Menora Mivtachim Holdings: How Much Of 2025 Profit Came From Underwriting, Markets, And The CSM Reservoir
Continuation of the main article: Menora ended 2025 with strong profit, but almost all of the improvement in the main profit lines versus 2024 came from investments and finance, while a large part of the insurance service result already reflected release from the existing CSM reservoir. The real question is not whether profit was high, but how much of it was current-period and how much was pushed forward.
What This Follow-up Is Isolating
The main article argued that Menora's 2025 profit was stronger than the headline, but also less clean than a first read suggests. This follow-up isolates the narrower question that matters most under IFRS 17: how much of 2025 profit came from current insurance service and underwriting, how much came from markets and interest rates, and how much simply came out of a profit reservoir that had already been built in prior years.
This is the key insurance-quality test. Under IFRS 17, even the insurance service result is not a pure underwriting line. It already includes CSM release, meaning profit that was stored on the balance sheet in prior periods and is recognized over the life of the contracts, as well as release of the risk adjustment. A reader who looks only at comprehensive income, or even only at insurance service profit, can easily attribute too much of 2025 to fresh economics generated in 2025 itself.
Three lines organize the whole story. Group insurance service profit rose to NIS 1.560 billion in 2025 from NIS 1.510 billion in 2024, only a 3.3% increase. Net investment and finance profit jumped to NIS 1.894 billion from NIS 996.5 million, a 90.0% increase. And in participating life policies, variable management fees returned, NIS 239 million after zero in 2024, yet that money was not booked as current revenue and was instead allocated to CSM.
The pace matters more than the size. If you add the change in insurance service profit and the change in net investment and finance profit, about 94.8% of the improvement came from markets, rates, and financial effects. Only about 5.2% came from improvement in the service line itself. That does not make 2025 fake. It does mean it was not a clean underwriting year.
The Insurance Service Result Already Contains The Reservoir
This is where IFRS 17 changes the read. Inside the 2025 insurance service result, Menora recognized about NIS 802.3 million of CSM release from insurance contracts, while booked CSM-related expenses of about NIS 54.4 million on held reinsurance. On a rough net basis, that means about NIS 748.0 million of the service result, nearly 48% of it, came from release of an existing reservoir. Net risk-adjustment release contributed another NIS 74.7 million. The remaining NIS 736.9 million is what was left after those two components.
That matters for two reasons. First, it explains why insurance service profit looks steadier than the current-period economics alone. Second, it makes clear that 2025 was not a year in which all the improvement came from better current underwriting. Even within the service line, a large share was simply a gradual release of profit that had already been locked in on the balance sheet.
That is why insurance service profit is a poor shortcut for profit quality. In Menora's 2025 numbers, the line is real, but it is a blend: slightly better current service margin, slightly more risk-adjustment release, and almost the same weight of CSM release as in 2024. The CSM is not a background item. It is already working inside the annual profit figure.
Life Improved, But Not In A Clean Straight Line
The contradiction is sharpest in life and long-term savings. At group level, the segment shows 9% growth in adjusted pre-tax profit. But inside life insurance itself, the picture is not as clean. The increase in total profit came mainly from higher investment income versus 2024 and from an interest effect that reduced insurance liabilities by about NIS 26 million, versus NIS 22 million a year earlier. At the same time, adjusted profit in life insurance itself fell, mainly because of the death-risk book.
At product level, the split is even clearer. Savings products with direct market participation improved because of favorable disability-claims development and higher CSM release. Products without a savings component moved in the opposite direction, with a significant increase in death-risk and disability claims, together with lower CSM release. That is the core of the read. Life improved in 2025, but not because everything in underwriting suddenly turned cleaner.
The return of variable management fees sharpens the distinction between current economics and reported profit. In 2025, Menora collected about NIS 251 million of fixed management fees in participating life policies, versus NIS 237 million in 2024. On top of that, variable fees returned, NIS 239 million for the full year and NIS 111 million in the fourth quarter, after zero collection in 2024. But both fixed and variable fees are not recorded as revenue. They are allocated to CSM according to the actuarial fee-forecast ratio.
