37 POLICY Special edition 2023 The Company Gross Premiums Investment Profits The Profit when the Investment is Neutralized Total Comprehensive Income Harel 3,693 612 -554 58 Menorah Holdings 3,391 373 -81 291 The Phoenix 3,155 448 37 485 Clal Insurance 2,819 266 -173 93 Ayalon 2,046 271 -328 -57 Migdal 1,872 379 -304 76 Bituach Yashir 1,711 109 55 164 Shlomo 1,666 124 47 170 Hacshara 1,177 262 -236 26 AIG 935 37 -49 -12 Bituach Haklai 496 29 -4 25 Wesure 310 14 1 15 Libra 304 0 5 6 Total 23,575 2,923 -1,584 1,340 The Pool 414 -384 The Outcomes in the Insurance Industry in 2021 according to Companies (in millions of NIS) and a small part of it derives from the underwriting profit. Even though this field has dropped to the second place in the contribution to profitability, it is still a haven of stability in the general insurance with respect to its contribution to the profitability. The production rose much above the growth rate, and this proves that the market returned to its full activity following the Coronavirus crisis. Liabilities The field of liabilities mainly includes four sub-fields: professional liability, product liability, third party liability and employer liability. The production in this field reached in 2022 4.532 billion NIS and a record profit of 661.2 million NIS (in 2021 the production was 4.159 billion NIS and the profit was 501.8 million NIS). This is an increase of 373.4 million NIS in the production (9%) and an increase of 159.4 million NIS (31.8%) in the comprehensive profitability, and this field rose to the first place in the contribution to the profitability. The profitability mainly derived in 2021 from profits in the capital market and from a change (downwards) in the interest curve, which moderated the profit rate. In 2022 the trend changed in the opposite direction and the influence of the interest curve and other factors (that part of them are one-time factors) was stronger on the debit because of the reduction of the insurance liabilities compared to the large erosion in the profits of the capital market. In addition, the underwriting profitability of the professional liability and product liability has intensified (which included a secondary effect), inter alia, because of an increase in the insurance rate after and following the Coronavirus. Despite the exceptional outcome in 2022 we are still far from solving the underwriting problems in the employer liability and third-party liability. Summary 2022 was an exceptional year in the conduct of the general insurances. This year the factors of a problematic capital market (except in Q4 2022) and a problematic underwriting reality, which reached in 2022 a new negative record in the field of comprehensive motor insurance, have combined together and it seemed that we were heading to a catastrophic year with respect to the outcome. The rising interest rate moderated the loss (because of a change in the interest curve), and it resulted in the fact that this exceptional year ended with a particularly large loss (569 million NIS), which is definitely not a catastrophic loss. The effect of the interest created a historic new also because the field of liabilities reached the first place in the contribution to the profitability. The underwriting change, mainly in the field of the comprehensive motor insurance, which includes interest raises, may positively (and gradually) influence towards 2023, and it seems that we are beyond the negative record. The change will be gradual and part of the companies will continue to present underwriting losses also in the first quarters of 2023. We hope that 2023 will be a better year and return the profitability to the sector of the general insurance.
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