Libra's Life Engine Is Growing on a Retained Basis, but Capital Is Already Taking a Cut
The follow-up checkpoint on Libra's life insurance business has moved in the right direction: retained CSM grew faster than gross CSM and is beginning to flow into profit. But the solvency report shows that new life business is already consuming capital, so the engine has to be measured by retained value after capital cost, not by CSM alone.
The life insurance checkpoint at Libra received a positive answer on the first half of the question, and a more cautious answer on the second half. Retained CSM, the number closer to the economics left for shareholders after reinsurance, rose to NIS 19.6 million from NIS 15.0 million at the end of 2025, and grew faster than gross CSM. Net CSM release into profit also increased, so the checkpoint opened in the previous life-insurance follow-up now looks better: this is no longer only a gross CSM engine that looks attractive in a presentation. The solvency report adds the balance-sheet price of that growth. New life contracts in 2025 added NIS 22.5 million to eligible own funds, but created NIS 24.7 million of capital requirement and reduced the capital surplus by NIS 2.2 million. That does not make the new business weak, the solvency ratio is still 136% and the surplus above the board target is NIS 62.4 million after deducting a NIS 10 million dividend. It does mean that the life-insurance question has moved from only "how much stays retained" to a sharper test: whether retained value is growing fast enough to justify the capital it is beginning to occupy.
Retained CSM Is No Longer Falling Behind Gross CSM
The important Q1 point is that the gap between gross CSM and retained CSM did not widen. At the end of 2025, Libra had gross CSM of NIS 30.9 million and retained CSM of NIS 15.0 million, meaning less than half of the gross balance remained after reinsurance. At the end of March 2026, the picture improved slightly: gross CSM rose to NIS 37.8 million, and retained CSM rose to NIS 19.6 million.
| Date | Gross CSM | Retained CSM | Retained Share of Gross |
|---|---|---|---|
| March 31, 2025 | NIS 14.7 million | NIS 7.4 million | 50.3% |
| December 31, 2025 | NIS 30.9 million | NIS 15.0 million | 48.6% |
| March 31, 2026 | NIS 37.8 million | NIS 19.6 million | 51.9% |
The table closes the prior concern in a fairly clean way: retained CSM increased by 30.8% from the end of 2025, faster than the 22.4% increase in gross CSM. Year over year, retained CSM also grew slightly faster: 165.5% versus 157.3% in gross CSM. In other words, reinsurance still takes a large part of the economics, but it did not swallow the growth this quarter.
That is beginning to reach the income statement as well. Life insurance service revenue was NIS 6.3 million in the quarter, compared with NIS 2.5 million in the comparable quarter. Life insurance service profit reached NIS 2.0 million, compared with only NIS 48 thousand in the comparable quarter. Within that, the CSM amount recognized in profit for services provided was NIS 1.9 million, offset by NIS 0.9 million recognized under held reinsurance contracts. Net CSM release into profit was therefore about NIS 1.0 million, compared with about NIS 0.35 million in the comparable quarter.
Still, total pre-tax profit in life insurance was only NIS 1.2 million because the financial margin moved to a negative NIS 0.8 million following an increase in the interest-rate curve. That is a small but important point: the life engine is improving on an underwriting basis, but at this stage it is still sensitive enough to financial movement that final profit does not look like the CSM release run rate.
The Capital Requirement Is Rising Faster Than the Headline Comfort Suggests
For an insurer, growth that consumes capital is not unusual by itself. It is part of the model. What matters at Libra is that the engine meant to reduce dependence on motor insurance is already carrying a visible capital cost while its profit contribution is still small relative to motor profits. That means life CSM cannot be read as nearly free value. It has to be read alongside the capital requirement.
At the end of 2025, the economic solvency ratio was 136%, compared with 116% at the end of 2024. The capital surplus rose to NIS 72.5 million, and the surplus relative to the board target of 105% was NIS 62.4 million. These are relatively comfortable numbers, especially because the report already deducts the NIS 10 million dividend declared after the balance-sheet date. There is no immediate capital-stress claim here.
But the SCR breakdown changes the quality of the read. The solvency capital requirement increased from NIS 157.1 million to NIS 202.2 million, up 28.7%. Within that, the life underwriting risk component jumped from NIS 15.8 million to NIS 40.5 million, up 156.6%. That increase is directly connected to the expansion of the life business following the Ma'alot cooperation, through higher premiums and a higher best estimate.
The sharpest number is in the capital-surplus movement: new life contracts written in 2025 added NIS 22.5 million to eligible own funds, but created NIS 24.7 million of capital requirement. The result was a NIS 2.2 million decrease in capital surplus. This item refers to the new life contracts themselves, excluding their impact on market risk, counterparty risk and operational risk. Even when the new contracts are isolated, their net capital contribution is not yet positive.
That is the part the market may oversimplify. Libra can show attractive growth in retained CSM and still be at a stage where every shekel of life-insurance growth requires additional capital before it becomes a meaningful profit source. Precisely because the company still has comfortable surplus capital, the question is not whether it can fund the life engine now. The question is whether, over the next 2 to 4 quarters, CSM release and underwriting profit start growing faster than the marginal capital requirement.
The Engine Works, but It Still Has to Justify the Capital
The current read is more positive than it was at the end of 2025, but less clean than a CSM headline alone may suggest. Retained CSM grew, its share of gross CSM improved, and release into profit is becoming more visible. That is enough to say Libra's life engine is moving in the right direction and is not merely a gross number shared with reinsurers.
The remaining friction is the capital price. New life activity already showed in 2025 that it can create CSM and eligible capital, but also that it raises capital requirements enough to slightly reduce the capital surplus. The fair counter-thesis is that this reduction is small relative to the overall surplus, and that comfortable capital gives Libra room to build the life business without impairing dividend policy or stability. That is true at this stage. But in the next reports, another increase in gross CSM, or even retained CSM, will not be enough. The proof point will be whether net CSM release and life insurance service profit grow without life SCR continuing to rise at a pace that erases the contribution to surplus capital.
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