Consolidated Interim Financial Statements as of June 30 2021 (Unaudited) The Phoenix Holdings Ltd.

Part 1	Report of the Board of Directors on the State of the
	Corporation's Affairs
Part 2	Consolidated Interim Financial Statements
Part 3	Standalone Financial Data from the Consolidated Interim
	Financial Statements Attributed to the Company
Part 4	Report on the Effectiveness of Internal Control over Financial
	Reporting and Disclosure
Part 5	Statements Regarding Controls and Procedures in respect of
	Disclosure in the Financial Statements of The Phoenix
	Insurance Company Ltd.

Members of the Board

Benjamin Gabbay - Chairman
Roger Abravanel
Ben Langworthy
Marilyn Victoria Hirsch
Zhak Cohen
Rachel Levine (External Director)
Zohar Tal (External Director)
Dr. Ehud Shapira (Independent Director)
Eliezer Yones

Report of the Board of Directors on the State of the Corporation's Affairs as of June 30 2021

1.	The Group's Structure, its Areas of Activity, and Developments Therein 3
2.	Description of the Business Environment 10
3.	Developments in the Macroeconomic Environment 23
4.	The Board of Directors' Explanations for the State of the Corporation's Business 26
5.	Disclosure on Exposure to, and Management of, Market Risks 51
6.	Linkage balance 35
7.	Corporate Governance Aspects 56
8.	Disclosure Provisions Relating to the Corporation's Financial Reporting 57
9.	Appendix A 60

Report of the Board of Directors on the State of the Corporation's Affairs As of June 30 2021

The Report of the Board of Directors of The Phoenix Holdings Ltd. (hereinafter, "The Phoenix Holdings" or the "Company" or the Corporation") as of June 30 2021, outlines the principal changes in the Company's operations in the period from January through June 2021 (hereinafter - the "Reporting Period").

The report was prepared in accordance with the Securities Regulations (Periodic and Immediate Reports), 1970. With regard to the insurance, pension, and provident fund operations of the Group, the Report was prepared pursuant to the Supervision of Insurance Business Regulations (Reporting), 1998, and in accordance with the directives issued by the Commissioner of the Capital Market, Insurance and Savings Authority (the "Supervisor" or the "Commissioner"). The report was prepared assuming that the reader also has at his/her disposal the Company's Q1 2021 financial statements as well as the full 2020 periodic report (hereinafter - the "Periodic Report").

The Report of the Board of Directors is an integral part of the quarterly report, and the quarterly report should be read in its entirety, as a single unit (hereinafter - the "Financial Report" or the "Financial Statements").

1. The Group's Structure, its Areas of Activity, and Developments Therein

1.1. Group structure

The Company's shareholders

The controlling shareholder of the Company is Belenus Lux S.à.r.l. (hereinafter - "Belenus"), which is held by Centerbridge Partners LP and Gallatin Point Capital LLC (hereinafter - the "Funds"). For further details regarding the holding stakes and structure, please see Section 1.1 under "Description of the Corporation's Business" in the Periodic Report.

1.2. Areas of activity

1.2.1. For a description of the Group's areas of activity and its holding structure, please see Section 1.2 in the chapter entitled Description of the Corporation's Business in the Periodic Report. In addition, see Appendix A to the Report of the Board of Directors in connection with the credit segment and the activity of Gama.
1.2.2. The Company has various sources of income from the activities of its subsidiaries, as outlined in the sections dealing with the various operating segments. Set forth below is the pre-tax comprehensive income attributed to the shareholders in the reporting period (for further details, please see Note 3 to the Financial Report):

(*) The income includes intra-group adjustments.

(**) Upon assuming control over Gama, the Company decided to launch a new segment - credit.

1.3. Developments in the Group

1.3.1 Share buyback

In September 2020, the Company's Board of Directors approved a share buyback plan for the purchase of Company shares for a period of one year, totaling up to NIS 100 million. As of the report publication date, the Company completed the share buyback plan at a total amount of NIS 100 million (3,983,092 shares of NIS 1 par value each). For further details, please see the Company's immediate reports dated October 1 2020 and July 15 2021 (Ref Nos.: 2020-01-112356 and 2021-01-053326, respectively).

On August 24 2021, the Company's Board of Directors approved an additional share buyback plan of Company shares, totaling up to NIS 100 million, for a period of one year. It should be noted that similarly to the buyback plan approved in September 2020, in the future some of the shares purchased as part of the share buyback plan may serve for the purpose of exercising the options awarded to officers and employees of the Company and subsidiaries. It shall be clarified that the amounts purchased under the additional share buyback plan will be considered a dividend distribution under the dividend distribution policy approved by the Company in October 2020.

