Periodic Report for 2005

Transcription

1 Oded Feingersh The land of Israel, the land of milk and flower honey, the land of snakes and scorpions, the land of plains and mountains touching the sky, where the river of Eden that turns and surrounds and waters the whole land. The land of colors and fragrances, of believers and amulet writers, of righteous and villains, the land of a thousand faces and smelling of roses, spices and magic. The painter was born in Jerusalem in He graduated from Bezalel Academy of Art & Design, Jerusalem. Throughout his rich and diversified painting career, Oded Feingersh has won renowned artistic prizes both in Paris and Tel Aviv, introducing a single exhibition in the Tel Aviv Museum and Herzliya Museum. His unique works of art are some of the most esteemed art collections both in Israel and around the world. He also prepares stage designs for ballets in the Jerusalem Festival and Israel Festival. Oded is also the curator of art collections for the Royal Beach Hotel, Eilat; the Hyatt Hotel, Dead Sea; David Intercontinental, Tel Aviv, and others.

2 Periodic Report for 2005

3 Table of Contents Chapter 1 Corporation Businesses Description Chapter 2 BoD Report on the Situation of the Corporation Businesses Chapter 3 Financial Statements Chapter 4 Additional Data on the Corporation Chapter 5 Appendices Nahlaot Jerusalem

4 Migdal Insurance & Financial Holdings Ltd. Company number Address: 26,Saadia Ga'on Street, Tel Aviv Telephone: , Facsimile: Website:

5 Houses in Jerusalem

6 Board of Directors Aharon Fogel, Chairman Rachel Adatto Sergio Balbinot Amir Barnea I. Amihud Ben-Porath Amerigo Borrini (retired on June 26th, 2005) Francesco Bosatra Mel Gerard Carvill (retired on April 14th, 2005) Izzy Cohen (serves also as Company CEO) Alessandro Corsi Ran Croll Rony Feinstein Zeev Nahari Samuel Penchas Eithan Raff Ori Slonim Dan Suesskind Valter Trevisani

7 Houses in Rosh Pina

8 Words from the CEO and the Chairman The business year 2005 was a year of reforms in the insurance, long term savings (LTS) and financial services markets in Israel. Migdal Group prepared in advance to turn the challenges embedded in these changes, the result of Bachar Legislation and regulatory changes, into business opportunities. Migdal s business arrays completed their deployment in the changing business environment including the banks entry into the pensionary savings market. Parallel to Migdal becoming a leading factor in the pension area, a process of merging the Group s new pension funds began; Tnufa, Teutza and Yozma into the pension fund New Makefet. The service levels to individual customers, employers and agents, were adapted to the reforms and to the provisions of the Bachar Legislation. Following an ever growing demand for annuity products over lump-sum products, during 2005, Migdal has focused on developing innovative annuity savings and insurance products, which are customized to the changing preferences of the public, as well as regulation, constituting a milestone in the pensionary savings and insurance sector in Israel; The development of the New Migdalor plan was completed annuity insurance with a unique savings mechanism, providing consistent customers with management fees benefits, while ensuring the real value, at the very least, of the accrued savings. The New Life plan was launched, managing the moneys accrued in the lump sum channels for third agers, while ensuring a life time annuity. In 2005, for the second consecutive year, Migdal recorded record profits. The Group s net profit reached about NIS 556 million, vs. NIS 534 million net profit in 2004, which also included, it should be mentioned, a one-time profit from BLL shares. Upon neutralizing this one-time profit, Migdal s profits in 2005 dramatically increased by 39%, vs. the profit yielded in 2004, (without the BLL shares) of NIS 399 million. Migdal s profits from the Group s insurance and financial services areas of activity increased in 2005 to NIS 844 million vs. NIS 627 million in 2004, while the profits from the life assurance and LTS areas of activity Migdal s main areas of activity, 2005 showed an increase of 49% to NIS 670 million vs. NIS 450 million in A dramatic increase was recorded in the new sales of life assurance and pension funds. The life assurance reserves increased by 5% to NIS 42.3 billion, while the profit participating policies portfolio reserves showed an increase of 21.5% to NIS 25.3 billion. The new pension fund reserves increased by 32% to 5% to NIS 7.3 billion. Consequently, Migdal is strengthening its status, holding a market share of more than 30% of life assurances and new pension funds in Israel. This year, too, Migdal maintained the lowest cancellation rate in the life assurance portfolio, similar to last year, while significantly reducing the surrender rate of reserves, from 3.8% in 2004 to only 3.1% in 2005.

