Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Phoenix Financial Ltd (XTAE:PHOE, Financial) reported a strong return on equity of 12.8% and ILS667 million of income in the first half of 2024, despite challenging market conditions.
- The company announced a dividend of ILS270 million and executed ILS116 million in buybacks, maintaining a payout ratio of around 58%.
- Phoenix Financial Ltd (XTAE:PHOE) has a robust capital position with a solvency ratio of 191%, allowing for strategic flexibility and attractive dividend distributions.
- The company has shown significant growth in assets under management, reaching ILS480 billion by the end of the first half, with half of the growth being organic.
- Phoenix Financial Ltd (XTAE:PHOE) continues to innovate with technology, using machine learning models to drive profitable growth in its P&C segment.
Negative Points
- The health segment experienced a decline in premiums due to the termination of a collective LTC HMO agreement, impacting income negatively.
- The company faced a negative non-operating effect of ILS168 million before tax in the life segment due to updated mortality tables.
- Geopolitical uncertainty in the region poses ongoing challenges, including potential impacts on the economy and market volatility.
- The increase in the health expense ratio was noted, attributed to lower premiums and product transitions, which may affect future profitability.
- Despite strong performance, the company is still closely monitoring risks in the P&C segment, including car thefts and the prices of parts.
Q & A Highlights
Q: What will be the impact of the controlling shareholders selling up to 21% of shares on the company, management, and the Board?
A: Eyal Simon, CEO, stated that there will be no significant impact on the company or management. The Board might see a few changes, but nothing dramatic. The management is committed and aligned through equity compensation, and they are optimistic about the company's future and updated targets.
Q: How does Phoenix manage its business amid geopolitical uncertainty and economic volatility in the region?
A: Eli Schwartz, CFO, explained that Israel has strong fundamentals, including low debt-to-GDP ratio and high foreign currency reserves. Phoenix maintains liquidity, solvency, and low interest exposure, and recently received an AAA rating from Israeli agencies. The company continues to attract international investor interest.
Q: What was the effect of the updated mortality tables on Phoenix's results, and how will future impacts be limited?
A: Eli Schwartz noted a negative effect of ILS168 million before tax in the life segment. To limit future impacts, Phoenix is changing the mix of insurance products, implementing IFRS 17, and using reinsurance transactions to mitigate back book effects.
Q: Does Phoenix expect to meet its 2025 target for asset management and credit of ILS670 million?
A: Eyal Simon confirmed that Phoenix plans to meet these targets, having grown above the annual plan. Synergies in the investment house and credit segment are expected to be fully realized, and updated targets will be announced on September 9.
Q: How is the implementation of IFRS 17 expected to affect Phoenix's results, and when will initial data be published?
A: Eli Schwartz stated that the regulator has not yet finalized the implementation decision, but based on European companies, Phoenix expects increased profits and decreased volatility. Full implementation is aimed for 2025, with initial reports expected in August.
Q: How much of the growth in private brokerage activity is organic, given the high interest rate environment?
A: Eyal Simon highlighted strong growth in client numbers and income per client. A new trading app has improved client engagement, contributing to increased margins and a growing customer base.
Q: Will Phoenix publish a new strategy along with the updated targets on September 9?
A: Eyal Simon clarified that the strategy remains long-term, with a focus on creating value across the group. An updated roadmap of strategic growth targets and focus areas for the coming years will be shared.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