1.3.2 Options to officers and employees

On May 26 2021, the Company's Board of Directors approved the award of up to 3,937,000 options to employees and officers of the Company and its subsidiaries, exercisable into up to 3,937,000 ordinary shares of the Company NIS 1.00 par value each, subject to adjustments, without cash consideration. The award of options to the Company's CEO was approved in an extraordinary annual general meeting of the Company on July 5 2021. For more information, see Note 8 to the financial statements and immediate reports of: May 27 2021, July 6 2021 and July 8 2021 (Ref. Nos. 2021-01-031390, 2021-01-048694 and 2021- 01-050455, respectively).

1.3.3 Binding offer in connection with the sale of Ad 120

In July 2021, the Board of Directors of The Phoenix Insurance resolved to grant a 30-day exclusivity period to Shapir Housing and Building Ltd. - which was extended by an additional brief period - a wholly owned subsidiary of Shapir Engineering and Industry Ltd. (hereinafter - (the "Acquirer"). The exclusivity period was granted in connection with the Acquirer's binding offer to purchase control of Ad 120 Residence Centers for Senior Citizens Ltd. (hereinafter - "Ad 120") (hereinafter - the "Purchase Offer"). The Purchase Offer reflects a current value of NIS 1,350 million for Ad 120. The Acquirer will acquire 44.44% (indirectly) of Ad 120 in consideration for a cash payment of NIS 600 million, and the amount of the consideration will be adjusted to the profits accrued in Ad 120 as from January 1, 2021, based on the most recent reviewed or audited financial statements of Ad 120 at the completion date.

In addition to acquisition of the shares, on the completion date, the Acquirer will transfer to Ad 120 two parcels of land that it owns, which are zoned for assisted living, offices, and commerce and are currently under development (hereinafter - the "Acquirer's Lands"). The Acquirer's Lands will be transferred on the basis of appraisals and against allocation of new shares in Ad 120, so that subsequent to completion of the share acquisition and the allocation (hereinafter - the "Transaction"), the Buyer will hold (directly and indirectly) 53% of Ad 120 and The Phoenix Insurance will hold 47% of Ad 120.

The Phoenix Insurance and the Acquirer will sign a shareholders' agreement which will regulate their relationship as shareholders of Ad 120, the Acquirer's control of Ad 120 and the minority interest that would be granted to The Phoenix Insurance. The Acquirer undertook that if at the end of the exclusivity period no binding agreement is signed between the parties other than due to a justifiable reason on the part of the Acquirer, then the Acquirer would pay The Phoenix Insurance agreed compensation in the amount of NIS 25 million. The closing of the transaction will also be subject to the fulfilment of conditions precedent generally accepted in similar transactions, including the receipt of regulatory approvals and other required third-party approvals.

The Company expects that if the transaction will be closed in accordance with the terms of the binding offer, The Phoenix Insurance will record a one-off post-tax capital gain ranging from NIS 220 million to NIS 270 million.

For more information about the key points of the Purchase Offer, see immediate report of August 1 2021 (Ref. No.: 2021-01-059806).

It should be clarified that the signing of binding agreements and the closing of the transaction are subject to the completion of the negotiations between the parties; to date, there is no certainty that the negotiations will, indeed, result in binding agreements.

The above information in connection with a potential transaction for the sale of control of Ad 120 constitutes forward-looking information, as defined in the Securities Law, 1968, and is based on Company's information and estimates as of the date of this report. Such information and assessments may not materialize, due to factors that are unknown to the Company and The Phoenix Insurance as of the date of this report and are not under their control, including, inter alia, signing binding agreements, obtaining regulatory approvals, and third-party consent to execute the sale (if and to the extent that binding agreements will, indeed, be signed), etc.

1.3.4 Gama IPO

In June 2021, Gama Management and Clearing Ltd. (hereinafter - "Gama"), an associate in which the Company has a 49% ownership stake, completed an IPO on the Tel Aviv Stock Exchange (TASE), pursuant to the Supplementary Prospectus for of the sale offer and initial public offering of shares (hereinafter - the "Offering"), and listing of Gama shares on the TASE, dated May 31 2021 (the Prospectus together with the Supplementary Notice will be hereinafter referred to as the "Prospectus"). Simultaneously with the execution of the Offering in accordance with the Prospectus, The Phoenix Investments purchased additional Gama shares (hereinafter - the "Purchased Shares"), such that after the Offering and the acquisition of the Purchased Shares, The Phoenix Investments holds approximately 61.6% of Gama's issued and paid-up share capital and voting rights therein (approximately 60% on a fully diluted basis) and became the controlling shareholder in Gama. In exchange for the Purchased Shares, The Phoenix Investments paid a total of NIS 124 million. Following the execution of the Offering and the acquisition of the Purchased Shares, the Company recorded a one-off post-tax profit of NIS 220 million in the second quarter, as a result of becoming the controlling shareholder in Gama. For further details, please see the Company's report dated June 16 2021 (Ref. No. 2021-01-039979). In addition, for further details about the activities of Gama and the opening of the credit segment, see Appendix A to the Report of the Board of Directors.

