Profitability in the quarter was affected by continuous growth Q1.24 Q1.25 in the credit portfolio 97 Additionally, Q1.25 and Q1.24 profit was affected by changes 76 in the fair value of the
Slide 22: Harel Insurance: Solvency Capital Ratio is 182%
Harel Insurance: Solvency Capital Ratio is 182% as of 31.12. 24 Solvency Capital Ratio at Harel Insurance Solvency Capital Ratio of Harel Insurance at With transitional measures Without transitional measures December 31, 2024 without transitional measures was 159%, considering Additional Tier 185% 1
Slide 23: Harel Insurance: Nostro portfolio breakdown and return
Harel Insurance: Nostro portfolio breakdown and return Breakdown of Nostro portfolio by asset classes (31.3.25) Real Nostro return Real estate (including own use) 3.7% Investments funds, 2.5% Infrastructure and PE 14.5% Credit and Corporate 0.8% 9.9% bonds 0.7% 0.4% Tradable equities 3.5% Cash and o
Slide 24: Harel Investments: Financial stability and consistent dividend policy
Harel Investments: Financial stability and consistent dividend policy Dividend in Harel Investments Shareholders’ Equity NIS B including share repurchase NIS M 10.4 9.9 share repurchase 926 8.9 8.9 8.3 dividend 7.8 474 397 800 357 400 67 54 2021 2022 2023 2024 25.5.25 Dividend Yield 6% 6% 1.1% 9% 0.
Slide 25: Agenda
Agenda Key messages Results overview Strategy Appendix 25
Slide 26: Strategic Focus
Strategic Focus Improving Diversifying Profitability and Revenues Leveraging scale for material and permanent improvement of insurance profitability and revenue diversification 26
Slide 27: Growth in premiums and deposits
Growth in premiums and deposits Premiums and deposits* NIS B Pension and Provident fund contributions- 42.4 substantial growth engine CAGR 2018-2024: 5.4% 39.4 37.5 4.2 2.9 33.0 3.9 29.9 3.9 2.5 18.7 22.3 16.5 13.8 7.4% 12.4 4.7 5.0 3.9 4 5.4 9.9 10.7 5.9 6.5 1.0 0.9 5 5.4 5.3 5.0 5.9 6.1 5.9 6.5 6.
Slide 28: Continuous growth in AUM
Continuous growth in AUM AUM NIS B CAGR 2018-2024: 13.8% 511.5 513.7 52.7 51.8 427.7 65.1 64.7 44.9 362.3 363.1 6.1 6.5 40.5 39.6 61.3 105.9 106.9 291.2 4 62.2 58.5 35.8 82.6 21.4 21.3 2.1 3.2 54.6 58.9 58.2 19.3 1.4 19.3 19.3 52.1 184.9 187.4 16.4 150.6 126.4 128.2 86.6 52.9 56.1 65.0 75.4 75.1 44.
Slide 29: Strategic focus
Strategic focus The impact on targets is driven by IFRS17 Comprehensive Income after tax 2026 NIS M/B implementation and continuous execution of the strategic plan: 2.9-3.2 Operating Improving insurance profitability Excellence 2.0-2.3 1.9-2.1 Leveraging ROE Continue growing existing in profitable p
Slide 30: Updated calculation principles – to follow strategic targets implementation
Updated calculation principles – to follow strategic targets implementation Updated calculation principles: Adjusted comprehensive income after tax and ROE Q1.25 vs Q1.24 NIS M • The adjusted net investments and finance income is calculated based on the nominal risk-free interest rate at the beginni
Slide 31: Implementation of the strategic targets
Implementation of the strategic targets Comprehensive income target ROE target NIS M/B after tax 22% 1.9-2.1 18%-19% 1,619 17% 12% 7% 600 543 264 (77) (1%) 2022 2023 2024 Q1.24 Q1.25 2026 2022 2023 2024 Q1.24 Q1.25 2026 IFRS 4 IFRS 17 IFRS 4 IFRS 17 31
Slide 32: Agenda
Agenda Key messages Results overview Strategy Appendix 32
Slide 33: Adjusted profit by business lines based on 2% spread Q1.25
Adjusted profit by business lines based on 2% spread Q1.25 NIS M 868 782 647 Life Health Non-life Total insurance AM Credit Equity and Adjusted Investment Special Comp. income profit other profit spread items before tax reported • Investment spread – the gap between the reported net Total insurance
Slide 34: Increase in adjusted profit based on 2% spread in Q1.25 vs Q1.24
Increase in adjusted profit based on 2% spread in Q1.25 vs Q1.24 Adjusted comprehensive income after tax by business lines Q1.25 vs Q1.24 NIS M Q1.24 Q1.25 868 771 647 570 606 501 102 106 61 64 38 51 Insurance AM Credit Equity and other Adjusted profit Adjusted profit business before tax after tax 3
Slide 35: Additional indicators under IFRS 17
Additional indicators under IFRS 17 Underwriting Profit Comprehensive equity* CSM balance CSM new business to CSM (Insurance Service Result) NIS B NIS B release – growth products NIS M 34% NIS M Expected to be 20.8 21.3 released to 5.6 137% profit over the 409 543 CSM net of next 5 years 467 10.9 10
Slide 36: Reminder: P&L structure in IFRS 17
Reminder: P&L structure in IFRS 17 543 Insurance service result Underwriting profit Net + Profit (loss) from Investment income from the nostro portfolio, saving policies + investment contracts, which presented separately. investments 641 investments Investment income from AM and credit is also prese
Slide 37: Reminder: Insurance service result composition
Reminder: Insurance service result composition CSM release (new and For insurance service under the contract in life and health 400 existing business) insurance provided in the period Reflects the compensation for assuming the insurance risk – released 82 RA release when the insurance service is pro
Slide 38: Composition of net investments and finance income (loss) - insurance
Composition of net investments and finance income (loss) - insurance Investment income from Nostro Investment income from nostro portfolio (assets backing life, health and non-life Investment liabilities and equity) portfolio income 220 (loss) Investment gains attributed to the saving policies and i
Slide 39: Our Global Partners
Our Global Partners @ Swiss Re CHUBB ®& CHINA RE Allianz @) STAR INSURANCE COMPANIES & QBE GERLING AYA + Sy ol all p. 2 DUBAI INSURANC & TOKIO MARINE Zarich Insurance Company wd HARTFORD @ | Berkley INSURANCE
Slide 40: Legal disclaimer and forward looking statement
Legal disclaimer and forward looking statement This presentation was prepared solely for the purpose of convenience and brevity and it contains partial information in relation to the Company’s results in the periods specified therein. This presentation should not be construed as an offer to purchase
Slide 41: Thank You
Thank You For more information: https://pr.harel-group.co.il/
Harel Insurance Investments & Financial Services — Q1 2025 Earnings Presentation on 6ix