Harel Insurance Investments & Financial Services Ltd. · TASE:HARL
Harel Insurance Investments & Financial Services — Investor Presentation (April 2024)
34 slides from Harel Insurance Investments & Financial Services's investor presentation, Apr 2, 2024
Slide 1: Strategy Presentation, April 2nd, 2024
No long-standing insurance company has a future that outstands ours Strategy Presentation April 2nd, 2024 1
Slide 2: Disclaimer and forward looking statement
Disclaimer and forward looking statement This presentation is not an offer to purchase the Company’s securities or an invitation to accept such offers, and it is intended solely to provide information as part of the explanations provided about the Company. The presentation was prepared solely for th
Slide 3: Statement of support for Israel and hostages
Harel Group, the Board of Directors, Management and employees support the defense forces and stand with the families of the hostages, hoping and praying for their safe and speedy return home. We offer our condolences to the bereaved families and feel the pain of their terrible loss in the horrific t
Slide 4: Agenda
Agenda Overview Strategy KPIs Harel 2026 4
Slide 5: Key Strengths
Stable ownership and Almost 90 years of experience with stable family long-term view ownership and long-term view Largest company in With premiums and deposits of NIS 39.4 B, AUM of the sector NIS 428 B in 2023 and market share leadership in most segments Key Highly liquid High financial flexibility
Slide 6: Our Journey
Our Journey From insurance agency to largest insurance and financial group in Israel Asset Management Credit Insurance 2019-2024 2000-2018 1984-1999 “Hamazpen” – SME credit is established Mutual and Provident 1982 Shiloah Funds from Bank Leumi Harel 60+ mortgages and reverse mortgages is established
Slide 7: Leadership
Experienced and Professional Leadership Yair Hamburger Chairman Harel Investments and Director in Harel Insurance Ben Hamburger Vice Chairman Harel Nir Cohen Investments and CEO Director in Harel Harel Investments Insurance and Harel Insurance Yoav Manor Gideon Hamburger Chairman Harel President Har
Slide 8: The largest insurance and financial group in Israel
Harel Insurance Investments and Financial Services The largest insurance and financial group in Israel Ownership Structure S&P Maalot 39.4 428 AUM 8.9 Hamburger ilAA+/Stable Premiums and Deposits Equity Family Harel Insurance NIS B NIS B NIS B 48.47% 51.53% Midroog 600 Aa1.il stable 7% 167% Public H
Slide 9: Consistent growth in premiums and AUM
Consistent growth in premiums and AUM Premiums and Deposits* NIS B Market Share AUM NIS B #1 51% 28% 428 37.5 39.4 362 363 33.0 30.8 29.9 283 291 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Market share – in terms of gross premiums earned as of 30.09.2023 * Gross premiums earned and contributi
Slide 10: Harel Investments: Excess cash and consistent dividend policy
Harel Investments: Excess cash and consistent dividend policy NIS 2 B Excess Cash Dividend Policy NIS million Harel Company B Company C Company D Company E 30% 31.12.2023 Investments (1,260*) (1,896) - (1,514) (170) > Bank loans and bonds Cash and 3,336 439 3 1,020 356 Harel Investments other financ
Slide 11: Harel Insurance: Surplus above regulatory capital requirements
Harel Insurance: Surplus above regulatory capital requirments Harel Insurance: Solvency Capital Ratio 130% 173% 170% 159% 175% 169% 167% 126% 125% 125% Dividend Policy 120% 1.7 35% 119% NIS B 116% > 115% 113% Harel Insurance* 110% 110% Minimal solvency ratio for dividend 105% 105% distribution** 100
Slide 12: Harel Insurance: Increase in embedded Nostro returns
Harel Insurance: Increase in embedded Nostro returns Breakdown of Nostro portfolio by asset classes (31.12.2023) Real Investment Yield Real Estate (including own use) 2023 10-Y Average 0.7% 3.7% Investment Funds, Infrastructure and PE 15.7% Credit and Corporate Bonds 9.4% Tradable Equities 4.9% Cash
Slide 13: Our Story
Brand, Human Capital Leading brand, committed and professional leadership, and Customers employees and agents – focused on providing the best service to our customers Ready to adopt tech We developed an infrastructure to connect legacy core innovation systems to advanced services and products on the
Slide 14: Our Strengths
Our Strengths Brand Human Capital Customers Leading Unique DNA evident in professional Broad customer base, Insurance brand and committed employees, agents creating substantial and management teams growth potential Top 800 Top 50 employers in ~4Customers million TOM desired The only the world Insura
Slide 15: Advanced Technological Infrastructure
Advanced Technological Infrastructure Cloud CMS | Digital OCR | Automation Ready to Challenges of the Future Infrastructure and Information Security Middleware | API Core Systems Life and Health Non-life and Claims AS400 Finance LT Savings 15 OCR- Optical Character Recognition; CMS – Content Managem
Slide 16: Formulating the strategic focus August 2022
Formulating the strategic focus August 2022 ‘Fix the core’ ‘Scale the core’ ‘Expand outside the core’ Fixing core performance Improving distribution engines Diversifying revenue sources and profitability in insurance to scale insurance production Performance Transformation (IDP/BUP*) Technical Opera
Slide 17: Strategic Focus
Strategic Focus Improving Diversifying Profitability and Revenues Leveraging scale for material and permanent improvement of insurance profitability and revenue diversification 17 Strategy
Slide 18: Strategy
