Migdal net profit more than doubles in Q3

In the three months ending on September 30, net profit soared to NIS 233m. from NIS 106m. in the same period a year earlier.

midgal insurance 88 (photo credit: )
midgal insurance 88
(photo credit: )
Migdal Insurance and Financial Holdings' third-quarter net profit more than doubled to record levels, boosted by a three-fold increase in profit at its life insurance operations, the company said on Tuesday. It also said it was buying 50.9% of Makefet Pension Fund from BV Famfox Amsterdam Investments for a minimum of NIS 98m., thereby increasing its stake to 100%. In the three months ending on September 30, net profit soared to NIS 233 million from NIS 106m. in the same period a year earlier. Total premiums fell to NIS 4.78b. from NIS4.82b., although assets under management rose to NIS 54.4b. from NIS 44b. Profit from Migdal's insurance operations jumped to NIS 329m. from NIS 133m., as profit from life insurance and long-term savings surged to NIS 271m. from NIS 89m., while income from general insurance rose to NIS 58m. from NIS 45m. Migdal attributed the increase in profits from its life insurance business to an increase in revenue from investments, which stemmed from improved returns and an expansion of its portfolio of assets. Nine-month net profit rose to NIS 487m. from NIS 357m. as profit from general insurance rose 29% to NIS 161m. Following the report, investment house IBI raised its recommendation to "Buy" from "Accumulate" and increased its price target to NIS 7.10 from NIS 6.60. Shares closed up 1.5% at NIS 608.30 on the Tel Aviv Stock Exchange. In a note to investors, IBI said, "The third-quarter results present an improvement in all its sectors. The progress in general insurance was particularly noteworthy and was achieved against a background of a difficult business environment." Migdal is consolidating its holdings in Makefet as part of the reorganization of its pensions operations whereby it is merging its four units and their funds. Famfox is an affiliate of Italian insurance company Assicurazioni Generali, which holds 60% of Migdal. The acquisition adds to the proposed purchase of Dikla Mutual Funds from First International Bank of Israel for NIS 220m. Migdal is exploiting the July passage of the Bachar Law, which obligates the banks to sell their mutual and provident funds interests, to expand its activities in this sector. However, it this week failed in an attempt to buy Bank Leumi's wholly-owned Psagot Ofek unit. In another transaction, Migdal's 50%-owned unit Migdal Capital Markets is buying the operations and goodwill of Afikim Mutual Funds Management for NIS 165m. up front and an extra NIS 88m. over seven years, depending on the achievement of certain targets. Afikim is controlled by Yacov Weinstein and manages assets worth NIS 3.02b. Migdal recently sold 50% of its capital markets unit to Bear Stearns Asset Management for $11.3m.