Phoenix Finds Offshore Route to Offer Reinsurance to Israeli Insurers

Phoenix Group has disclosed a new deal with a foreign reinsurer that lets it sidestep restrictions imposed by the Israeli Capital Market, Insurance and Savings Authority head Amit Gal on its reinsurance business. In a brief stock-exchange filing on Tuesday, Phoenix said its subsidiary Phoenix Services invested NIS 135 million to establish a dedicated cell, or protected cell company structure, inside an international reinsurer rated AA-. The reinsurer’s identity has not yet been revealed.

Under the arrangement, Phoenix effectively becomes a partner in a large reinsurance vehicle. It provides the initial capital cushion, gains control over the activity, and shares in the cell’s profits, while contracts with Israeli insurers are formally signed with the foreign entity. Reinsurance companies buy part of insurers’ risk in exchange for part of the premiums, helping spread exposure to major losses such as natural disasters or large claims beyond the local market.

The move follows the regulator’s rejection in early 2025 of a different plan under which Phoenix Insurance intended to sign a direct reinsurance agreement with Ayalon Insurance, a rare transaction that was expected to bring Phoenix hundreds of millions of shekels. The authority blocked that deal over fears that Phoenix, already a dominant player in the local liability market, would use its power to harm competition and concentrate too much risk in a way that could endanger the industry’s stability.

Phoenix then shifted the activity abroad through its holding company, which is not directly supervised by the authority. The company argues that global reinsurance is suffering from weak competition and player exits, and that Israel’s dependence on European firms is a strategic risk, especially during geopolitical tension and war. Group CEO Eyal Ben Simon has said, “What we need to fear most is what is happening in Europe. The continent is sinking,” and has insisted the blocked local deal will eventually happen, adding, “There is no reason Israel should not become an exporter of reinsurance.”