Migdal Declines on Higher Provision Concerns: Tel Aviv Mover

July 16 (Bloomberg) -- Migdal Insurance & Financial Holding Ltd. fell to the lowest since April 2009 on concern higher provisions due to new life expectancy data may hurt profitability.

Migdal shares slipped 3.4 percent, falling for the fourth consecutive day, to 3.72 shekels at the 4:30 p.m. market close in Tel Aviv.

The shares in Israel’s largest insurer by market value, according to data compiled by Bloomberg, have tumbled 19 percent since the Finance Ministry said on July 11 that insurers must boost their reserves by about 500 million shekels due to changes in life expectancy tables. The TA-Insurance index has fallen 9 percent in the period.

“Migdal is the most affected because most of its business is in the life insurance sector,” Alon Glazer, an analyst at Leader Capital Markets Ltd., said today by phone. “Insurers will have to increase provisions, hurting profitability.”

Loan Guarantees

Migdal said on July 12 updated life-expectancy figures could lead to higher provisions and the ministry’s draft directives may also limit the marketing of some insurance products.

Separately, Globes reported Bank Leumi Le-Israel Ltd. may demand more guarantees for the 2.4 billion-shekel ($603 million) loan to businessman Shlomo Eliahu for his acquisition of the insurer following the decline in Migdal shares, without saying how it obtained the information. Eliahu agreed to buy a controlling stake in the company from Assicurazioni Generali SpA. for 4.2 billion shekels in March.

The Bank Leumi spokesman’s office said in an e-mailed response to a query on the article that bank policy wasn’t to comment on questions about its clients.

Harel Insurance Investments and Financial Services Ltd. declined 1.9 percent to 102.7 shekels, bringing its decline since July 11 to 11 percent. Clal Insurance Enterprise Holdings Ltd. dropped 2.8 percent to 34.63 shekels, bringing its decline in the period to 7.5 percent.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net