Migdal Insurance Reports Stable Profit and 22.4% Return on Equity in Q2
Translated & summarized from Globes by baba
Migdal Insurance posted a stable profit of about 575 million shekels in Q2 with a 22.4% return on equity, driven by growth in core profits and long-term savings despite challenges from declining interest rates. Managed assets reached 631 billion shekels, and CEO Ronen Agassi noted strong growth in premiums and fees, reinforcing Migdal's leading position in Israel's pension market.
The story in 6 lines · by baba
- Migdal's Q2 profit rose slightly to 575 million shekels with a 22.4% return on equity.
- Core operating profit grew 5% to 731 million shekels, led by long-term savings and health insurance.
- Managed assets totaled 631 billion shekels, boosted by positive market returns and fund growth.
- Life insurance profit surged 379% despite a 5% drop in premiums compared to last year.
- Health and general insurance profits declined due to lower financial margins from falling interest rates.
- Pension and provident fund fees grew 13% and 41%, respectively, reflecting strong market trends.
Migdal Insurance concluded the second quarter of the year with a slight profit increase of about 1%, reaching approximately 575 million shekels. The company maintained a high return on equity of around 22.4%. Core operating profit grew by about 5% to 731 million shekels, driven mainly by improved underwriting profits in long-term savings and health insurance. However, a decline in the interest rate curve increased insurance liabilities, which reduced excess financial profits and impacted overall earnings despite strong market returns.
At the end of the quarter, Migdal's managed assets totaled about 631 billion shekels, primarily due to positive market returns and net growth in pension and provident fund accumulations, along with an increase in financial services assets, mainly mutual funds. Life insurance premiums amounted to roughly 1.6 billion shekels, a 5% decrease compared to the same period last year, but the segment's overall profit surged by 379% to 281 million shekels, thanks to core profit improvements and higher financial margins.
Health insurance premiums rose by about 6% to 557 million shekels, yet the segment recorded a 51% drop in pre-tax profit to 64 million shekels, mainly due to lower excess financial profit from the interest rate decline. General insurance profits also fell by 40% to 148 million shekels, affected by reduced core profits in auto insurance and the impact of interest rate changes on liabilities.
Long-term savings benefited from positive market trends, with pension fund fees growing 13% to 3.73 billion shekels and provident fund fees increasing 41% to 1.35 billion shekels. Migdal's CEO, Ronen Agassi, highlighted a record half-year core profit, driven by strict execution of the company's business strategy across all lines, with a 20% increase in premiums and fees and consistent growth in revenues and profitability. He emphasized Migdal's position as Israel's fastest-growing pension fund, benefiting from steady positive fund transfers.
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