Hachshara Insurance Confirms Entry Into Provident Funds Market

Hachshara Insurance has confirmed reports that it is seeking to enter the provident funds (GML) market. The company announced via a stock exchange filing that its subsidiary has submitted a request to the Capital Markets Authority for a license and controlling permit. This move is intended to establish a management company and launch operations in the sector, with Hachshara Holdings Insurance, the parent company, expected to submit the application.

The company aims to build its provident fund operations from scratch and is open to mergers and acquisitions for future growth. Hachshara reportedly intends to reach NIS 50 billion in assets under management within three to four years, a goal that would require an investment of approximately NIS 500 million from the parent company to cover agent commissions. Industry estimates suggest that a break-even point in this market is around NIS 40 billion in managed assets.

Hachshara's entry follows that of Ayalon, which began operating in the provident fund sector last August and has since raised NIS 3 billion, and the agent house Profit, which is considering entering the market. No new major player had entered the market for several years prior to these developments.

The provident fund industry, encompassing study funds, investment provident funds, and savings for every child, has seen significant growth, with assets under management increasing by 70% over the past three years to NIS 1.1 trillion. Annual long-term savings deposits exceed NIS 200 billion. The market includes major investment houses like Meitav, More, Altshuler Shaham, and Analyst Vilen Lapidot, as well as insurance companies such as The Phoenix, Harel, Clal, Menora Mivtachim, and Migdal. These managing entities generate approximately NIS 6.7 billion annually from management fees before agent commissions, which constitute about 40% of that sum. Management fees in the sector range from 0.6% to 0.8%.