TEL-AVIV, Israel, Aug. 22, 2024 /PRNewswire/ -- Phoenix Financial Ltd. (formerly Phoenix Holdings), a leading Israel-based financial, insurance, and investment group (TLV:PHOE) ("Phoenix," the "Group," or the "Company"), today reported its results for the first half of 2024 and second quarter of 2024.
Income and return on equity
Phoenix reports NIS 667 million in comprehensive income for the first half of 2024, resulting in NIS 2.65 in income per share and 12.8% in return on equity. Core comprehensive income totaled NIS 869 million (net of non-operating effects, including capital market effects above and below real returns of 3%, interest rate effects and special items), which reflects a core (normalized) return on equity of 16.7%.
In the second quarter of 2024, Phoenix reports NIS 383 million in comprehensive income, reflecting NIS 1.52 in income per share and 15.1% return on equity. Core comprehensive income (net of non-operating effects, including capital market effects above and under real returns of 3%, interest rate effects and special items) totaled NIS 548 million, which reflects core (normalized) return on equity of 21.9%.
Growth in profitability and activities
Phoenix reports continued growth in its Asset Management, Distribution, and Credit activities with NIS 275 million and NIS 146 million in core comprehensive income for the first half of 2024 and second quarter of 2024, respectively, compared to NIS 215 million and NIS 114 million in the first half and second quarter of 2023, respectively.
Adjusted EBITDA for the Asset Management, Distribution, and Credit activity totaled NIS 567 million and NIS 286 million in the first half and the second quarter of 2024, respectively, consolidated including minorities, compared to NIS 459 million and NIS 232 million in the first half of 2023 and the second quarter of 2023, respectively.
The Group reports continued, consistent growth in Insurance activities, with core comprehensive income increasing to NIS 594 million and NIS 402 million in the first half and the second quarter of 2024, respectively, compared to NIS 435 million and NIS 243 in the first half and the second quarter of 2023, respectively.
Total assets under management increased 11% in the first half of 2024 to NIS 480 billion, including the acquisition of Psagot's fund management activities completed in March 2024; the Group's Credit portfolio was NIS 5.8 billion.
Phoenix has achieved its strategic goals for 2025 earlier than expected and expects to publish updated strategic targets and roadmap on September 9, 2024.
Financial resilience
Phoenix has a strong financial profile characterized by high liquidity and low net debt, further supporting the company's dividend policy. Asset Management, Distribution, and Credit activities generate significant and increasing cash flow; in addition, in June Phoenix-Gama successfully completed an issuance of commercial notes totaling 0.5 billion shekels. Phoenix Insurance has a high solvency ratio of 191% the transitional measures as of March 31, 2024 (after dividend distribution).
On August 19, 2024, rating agency Midroog raised its Phoenix Insurance credit rating to Aaa.il, the highest on the Israeli rating scale. Phoenix also has an existing ilAAA rating from Maalot and international insurance ratings including A2 by Moody's and A- by S&P. These strong financial ratings reinforce Phoenix's leadership position in the insurance and finance sector in Israel.
Dividend and buyback
Phoenix's dividend policy increased this year from at least 30% to at least 40% of annual comprehensive income, reflecting successful strategic execution and associated growth in the Group's profitability and cash flows.
Today, Phoenix announced a dividend distribution of NIS 270 million from first half income, which reflects NIS 1.07 per share. Since 2020, Phoenix has distributed dividends of approximately NIS 2 billion.
In addition, by the report publication date, the company has executed NIS 116 million out of the NIS 200 million 2024 buyback plan.
The dividend and buybacks together represent 58% of the company's income for the period.
Eyal Ben Simon, Phoenix CEO:
"Israel is still at war on several fronts and, as a leading financial group, Phoenix continues to support and assist Israeli society with resources and volunteer efforts while also focusing on its business activities. Our hearts go out to the families of the fallen, and we pray for the quick return of the hostages and for the recovery of the wounded.
For the second quarter of 2024, Phoenix reports continued growth in both our Insurance business and our Asset Management, Distribution, and Credit businesses, despite non-operating factors including capital market uncertainty. The Group's successful execution of its business strategy, including offering compelling client and agent value propositions and leveraging associated technologies, further highlights our competitive advantages, leadership, and financial position.
After the end of the quarter, several leading international funds acquired Phoenix shares from Centerbridge and Gallatin, representing a significant vote of confidence in the Group and the Israeli economy. Going forward, Phoenix's committed and experienced management team continues to focus on driving strategic growth and value creation.
