Abstract
As a relatively developed country with a sophisticated financial services
sector and a favourable
regulatory regime, Israel should be an attractive
market for the world’s insurers. Recent growth has been
steady, if
not spectacular. There are no legal barriers to participation by foreign
insurers: indeed, the local
subsidiary of Italy’s Generali is one of
the five largest players in both the non-life and the life segments.
AIG
is the other major international player. Overall, Israel is currently
producing one of the highest
premiums per capita in the world.
The
sector is relatively crowded with major players, however. After a long wave of
mergers and
acquisitions, both the non-life and the life segments are
dominated by five locally listed composite
insurers. Some – such as
Clal Insurance Pension & Finance Group, which recently bought the
USA’s
Guard Financial – have expanded by buying niche insurers
overseas. In general, though, the five leaders –
Clal, Harel,
Phoenix Insurance Company, Menorah Mivtachim and Migdal Insurance and
Finance
Holdings (the Generali subsidiary) – have little room to
expand within Israel. Growth in premiums has
thus become stagnant, a
situation that is not aided by the recent world economic downturn.
Operating
profit has also been flat, and profits were down in 2007 from
2006. It is unlikely that additional
international players will be seeking
to enter the market.
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