1 # Operational Excellence Improving insurance profitability Strategy #2 Leveraging Continue growing Existing in profitable products Implementation #3 Customers Revenue Expanding non- Diversification insurance activities 18 Strategy
Slide 19: Improving insurance profitability
1 # Operational Improving insurance profitability 2 Excellence # Accurate Pricing and Efficient Leveraging Claims Management Existing 3 Customers Process Automation # Revenue Diversification “Measurable Organization” 19 Strategy
Slide 20: Continue growing in profitable products
1 # Operational Excellence Continue growing in profitable products 2 Strengthening relationships with # customers by providing superior Leveraging service in a variety of channels Existing 3 Customers Increasing product offering to existing customers # Revenue Diversification Advanced services to ag
Slide 21: Non-life Insurance: improvement in motor property and long tail
Non-life Insurance Continuous improvement in motor property and ‘long tail’ Operational Excellence Customers Strengthening managerial Ongoing focus on personal lines and tools and controls in claims leveraging interaction with customers handling processes to add more products and services Further po
Slide 22: Life Insurance: Focus on personal-lines risk
Life Insurance Focus on personal-lines risk Operational Excellence Customers Accurate claims process Unlocking growth potential in risk especially in disabilities products with existing customers Personal-lines Risk: Harel is the largest company, growing while improving profitability Breakdown of 20
Slide 23: Health and Long Term Care: personal lines focus
Health and Long Term Care (LTC) Focus on personal lines, terminating exposure to group LTC Operational Excellence Customers Enhanced usage in automation and Developing marketing tools digitalization to strengthen profitability for activity with existing of personal and group lines customers Continue
Slide 24: Asset Management: Unlocking benefits of scale
Asset Management Unlocking benefits of scale Operational Excellence Customers Material sales potential Increase automation allowing to customers with one for improved profitability while product only unlocking benefits of scale Growth potential in Asset Management AUM in Pension Funds, Provident Fun
Slide 25: Expanding non-insurance activities
1 Expanding non- # Operational Excellence insurance activities 2 Acceleration of growth in existing non-insurance activities: # • Hamazpen Leveraging • Development property Existing financing #3 Customers • Harel 60+ • Financial guarantees • Investment in agencies Exploring additional Revenue invest
Slide 26: Composition of comprehensive income 2023
Composition of comprehensive income 2023 NIS M 975 233 202 Underwriting profit Asset Management Credit and other (Insurance) 1,410 821 611 600 Life Health Non-life Investment Provident Pension Financial Credit Equity and Adjusted Investment Interest Special Comprehensive Tax Profit after Profit afte
Slide 27: NIS 785 M underwriting improvement in 2023
NIS 785 M underwriting improvement in 2023 Underwriting Improvement 2023 vs 2022 Change in adjusted profit 2023 vs 2022 NIS M before tax NIS M 2023 2022 change Non-life 284 )90( 374 Health 386 124 262 Life total 305 975 156 190 149 785 785 1,410 660 2022 Adjusted Underwriting Asset Credit Equity and
Slide 28: Harel 2026: ROE and comprehensive income targets
Harel 2026 Our targets: ROE Comprehensive Income NIS M after tax 1,447 13.5% 10.2% 7.4% 770 600 (1.0%) (77) 2022 2023 שנים 5 ממוצע 2026 2022 2023 2019-2023 שנים 5 ממוצע 2026 2019-2023 Average Average Key forecast assumptions: Real Nostro return of 3.0%, change in CPI 3.0%, implementation of
Slide 29: Harel 2026: AUM, premiums and fee income targets
Harel 2026 הראל 2026 Our targets: AUM NIS B Premiums and Deposits* NIS B Fee Income NIS B 520 43.8 1.91 428 363 1.47 1.53 39.4 37.5 2022 2023 2026 2022 2023 2026 2022 2023 2026 Key forecast assumptions: Real Nostro return of 3.0%, change in CPI 3.0%, implementation of strategic plan to improve pro
Slide 30: Additional improvement of NIS 800 M before tax until 2026
Additional improvement of NIS 800 M before tax until 2026 Change in adjusted profit 2026 vs 2023 NIS M before tax 2,217 430 1,410 2023 Adjusted Underwriting Asset Credit Equity and 2026 Expected Profit Profit Management Agencies Adjusted profit before tax (Insurance) before tax Key forecast assumpti
Slide 31: 2026: NIS 1.5 B profit after tax
2026: NIS 1.5 B profit after tax Composition of 2026 Expected Comprehensive Income NIS M after tax 1,404 327 486 Insurance Asset Credit and Other Management 2,217 (770) 1,447 Underwriting Asset Credit Equity and 2026 Expected Tax 2026 Expected Comp. Profit Management Agencies Adjusted profit Income
Slide 32: To Summarize
Solid history Almost 90 years of experience with stable family ownership and and long term view, leading brand, committed and professional management, employees and agents teams fundamentals In recent decades Harel established its leading market Growth and position and expanded its activities throug
Slide 33: Calculations Principles
Appendix Calculations Principles Insurance Asset Management Credit and Other Hamazpen Pension Funds Development Property Financing Life Insurance Provident Funds Harel 60+ Health Insurance Financial Guarantees Finance Non-life Insurance Agencies Investment Contracts Equity Underwriting Profit: profi
Slide 34: For further information
The Israel’s spirit is our insurance For further information: https://pr.harel-group.co.il/
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