1.3.5 Transfer of the shares of management company Phoenix Excellence from The Phoenix Insurance to the Company

In June 2021, the transfer the shares of Phoenix Excellence by way of a dividend in kind distribution was completed. The distribution was carried out after obtaining the Israel Tax Authority's approval.

1.3.6 The Phoenix Mortgages (Gold) Ltd.

In February 2021, the Board of Directors of The Phoenix Insurance approved a new activity, which includes the establishment of a new company, The Phoenix Mortgages (Gold) Ltd. (hereinafter - "The Phoenix Mortgages"), which is owned by The Phoenix Insurance (51%) and a number of other partners holding different percentages of the remaining shares. The Phoenix Mortgages began operations at the end of Q2 2021 and its core operation is providing loans to persons over 60 years-old against a first-degree lien on their apartment The operations of The Phoenix Mortgages are financed by The Phoenix Insurance through loans.

1.3.7 Acquisition of the Halman Aldubi Investment House

The Halman Aldubi transaction

As part of the implementation of its business strategy and its wish to expand its asset management activities in general and its pension and provident funds activities in particular, on February 28 2021, the merger transaction - under which the Company acquired Halman Aldubi Investment House Ltd. (hereinafter - "Halman Aldubi"), by way of a reverse triple merger transaction - was completed. Upon completion of the transaction, Halman Aldubi became a privately-held company wholly-owned by the Company. The proceeds of the Halman Aldubi transaction totaled NIS 275 million.

Merger of Halman Provident into The Phoenix Excellence

On May 23 2021, the Phoenix Excellence's Board of Directors decided to merge Halman Aldubi Provident and Pension Funds Ltd. (hereinafter - "Halman Provident" with and into Phoenix Excellence. According to the merger outline, the provident funds and the old pension funds managed by Halman Provident will be transferred to the management of Phoenix Provident. The merger between the companies - including the merger of the provident funds and the provident funds' investment tracks - is expected to be completed on September 30 2021, subject to obtaining the approvals required by law.

Default pension sale - Meitav-Dash deal

On June 30 2021, after fulfillment of all conditions precedent, the sale to Meitav Dash Provident Funds of the new pension funds managed by Halman Provident was completed in consideration for NIS 45 million.

For further details, please see the immediate reports from the following dates: December 8 2020, January 28 2021, February 3 2021, February 18 2021, February 23 2021, February 24 2021, February 28 2021 and July 1 2021, Ref. Nos.: 2020-01-133119, 2021-01-011467, 2021-01-013942, 2021-01-020860, 2021-01-022078, 2021-01-021813 and 2021-01- 023697, respectively.

1.3.8 ESG work plan

In July 2021, the Company's Board of Directors approved a work plan for the implementation and measurement of ESG issues in The Phoenix Group. Furthermore, the Board of Directors appointed a dedicated ESG sub-committee that will supervise the implementation of the ESG work plan and report periodically to the Board of Directors.

1.3.9 Financial services

During the reporting period, Excellence investment house began - as part of the implementation of the strategy - to increase the retail brokerage portfolio, which led to an increase in acquisition expenses. In July, 2021, KSM launched a campaign to increase total assets under management, which offered zero management fees for a fixed period of time for several mutual funds. The Company believes that during the campaign period, the number of customers and amount of assets under management will increase, while revenues will decrease relative to the assets under management amount. See also Section 4.4.1.2 below.

1.3.10 Research

During the reporting period, the Company conducted several studies in the health insurance segment and life insurance segment. For further details, please see Section 4.6.2 and Section 4.7.1 below.

1.3.11 Interest

Changes in the risk-free interest rate curve have significant effect on The Phoenix Insurance's assets, liabilities, financial performance, and solvency ratio. For further details on changes in the interest rate curve, please see Note 8.A to the Financial Statements as of June 30 2021 (hereinafter - the "Financial Statements"); as to the interest's effect on the solvency ratio, please see Section 2.1.5 below.

1.3.12 Issuance of Restricted Tier 1 capital (RT1) by The Phoenix Insurance

In August 2021, The Phoenix Insurance issued - through The Phoenix Capital Raising (2009) Ltd. (hereinafter - "The Phoenix Capital Raising") an Additional Tier 1 capital instrument (hereinafter - the "Capital Instrument") totaling approximately NIS 200 million recognized as regulatory capital under the Economic Solvency Regime, in order to strengthen its capital and improve its solvency ratio. The Capital Instrument is currently traded on the TACT-Institutionals trading platform.

