Ayalon: Did the Savings Engine Really Open Up in 2025?
In 2025 Ayalon’s life and savings segment still did not deliver an earnings breakout: core profit slipped slightly and pre-tax comprehensive income rose only to ILS 109.7 million. But beneath that line, investment-contract inflows surged and the future-profit pipeline improved materially, so the engine opened mainly below the current P&L rather than inside it.
What Actually Opened, And What Did Not
The main article argued that Ayalon ended 2025 in a stronger position, but that the market still had to decide whether this was just a strong profit year or the start of a genuine savings engine. This follow-up isolates that exact issue, because in life and savings 2025 shows something that looks almost contradictory: current earnings barely moved, while new-money inflows and future-profit metrics changed sharply.
That is not an accounting quirk. It is the core economic point. If you look only at pre-tax comprehensive income in life and long-term savings, it rose from ILS 96.4 million to ILS 109.7 million. That is better, but it is not what an earnings breakout looks like. If you go one layer deeper, core profit actually slipped slightly from ILS 102.1 million to ILS 100.3 million, and almost the entire annual improvement came from excess financial margin, which moved from minus ILS 6.4 million to plus ILS 8.8 million.
So the current earnings line did not truly open up. What did open up was the pipe from which future earnings can arrive: investment-contract inflows jumped from ILS 268.0 million to ILS 1.66 billion, the ratio of new CSM to released CSM rose from 52% to 122%, and in growth products the ratio climbed from 97% to 233%.
The short table below frames the gap:
| Metric | 2024 | 2025 | Correct Read |
|---|---|---|---|
| Pre-tax comprehensive income in life and savings | 96.4 | 109.7 | A modest increase, not a breakout |
| Core profit | 102.1 | 100.3 | Current earnings actually dipped slightly |
| Investment-contract inflows | 268.0 | 1,660.1 | This is the clearest commercial signal of change |
| New CSM as a share of released CSM at company level | 52% | 122% | Future profit stock refilled faster than it was released |
| Same ratio in growth products at company level | 97% | 233% | The improvement sits in products the company is still pushing |
Where A Real New Mass Was Built
The first signal is investment-contract inflows. This was not a marginal move. It was a pace change. By the end of June 2025, cumulative inflows stood at ILS 315 million. By the end of September they had already reached ILS 832 million. By year-end they hit ILS 1.66 billion. That is not gradual improvement. It is acceleration.
The second signal sits inside the contractual service margin, or CSM. At company level, 2025 included about ILS 171 million of gross CSM release, but new-business CSM already ran at about 122% of that release pace, and in growth products at about 233%. That is the center of gravity. The company was not merely harvesting an old profit stock into earnings. It was refilling the warehouse faster than it was emptying it.
There is also a good reason current earnings did not react at the same magnitude. In life, management says the improvement in policies with savings components came from better CSM in the participating portfolio with variable management fees, driven by a higher present value of fees after stronger investment returns. At the same time, the company says it resumed collecting variable management fees in 2025, amounting to ILS 38 million for the year, including about ILS 14 million in the fourth quarter. But under IFRS 17 those fees do not go straight into profit and loss. They are spread over time through CSM.
That is exactly why the segment can look quiet on current earnings while becoming much more alive underneath. Put differently, part of the new economics of 2025 moved into future-profit inventory rather than appearing immediately in the current earnings line.
CSM Improved, But It Is Not Cleanly A Life Story
This is where the reading needs discipline. Anyone who sees only the headline that "CSM increased" can easily load too much onto the savings story. The year-end table shows that net CSM at company level rose from ILS 1.014 billion to ILS 1.058 billion. But the split matters more than the total.
In life and long-term savings, net CSM actually fell from ILS 557 million to ILS 509 million. In health, it rose from ILS 457 million to ILS 549 million. So the improvement in future-profit inventory at company level is real, but it is not a pure life-and-savings story. Part of the better picture comes from health.
That does not invalidate the savings thesis. It sharpens it. In 2025 the savings engine did not open through a clean step-up in life CSM inventory on its own. It opened through three narrower but still important channels: a sharp sales wave in investment contracts, the return of variable management fees in the participating book, and a new-business mix that started to refill future-profit stock at a better pace.
The good news is that the life segment itself still holds a large future release stock that matters for the coming years. The release forecast for gross life-and-savings CSM points to ILS 373 million for 2025-2029 and another ILS 264 million for 2030-2034. In other words, most of the stock still sits in a window investors can realistically see and evaluate, not in an excessively distant tail.
But the mix matters here as well. In 2025-2029, a meaningful part of the release still comes from RunOff books, ILS 244 million, versus ILS 129 million from growth products. So anyone trying to argue that a fully clean new engine is already built is skipping over the fact that part of the future release still depends on an older book.
So Did The Savings Engine Really Open In 2025
The short answer is yes, but only partially, and not where a first-pass reader will look.
If the question is whether life has already moved to a clearly higher current earnings run rate, the answer is still no. Both at the annual level and in the fourth quarter, the move in core profit remained modest. In the fourth quarter, for example, core profit rose only from ILS 18.2 million to ILS 19.7 million, while pre-tax comprehensive income rose from ILS 22.6 million to ILS 31.6 million.
If the question is whether Ayalon opened a new commercial engine in savings during 2025, the answer is much more positive. The jump in investment contracts, the return of variable fees, and the high ratio of new CSM to released CSM all show that the company managed to generate both new money and a pipeline that can turn that money into future earnings.
But this is still not an engine that has proven itself end to end. For that reading to hold, the market needs to see three things over the next 2 to 4 quarters at the same time: investment-contract inflows staying high, core profit in life starting to respond rather than staying stuck, and life CSM itself stopping its decline and beginning to expand on the back of the newer products.
The danger in reading 2025 too quickly cuts both ways. On one side, it is easy to miss that a real new business infrastructure was built. On the other side, it is just as easy to over-credit 2025 with an earnings engine that is already running, when in reality sales and accumulation are still moving faster than the translation into current profit.
Conclusion
2025 was the year in which Ayalon’s savings engine opened in the pipeline, not in the current P&L line. Current earnings from life and savings still did not provide a full proof point. But investment-contract inflows, variable management fees, and the new CSM build-versus-release ratios do show that the company moved from talking about savings to building an economic stock that should matter over the next few years.
That is also the point the market will need to measure correctly. If 2026 shows that the new money sticks, that life starts to generate rising core profit, and that dependence on RunOff books gradually declines, then 2025 will look in hindsight like a true opening year. If not, it will remain a year of strong sales and partial accounting improvement, without full proof that the savings engine really became an earnings engine.
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