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Investing.com -- Barclays initiated coverage on Harel Insurance Investments & Financial Services Ltd. with an “overweight” rating and a price target of ILS 97, indicating about 30% upside from the current price of ILS 73.80 as of June 16.
The brokerage flagged Harel’s dominant market position, strong financials, and growth strategy across its core insurance and expanding financial services segments.
Harel is Israel’s largest multi-line insurer by premiums and deposits, holding 36% market share in health insurance and 20% in life insurance.
It manages ILS 514 billion in assets, ranking as the country’s second-largest asset manager.
Barclays said Harel’s exposure to Israel’s strong economy, supported by favorable demographics and mandatory savings schemes.
Between 2020 and 2024, Harel achieved a 9% CAGR in premiums and deposits, reaching ILS 15.4 billion in total premiums and 15% year-over-year growth in pension deposits in 2024.
Its solvency ratio stood at 182% in Q1 2025, well above the industry average of 157%. Harel targets ILS 1.9-2.1 billion in comprehensive income and 18-19% ROE by 2026.
Barclays projects slightly higher results, estimating ILS 2.3 billion in net income and 19.4% ROE for FY26.
The credit segment contributed ILS 249m to pre-tax profit in 2024. Recent acquisitions, including Gamla Harel Residential Real Estate Ltd. and a memorandum with Pama for a 30% stake, aim to strengthen its real estate developer financing and vehicle loan businesses. Barclays forecasts credit segment pre-tax profit of ILS 299m in 2026.
Asset management, encompassing financial services, pension, and provident funds, delivered ILS 100m in pre-tax profit in 2024.
Barclays expects this to increase to ILS 321m by 2026, with ILS 126m from financial services and ILS 195m from pension and provident funds.
The pension market posted 23% growth in 2024, while provident funds expanded 11%.
The property and casualty segment grew premiums 3% year-over-year in Q1 2025, driven by 6% growth in motor property and 3% in other property.
The health segment saw 5% premium growth and 8% revenue growth year-over-year in Q1 2025. Harel maintains leading positions in both segments.
Harel’s shares trade at 6.6x FY26 estimated earnings, below the European sector average of 11.2x. The company upholds a minimum 30% dividend payout policy and has authorized ILS 200m in share repurchases since November 2024.
Despite the ongoing conflict with Iran, Barclays noted minimal operational or financial impact on Harel, as most war-related damages are not covered by insurance policies, except life insurance.