After a rise of almost 190% in its share price in the past twelve months, and 98% for the year to date, Clal Insurance Enterprise Holdings (TASE: CLIS) has decided to buy 1% of rival insurance company Harel Insurance Investments and Financial Services (TASE: HARL) for NIS 200 million. The seller is the Hamburger family, the controlling shareholder in Harel, whose stake in the company will fall to 45.3%.
As far as is known, the Hamburger family, which at the end of 2024 sold 2.5% of Harel to financial institutions for NIS 250 million, does not at present plan to sell more shares. Does the insurance sector have further to rise? At least Clal Insurance apparently believes that it does.
Today, following the announcement of the deal by Clal Insurance, insurance stocks rose strongly on the Tel Aviv Stock Exchange, and the sector index is up some 2%. The entire sector continues to benefit from the sharp rises on the local stock market in the past year. Insurance companies are among the main beneficiaries of a rising market for several reasons. The first is that they are an option on the market itself, since they gain on their nostro portfolios, that is, the securities and other assets they hold for themselves, and also from the rise in the values of the portfolios they manage for their customers and the management fees they charge.
In addition, the new accounting standard IFRS 17 means that insurance companies can recognize future profits in the various insurance categories earlier, which has boosted their results. They have also benefitted from a rise in premiums, especially for vehicle insurance, in recent years.
Large purchases by insurance companies of shares in other companies in the sector are rare, because they are already invested in one another. Without permission from the Capital Markets, Insurance and Savings Authority, an insurance company is not allowed to hold more than 5% of another insurance company. With special permission, the limit rises to 7.5%.
In late 2024, Shlomo Eliahu, controlling shareholder in Migdal Insurance and Financial Holdings (TASE: MGDL) sold a 6% stake in the company for NIS 412 million, and gave the financial institutions an option to buy a further 6.16% for NIS 420 million.
The institutions exercised the option at the end of June this year. In the middle of last year, Eliahu sold Migdal shares to Altshuler Shaham to the tune of NIS 163 million, so that within a year he has dropped from a holding of 64.3% in the company to 48.6%, in exchange for a total of some NIS 1 billion.
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Published by Globes, Israel business news – en.globes.co.il – on July 23, 2025.
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