The terms and conditions of the instrument, including the redemption period, are in accordance with the provisions of Part B ("Provisions in respect of Equity Capital of Insurance Companies") to Insurance Circular 2020-1-15, "Provisions for Applying Economic Solvency Regime Based on Solvency II for Insurance Companies." Tier 1 capital instrument rated A+ by Maalot S&P.

As part of the issuance, in addition to the aforesaid amount that was issued and after obtaining the approval of the relevant organs in The Phoenix Group and the approval of the Capital Market, Insurance and Savings Authority, The Phoenix Capital Raising issued to the Company NIS 1.02 billion of the Capital Instrument in exchange for Tier 1 capital notes previously issued to the Company by The Phoenix Insurance. For further details, please see the Company's reports dated May 27 2021 and August 8 2021 (Ref. Nos.: 2021-01-031384 and 2021-01-062515, respectively).

1.3.13 Ratings

On July 27, 2021, Maalot S&P announced an A+ rating for the Tier 1 capital instrument issued by the Company as stated in Section 1.3.12 above.

1.3.14 The Company's preparation for the application of IFRS 17

As part of the preparations of The Phoenix for application of IFRS 17 (hereinafter - the "Standard"), in the financial statements of the Company and The Phoenix Insurance as from the quarterly and annual periods beginning on January 1, 2023, and following the agreements of The Phoenix Insurance with software and application suppliers for the purpose of applying the Standard, in the first and second quarters of 2021, reviews and training sessions were held for the Balance Sheet Committee in connection with assimilation of the Standard. The Company is progressing according to plan in implementing the Standard. For further details, please see Note 2(ee)(1) to the Financial Statements as of December 31 2020.

1.3.15 Riskified Transaction

In February 2016 and July 2017, The Phoenix Insurance (together with its wholly-owned subsidiaries) invested a cumulative amount of NIS 30 million in Riskified (hereinafter - "Riskified") (nostro and planholders). The Company re-evaluates the investment from time to time in accordance with an independent external valuation. As of December 31 2020, the balance of the investment amounted to approximately NIS 160 million.

Following the listing of Riskified on NASDAQ in July, 2021, the Company performed a valuation by an independent external appraiser as of June 30, 2021. According to the valuation, the Company recorded a profit before tax of approximately NIS 76 million in the second quarter of 2021. It should be clarified that Riskified shares are under lockup for a period of 180 days from the date of initial listing. The value of the Company's stake (Nostro and the planholders) in Riskified as of the IPO date amounted to approximately NIS 450 million (value per share of USD 21) (immediately prior to the signing of these financial statements, the value is approximately NIS 600 million (value per share of USD 27.85), before adjustment in respect of the lockup period. It should be noted that the share price may be highly volatile and there is no certainty of the profit to be generated for the Company in the future, inter alia, taking into account said lock-up period. For further details, see the Immediate Report dated August 1, 2021 (Ref. No. 2021-01-059863).

1.4. The coronavirus and its impact

For details regarding the extent of the coronavirus crisis's impact on the Company's various business activities, please see Note 1 to the Financial Statements as of December 31 2020.

Towards the end of the second quarter of 2021, the rate of morbidity began to increase (hereinafter - the "Fourth Surge"), following the penetration of the Delta strain of the coronavirus and spread in Israel. As of the report publication date, the Fourth Surge has had no effect on the Company's operations. Since this is an event that is not under the Company's control, at this stage, the Company is unable to assess the future effects of the Fourth Surge on the Company's operations.

1.5. The Draft Economic Arrangements Law

For details regarding the publication of the law memorandum of the Economic Efficiency Law (Legislative Amendments for Achievement of Budgetary Targets for Budget Years 2021 and 2022), 2021 (hereinafter - the "Economic Efficiency Law"), as part of the approval of the Government's budget for the years 2020-2021, which includes, inter alia, bills on "Ensuring the Stability of Yields in Pension Funds" and on the settling of accounts with the National Insurance Institute, please see Section 2.3.12 below.

2. Description of the Business Environment

2.1. Implementation of the Economic Solvency Regime provisions applicable to The Phoenix Insurance Company Ltd.

2.1.1 Provisions regarding the implementation of the Economic Solvency Regime

The Phoenix Insurance is subject to the Solvency II-based Economic Solvency Regime in accordance with the provisions of Circular 2020-1-15 of the Commissioner of the Capital Market, Insurance and Savings (hereinafter - the "Commissioner") - "Amendment to the Consolidated Circular concerning Implementation of a Solvency II-Based Economic Solvency Regime for Insurance Companies" (hereinafter - the "Economic Solvency Regime"), which was published on October 14 2020. The Economic Solvency Regime is a regulatory directive that regulates capital requirements and risk management processes among insurance companies. The Economic Solvency Regime sets a standard model for calculating eligible capital and the regulatory solvency capital requirement, with the aim of bringing insurance companies to hold buffers to absorb losses arising from the materialization of unexpected risks to which they are exposed. The solvency ratio is the ratio between an insurance company's economic shareholders' equity recognized for solvency purposes and the required capital.

