Global investment bank on Israeli insurance stock: "Will rise by 17%"

The international investment bank Jefferies published an analysis of the Menora Mivtachim group following the second quarter 2026 reports, and gave the stock a "buy" recommendation with a target price of 565 shekels - reflecting an upside potential of about 17% relative to the stock price at the time of the review's publication.

Analyst Philip Kett argues that the results reaffirm Menora's structural advantages, and that the market has not yet fully priced in the company's profit power. For the Israeli investor, whose pension funds are often managed by these entities, this is a rare window into how a large foreign investor analyzes the local insurance sector.

The heart of the analysis is property auto insurance. According to Jefferies, premium rates in this field have dropped by about 20% in the last year - a trend parallel to that in the US and UK - and the impact is already evident in the results.

Kett points out that Clal's profits in the field were eroded from 52 to 18 million shekels, and Phoenix's profits plummeted 48% to 53 million shekels. Menora, on the other hand, is the only one that increased profits - an increase of 1% to 111 million shekels. In Kett's words, Menora "demonstrates resilience, detaches from industry cyclicality and is the only insurer showing growth in sector profits."

Jefferies' explanation for this resilience is the quality of underwriting. Menora's combined claims and expense ratio stood at less than 80% for the quarter - a negligible increase of only 0.3 percentage points compared to the first quarter, and significantly lower than 81.9% in 2025.

Kett notes that Menora's historical underwriting gap against the industry (an average of 6.8 percentage points since 2019) is only widening, and while competitors may struggle to reach break-even (a ratio above 100%) in the second half of the year, Menora's data, in his opinion, justifies pricing at a significant premium.

Jefferies points to two additional strengths. The first is pensions and provident funds, where pre-tax profit for the half-year jumped 23% to 246 million shekels, thanks to improving operating leverage. The expense ratio dropped to 61% - 19 percentage points lower than the industry average - and according to Kett, at the current pace, Menora could reach an expense ratio in the 50% range within a year, without cutting expenses but only through growth.

The second is health insurance: sector profits jumped 45% in the quarter and completed a 74% growth for the half-year. Kett emphasizes that this is a surprise, as Harel is considered the traditional leader in health - and therefore, in his opinion, the market has not yet priced in Menora's multi-sector advantage.

It is important to remember that this is a recommendation from an entity that explicitly states it seeks to do business with the companies it covers, and therefore a conflict of interest is possible. Beyond that, Jefferies itself lists the risks: the target price is derived from a multi-stage valuation model, and among the downside risks are natural disasters and losses in the capital market.

In other words, even the positive thesis depends on the markets not crashing and no exceptional insurance event occurring. Past returns, as the report reminds, are no guarantee for the future.

This analysis positions the insurance sector's reporting season in an interesting light. Almost all companies - Clal, Migdal, Phoenix, and Harel - presented record profits and high returns on equity, but a significant part of the glow relies on a strong capital market.

Menora's story, according to Jefferies, is different: it profits from the underwriting itself, precisely in the field that burdens the competitors.

For savers and investors, the meaning is twofold - on one hand, an entity that manages their pension is demonstrating stable structural profitability, on the other hand, the drop in rates in property auto insurance may in the medium term lower insurance policies for the consumer, even if it burdens the companies' profits.