9 Houses in Jerusalem

10 Words from the CEO and the Chairman - Continued In the report year, Migdal s profit participating policies insureds benefited from a net real yield of 9.6%. The New Makefet pension fund, owned by the Group, achieved the highest yield for free investments among the large pension funds (gross nominal 15.85%) and the pension fund Tnufa won first place in yields among the small pension funds (gross nominal 12.45%). The optimization of yields to the insureds takes place through constant management of the risk levels out of full awareness to the liability for the money of the public investing and saving in Migdal for the long run. In the general insurance business results, in 2005, Migdal recorded a profit of NIS 170 million vs. NIS 166 million last year, while conducting cautious underwriting throughout the year. During 2005, Migdal has significantly strengthened the financial services array managed by it, while its overall managed assets increased by 50%, from NIS 3.5 billion at the end of 2004 to NIS 5.24 billion at the end of The strategic partnership with the US Investments Bank, Bear Stearns, has been extended, and it was agreed in principle to acquire the activity of Afikim and Dikla mutual funds. Completing these transactions would have increased the total managed assets in this area to NIS 12.1 billion. Migdal continues to foster the area of financial services to customers, while being constantly alert to the reforms and processes characterizing the market. The total managed assets of the Group namely, insurance, pension and financial services have reached about NIS billion at the end of 2005 an increase of 19.8% vs. NIS billion in Parallel to Migdal s business activity, the Group and its employees are proud to make further contributions to the Israeli society. This year, too, we have had the privilege to take part through resources of management, time and money - in Tlalim Association s incredible support of pupils who are sick or victims of terrorist attacks, who are contained to their beds and wheelchairs, helping severely disabled children and adolescents to adjust to the community. The Group, its employees and agents have contributed, among other things, to associations mainly assisting underprivileged youngsters, such as Elem and Gag VeGam Associations. Migdal is helping students who come from the periphery in leading a social change under Atidim Association and naturally, continues to proudly sponsor the basketball team, Hapoel Migdal Jerusalem, as well as the Israeli judoka, Arik Ze'evi. Migdal is exiting 2005 well prepared to future challenges. We would like to thank the members of the Board of Directors, the Group's managers and employees, as well as its agents, for their significant contribution to strengthen and maintain Migdal Group's position as the leading factor in the areas of insurance, pension and finance in Israel, this year and in the future. Respectfully, Aharon Fogel Chairman of the Board of Directors Izzy Cohen CEO

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12 Migdal Insurance and Financial Holdings Ltd. Migdal Group is the leading insurance and finance company in Israel. For over 70 years, Migdal has been providing a wide variety of insurance, pension and financial assets services products. Migdal and its subsidiaries serve over one million individual and business customers. Migdal Insurance Company was founded in 1934, in Jerusalem, by families of businessmen who operated under the mandate, a group of Jewish families from Alexandria and the Italian insurance company Generali. The name Migdal was given to the company by the national poet Haim Nachman Bialik, who thought of a name that would express strength and security. The poet Shaul Tchernichovsky who served as the Company's first physician. During the forties, the bank which later became Bank Leumi le-israel joined the Company s shareholders. Ever since then, Generali and Bank Leumi maintain their business partnership. Migdal is currently held by the public company Migdal Insurance and Financial Holdings Ltd., whose shareholders as of December 2005 are: Generali approx. 60%, Bank Leumi approx. 20% and the public approx. 20%. Since its inception, Migdal has been committed to innovation and creativity in the development of insurance products. Among other things, Migdal was the first company to launch managers' insurance. Migdal Group manages approx. 30% of total life assurance and new pension funds in Israel. Migdal is also the first insurance company that established a non-histadrut pension fund. In 2004, Migdal, together with foreign investors, acquired the pension fund New Makefet and completed the acquisition of the private pension fund Teutza. Upon becoming the leading entity in the area of pension, the merging of the new pension funds in the Group began: Tnufa, Teutza and New Yozma into New Makefet pension fund. Along with Migdal s reputation in the life assurance area, the Company deals with a variety of general insurance lines for corporations and small businesses, property insurance, health etc. Migdal also holds insurance and pension arrangements agencies, agent houses and companies which manage investments, credit and real estate. Migdal Capital Markets serves as the Group's financial services activity: investment portfolio management, mutual funds management, execution services on the Stock Exchange, consulting, accompaniment and underwriting services for IPOs. Migdal s Chairman of the Board of Directors is Mr. Aharon Fogel. In the past, Mr. Fogel served as General Manager of the Ministry of Finance, Chairman and consultant to several companies, and now he also serves as the Chairman of the advisory committee to the Bank of Israel. Migdal Group s CEO is Mr. Izzy Cohen, who also serves as a member of the Board of Directors in Migdal and its subsidiaries. During the past 30 years in management positions in the Group, he played a significant role in outlining the Group s unique form of activity and achievements. The integration between all the Group's divisions and its control in the insurance and finances areas have enabled its customers to benefit from reliable and advanced services over the years, both through more than 1,500 insurance agents and agencies working with the Group, and with the assistance of Migdal at Your Service - an advanced Call Center, which serves all insureds. Within Migdal s commitment towards its customers, the Company invests many resources in accompanying and providing consulting to the customers and survivors whose insurance plans have terminated or matured.

