Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), controlled by the Hamburger family and managed by CEO Michel Siboni, has reported a strong year with a 12% rise in revenue from premiums and a 100% increase to a record total profit of NIS 845 million. Harel’s market cap is NIS 5.5 billion, after having recently been above NIS 6 billion. The company’s share price climbed 3% yesterday. Harel announced that it would distribute a NIS 107 million dividend in April.
The improvement in Harel’s results followed changes in the risk-free interest rate and its many effects in 2017 and 2016, in addition to positive sentiment in the capital market, which boosted the group’s income from investments and management fees. Harel’s results were also affected by changes in insurance liabilities caused by a revision of discounts. In 2016, Harel’s results were affected by one-time losses, especially a NIS 201 million loss caused by the Vinograd Committee and a NIS 75 million write-down on the activity of mutual funds. Siboni also attributed his company’s results to “progress in a new strategy combining digital and big data.”
Harel’s earned premiums and fees grew 16% to NIS 23.6 billion in 2017. The company’s pre-tax profit in long-term savings totaled NIS 594 million, compared with NIS 128 million in the preceding year, while its pre-tax profit in the general insurance sector was NIS 205 million, compared with NIS 74 million in 2016.
Harel’s pre-tax profit in health and nursing care insurance fell from NIS 158 million in 2016 to NIS 110 million in 2017. The company, Israel’s biggest player in this sector, attributed the decline to poorer underwriting results in the collective nursing care sector caused by higher claim costs” and “higher insurance liabilities resulting from revision of discounts.”
The financial services sector contributed over 34 million in operating profit to Harel through the Harel Finances investment house, which had a NIS 21.3 million net profit in 2017.
Plunging management fees
In its reports, Harel states that its management fees from mutual funds totaled NIS 123 million in 2017, 13% less than in 2016 and 38% less than its NIS 198 million in management fees in 2015. Summing up, “revenue in the capital market and financial services sector (including exchange traded funds, R.S.) totaled NIS 202 million in 2017, compared with NIS 253 million in 2016,” a decrease of over 20%.
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2018
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