Phoenix Holdings Publishes Financial Statements for Q4 and 2023

Phoenix Holdings Ltd., a leading Israel-based financial, insurance, and investment group (TLV:PHOE) (“Phoenix,” the “Group,” or the “Company”), today reported its results for the fourth quarter of 2023 and calendar year 2023.

Highlights

Income and Return on Equity

• Phoenix reports NIS 1.1 billion in comprehensive income for 2023 and return on equity of 10.5%.
• Comprehensive income in the fourth quarter of 2023 totaled NIS 578 million and return on equity was 24.4%.

Dividend

• The Company has announced a NIS 265 million dividend distribution for H2 2023, facilitated by diverse income streams and high Solvency, in addition to the NIS 120 million distributed in H2 2023; a total of NIS 385, or 35% of comprehensive income for 2023, was distributed from 2023 earnings.

Growth and Profitability

• Core income grew to NIS 1.3 billion, representing core return on equity of 12.6% (without non-operating effects from capital markets above and below 3% yields, interest rates, and special items)
• Core income from insurance grew to NIS 872 million, primarily from improved performance in P&C insurance. Core income from Asset Management and Credit activities grew to NIS 450 million, representing 34% of total core income.
• For the first time, Phoenix reports Adjusted EBITDA for the Asset Management and Credit business (without insurance risk activities) of NIS 926 million, fully consolidated including minorities (roughly NIS 763 million without minority interests)
• Total assets under management grew during 2023 by 17% to NIS 433 billion; as of publication, AUMs reached NIS 455 billion including the acquisition of active funds from Psagot signed in 2023 and completed in 2024.
• Phoenix continues to improve efficiency and productivity; Insurance activities reduced staff by 240 employees representing 8% of the total, primarily in life and savings; Asset Management and Credit activities grew staff by 150 employees, primarily from mergers and acquisitions.

Strategy

• Phoenix is achieving 2025 strategic targets ahead of schedule, is assessing growth engines and targets for the coming years, and will publish updated plans and targets in the near future.

Financial Resilience, Technology, Accounting, and Community

• Phoenix is financially resilient with high levels of liquidity and a high Solvency II ratio for Phoenix Insurance, which reached 209% with transitional measures as of September 30, 2023.
• The Group continues to invest in infrastructure and innovation to benefit its customers, broadening digitization and improving precision underwriting and pricing, including machine learnings and advanced models for motor insurance.
• Phoenix is preparing to implement IFRS 17 in 2025, which is expected to reduce accounting volatility.
• Following the start of the Gaza War, the Company increased financial support and staff volunteering across a wide set of activities, including supporting Barzilai Medical Center in the south of Israel.
• The Company made efforts to provide access to its leading collection of Israeli art through exhibitions in Israel and the US that have been attended by over 50,000 people to date.

Eyal Ben Simon, CEO of Phoenix Holdings:

"This past year was a difficult one for the people of Israel and will continue to impact us for many years to come. We carry the memory of the fallen, we wish for the safe return of the hostages and the speedy recovery and rehabilitation of the injured, and we hope for recovery of the State of Israel and a return to the path of prosperity and sustainable peace among our people.

In these days of pain and challenge, the spirit of Israel is also being tested, and our ability to rise and act will ensure the continued safety and prosperity of Israeli society. I believe that it is the spirit of unity, mutual support, and determination that will ensure our success. In the past year, the Phoenix group and our staff have led significant initiatives, including supporting the Barzilai Medical Center, volunteering across various important efforts, and displaying the extensive Phoenix collection of Israeli art for public viewing. Phoenix and its employees are committed to deepening social cohesion and resilience.

In addition to the war, this challenging year was also characterized by political uncertainty, inflation, high interest rates, and sharp volatility in the capital markets. Facing these headwinds, Phoenix proactively managed our business and exposures, initiating changes and adjustments to ensure full business continuity and support clients while achieving strategic targets with consistency and determination. Despite the challenges, Phoenix was able to meet all its targets for 2023.

This was another year of continued growth and improvement across core activities, which include Insurance as well as the growing Asset Management and Credit businesses. We continue to execute our value creation strategy through organic growth and synergetic acquisitions. The group's broad range of activities, in addition to the measures we have taken, disciplined capital management, efficiency improvement, and continuous innovation, have lifted performance to reach our targets faster than anticipated. We intend to provide higher strategic growth targets in the coming months.

Group income continued to improve in the fourth quarter, another indication of our ability to generate strong profitability against a challenging backdrop. We continue to improve our insurance underwriting and profitability, including in the P&C segment. At the same time, we continued to grow across all asset management activities, including the Investment House and Wealth segment. The Phoenix is also expanding its credit business while reinforcing Phoenix Gama's position in SME credit space, in addition to the merger with the Phoenix Construction Finance operation in January, 2024.

Our objective is to continue to create shareholder value while leveraging our financial position continue to accelerate growth across capital-efficient activities and capturing business opportunities. Phoenix will continue to seek to distribute dividends according to our policy and to execute our renewed share buyback program.

