Insurance companies will not bear the cost of the damage caused to property as a result of the war, since this is covered almost in full by the government property tax compensation fund, but the war affects them in other ways, and even opens up business opportunities.
Insurance group The Phoenix Holdings (TASE: PHOE), the largest in Israel in terms of assets and market cap, reported to the stock exchange yesterday concerning the negative impact of the security situation, and also the investment opportunities that it creates.
The company said that it intended to raise NIS 350 million in a bond offering "in order to increase the financial flexibility of the company and its subsidiaries, including being prepared for various business opportunities resulting from the situation."
As far as the negative impact is concerned, The Phoenix reported that from the beginning of the war on October 7 up until yesterday morning it had incurred a loss of NIS 70 million as a result of falls in the financial markets. To that should be added NIS 60 million in management fees that the company will not be able to collect on with-profit insurance policies because of negative returns.
"The war has led to a series of consequences and limitations, among other things the temporary closure of many businesses, restrictions on gatherings at places of work and events, and the closure of schools and kindergartens. Furthermore, a large number of people has been drafted into the IDF reserves. These measures have caused a reduction in activity in the Israeli economy," the company stated.
"As a result of the war there have been sharp fall on the financial markets in Israel," the company’s report continued. "The group is exposed by virtue of its businesses to falls in the financial markets, to a slowdown in activity, and to other risks arising from the war.
"At this stage there is considerable uncertainty over how the war will develop, its extent, and its duration. It is therefore no possible at this stage to estimate the full extent of the war’s impact on the company and its results in the immediate and medium terms. On the basis of past events, there could be a significant recovery by the markets," The Phoenix stated.
Published by Globes, Israel business news - en.globes.co.il - on October 23, 2023.
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