Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — FY2023 Earnings Presentation
49 slides from Phoenix Financial's earnings presentation, March 2024
Slide 1: Phoenix Holdings 2023 Annual Review
2023 Phoenix Holdings Annual 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 433 NISb TA-35 Phoenix Holdings financials group AUM 1 Leading index Insurance Asset Management & Credit 19% 15% Distinctive AUM CAGR ROE P&C Retirement (Pension & Provident) performance 5-years 2 5-year average 2 Health & Travel Investment House & Wealth
Slide 4: 2023 Performance Despite Headwinds
2023 Performance Despite Headwinds Headwinds included materialization of several risks: Inflation Interest War rates Political Market uncertainty volatility 1.1 NISb 10.5 % 12.6 % Comprehensive Income ROE Core ROE Israel economic resilience including rebounding capital markets (TA-35 index +4%), pro
Slide 5: Economic Snapshot
Economic Snapshot GDP Growth 2 GDP per Capita 3 Long-Term Savings AUM 4 Long-term positive Percent USD ‘000 NIS Trillion structural trends (e.g., 8.6% wealth accumulation, 6.5% Sweden 57 2.4 2.3 2.4 2.0 vibrant tech sector)1 4.1% 4.2% Israel 53 1.9 1.6 2.0% 2.0% Germany 53 Resilience in face of 2023
Slide 6: 2023 Highlights
2023 Highlights 10.5 433 Resilience in face of 2023 headwinds 2023 1.1 NISb % NISb Strategic execution driving 12% growth in core income (12.5% core ROE / 10.5% ROE Comprehensive Income ROE AUM1 after non-operating effects) Continued growth in Asset Management & 10.6 NISb 209 % Credit including orga
Slide 7: Growth in Core Business
Growth in Core Business Income (Comprehensive, after Tax) NISm 2,316 1,450 1,353 1,124 1,093 Core Insurance improved profitability 450 752 390 Non-Operating 664 Core Asset Management & Credit 44 314 578 growth in fee income across 526 266 271 212 segments year-on-year Core Asset Management 790 872 2
Slide 8: Investment Core Capabilities
Investment Core Capabilities Returns - Insurance Nostro / Corporate Account Asset Allocation - Corporate Account (Nostro) Percent (nominal) Percent (December 31, 2023) 10.6% Cash Alternatives & other 3% 11% 7.4% 5.8% Real estate 12% Fixed income (Govt) 4.8% 4.5% 33% ~70% fixed 1.9% Equities 6% incom
Slide 9: Strong Cash Flow Businesses
Strong Cash Flow Businesses Sources: Diverse & Growing Cash Flows Uses: Capital Allocation 1. Insurance A. Dividends Well capitalized (high Solvency II), Policy at least 30% payout, with 35% distributed from 2023 comprehensive profitable business with 30-50% income dividend policy to Phoenix Holding
Slide 10: Equity Generation and Dividend Distribution
Equity Generation and Dividend Distribution Building Track-Record Shareholders' Equity NISm 265 NISm semi-annual dividend announced, 10,580 together with previous 120 NISm dividend 10,145 9,653 summing to a total 385 NISm representing 35% of 2023 comprehensive income 7,970 6,446 6,636 Consistent wit
Slide 11: Agenda
Agenda Highlights Strategy & Targets Financial Results Segment Breakdown Appendix Glossary | 11
Slide 12: Value Creation Strategy & Catalysts
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 & sustaina
Slide 13: Group: Core Income Achieving & Surpassing Targets
Group: Core Income Achieving & Surpassing Targets Updated growth targets and Core Income roadmap to be published 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 rates, & special items) 2020 2021
Slide 14: Group: KPIs on Track to Achieve Targets
Group: KPIs on Track to Achieve Targets Group AUMs Shareholders’ Equity ROE NISb NISb 450-550 433 )*( 26.3% 11-13 369 371 10.1 10.6 9.7 18.5% 8.0 234 12%-15% 8.9 11.4% 10.5% 7.6 2020 2021 2022 2023 2025 2020 2021 2022 2023 2025 2020 2021 2022 2023 2025 target target target Core ROE *** 8.7% 10.7% 11
Slide 15: Insurance: Shifting Mix
Insurance: Shifting Mix Premiums & Contributions NISb +8% CAGR 19.7 19.1 17.5 Continued inflows in 7.3 investment policies, including 14.5 7.8 5.2 Investment Policies co-branding (capital-efficient, high-margin) 12.1 3.2 12.4 11.3 2.0 1.9 1.6 4.5 Life and Savings 5.6 5.2 5.4 4.8 5.1 5.1 3.3 Health*
