Clal Insurance is, above all, a company without a controlling shareholder — a unique case in the Israeli insurance industry. That distinction is foundational to the analysis. Harel is controlled by the Hamburger family (45.7%), The Phoenix by Centerbridge (PE), Menora by the Gutman family, and Migdal was previously controlled by Shlomo Eliahu and others. Clal Insurance, in contrast, has had no formal controlling shareholder since December 2019. The independent board is the de facto strategic decision-maker. This affects decision-making dynamics (less "chain of command", more deliberation), capital-allocation policy (no bias toward PE-style "fast return" requirements or family-style conservatism), and M&A potential. The company is, simultaneously, a potential acquirer and a potential acquisition target — creating a distinctive optic.
Max IT Finance is a bank-like asset inside an insurance group — the most interesting angle in Clal. Max manages a NIS 13.3B credit portfolio — larger than The Phoenix's Gama (~NIS 12.5B). It maintains a 13.0% capital adequacy ratio and a 10.2% Tier 1 ratio — banking standards. Its ratings (AA+ at S&P Maalot, Aa1 at Midroog) are among the highest in Israeli non-bank financials. About NIS 455M of Clal's 2025 Core pre-tax profit (24%) comes from an asset that is not insurance at all. An investor who looks at "Clal Insurance" as a pure insurance company misses the story. The central question to monitor is: to what extent will Max sustain a normalised ROE of ~15% across a full consumer cycle, and how often will one-off provisions (like the 2025 charge) recur?
ROE of 27.2% — how much is structural and how much is cyclical? 27.2% is exceptional relative to the company's multi-year history and well above the 12-15% target management set for 2027. The drivers are twofold: (1) positive capital markets — total investment results of NIS 17,776M in 2025 versus NIS 13,630M in 2024, a 30% increase in the market-sensitive component; (2) operational improvement in insurance — Insurance Service Result of NIS 1,298M in 2025 versus NIS 1,067M in 2024 (+22%). The first is cyclical, the second is structural. Core pre-tax profit (which partially neutralises mark-to-market) grew "only" 12% — that is the true structural pace, not the headline 47%.
Capital allocation under no controlling shareholder — the mechanism differs from Harel or The Phoenix. In a family-owned company like Harel, capital allocation is shaped by an inter-generational horizon. In a PE-owned company like The Phoenix, it is shaped by the fund's exit horizon (5-7 years). At Clal — the board decides, and its decisions should reflect the broad public-shareholder interest. The dividend declared for 2025 = NIS 400M — double the NIS 200M for 2024 and four times the NIS 100M for 2023, an aggressive uplift. Open question: will the independent board redirect additional capital to shareholder returns (buybacks), or retain surplus capital for growth and M&A?
Shareholders' equity grew 49% in two years — and that is not incidental. From NIS 7,289M at year-end 2023 to NIS 10,827M at year-end 2025 (+49%), despite cumulative dividends of NIS 300M over the period. In parallel, net CSM rose from NIS 8.8B to NIS 10.3B — accumulation of NIS 1.5B over three years. CSM, under IFRS-17, represents future profit already recognised in an insurance contract but not yet released to the income statement; it is released gradually over the contract's life. This is an "earnings bank" of existing contracts that will be released to P&L in coming years — a positive structural signal on future earnings flow, even in a flat-market environment.
Dual adoption of IFRS-17 + IFRS-9 on 1 January 2025 — complicates comparisons. The 2025 financial statements are the first under the new framework. 2024 figures have been restated. Comparison to prior years (2020-2023) requires adjustments — and several classical metrics (loss ratio, combined ratio in legacy format) are no longer published. Instead, Insurance Service Result, CSM, and Risk Adjustment appear. For analysts tracking long-term history, any traditional "5-year trend" analysis is methodologically problematic — the base has changed. Comparisons to peers also require care, because each undertook the transition with potentially different assumptions.
What can go wrong — three angles. First: capital-markets cycle — 2025 inflates profit through investment results; a materially negative market in 2026 would compress ROE significantly. Second: credit quality at Max — the 2025 special provision reduced reported Max profit from NIS 318M (normalised) to NIS 187M (reported). If such provisions recur, the expected ~15% Max ROE would fail. Third: regulatory change — Clal has a triple exposure: insurance regulation, credit-card regulation, and pension/provident management-fee regulation. Any of the three arenas can reshape the profit mix.
Board succession risk — a topic unique to companies without a controlling shareholder. In a family-owned company, the risk is in inter-generational transition. In a company without a controlling shareholder, the risk is in board rotation — an independent director leaves, a new one joins, and strategy shifts. There is no "anchor" controlling shareholder to stabilise long-term direction. At Clal, Haim Samet as Chairman and Yoram Naveh as CEO are the stabilising figures — but they serve under an 8-member board (2 external), and board composition can change at any AGM. This warrants ongoing monitoring.
The difference between surface-level analysis and professional thinking often lies in the variables that are not immediately visible.
The difference between surface-level analysis and professional thinking often lies in the variables that are not immediately visible.
