Harel Insurance Investments & Financial Services Ltd. · TASE:HARL
Harel Insurance Investments & Financial Services — Q1 2024 Earnings Presentation
40 slides from Harel Insurance Investments & Financial Services's earnings presentation, May 29, 2024
Slide 1: Summary of Financial Results Q1.2024
Summary of Financial Results Q1.2024 May 29, 2024
Slide 2: Harel Group supports the defense forces and the hostages' families
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 3: Agenda
Agenda Key messages Strategy Financial overview Appendix 3
Slide 4: Largest insurance and finance group in Israel
Harel Insurance Investments and Financial Services Largest insurance and finance group in Israel S&P Maalot Premiums and Deposits* Shareholders’ Equity AUM NIS B NIS B NIS B ilAA+/Stable Q1.24 9.9 Q1.24 8.7 Q1.24 453 Harel Insurance Q1.23 9.2 Q1.23 8.4 Q1.23 377 Midroog Aa1.il stable Harel Insurance
Slide 5: Key Messages Q1.24
Continuous growth in Q1.24 profit was NIS 233 M compared with NIS 33 M in Q1.23 quarterly profit supported by underwriting improvement in all segments, despite War impact of NIS 34 M before tax, and by higher nostro returns Improvement in all NIS 178 M underwriting improvement in insurance, NIS 16 M
Slide 6: Agenda
Agenda Key messages Strategy Financial overview Appendix 6
Slide 7: Strategic Focus
Strategic Focus Improving Diversifying Profitability and Revenues Leveraging scale for material and permanent improvement of insurance profitability and revenue diversification 7
Slide 8: 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 8
Slide 9: Harel 2026 targets: comprehensive income and ROE
Harel 2026 Our targets: Comprehensive income NIS M after tax ROE 1,447 13.5% 10% 11% 7% 770 600 233 (1%) (77) 2022 2023 ממוצע Average Q1.24 2026 2022 2023 Average ממוצע Q1.24 2026 2019-2023 2019-2023 Key forecast assumptions: Real Nostro return of 3.0%, change in CPI 3.0%, implementation of stra
Slide 10: Harel 2026 targets: AUM, premiums, fee income
Harel 2026 הראל 2026 Our targets: AUM NIS B Premiums and Deposits* NIS B Fee Income NIS B 520 43.8 1.91 37.5 39.4 428 453 1.47 1.53 363 9.9 0.4 2022 2023 31.3.24 2026 2022 2023 Q1.24 2026 2022 2023 Q1.24 2026 Key forecast assumptions: Real Nostro return of 3.0%, change in CPI 3.0%, implementation
Slide 11: Agenda
Agenda Key messages Strategy Financial overview Appendix 11
Slide 12: Q1.2024: Continuous growth in quarterly profit
Q1.2024: Continuous growth in quarterly profit Comprehensive Income attributed to shareholders ROE NIS M after tax 1,518 18% 11% 11% 833 600 7% 233 2% 33 (77) (1%) 2020 2021 2022 2023 1-3.23 1-3.24 2020 2021 2022 2023 1-3.23 1-3.24 271 13% 233 11% 203 9% 93 4% 33 2% 1-3.23 4-6.23 7-9.23 10-12.23 1-3
Slide 13: Q1.24: Growth in AUM
Q1.24: Growth in AUM AUM NIS B 60% 452.9 427.7 44.8 45.0 362.3 363.1 61.7 40.5 39.6 61.3 4.1 282.8 291.2 3.9 62.2 58.5 92.7 35.8 82.6 35 2.1 3.2 58.2 20.2 51 54.6 58.9 19.3 0.8 1.4 19.3 19.3 59 52.1 16.4 150.6 160.8 16.4 128.2 126.4 76 86.6 52.9 56.1 65.0 68.6 45 44.3 2019 2020 2021 2022 2023 31.03.