2.1.2 Increasing economic capital according to the transitional provisions:

The Company opted for the alternative provided by the Economic Solvency Regime regarding the transitional provisions, whereby the economic capital may be increased by gradually deducting from the insurance reserves until 2032 (hereinafter - the "Deduction during the Transitional Period"). With regard to the Deduction during the Transitional Period, a letter was addressed to insurance companies managers titled "Principles for calculating Deduction during the Transitional Period in the Solvency II-based Economic Solvency Regime" (hereinafter - the "Letter of Principles"). Pursuant to the Letter of Principles, the Deduction during the Transitional Period shall be calculated by dividing insurance policies issued through December 31 2016 into homogeneous risk groups. The aforesaid deduction shall be calculated as the difference between insurance reserves (retention) as per the economic balance sheet, including the risk margin attributed thereto (net of the difference between the fair value and the carrying amount of designated bonds) and the insurance reserves (retention) as per the Financial Statements. This difference shall be deducted on a linear basis until December 31 2032. The deduction balance at each reporting date (hereinafter the "Deduction Value During the Transitional Period") shall be proportionate to the expected increase in the solvency ratio calculated excluding expedients during the Transitional Period.

2.1.3 Publication of Economic Solvency Ratio Report

The Economic Solvency Ratio Report as of December 31 2020 was published at the same time as the Financial Statements, on May 27 2021, and was prepared and presented in accordance with the provisions of Chapter 1, Part 4, Section 5 of the Consolidated Circular, according to Circular 2020-1-17 (hereinafter - the "Disclosure Provisions"). In accordance with the Consolidated Circular, the economic solvency ratio report in respect of the December 31 and June 30 data of each year shall be included in the first periodic report published after the calculation date. Despite the aforesaid, on March 19 2020, the Commissioner published a letter whose reference no. is SH 2020-2031, stipulating that an insurance company is exempted from publishing an economic solvency ratio report as of June 30 2020 and from filing solvency reporting files in relation to that date.

On March 14 2021, a letter from the Commissioner was published, Ref. No. 2021-423, stating that the deadline for publication of the economic solvency ratio report as of December 31 2020, as well as the accompanying files reported to the Commissioner, shall be filed no later than June 30 2021. In addition, the letter states that an insurance company may refrain from publishing an economic solvency ratio report as of June 30 2021.

2.1.4 Economic solvency ratio and minimum capital requirement (MCR):

The meaning of the terms in this section is the same as in Appendix B to Chapter 2 in Part 2 of Section 5 of the Consolidated Circular - "Economic Solvency Regime".

A. Economic solvency ratio:

	As of December 31
	2020	2019**
	Audited*
		In NIS thousand
Shareholders equity in respect of SCR (1)	12,770,842	12,086,505
Solvency capital requirement (SCR)	6,661,640	7,455,885
Surplus	6,109,203	4,630,620
Economic solvency ratio (in %)	192%	162%

Effect of material capital-related measures taken in the period between the calculation date and the publication date of the solvency ratio report:

Raising of capital instruments	-	220,000
Shareholders equity in respect of SCR	12,770,842	12,306,505
Surplus	6,109,203	4,850,620
Economic solvency ratio (in %)	192%	165%

* "Audited" refers to an audit held in accordance International Standard on Assurance Engagement (ISAE) 3400 – "The Examination of Prospective Financial Information."
** The solvency ratio calculation as of December 31 2019 does not include the effect of retrospective application following a policy change regarding LAT in life and health insurance.
(1) The above audited solvency ratio includes a NIS 200 million dividend distribution performed between the calculation date and report publication date. For the avoidance of doubt, it should be clarified that an additional dividend distribution and distribution of dividend in kind carried out in June 2021, as described in Section E. above, were not included in the results of the solvency ratio calculation as of December 31 2020, since they were carried out after the publication date of the Economic Solvency Ratio Report. See Section E below.