13 Lower Galilee

14 Ï Ó For the Good of the Community We, at Migdal, consider it as our human and civil duty to help and contribute! We decided, as a strategy, to take an active part in helping children and youth in need, with an emphasis on lower socio-economic strata. The Wheel House An association helping children and teenagers suffering from muscular dystrophy, CP and other severe physical disabilities. The main goal of this association is to integrate disabled persons in the community, as active contributing members. Currently 300 teenagers and adults are supported by the association in four centers. They enjoy social activities and weekends, and some even join the job market in spite of physical handicaps. ˆÓ Ó Tlalim Association An association providing scholastic support to pupils who are absent from school for long periods. The association helps approx. 3,000 children. We support this association for the fourth year in a row. A skilled team of teachers, educators, and volunteers visit the children at home or in the hospital, and thanks to the virtual campus and private lessons, help those children learn and succeed. Our support of Tlalim increased the public s awareness to this important activity. In addition, this year the association won the President s volunteer award. Atidim Association An association aiming at reducing the gaps in the Israeli society, through education and enabling high-potential adolescents to lead change processes in the periphery. Atidim operates a variety of unique programs and plans from the age of 13 to 30, from high school, the academic reserve in the IDF and first degrees in the university and employment, aimed at providing high education to these youngsters. Gav VeGam Association An association taking care of homeless children and teen agers in Tel Aviv, who left their homes or were forced to leave. The association provides first aid for several months until they are referred to an adequate setting. Right now the association handles 250 children and adolescents per year. Elem Association An association for youth in risk and distress. The Group focuses on helping coordinators who help young immigrants from the ex-soviet Union and Ethiopia. Our contribution helps financing activities such as "Hafuch al hafuch" centers and night patrols, which provide support, comfort, and a link back into the normal society from which they have despaired. Promoting Sports in Israel Migdal continues to accompany the Israeli Judoka, Arik Ze'evi, the bronze medalist in Athens Olympic games in 2004 on his way to the 2008 Olympic Games to be held in Beijing, and Hapoel Migdal Jerusalem,

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16 Migdal Insurance & Financial Holdings Ltd. Migdal Investments Management 2001 Ltd. ππæ Migdal Capital Markets (1965) Ltd. Æ Migdal Real Estate Holdings Ltd. Migdal Eshkol Finansim B.M. Migdal Platinum Provident Ltd. Meqarqee Merkaz Ltd. ±µ Migdal Credit Services Ltd. Migdal Asset & Securities Management (1998) Ltd. Givat Savyon Ltd. ±µ Migdal Leasing Ltd. C.S.C (1983) Management and Trusteeship Ltd. Nichsei Carmel B.M. ±µæ Migdal Financial Services Ltd. The Central Stock Exchange Services (N.E.) Ltd. Migdal Alumim Investment House Ltd. Ƶ µ Avgad Yahalom Management & Services Ltd. Europ Assistance Israel Ltd. Migdal Trust Funds Ltd. µ Data Car Israel Ltd. µ µπ Migdal Forex Matach Services Ltd. Migdal Business Underwriting & Promotion Ltd. Shamgad Claims Management Company Ltd. T.I.P - Planning and Pension Consulting Insurance Agency (1996) Ltd. Æ Tvuna Life Assurance Agency (1998) Ltd. Yeud Life Assurance Agency (1999) Ltd. Mivtach Granot Assurance Agency (2000) Ltd. Migdal P.E. Ltd. Mivtach Gonen Pension Insurance Life Assurance Agency (2002) Ltd. µ

17 The Structure of the Group 31 December 2005 The Magen Insurance Company Ltd. Maestro Ltd. Migdal Insurance Co. Ltd. Migdal Management of Provident Funds Ltd. Migdal Holdings and Management of Insurance Agencies Ltd. Hamagen Properties Ltd. Pel-Hamagen House Ltd. Proline Exclusive Ltd. Mivtach Simon Agencies Management Ltd. Æ ± Yosef Fridman Insurance Agency (1986) Ltd. Gilat D.B.S Ltd. Ashmoret Tihona Ltd. µ Mivtach Simon Rubinstein Mor (Insurance Agency) 2000 Ltd. Ʊ New Makefet Providence Fund Ltd. Makefet Financial Services - Insurance Agency (1998) Ltd. Mivtach Rom Insurance Agency L.P. Mivtach - Peltours Insurance Agency (2002) Ltd. µµ µ µ Yozma Pension Fund for Self Employed Ltd. Migdal Pension Funds Management Ltd. Teutza Tesua Ve Sherut Ltd. New-Makefet Pension and Benefit Funds Management Ltd. Mivtach Simon Insurance Agencies Ltd. Peltours Insurance Agencies Ltd. Municipalit Insurance Agency (2000) Ltd. Leibowitz & Streichman Consultants (1998) Ltd. Ihud - Peltours Diamonds Insurance Agency (2002) Ltd. Amit Insurance Agencies Ltd. µ Æπ Æ µ π Shaham Insurance Agencies (1977) Ltd. Anglo Saxson Real Estate Agency (Israel 1992) Ltd. Rav Ofek Ltd. Ihud Insurance Agencies Ltd. Ihud-David Berman Insurance Agency Ltd. Leumi Insurance Services (U.K.) Ltd. (in voluntary liquidation) Freddie & Ilan Bek Insurance Agency Ltd. Sagi Yogev Assurance Agencies (1988) Ltd. µ Reshef Insurance Agency 2004 Ltd. Æ π µ µ±