Slide 16: 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% 3 209% 192% 190% 205% 3.2 2019 4.10% 5.57% 0.50% 150-170% 2020 5.08% 5.82% 0.49% 2021 4.40% 5.50% 0.41% 2022 3.53% 5.00% 0.40% 2023 3.46
Slide 17: Asset Management & Credit (AM&C): Growing EBITDA
Asset Management & Credit (AM&C): Growing EBITDA Asset Management & Credit Adjusted EBITDA – Asset Management & Credit produces significant EBITDA NISm, consolidated including minorities Non-insurance / risk activities 926 • Mostly fee-based income 125 Credit (Gama) • Spread income in Credit (adjust
Slide 18: AM&C: Platforms of Broad Solutions
AM&C: Platforms of Broad Solutions AM&C does not include: Retirement (Pension & Provident) Investment House & Wealth Segment Life Insurance Segment on- Segment for mass & affluent clients for private & institutional clients balance sheet solutions Executive Investment Pension Provident ETFs & Discre
Slide 19: AM&C: Continued Growth in AUMs
AM&C: Continued Growth in AUMs Assets Under Management 455 NISb with active NISb fund acquisition 433 +19% CAGR 369 371 92 Retirement - Pension 53 67 Asset Management 113 Retirement - Provident (off balance 234 117 111 215 sheet) 37 178 31 35 90 Investment House & Wealth 24 34 70 66 30 56 52 45 Insu
Slide 20: 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 2023 0.12% 2025 Target 0.11% 2020 2021
Slide 21: 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 22: 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 NISb Q3 (continues to report with publicly 5.6 traded bonds); building platform for 5.1 0.7 Investment House growth (e.g., balance sheet, governance, 0.6 0.4 Mortgages infrastru
Slide 23: Sustainability 2023 Highlights
Sustainability 2023 Highlights Environnent 23% 32 69% 12 Tons Addressing risks & reduction in direct carbon intensity of assets (tons of hybrid & paper avoided opportunities carbon footprint CO2 equivalent per NISm invested); electric cars by digitalization 2019-22 (est.) first in industry to measur
Slide 24: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 24
Slide 25: Segment Income 2023
Segment Income 2023 Segment Income Breakdown Before Tax (Comprehensive) 2023 NISm 1,613 91 (6) 307 )413( (107) 1,093 9 241 (153) 73 348 703 P&C Health Life Other Equity Retirement Investment Distribution Credit Other Income Tax Miniority 1-12/23 Returns House & before Tax Wealth & Minority 907 706 I
Slide 26: Segment Income Q4 2023
Segment Income Q4 2023 Segment Income Breakdown Before Tax (Comprehensive) Q4 2023, NISm 906 14 (11) 66 65 9 )306( 221 578 (22) 46 53 443 P&C Health Life Other Equity Retirement Investment Distribution Credit Other Income Tax Miniority Q4/23 Returns House & before Tax Wealth & Minority 763 143 Insur
Slide 27: Core Income 2023
Core Income 2023 Breakdown Before Tax – By Segment NISm 2023 2022 Difference P&C 638 287 351 Health 165 296 (131) Core Income Breakdown Before Tax (Comprehensive) Life & Savings 217 215 2 2023, NISm Other Equity Returns 294 374 (80) Core Insurance 1,314 1,172 142 Primarily negative Retirement (Pensi
Slide 28: Core Income Q4 2023
Core Income Breakdown Before Tax – By Segment Core Income Q4 2023 NISm Q4/2023 Q4/2022 Difference P&C 328 168 160 Health 21 69 (48) Life & Savings 50 33 17 Core Income Breakdown Before Tax (Comprehensive) Other Equity Returns (5) 50 (55) Q4 2023, NISm Core Insurance 394 320 74 Retirement (Pension &
Slide 29: Strong Balance Sheet
Strong Balance Sheet Difference Phoenix Holdings NISm 31/12/2022 31/12/2023 12/23-12/22 Financial Liabilities (NISm) Cash 3,440 3,053 )387( Bonds and Loans Intangible Assets 2,992 3,598 606 31/12/2023 31/12/2022 Deferred acquisition costs 2,453 2,686 233 CPI Floating Fixed linked interest interest T
Slide 30: Active Solvency & Capital Management
Active Solvency & Capital Management Economic Capital & Solvency (Insurance Company, NISb) Solvency II implementation Cashflow and Liquidity Solvency II implemented in Israel in line with (Holding Company) Solvency ratio1 international standards, with strong regulatory Insurance dividend 30-50% of o