Slide 14: Q1.24: Leading in premiums and deposits
Q1.24: Leading in premiums and deposits Premiums and deposits* NIS B 39.4 Pension and Provident 37.5 fund contributions- 2.9 33.0 3.9 substantial growth 30.8 engine 29.9 3.9 3.3 2.5 18.7 16.5 13% 13.8 20% 8.6% 12.4 12.4 11% 0.0% 4.7 5.0 Decline in Long term care 3.9 3.9 4 9.9 premiums is driven by 9
Slide 15: Composition of comprehensive income Q1.2024 NIS M
Composition of comprehensive income Q1.2024 NIS M 269 62 30 Underwriting profit Asset management Credit (Insurance) 388 366 236 233 Life Health Non-life Investment Provident Pension Finance Credit Equity and Adjusted Investment Interest Special Reported Tax Reported Minority Reported contracts Other
Slide 16: Q1.24: Growth in adjusted profit vs Q1.23
Q1.24: Growth in adjusted profit vs Q1.23 Underwriting Improvement Q1.24 vs Q1.23 Change in adjusted profit in Q1.24 vs Q1.23 NIS M before tax NIS M 1-3/24 1-3/23 change Health 144 8 136 Profit growth in all Life 84 80 4 segments, despite War impact of NIS 34 M Non-life 41 3 38 Total 269 91 178 178
Slide 17: Health: Underwriting improvement and termination of Group LTC transaction
Health: Comp. Income before tax Underwriting improvement and termination of Group LTC transaction Change in Comprehensive Income before tax: Health: Change in comprehensive income Q1.24 vs Q1.23 NIS M before tax • Underwriting improvement especially in group LTC and long- term health +184 • Positive
Slide 18: Improvement in LT Health and in Long-Term Care
Health: Underwriting Improvement in LT Health and in Long-Term Care Health: Breakdown of underwriting profit NIS M NIS 136 M underwriting improvement: LTC Personal and Group: Decrease in insurance liabilities (decrease in IBNR reserve) due to +136 reducing the time period from occurrence of an 144 i
Slide 19: Life: Positive impact of investment income and underwriting improvement
Life: Comp. Income before tax Positive impact of investment income and underwriting improvement Life: Change in comprehensive income Q1.24 vs Q1.23 NIS M before tax Change in Comprehensive Income before tax: +55 • Positive impact of investment income due to positive real Nostro returns in Q1.24 comp
Slide 20: Higher profitability in risk products despite the War impact
Life: Underwriting Higher profitability in risk products despite the War impact Life: Breakdown of underwriting profit NIS M NIS 4 M underwriting improvement: +4 • NIS 30 M increase in claims due to the War 80 84 (personal and group) offset the underwriting improvement due to continuous activity gro
Slide 21: Non-life: Growth in underwriting profit, lower interest rate impact
Non-life: Comp. Income before tax Growth in underwriting profit, lower interest rate impact Change in Comprehensive Income Non-life: Change in comprehensive income Q1.24 vs Q1.23 NIS M before tax before tax (23) • Underwriting improvement across most segments • Positive impact of investment income d
Slide 22: Underwriting improvement, particularly in motor property
Non-life: Underwriting Underwriting improvement, particularly in motor property Non-life: Breakdown of underwriting profit NIS M NIS 38 M underwriting improvement: Compulsory motor: decline in underwriting +38 profitability due to negative developments in previous years, partially offset by continuo
Slide 23: Continuous growth in AUM and profitability
AM: Adjusted profit Continuous growth in AUM and profitability Change in adjusted profit*: AM: Breakdown of adjusted profit NIS M before tax 62 Pension and Provident: increase in 46 management fees driven by increase in AUM 20 21 • Total AUM in Pension Funds amounted to 15 18 14 NIS 161 B, up 6.8% f
Slide 24: Diverse and growing credit activity
Credit: Comp. income before tax Diverse and growing credit activity Comprehensive income NIS M before tax 30 Change in Comprehensive Income: 24 • The increase in comprehensive income in Q1.24 compared with Q1.23 is due to activity 12 growth and higher financial margin 7 7 8 5 5 6 4 Harel 60+ Develop
