The financial sector on the Tel Aviv Stock Exchange (TASE) has soared in recent years due to a range of reasons - the improvement in Israel’s security situation, the growth in public savings and positive stock market returns led to a surge in profits. This has been compounded by a new accounting standard that allows companies to recognize profits earlier, among other factors.
Yet, within this thriving sector, one company has seen the most dramatic leap: Ayalon Insurance and Finance (TASE: AYAL). Once seen as a sluggish company that failed to attract investors, Ayalon has seen its stock gain significant momentum over the past three years, soaring by 1,260% to reach a current market cap of about NIS 5.5 billion, making it the sixth-largest player in the sector by market cap.
For comparison, shares in the auto insurance company Libra have risen by 1,000%, reaching a market cap of about NIS 1.4 billion. Local insurance giants have also seen their stock prices surge, though by less: Harel Investments rose by 647%; Menora Mivtachim by 585%; and Phoenix Finance by 437%.
The specific reason for the jump in Ayalon’s share price is the major improvement in its financial results. Having been an insurance company that lost over NIS 100 million at the beginning of the decade, Ayalon staged a turnaround last year, posting a profit of NIS 426 million - a 70% increase. In the first half of this year, the company earned NIS 217 million, an 8% rise compared with the corresponding period last year.
Without doubt, Ayalon has undergone numerous changes in recent years. These include shedding loss-making operations, shifting focus toward profit, the acquisition of a controlling stake by digital insurer Wobi (weSure) in 2022, the merger of Wobi’s insurance operations into Ayalon, and more. In 2024, the company also resumed dividend distributions, for the first time since 2008, paying out a total of NIS 295 million over the past two years. To put matters into perspective, that amount was the company’s entire valuation just a few years ago.
A change in business thinking
Market sources believe that the success is primarily attributable to Sharon Reich, who has served as the company’s CEO since early 2022. Previously, Reich (59) held the positions of deputy CEO and head of the finance division at Ayalon, and before that, he spent nearly a decade as Harel VP accounting.
"Ayalon has undergone a major transformation. Many are trying to claim credit for this shift, including the entry of Wobi (weSure) into the company, but I attribute a large part of the success to CEO Sharon Reich, who, through modest, painstaking, and relentless work, has fundamentally altered Ayalon’s DNA," says Achord Investment Management managing partner Kobi Segev. "Previous CEOs focused on how to break out of the mould of being a 'small insurance company.' However, insurance is a generic sector. The 'old' Ayalon competed by offering lower premiums, higher commissions for agents, and loss-making products simply to generate volume. It also shut down its financial services operations and sold its provident funds to Meitav."
"When Sharon stepped into the role, the business mindset shifted," Segev explains. "Ayalon has shut down loss-making operations and focused on areas capable of generating profit. This strategic shift reached maturity when weSure took control of the company. Ayalon’s focus has now shifted toward profitability rather than market share. Reich also opted to rebuild the provident fund business and strengthen savings policies, while expanding the commercial insurance segment at the expense of personal insurance. Furthermore, he has closed down lines of business that were generating underwriting losses, while refining and strengthening existing customer policies."
This is reflected, for instance, in the change to Ayalon’s business mix: whereas general insurance previously accounted for 86% of the company’s revenue, that figure now stands at 62%. Within the general insurance segment itself, the company has shifted its focus away from personal insurance (such as vehicle and home insurance), which once made up 60% of the total, toward commercial insurance, which now accounts for 60%. This category includes, among others, employers' liability, professional indemnity, third-party liability (excluding vehicles), engineering insurance, and business insurance. In these sectors, Ayalon ranks among the largest insurers in Israel.
However, Reich did not stop there. Since assuming office, he has been actively engaging with investors, working to generate interest in Ayalon’s stock. "Not a month goes by without him meeting with serious investors, such as hedge funds and institutional entities," says a source familiar with the company's internal affairs. "He is actively involved in the company's investor relations." It has also been learned that, recently, Reich has been attempting to attract foreign investors to the firm.
Initially, the market paid little attention to Reich; however, over time, and particularly following an improvement in the company's results, the market's attitude toward him has shifted. Even now, he appears to remain "hungry" for success, moving among the staff and motivating them to improve and move forward. For instance, Ayalon is preparing to take over the management of long-term care insurance for Clalit Health Services - a role Harel chose to forego, and which no other insurance company was willing to assume. Ayalon anticipates that this sector, too, will produce profits.
The challenge in the provident fund sector
Ayalon is now entering the provident fund sector, and doing so with significant efforts. Management is placing a strong emphasis on this area, identifying it as a segment poised for rapid growth in the coming years. *Globes* has learned that, despite weak returns during the first month of its provident fund operations, Ayalon has already attracted nearly NIS 2 billion in assets. Insurance agents are clearly effectively promoting the company.
According to a senior industry competitor, Ayalon, though relatively small, is stirring up interest, and generating a tangible impact on the market. "Ayalon is on the right track. They are a formidable competitor. They’ve raised a massive sum in virtually no time," he admits. "They are an 'agent-focused' company with a strong team, including investment manager Tamir Hershkovitz, and their smaller size has generated a fair amount of buzz."
However, this development could also pose a challenge for Ayalon. The company is aggressively entering the provident fund sector, even as a potential regulatory issue looms: its controlling shareholder, Wobi (weSure), is in the process of acquiring investment firm Altshuler Shaham. This could lead to an unprecedented scenario where two separate provident fund entities fall under the same ownership. It remains unclear whether regulators will approve this arrangement. Ayalon could ultimately pay a heavy price, potentially being forced to shut down its operations prematurely, after having already invested tens of millions of shekels.
Another challenge lies in underwriting within the vehicle insurance sector (property and comprehensive coverage). According to data from the Capital Markets, Insurance and Savings Authority, Ayalon exhibits the highest claims payout ratio relative to premiums: 70% is returned to policyholders for every NIS 100 collected, compared with an industry average of 64%. Ayalon plans to improve underwriting in this sector while simultaneously continuing to expand its market share. What potential does the stock currently possess
Following the stock's major surge, Dror Karni, CEO and founder of Karni Family Office, note, "The market has already priced in much of the turnaround the company has undergone. However, it remains difficult to gauge the extent to which it has priced in the new growth engines. In the provident fund sector, there is a distinct advantage to scale. If Ayalon succeeds in reaching a point where it manages tens of billions of shekels, an increasing portion of the management fees could flow directly to the profit, as much of the necessary infrastructure is already in place. Under mature operating conditions, a provident fund business managing NIS 100 billion can become a significant profit driver in its own right. Ultimately, the narrative hinges on whether Ayalon can grow its profits at a pace that justifies its operations.
"If it manages to maintain its high return on equity (26% in the first half of 2026, comparable with the major insurance companies), while simultaneously building a significant provident fund business, there remains a growth engine here whose full impact is not yet reflected in the current financial statements," Karni emphasizes.
Segev from Accord agrees, noting, "The valuation is not cheap, and the improvement in results is already priced into the stock. However, what is ‘not’ priced in is an expansion into new business areas such as the financial sector (e.g., the recently launched provident fund activity), or a potential merger and acquisition involving Altshuler Shaham, followed by a series of synergistic acquisitions, such as mutual funds, portfolio management, hedge fund management, and more."
Published by Globes, Israel business news - en.globes.co.il - on October 1, 2026.
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