We will continue to face challenges, and I believe in the ability of the Phoenix to act effectively and decisively to ensure future prosperity. I am proud of our group’s efforts and would like to thank our clients, employees, agents, business partners, and members of our Board of Directors for our collaborative work and achievements in 2023. I wish for the people of Israel and for our friends and partners internationally that we will know a better future."

Below are financial statement highlights:

Comprehensive income attributable to shareholders -

In 2023, comprehensive income attributable to shareholders amounted to NIS 1.1 billion, similar to 2022, reflecting a return on equity of 10.5%. The comprehensive income in 2023 was achieved despite the economic challenges and non-operating negative effect of NIS 229 million during the year (including capital market effects above and below 3% real yields, interest rate effects, and special items).

The comprehensive income attributable to shareholders in the fourth quarter of 2023 amounted to NIS 578 million, reflecting a return on equity of 24.4% for the shareholders. This compares with NIS 526 million in the corresponding period in 2022. The non-operating positive effect on the comprehensive income was NIS 211 million in the fourth quarter of 2023 (including capital markets).

Core income (net of capital market effect above and under a real return of 3%, interest rate effects and special items)

Core income was NIS 1.3 billion in 2023, representing a 12.6% core (normalized) return on equity, an increase from NIS 1.2 billion (a 11.9% core return on equity) in 2022.

Contribution to core income from insurance totaled NIS 872 million compared to NIS 790 million in 2022, and core income from asset management and credit totaled NIS 450 million compared to NIS 390 million in 2022.

Core income in the fourth quarter of 2023 totaled NIS 366 million, which reflects a 15.2% core return on equity. This compares with NIS 302 million, which reflected 13% in core return on equity in the corresponding period last year.

Equity capital and total assets under management

Shareholders equity

Equity attributable to Company’s shareholders totaled approximately NIS 10.6 billion as of December 31, 2023.

Assets under management

Total assets under management by the Group increased to NIS 433 billion as of December 31, 2023, including the acquisitions of Psagot and Epsilon during the year (NIS 455 billion including the acquisition of NIS 22 billion in active funds from Psagot, signed in 2023 and completed in March 2024).

Phoenix is meeting 2025 strategic targets ahead of schedule, is currently assessing targets and growth engines, and will publish updated plans and growth targets in the near future

Following are the main financial results of the group's operating segments:

(For more details regarding the changes in the financial results, see the Report of the Board of Directors on the State of the Corporation's Affairs and the Analyst Presentation)

Insurance

P&C

Comprehensive income before tax for the fourth quarter of 2023 amounted to NIS 443 million, compared to NIS 213 million in the corresponding period last year. Comprehensive income before tax in 2023 amounted to NIS 703 million, compared to NIS 29 million in 2022.

Health Insurance

Comprehensive income before tax for the fourth quarter of 2023 amounted to NIS 53 million, compared to NIS 172 million in the corresponding period last year. Comprehensive income before tax in 2023 amounted to NIS 348 million, compared to NIS 1.120 million in 2022.

Life Insurance and Savings

Comprehensive income before tax for the fourth quarter of 2023 amounted to NIS 46 million, compared to NIS 115 million in the corresponding period last year. Comprehensive income before tax in 2023 amounted to NIS 9 million, compared to NIS 611 million in 2022.

It is noted that as of the report publication date, unreceived variable management fees amount to NIS 219 million.

Asset Management and Credit

Retirement (Pension and Provident)

Comprehensive income before tax for the fourth quarter of 2023 amounted to NIS 9 million, compared to NIS 16 million in the corresponding period last year. Comprehensive income before tax in 2023 amounted to NIS 73 million, compared to NIS 89 million in 2022.

Investment House & Wealth

Comprehensive income before tax for the fourth quarter of 2023 amounted to NIS 65 million, compared NIS 53 million in the corresponding period last year. Comprehensive income before tax in 2023 amounted to NIS 241 million, compared to NIS 235 million in 2022.

Distribution (Agencies)

Comprehensive income before tax for the fourth quarter of 2023 amounted to NIS 66 million, compared to NIS 69 in the corresponding period last year. Comprehensive income before tax in 2023 amounted to NIS 307 million, compared to NIS 300 million in 2022.

Credit (Phoenix Gama)

Comprehensive income before tax for the fourth quarter of 2023 amounted to NIS 14 million, compared NIS 25 million in the corresponding period last year. Comprehensive income before tax in 2023 amounted to NIS 91 million, compared to NIS 73 million in 2022.

Conference Call Information

Phoenix Holdings will hold a conference call on Wednesday, March 27, 2023 at 1pm local time in Hebrew and at 5pm local time / 3pm UK / 11am ET in English, and has published dial-in details and the presentation through the Tel Aviv Stock Exchange website.

About Phoenix Holdings

Phoenix Holdings is a leading Israel-based financial, insurance, and investment group traded on the Tel Aviv Stock Exchange (TASE: PHOE). Group activities include multi-line insurance, asset management, and credit, and have demonstrated strong growth and performance across the cycle. The Phoenix serves a significant share of Israeli households with a broad set of activities and solutions across businesses and client segments. Managing over $120 billion in assets, the Phoenix accesses Israel’s vibrant and innovative economic activity through a robust investment portfolio, creating value for both clients and shareholders.

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