Main changes in capital surplus and in the economic solvency ratio compared to last year

Positive returns on risk-free interest in planholders' portfolios (which have a positive effect on Company's management fees income from these portfolios) and in the nostro portfolio caused an increase in the Company's Tier 1 Capital, and on the other hand increased the capital requirement. On a cumulative basis, these returns have had a significant positive effect on the Company's economic solvency ratio.
During 2020, the Company conducted studies and revised criteria in its actuarial model and the expenditure model, which had a positive effect on the solvency ratio.
A substantial positive effect on the solvency ratio was recorded as a result of an increase in accordance with the loss absorption adjustment due to a deferred tax asset, in accordance with the Company's estimate regarding utilizable tax credits. This effect reduced the capital requirement and, accordingly, increased the capital surplus.
A decline in the risk-free interest rate curve (in the mid- to long-term) has had a negative effect on the Company's capital surplus and solvency ratio.
In December 2020, the Company and a reinsurer rated AA entered into an agreement aimed at providing the Company with partial protection against a mass lapse scenario in its life and health insurance business. The effect of the transaction on the capital surplus is an increase of approximately NIS 290 million, which increases the solvency ratio by approximately 7% (taking into account the transitional provisions and the adjustment of the stock scenario). For further details regarding the transaction, please see the Company's immediate report dated December 27 2020.
In March 2021, the Company's Board of Directors approved a dividend distribution in the amount of NIS 200 million, which reduces the capital surpluses at this amount. According to the guidelines, the dividend amount will be deducted from the economic capital balance as of December 31 2020. For the avoidance of doubt, it should be clarified that an additional dividend distribution and distribution of dividend in kind carried out in June 2021, as described in Section e. above, were not included in the results of the solvency ratio calculation as of December 31 2020, since they were carried out after the publication date of the Economic Solvency Ratio Report.

The deduction amount

In March 2020, the Commissioner published an amendment to the provisions of the Consolidated Circular regarding the Liability Adequacy Testing (hereinafter - the "LAT Circular"). The amendment included changes in the way insurance liabilities are calculated as part of the Liability Adequacy Test (LAT), and determined that these changes would apply from the financial statements as of March 31 2020 as a change in accounting policies by way of retrospective application. In accordance with the Commissioner's Directives, the said amendment is not reflected in the calculation of the Deduction during the Transitional Period as of December 31 2019.

In March 2021, the Commissioner published a clarification in connection with this issue, stipulating that the calculation of the LAT Circular's effect on the Deduction during the Transitional Period as of December 31 2020 shall be carried out retrospectively, as follows: The Deduction during the Transitional Period will be calculated as of December 31 2019 using the same method as the one used to calculate the Economic Solvency Ratio Report for that date; the accounting-based insurance liabilities include the effect of the LAT Circular, and the economic-based insurance liabilities (best estimate plus risk margin) and added fair value of the designated bonds include the effect derived therefrom.

The Deduction during the Transitional Period as of December 31 2020 shall be based on the Deduction during the Transitional Period that was calculated retrospectively and will be deducted as described above. The effect of the LAT circular's application, as explained above, is to increase the amount of the Deduction during the Transitional Period by approximately NIS 382 million as of as of December 31 2019. Were it not for the capital surplus circular as of December 31 2020, it would have been NIS 5,816 million and the solvency ratio - 186%, after the Deduction as stated in the Letter of Principles. For details regarding the economic solvency ratio without applying the transitional provisions for the Transitional Period, and without adjusting the stock scenario, and for details regarding the solvency ratio target and restrictions imposed on the Company with respect to dividend distribution, please see Section C below.

B. Minimum capital requirement (MCR)

		As of December 31
	2020	2019**
		Audited*
		In NIS thousand
Minimum capital requirement (MCR)	1,665,410	1,863,971
Shareholders equity for MCR	9,773,104	8,919,336

* "Audited" refers to an audit held in accordance International Standard on Assurance Engagement (ISAE) Under Table 43400 – "The Examination of Prospective Financial Information."

** The calculation does not include the effect of retrospective application following a policy change regarding LAT in life and health insurance.

Below is a link to the Economic Solvency Ratio Report on the Company's website.

https://investor-relations.fnx.co.il/about-us/solvency-report/

C. Limitations on dividend distribution and solvency ratio without the implementation of the transitional provisions

The Company's policy is to have a solid capital base to ensure its solvency and ability to meet its liabilities to policyholders, to preserve the Company's ability to continue its business activity such that it is able to provide returns to its shareholders. The Company is subject to capital requirements set by the Commissioner.

On October 27 2020, The Phoenix Insurance's Board of Directors set a minimum economic solvency ratio target and target range based on Solvency II.

The minimum economic solvency ratio target, taking into account the transitional provisions, is set at 135% while the minimum solvency ratio target without taking into account the provisions during the Transitional Period is set at 105% set to reach 135% at the end of the Transitional Period according to the Company's capital plan.

Furthermore, The Phoenix Insurance's Board of Directors approved an economic solvency ratio target range of 150%-170%, within which the Company seeks to be during and at the end of the Transitional Period, taking into account the Deduction during the Transitional Period and its gradual reduction. As of December 31 2020, the Company meets the set targets. It is hereby clarified that the aforesaid does not guarantee that the Company will meet the set targets at all times.

