JERUSALEM Feb 28 Israeli insurance and pension management companies said on Tuesday a government bill to cap management fees will hit revenue and profitability.
Parliament's finance committee on Monday approved a measure that would cap management fees at 4 percent of deposits and 1.05 percent on accumulation, beginning in 2014. Currently, management fees are up to 2 percent of accumulation.
Israel's largest insurers -- Clal Insurance, Harel Insurance and Financial Investments, Migdal Insurance and Financial Holdings, and Phoenix Holdings -- issued statements saying they would be affected.
"Implementation of the reform is expected to have a significant impact on revenue from management fees ... and also a significant effect on the company's profits," Harel said.
"Implementing the reform will also affect profitability and the value of new life insurance policies that will be sold in the future."
Harel, like its peers, said it was examining the potential impact and steps it could take to mitigate the impact.
Clal Finance said: "The regulations on management fees are liable to impact the company's profitability, the value of new transactions that will be sold in the future, the potential value of life insurance activities and supplementary pension funds, and the value of provident fund (long-term savings) recorded in its books".
Migdal, 69.1 percent owned by Italian insurer Generali , said while its insurance unit will be harmed through lower revenue, the total impact would not be significant.
Migdal shares were up 0.1 percent, but Clal, Harel and Phoenix were down about 2 percent in afternoon trading, with the Tel Aviv financials index down 1 percent. (Reporting by Steven Scheer; Editing by Dan Lalor)