Hachshara Insurance to Enter Israel's Pension Market
Translated & summarized from Globes by baba
Hachshara Insurance is preparing to enter Israel's rapidly growing pension and provident fund market, aiming to manage NIS 50 billion within four years. The company plans to build its operations from the ground up and will leverage its network of insurance agents to attract assets. The GML market has seen substantial growth, with total assets reaching NIS 1.1 trillion, and Hachshara's entry is seen as a strategic move to capitalize on this trend and potential regulatory changes.
The story in 6 lines · by baba
- Hachshara Insurance plans to enter Israel's NIS 1.1 trillion pension and provident fund market.
- The company aims to manage NIS 50 billion in assets within three to four years.
- Hachshara will leverage its extensive network of insurance agents to attract funds.
- The Israeli GML market has grown 70% in the last three years.
- New regulatory recommendations could encourage internal fund transfers, benefiting diversified providers.
- Hachshara currently manages NIS 31 billion in savings policies.
The Israeli finance sector, particularly the pension and provident funds (GML) market, is experiencing significant growth, attracting new players. Hachshara Insurance, owned by Eli Elezra and managed by Shimon Miron, is set to become the latest entrant. The company plans to apply for a license from the Capital Markets Authority to establish its GML operations from scratch. This move follows the recent entry of Ayalon Insurance, which has already raised NIS 3 billion, and the consideration by agent firm Profit to enter the market, ending a period of no new participants.
Hachshara aims to manage NIS 50 billion in assets within three to four years, requiring an investment of approximately NIS 500 million for agent commissions. Industry estimates suggest that NIS 40 billion in managed assets is needed to achieve profitability. The GML market has seen a 70% surge in assets over the past three years, reaching NIS 1.1 trillion, with total long-term savings exceeding NIS 3.3 trillion. Major players include investment houses like Meitav, More, and Altshuler Shaham, alongside insurance companies such as The Phoenix, Harel, and Migdal.
The attractiveness of the GML market is driven by consistent management fees, ranging from 0.6% to 0.8%, which provide stable income regardless of market fluctuations. Hachshara's entry is also influenced by a regulatory recommendation for a unified investment account for savers, which could encourage internal fund transfers and retention of clients if Hachshara offers a diverse range of products. The company plans to leverage its extensive network of insurance agents, who play a crucial role in managing long-term savings, to attract hundreds of millions of shekels monthly.
Hachshara is also developing a credit brokerage to assist agents in offering loans and mortgages to clients, further strengthening its ties with the agency network. The significant influence of insurance agents was highlighted at a recent conference attended by top insurance executives and the Chairman of the Israel Securities Authority, who indicated potential new licensing pathways for agents in mutual funds. Hachshara currently manages approximately NIS 31 billion in savings policies, with competitive returns in the past year and over three and five-year periods, ranking second only to Ayalon Insurance in this segment.
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