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Insurance companies obtained a 14.92 percent gross yield on profit-sharing investments for clients in 2005, up from 9.61% the previous year, the Finance Ministry said this week.
The companies' gross yield was about two percentage points higher than that achieved by provident funds, but insurance companies also charged, proportionally, four-times on the assets than provident funds did in management fees, the Ministry noted.
"It is important to remember that the amount of money managed by provident funds is much greater than the amount of savings assets managed in the insurance companies' profit-sharing track," the Ministry said.
Provident funds managed NIS 237 billion at the end of 2005, while profit-sharing investments held by the insurance companies totalled NIS 71.1b. Yields on the assets came to NIS 8.2b. for the whole of the year. On average, insurance companies charged 2.42% of the investments' value in management fees, totalling NIS 1.3b. in 2005.
Privately run provident funds charged 1.49% in management fees, significantly more than the bulk of provident funds run by the banks, which average about 0.6%, the Ministry noted.
Among insurance companies, The Magen obtained the highest yield in 2005 with 15.56%, and charged 0.28% in management fees in December. Bituah Yashir earned the lowest yield, 8.72%, but charged only 0.13%.
Insurance companies changed the composition of investments in the course of 2005, the central bank noted.
While in 2004 investments were concentrated in government bonds, in 2005 three central investment channels emerged as low-risk government bonds were joined by stocks and bonds issued by private concerns. Nonetheless, investment in these three types accounted for 80% of assets held in both 2004 and 2005.
Additionally, the companies' investments abroad rose to 15% of assets held, or NIS 10.7b., in 2005, from 10%, or NIS 5.8b., in 2004 and 9.8%, or NIS 4.9b., in 2003. Investment in foreign stocks, the leading category of assets held abroad, rose to NIS 3.75b. from NIS 1.71b. in 2004, bringing its weight among investments abroad to 35% from 29%.