Slide 25: Harel Investments: Financial stability and consistent dividend policy
Harel Investments: Financial stability and consistent dividend policy Shareholders’ Equity NIS B Dividend in Harel Investments including share repurchase NIS M 8.9 8.9 474 8.4 8.7 7.8 397 409 6.9 Dividend 6.2 350 236 NIS M 221 For 2023 COVID 19 67 2018 2019 2020 2021 2022 2023 30.4.2024 2018 2019 20
Slide 26: Harel Insurance: Increase in Solvency Capital Ratio
Harel Insurance: Increase in Solvency Capital Ratio Solvency Capital Ratio at Harel Insurance With transitional measures Without transitional measures The Solvency Capital Ratio of Harel Insurance at December 31, 2023 without transitional measures increased to 138% and capital surplus is NIS 3.8 B,
Slide 27: 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 fundamentals In Q1.24 we continued to pursue a material and permanent Strategy improvement in underwriting profitability while l
Slide 28: Agenda
Agenda Key messages Strategy Financial overview Appendix 28
Slide 29: Harel Insurance: Positive real Nostro return
Harel Insurance: Positive real Nostro return Breakdown of Nostro portfolio by asset classes (31.03.2024) Real Nostro return Real estate (including own use) 2023 10-Y Average 0.7% 3.7% Investment funds, Infrastructure and PE 15.6% Credit and Corporate bonds 9.6% Tradable equities 4.3% Cash and other
Slide 30: Calculation Principles
Calculation 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: profit from the
Slide 31: Our Global Partners
Our Global Partners @ swissRe & Ww cS ‘Berkley QBE TOKIOMARINE SOMPO JAPAN CHUBB B HDI ZURICH 0 fy SUKOON. GERLING Ss RSA 3 INSURANCE ®& CHINA RE Allianz @) aA wu eahis ee SS STARR @é @ INSURANCE COMPANIES
Slide 32: Thank You
Thank You For further information: https://pr.harel-group.co.il/
Slide 33: Presentation prepared solely for convenience and brevity
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 the Company’s securities or an invitation to a
Slide 34: Society, Community and Environment
Harel presents Society, Community and Environment 34
Slide 35: Harel Volunteers
Harel volunteers To give 100% your way Harel Volunteers Investment and involvement in the community is an integral part of our DNA, corporate culture and values. We are committed to increasing our value and social actions for as many beneficiaries as possible, alongside integrating and developing th
Slide 36: Harel Volunteers
Harel volunteers To give 100% your way Harel Volunteers The Sandwich project: an annual project of daily February 2024 | On the occasion of Women's Day, approximately Tu BiShvat activity of employees together supply of sandwiches throughout the year to 2 300 care and pampering packages were packed f
Slide 37: Harel Volunteers
Harel volunteers To give 100% your way Harel Volunteers March 2024 | 400 Purim baskets for evacuee April 2024 | 500 food baskets for Passover for April 2024 | Establishing of a garden in children from Kiryat Shmona evacuated families memory of the late Tomer Morad 37
Slide 38: HAREL HEROES
HAREL HEROES Harel announced Harel HEROES - Israelis for the world An initiative that aims to empower and put at the center a variety of inspiring stories from Israeli society that happen abroad, across various fields including sports, unique rescue missions and personal victories. Harel HEROES’ vis
Slide 39: HAREL HEROES
HAREL HEROES Personal sponsorship for the marathoner Geshao Ayala, record holder and champion of Israel Harel HEROES' support for Ayala emphasizes Harel's dedication to the aspirations and efforts of extraordinary people in Israeli society and this is how we will continue to do and encourage Israeli
Slide 40: Collaboration with Fresh Paint
Fresh Paint - the Tel Aviv Art and Design Fair Collaboration Between the Harel Insurance and Finance Group and the Fresh Paint Group The Harel Insurance and Finance Group joins the Fresh Paint Group for the sake of cooperation, which will begin this year and continue over the next three years. As pa
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