Clal Insurance Enterprise Holdings' Q1 2001 net profits totaled NIS 56.1 million, representing a 50% plunge compared to the company's NIS 103 million Q1 2000 net profit, according to the group's financial reports, published today. Clal Insurance is the first Israeli insurance company to publish its quarterly results.
Clal Insurance Enterprises Holdings president and CEO Avigdor Kaplan told "Globes", "Clal Insurance's insurance profits fell only 4% compared to the corresponding quarter last year. The balance of the decline is due to two one-time factors last year: a NIS 27.2 million capital gain from the sale of Clal Israel shares, and a NIS 36 million investment profit from the company's nostro funds, mainly in the stock market."
Clal Insurance announced its first interim dividend for 2000, totaling NIS 100 million. The dividend is greater than the profits, and will be financed by expected Q2 profits. Clal Insurance distributed a NIS 300 million dividend last year.
Q1 profits from life insurance policies reached NIS 66.5 million, a 22% drop compared to the corresponding quarter last year. The decline is due to a sharp 76% plunge in investment income, which totaled NIS 75 million. Gross premiums totaled NIS 772 million, a 7.6% increase.
Early redemption of policies totaled NIS 237 million, the same as in the corresponding quarter last year. Participating life insurance policies had a negative yield of 0.7%, due to the stock exchange fall, which has affected Clal Insurance's revenue, as it is not entitled to charge management fees when the policies are not profitable.
Clal Insurance's elementary insurance business yielded a Q1 profit of NIS 39.9 million, representing a 57% increase compared to last year. About NIS 10 million of this profit was from comprehensive vehicle insurance, despite a 5% decline in activity, due to a decision not to insure loss-making vehicles.
Kaplan said that the increase in profits was mainly due to selective underwriting, profits, and varying rates premiums, based on risk. Gross premiums and fees totaled NIS 1.04 billion, 4.8% higher than last year. The company's investment portfolio stood at NIS 18.6 billion, 5.7% higher than on March 31, 2000.
Clal Insurance’s equity stood at NIS 1.04 billion on March 31, NIS 187 million more than required by regulations. In contrast, subsidiary Aryeh Israeli Insurance had an equity deficit of NIS 21.8 million, which will be covered by issuing surplus preferred shares.
Kaplan said today that Clal Insurance will begin marketing mutual funds this year, expanding the range of financial products it offers, including factoring insurance, sales guarantees, mortgages, and financial coverage instruments for companies issuing bonds.
Commenting on the merger of subsidiaries Aryeh Israeli Insurance and Ilit Insurance, Kaplan said the move would save the company NIS 15 million a year.
Published by Israel's Business Arena on 16 May 2001