The Group continues to grow its return on equity and dividend distributions, reflecting strong performance and continued improvement in profitability across activities. Core comprehensive income is meeting 2025 targets ahead of schedule, based on solid foundations, leading market positions, and careful management of opportunities and risks. In September, we will present updated strategic targets, reflecting the Group's opportunities for significant growth and value creation in the coming years."
Highlights
Comprehensive income attributable to shareholders:
For the first half of 2024, the comprehensive income attributable to shareholders amounted to NIS 667 million, reflecting a return on equity of 12.8%, compared to a return on equity of 6.0% in the first half of 2023. The comprehensive income in the first half of 2024 was achieved despite the economic challenges and non-operating negative effects (capital markets above or below 3% real returns, interest rate effects, and special items) of NIS 202 million.
Core income (net of non-operating effects, including the capital market above and under a real return of 3%, interest rate effect and special items)
Core income increased to NIS 869 million in the first half of 2024, reflecting a 16.7% core return on equity, compared to NIS 650 million, reflecting a 13.0% core return on equity in the corresponding half last year.
Core income from Insurance increased to NIS 594 million compared to NIS 435 million in the corresponding period last year, and core income from Asset Management, Distribution and Credit increased to NIS 275 million compared to NIS 215 million in the corresponding period last year.
Shareholders' equity
Equity attributable to Company's shareholders totaled NIS 10.8 billion as of June 30, 2024.
Assets under management
Total assets under management increased to NIS 480 billion as of June 30, 2024, including the March 2024 acquisition of fund management activity from Psagot.
The Group is meeting strategic targets for 2025 and will publish revised strategic growth targets and roadmap on September 9, 2024.
Operating segment results
Insurance
P&C
Comprehensive income before tax for the first half of 2024 amounted to NIS 507 million, compared to a comprehensive income of NIS 173 million before tax for the corresponding period last year. The increase reflects improvement in underwriting income from Motor Property, Other Property, and Other Liability subsegments, offset by a decrease in profitability in the Compulsory Motor subsegment and interest rate effects.
Health
Comprehensive income before tax for the first half of 2024 amounted to NIS 259 million, compared to NIS 73 million before tax in the corresponding period last year. This growth reflects an increase in the underwriting income, primarily due to an improvement in the loss ratio, and policyholder mix, primarily due to an improvement in the individual health portfolio and interest rate effects.
Life and Savings
Comprehensive loss before tax for first half of 2024 amounted to NIS 42 million, compared to a comprehensive loss of NIS 83 million before tax in the corresponding period last year. The reduction in loss resulted primarily from an increase in underwriting income. The positive effect of the change in the interest rate curve, including the change in the K factor, was offset by capital market effects and updated mortality tables.
It is noted that as of shortly before the report publication date, shortfall in variable management fees amounted to NIS 228 million.
Other Equity Returns
Comprehensive loss before tax for the first of 2024 amounted to NIS 121 million, compared to a comprehensive loss of NIS 181 million before tax in the corresponding period last year. The decreased loss is primarily due to capital market conditions compared with the corresponding period last year.
Asset Management, Agencies, and Credit
Retirement (Pension and Provident)
Comprehensive income before tax for the first half of 2024 amounted to NIS 47 million, compared to NIS 60 million before tax in the corresponding period last year.
Investment House and Wealth
Comprehensive income before tax for the first half of 2024 amounted to NIS 151 million, compared to NIS 111 million last year. The year-over-year increase in profitability is due to an improvement in the income in the Funds & Portfolios subsegment following acquisitions.
Distribution (Agencies)
Comprehensive income before tax for the first half of 2024 amounted to NIS 155 million, compared to a comprehensive income of NIS 155 million before tax in the corresponding period last year.
Credit (Phoenix Gama)
Comprehensive income before tax for the first half of 2024 amounted to NIS 71 million, compared to comprehensive income of NIS 55 million before tax in the corresponding period last year. The increase in profitability stems mainly from an increase in activity turnovers and credit spreads.
Conference Call Information Phoenix Holdings will hold a conference call on Thursday, August 22 at 1pm local time in Hebrew and at 5pm local time / 3pm UK / 10am ET in English, and has published dial-in details and the presentation through the Tel Aviv Stock Exchange website.
About Phoenix Financial (formerly Phoenix Holdings) Phoenix Financial is a leading Israel-based financial and investment group traded on the Tel Aviv Stock Exchange (TASE: PHOE). Group activities include multi-line insurance, asset management, credit, and brokerage services, and have demonstrated strong growth and performance across the cycle. Phoenix serves a significant portion of Israeli households with a broad set of activities and solutions across businesses and client segments. Managing over $120 billion in assets, Phoenix accesses Israel's vibrant and innovative economic activity through a robust investment portfolio, creating value for clients and shareholders.