Slide 31: IFRS 17 & IFRS 9 Implementation Update
IFRS 17 & IFRS 9 Implementation Update Implementation Principles Impact IFRS 17 expected to be Under IFRS 17 total income Accounting changes impact primarily Life and Health Insurance segments, with long-term implemented in Israel remains unchanged over lifetime policies where earnings are expected
Slide 32: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 32
Slide 33: P&C
P&C P&C Health Life Other RetirementInvestment Distribution Credit Equity House Other 22% growth in premiums YOY Comprehensive Income Before Tax NISm Improved performance especially in motor in 2023, doubling underwriting profit despite challenging environment including high rates of theft (22) Matu
Slide 34: Health
Health P&C Health Life Other RetirementInvestmentDistribution Credit Equity House Other Lower underwriting profit Comprehensive Income Before Tax compared to 2022 mainly due to NISm increase of LTC claims Income from release of LAT 51 reserves in Q4, with 104 NISm LAT reserves remaining as of Decemb
Slide 35: Life and Savings
Life and Savings P&C Health Life Other RetirementInvestmentDistribution Credit Equity House Other Stable underwriting profit Comprehensive Income Before Tax NISm Negative capital market impact including variable management fee deficit of 274 NISm as of report publication date; lower interest rate mi
Slide 36: Other Equity Returns (Insurance)
Other Equity Returns (Insurance) P&C Health Life OtherRetirementInvestmentDistribution Credit Other Equity House Comprehensive Income Before Tax NISm 294 (406) (153) (41) Financial Investments Special Items 2023 Margin above 3% 2022 374 (1,219) - (845) Difference (80) 813 (41) 692 Q4/23 (5) 248 (22)
Slide 37: 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 efficiency including closing of direct sales activity and focusing on higher margin / efficient (9) activities (7
Slide 38: Investment House & Wealth (Financial Services)
Investment House & Wealth (Financial Services) P&C Health Life Equity House Distribution Credit Other RetirementInvestment Other Performance improvement from strategic Comprehensive Income Before Tax execution NISm Higher brokerage contribution due to 10 (18) continued growth & higher spreads in 10
Slide 39: Distribution (Agencies, Planning, Benefits)
Distribution (Agencies, Planning, Benefits) P&C Health Life Equity House DistributionCredit Other RetirementInvestment Other Stable income with organic growth in Comprehensive Income Before Tax business, however growth rate NISm impacted by slower pace of hiring in 24 (7) the market (including in te
Slide 40: 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 Q4 2,500 (12) Continued grow
Slide 41: 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 (70) 83 (2) (21) (6) 4 Financial Interest Subsidiaries Other Special Items 2023 Mar
Slide 42: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 42
Slide 43: 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 44: Investment Returns – Explanation
Investment Returns – Explanation Reconciliation of investment returns above / below 3% real returns with financial statements NISm 2023 2022 P&L Items from Financial Statements Investment income 9,910 (5,555) Share in profits of equity-accouted investees 42 62 Total components of net other comprehen
Slide 45: Agenda
1. Highlights 2. Strategy & Targets Agenda 3. Financial Results 4. Segment Breakdown Appendix Glossary Disclaimer | 45
Slide 46: Glossary
Glossary Adjusted EBITDA calculated as earnings before interest, tax, depreciation & amortization; consolidated before minority interests; adjusted for non-operating items, Adjusted EBITDA without IFRS 16 influence, and cash items relevant to specific segments (Retirement includes DAC amortization,
Slide 47: 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 48: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 48
Slide 49: 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