Ahead of the publication of the financial report for the fourth quarter and full year of 2009, Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) today sent a clear signal about the company's high profit last year. The board of directors last night approved the distribution of a NIS 240 million dividend.
The report is unusual, in that the Ministry of Finance previously instructed that an insurance company may not distribute a dividend without the prior consent of the Capital Markets, Insurance and Savings Division. The order is part of the preparations to boost the industry's minimum capital requirements. The order was issued during the economic crisis, and it seemed that no insurance company would distribute substantial dividends for several years.
Migdal expects to obtain the Ministry of Finance's approval for the dividend, in view of the company's strong capital requirement position. The company had a surplus of NIS 1.03 billion at the end of September 2009, and needs to increase its capital threshold by NIS 1 billion by the end of 2012, compared the Ministry of Finance's minimum requirements.
The improvement in Migdal's business apparently continued during the fourth quarter, so its surplus relative to both current and future capital requirements has presumably only grown.
Published by Globes [online], Israel business news - www.globes-online.com - on February 24, 2010
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