That is not a technical footnote. It means Menora collected roughly NIS 490 million of fixed and variable fees in those participating life products during 2025, yet a meaningful part of the economic improvement did not land as immediate profit. It strengthened the future-profit reservoir instead. Anyone looking for the full return of variable fees in the 2025 income statement will not find it there.
Still, it would be wrong to dismiss the improvement. The surrender rate fell to 6.84% from 7.01%, and investment-contract redemptions declined to NIS 836 million from NIS 855 million. That suggests the return of variable fees was not achieved by deterioration in the persistence of the book. The economics did improve. The real issue is the layer in which that improvement was recognized.
The Reservoir Is Bigger, But Most Of It Still Sits In The Future
This is the other half of the story. Expected future CSM recognition, before held reinsurance, rose to NIS 7.193 billion at year-end 2025 from NIS 6.676 billion at year-end 2024. In life and long-term savings alone, it rose to NIS 2.236 billion from NIS 1.978 billion. Even after deducting held reinsurance, the group's net reservoir increased to about NIS 6.672 billion from about NIS 6.273 billion, and life and long-term savings rose to about NIS 2.163 billion from NIS 1.896 billion.
That chart cuts through the debate. Menora's CSM did not melt in 2025. It grew. But most of it still belongs to later years. Out of NIS 7.193 billion of future gross CSM, only NIS 759 million is expected to be recognized within one year. In life and long-term savings, only NIS 310 million out of NIS 2.236 billion sits in the next year. Everything else is pushed further out.
| Layer | 2024 | 2025 | What changed |
|---|---|---|---|
| Total future gross CSM | NIS 6.676 bn | NIS 7.193 bn | Reservoir up 7.7% |
| Life and long-term savings gross CSM | NIS 1.978 bn | NIS 2.236 bn | Core life reservoir up 13.0% |
| Total gross CSM within one year | NIS 719 m | NIS 759 m | Only about 10.6% of the stock is close to the P&L |
| Life and long-term savings gross CSM within one year | NIS 285 m | NIS 310 m | In life, only about 13.9% sits in the next year |
The reservoir is also presented conservatively. This schedule does not yet include future CSM that may be generated from new business, future interest accretion, or future assumption changes. In other words, Menora enters 2026 with a meaningful locked-in profit reservoir even before the new year's business is added on top.
But this is not a one-direction story either. Changes in assumptions during 2025 reduced CSM by about NIS 53.2 million in life and by about NIS 71.5 million in health. At the same time, those same changes added about NIS 25.5 million to investment and finance profit in life and about NIS 50.2 million in health. At group level, assumption and estimate effects added about NIS 41.6 million to 2025 profit and loss, after subtracting NIS 26.7 million in 2024. This is exactly the timing issue the market has to remember: under IFRS 17, current-period profit can improve while the reservoir shrinks, or the reservoir can build while current profit remains subdued, without the underlying economics moving by the same amount.
Capital matters here as well. Equity attributable to shareholders rose to NIS 9.187 billion in 2025 from NIS 7.432 billion, and excess capital rose to NIS 5.213 billion from NIS 3.841 billion. So the future-profit reservoir does not sit on a weaker capital base. It sits on a stronger one. That does not turn it into current-period profit, but it does increase the odds that the reservoir can keep being released without immediate capital friction.
Conclusion
2025 was not a clean underwriting year, but it was not an empty market-windfall year either. In the main profit lines, almost all of the year-on-year improvement came from investments and finance. Inside the service result itself, nearly half already came from release of existing CSM. And in life, the return of variable management fees mainly strengthened the future reservoir rather than current revenue.
But the reservoir did not deteriorate. It grew. Surrenders improved. Equity and excess capital strengthened. So the right way to read Menora in 2025 is neither "just market profit" nor "just underwriting profit." It was a year in which the economics of life and long-term savings improved, but an increasing share of that improvement moved through the balance sheet and was stored for later periods.
That makes the 2026 test straightforward. The next strong year will need to show three things at once: current insurance service margin improving without heavier reliance on reservoir release, continued collection of variable fees without renewed claims or lapse pressure, and investment and finance support that remains solid even as the comparison base gets tougher.
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