The American culture of the investment funds Centerbridge and Geltin Point, which acquired control of the insurance group The Phoenix Towards the end of 2019, it is giving its signals in the conduct of Group E.Insurance Israel, which becomes the first major insurance group to announce a policy Dividend .
In fact, the move announced today by the insurance group, managed by CEO Eyal Ben-Simon and chaired by Bnei Gabay, is part of a chain of moves led by the company and its controlling shareholders, in order to create great interest among investors in the capital market. It began with the hiring of the services of the international consulting firm McKinsey, which examined the Israeli company, and continued with a plan to repurchase the company’s shares – both by its stakeholders, launching an options plan for executives and beyond the reporting format in English, different from the local insurance industry.
Today, Phoenix Holdings, which is traded on the stock exchange at a value of NIS 4.63 billion, after climbing 14.5% since the beginning of the current month, announced a new dividend distribution policy for the group, which will distribute “an annual dividend of not less than 30% of profit.”
Meanwhile, the company also announced the adoption of a dividend policy in the central subsidiary – Phoenix Insurance, according to which “starting in 2021, Phoenix Insurance intends to distribute an annual dividend at a rate of between 30% and 50% of Phoenix Insurance’s total profit distributable according to the annual consolidated financial statements. Of Phoenix Insurance, as long as Phoenix Insurance meets the minimum targets for a solvency-based economic solvency ratio 2 “.
With the clear message The Phoenix Holdings that “the dividend distribution by the Company may be affected, inter alia, by Phoenix Insurance’s ability to distribute actual dividends.” The aforesaid reservation regarding the obligation to distribute dividends from the insurance company stems from the strict regulation based on Phoenix Insurance, and from the need to meet strict capital targets. In this context, Phoenix stated today that Phoenix Insurance must also build capital and reach an economic solvency ratio target in the range of 150% to 170% dividend distribution.
However, for the Phoenix Holdings Group, it has the ability to distribute dividends at a rate of 30% (including self-purchases) on a relatively regular basis, because it has a number of subsidiaries beyond Phoenix Insurance, including insurance agencies, provident and pension companies, Excellence and Gamma. Thus, unlike other insurance groups, the Phoenix Group has less dependence on the Phoenix Dividend Insurance Company, which is subject to the solvency provisions. The Phoenix stock was trading in the hours after the announcement in slight declines, similar to the trend in the industry.
Bnei Gabay, chairman of the board of Phoenix Holdings, said today that “the company has adopted a dividend distribution policy and thus seeks to signal to shareholders that the company can distribute a regular and stable dividend at a rate of at least 30% of the company’s profits. This indicates the financial strength and liquidity of the group’s companies. “He added that” the group’s strength is also reflected in the solvency ratio of 165% that Phoenix Insurance published this morning. ”
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