11 POLICY Special edition 2023 was 8.57 billion NIS out of 23.57 billion NIS - which constitutes 36.4%). This indicates a certain reduction in the participation rates (1.8%) despite the nominal increase of 633 million NIS in the production that was transferred to the reinsurers. There are two main reasons that explain this contrast: A significant increase in the companies’ production in all fields, mainly in property and other insurances, that about 70% of its production was transferred to the reinsurers (the increase is from 3.87 billion NIS to 4.40 billion NIS – an increase of 530 million NIS in the secondary production), and in the field of liability insurances - there was an increase of 44.7% from 1.82 billion NIS to 2.02 billion NIS, meaning an increase of 202 million NIS in the secondary production. On the other hand, there was an offset that derives from a reduction in the secondary production of the compulsory motor insurances (297 million NIS), which derives from a strategic decision of the reinsurers to reduce their participation and because of their desire to change the contractual terms with the Israeli insurers following large losses in the recent years. An increase in the production of the (relatively) new companies that have many reinsurances (also in the field of the compulsory motor insurance), such as weSure and Libra, where the reinsurance constitutes a significant part of the insurance (above 65% of the gross insurance), as part of the policy (and need) of expansion while protecting the equity (we are dealing in 2022 with an increase of about 100 million NIS from 161 million NIS to 261 million NIS that its main effect was in the increase in comprehensive motor insurance). As for the profitability of the reinsurers: 2022 generated for the reinsurers a profit of 1,131.8 million NIS compared to a loss of 723.7 million NIS in 2021- an improvement of 1,855.6 million NIS and an (alleged) transfer to a profit. However, when you neutralize the influence of the property and other insurance, the change is even more dramatic: and in this case we transfer from a loss of 1.982 billion NIS to a profit of 54.9 million NIS, an improvement of 2.036 billion NIS, but we are closer to a balance (than to a profit). In principle, the profit that is recorded in the property and other insurances is distorted because of the large effect of the earthquake premium that is mainly a profit, since there was no earthquake (and let’s hope there won’t be one). Therefore, let’s refer to this field separately. Another distortion that exists in the liability insurances and in the property and other insurances derives from facultative insurances of special risks, which may present large losses or profits that aren’t within the regular contracts, and this can distort the results. Therefore, the results of the reinsurers in the fields of the compulsory motor insurance and comprehensive motor insurance better reflect the true situation, which we must learn to analyze. Compulsory Motor Insurance In 2022 the field of compulsory motor insurance, that its secondary production amounted to 1.788 billion NIS (30.1% of the gross premium) and it endured a minimal loss of 46.9 million NIS, performed in comparison to 2021 (when the production was 2.085 billion NIS, which was 38.9% of the gross premium) a significant positive change with respect to the reinsurers. The field recorded in 2021 a loss of 1.019 billion NIS compared to the loss of 46.9 million NIS in 2022, which is an improvement of 972 million NIS, but still a loss, while the secondary production decreased by 297 million NIS (8.8% - which reflects a The Production and Profitability of Reinsurers in 2021 and 2022 (in Millions of NIS) Compulsory Motor Insurance Comprehensive Motor Insurance Liability Insurance 2022 2021 2022 2021 2022 2021 Production 5,943 5,365 9,899 8,472 5,943 5,365 Reinsurance 1,788 2,086 988 791 1,788 2,086 30% 39% 10% 9% 30% 39% Change -297 -9% 197 1% -297 -9% The Insurance Companies’ Profit -199 134 -1,545 -23 -199 134 The Reinsurers’ Profit -47 -1,019 -459 -168 -47 -1,019 Total of Motor Insurance and Liability Insurance Property and Other Insurance Total 2022 2021 2022 2021 2022 2021 Production 20,375 17,997 6,263 5,578 26,637 23,575 Reinsurance 4,801 4,700 4,405 3,873 9,206 8,573 24% 26% 70% 69% 35% 36% Change 101 -3% 531 1% 633 -2% The Insurance Companies’ Profit -1,083 593 514 716 -569 1,308 The Reinsurers’ Profit 57 -1,982 1,077 1,258 1,134 -723 Continued on the next page
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