Dividend

According to the letter published by the Commissioner, in October 2017, (hereinafter the "Letter") an insurance company shall be entitled to distribute a dividend only if, following the distribution, the company has a solvency ratio - according to the provisions of the Economic Solvency Regime - of at least 100%, calculated without taking into account the transitional provisions and subject to the solvency ratio target set by the Company's Board of Directors. The aforesaid ratio shall be calculated without the relief granted in respect of the original difference attributed to the acquisition of the provident funds and management companies. In addition, the letter set out provisions for reporting to the Commissioner.

The following are data on the Company's economic solvency ratio, calculated without taking into account the transitional provisions and the solvency ratio target set by the Company's Board of Directors, as required by the letter. As of December 31 2020, the ratio is higher than the target set by the Board of Directors.

D. Solvency ratio without applying the transitional provisions for the Transitional Period, and without adjusting the stock scenario:

	As of December 31
	2020**	2019**
	Audited*
	In NIS thousand
Shareholders' equity for SCR (in NIS thousand)	9,931,007	9,161,522
Solvency capital requirement (SCR) (in NIS thousand) (1)	8,557,405	8,896,554
Economic solvency ratio (in %)	116%	103%
Effect of material capital-related measures taken in the period between the calculation date and the publication date of the solvency ratio report:
Raising of capital instruments	-	220,000
Shareholders equity in respect of SCR	9,931,007	9,381,522
Surplus	1,373,602	484,967
Economic solvency ratio (in %)	116%	105%
Capital surplus after capital-related actions in relation to the Board of Directors' target:
Minimum solvency target, net of the transitional provisions	105%	105%
Capital surplus over target***	945,731	40,140

* "Audited" refers to an audit held in accordance International Standard on Assurance Engagement (ISAE) 3400 – "The Examination of Prospective Financial Information."
** The capital surplus includes 35% of the original difference attributed to the purchase of the activity of provident funds and management companies amounting to approximately NIS 15 million as of December 31 2020 and 2019. The difference is not recognized for dividend distribution purposes.
*** The solvency ratio calculation as of December 31 2019 does not include the effect of retrospective application following a proactive policy change regarding LAT in life and health insurance.
(1) The above audited solvency ratio includes a NIS 200 million dividend distribution performed during the first quarter of 2021, between the calculation date and report publication date. See Section E below.

E. Capital-related measures in 2021

During the first quarter of 2021, The Phoenix Insurance distributed a dividend in the amount of NIS 200 million, in accordance with the audited results as of December 31 2019, and in accordance with the results of an estimate to calculate the Solvency IIbased economic solvency ratio as of December 31 2020 (hereinafter, the "Estimate"). For further details regarding the Estimate, please see the Company's immediate report dated March 25 2021.

According to the audited results as of December 31 2020, following the dividend distribution, as stated above, the economic solvency ratio of The Phoenix Insurance is 192%, and the economic solvency ratio net of the transitional provisions for the Transitional Period and without adjusting the stock scenario is 116%.

The results exceed the minimum capital target set by the Board of Directors, which is 105% excluding the transitional provisions and 135% including the transitional provisions. Therefore, the Company meets the requirements of the letter published by the Commissioner in October 2017 regarding the restrictions on dividend distribution, as stated above.

In June 2021, The Phoenix Insurance distributed a cash dividend in the amount of NIS 200 million. Furthermore, The Phoenix Insurance completed the distribution of a dividend in kind of the Phoenix Excellence Pension and Provident Funds Ltd. further to the Company's report of December 31 2019. For more information about the distribution of the cash dividend and the distribution of the dividend in kind, see the Company's immediate report of June 6 2021. In the opinion of the Company, the solvency ratio as of December 31 2020, after the capital-related measures described above, and taking into account the transitional provisions, is 186%, without taking into account the Transitional Provisions - 110%.

Furthermore, on August 5 2021 a Tier 1 capital instrument at the total amount of NIS 200 million was issued (see Section 1.3.10 above); the said issuance is expected to increase the Company's solvency ratio - taking into account the transitional period - by 3%.

2.1.5 Changes in the linked shekel risk-free yield curve affect the Company's economic solvency ratio, especially in the mid- to long-terms, affect the Company's economic solvency ratio.

The following table summarizes the positive (negative) risk-free linked interest ("spot") rates:⁴

⁴ The risk-free linked interest rate curves were taken from Fair Spread Ltd. To calculate the solvency ratio, the Company takes into account other components in addition to the risk-free interest rate. For further details, please see the solvency ratio report published on October 28 2020 (Ref. No.: 2019-01-126082).

