The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) reported the highest insurance profit in Israel for 2013, despite being only the fourth largest company. The company's good results stood out in a number of areas, including liability insurance, a competitive sector that is not ordinarily a major source of profit in the insurance industry.

Insurance market sources inform "Globes" that the Ministry of Finance capital markets, insurance, and savings division has been monitoring the company recently, focusing on last year's change by the company in its liability insurance reserves and the high profit Phoenix reported in this sub-sector. At the same time, it cannot be ruled out that the matter is being addressed as part of a routine audit taking place in the company. Phoenix said in response that it "does not comment on professional matters that it is discussing with the Ministry of Finance."

"Globes" has already referred to Phoenix's high profit in liability insurance as "disassociated from what is going on in the other companies active in the subsector." Phoenix's 2013 pre-tax profit on liability insurance totaled NIS 166 million. A large proportion, although not all, of this is attributable to actuarial estimates used by the company in these sub-sectors, which led to the release of profits from its reserves. Incidentally, Phoenix reported total pre-tax profits on liability insurance of NIS 43 million and NIS 20 million in 2012 and 2011, respectively.

In contrast to Phoenix's exceptional profit, which the company attributed to better portfolio management than the other companies, more than half the companies competing with Phoenix reported losses on their liability insurance. Even the other companies that did report a profit in this area had much more modest profits; none of them even approached Phoenix's profit.

The second highest liability insurance profit in 2013 was reported by Ayalon Holding Ltd. (TASE: AYAL), whose total pre-tax profit in this area was NIS 12 million. The other companies reported either a few million shekels in profit or a loss.

At the same time, even excluding this substantial profit of tens of millions of shekels resulting from the release of reserves, Phoenix's 2013 results were still strong, especially in relation to its size (Phoenix is smaller than Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS)).

Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2014

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