Stock market today: S&P 500 hits fresh record close on stronger economic growth
Investing.com -- Moody’s Ratings has confirmed the Baa1 insurance financial strength ratings (IFSRs) of The Phoenix Insurance Company Ltd., also known as Phoenix Insurance. The ratings agency has also shifted the insurer’s outlook to stable from its previously negative status. Phoenix Insurance is a key insurance operating subsidiary of Phoenix Financial Ltd., a diversified financial services group based in Israel.
The change in outlook to stable is attributed to Phoenix Insurance’s substantial capital and liquidity buffers, along with its ongoing strong performance. These factors position it to withstand potential further stress in the operating environment, including possibly a one-notch downgrade of the sovereign debt rating. Additionally, the Group’s significant non-insurance activities provide a source of extra cashflows that could support the insurer’s solvency in times of stress.
The revised outlook also reflects Moody’s updated expectations for Israel’s real GDP growth, which is expected to bolster business growth for the Group and maintain stability in asset prices, despite fiscal challenges and ongoing pressure on government finances.
The insurer’s IFSR reflects its A2 standalone credit profile which has been constrained at Baa1 due to its linkage to the Israeli sovereign and operating environment. Despite this, Phoenix Insurance has shown resiliency in its solvency and liquidity position and has continued to generate solid earnings since the start of the military conflict in October 2023. For 2024, the Group reported comprehensive income of around NIS 2.1 billion and return on equity of 18.6%, while its most recently reported Solvency II coverage ratio stood at 189%.
The Government of Israel’s ratings, including its Baa1 long-term issuer rating, with a negative outlook remain unchanged. Geopolitical risks for Israel remain elevated but broadly in line with Moody’s expectations. However, recent temporary ceasefire agreements have allowed the economy to gradually recover. As a result, Moody’s now expects real GDP growth to increase by 3.8% in 2025 and 4.3% in 2026, following 1% last year.
The upward revision in forecasts for economic growth underpin Moody’s expectation of continued business growth and profitability for the Group’s insurance, asset management and lending businesses while contributing to relative stability of asset prices. These factors support continued strength in the Group’s overall business and financial profile.
The ratings could be upgraded once Moody’s believes that downside risk to the sovereign and operating environment has receded sufficiently and the outlook for the sovereign is changed to stable. Conversely, Phoenix Insurance’s ratings could be downgraded in the event of a multi-notch downgrade on the sovereign rating.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.