Range/years		Dec. 31 2020	June 30 2021	Aug. 22 2021
Short term	1-3	Between 0.13% and (0.85)%	Between (1.81)% and (1.64)%	Between (1.92)% and (1.85) %
Mid-term	4-10	Between (0.94)% and (0.58)%	Between (1.48)% and (0.58)%
Mid-long term	11-15	Between (0.49)% and (0.23)%	Between (0.47)% and (0.12)%	Between (0.68)% and (0.26)%
Long term	16-25	Between (0.18)% and 0.23%	Between (0.05)% and 0.39%	Between (0.17)% and 0.35%

The Company performed a sensitivity analysis for a corresponding decrease of 50 basis points along the risk-free linked shekel interest rate curve. The effect of such a scenario on the economic solvency ratio is a 13% decrease in the solvency ratio, taking into account the transitional provisions and 8% and excluding a transitional provision or adjusting a stock scenario. This scenario reflects the effects on equity, including the quantitative restrictions that apply to equity, on the economic solvency ratio and capital required for solvency purposes.

The sensitivity test only reflects direct effects on the economic solvency ratio, holding all other factors fixed, and do not include effects derived from changes arising from other risk factors. It should be noted that the sensitivity is not necessarily linear; i.e., sensitivity at other rates is not necessarily a simple extrapolation of the sensitivity test presented.

The calculation of the solvency ratio is based, among other things, on forecasts, assessments, and estimates of future events, the materialization of which is uncertain and is not under the Company's control, and which should be considered as "forward-looking information" as the term is defined in Section 32A to the Securities Law, 1968.

2.2. Arrangements in force

Set forth below are material regulatory directives published during the reporting period and thereafter, and which are not included in the Report on the Corporation's Business for 2020 and the Report of the Board of Directors for the first quarter of 2021. For further details regarding material regulatory directives published during the reporting period, please see Section 4.1.1 to the 2020 Report on the Corporation's Business as well as Section 2.2 of the Report of the Board of Directors for the first quarter of 2021.

2.2.1. In May 2021 the Circular on Acceptance of Planholders by a Pension or a Provident Fund - Amendment was published. The Amendment to Supervision of Financial Services Regulations (Provident Funds) (Direct Expenses Incurred as a Result of Execution of Transactions), 2008 of September 2020 stipulates that an institutional entity shall inform people wishing to join as planholders or policyholders in a provident fund of the collection in addition to management fees - of direct expenses as per the said regulations, and the rate of the direct expenses collected in the past year out of fund's assets in accordance with the terms and manner set by the Commissioner. Further to what is stated above, the amendment to the circular stipulates that an institutional entity shall disclose the collection of the direct expenses and their rate; such disclosure will be made in the notice issued to planholders once they have joined the fund, in the forms filled out by candidates to sign on to the provident funds, and on the management company's website, in the format specified in the circular.

2.2.2. In June 2021 a Circular on the Manner of Making Contributions to Provident Funds - Amendment - was published. The circular's key amendments include: reducing the scope of the requirement to send to the employee notice of discontinuance of contribution into his/her account such that this requirement will only apply if contributions to base salary were discontinued; cutting the period during which an employer can be given a feedback while making contributions to provident funds; requiring institutional entities to inform planholders who have funds in a transitional account; amending the mechanism for employer's application to receive a refund of excess amounts funded; and postponing the effective date of the requirement from small employers to report using the employers' platform.
2.2.3. In June 2021 a Circular on a Uniform Format for Transferring Information and Data in the Pension Savings Market - Amendment - was published. The circular's key amendments include: adding a new interface to the circular - "Events Interface Set Up", and requiring license holders to transfer applications to join provident funds using this interface; requiring that applications to transfer funds from a transferring fund to a receiving fund will only be submitted using the transition interface; cutting the period for giving initial feedback to an application to transfer funds submitted by a receiving fund to a transferring fund; and giving customers the option to update material details pertaining to his/her pension savings using the clearing system.
2.2.4. The Supervision of Insurance Business Regulation (Contract Terms and Conditions for Insuring a Private Vehicle) (Amendment), 2021 were published in June 2021. The regulations include a number of amendments and adjustments, including: revising the standard policy in view of the revocation of Regulation 172a to the Transport Regulations, such that an insurer will not be exempted from its duty under the policy if the driver had a driving license at any time during the 10-year period prior to the road accident date; revisions and adjustments in the policy regarding accessories and systems installed in modern vehicles; updating the policy's provisions as to the refund payable to a policyholder upon cancellation of the policy; giving a policyholder the right to decide whether he/she wishes to fix the car or receive compensation; and adding data to a policyholder's insurance history report.
2.2.5. In June 2021, Supervision of Financial Services Regulations (Provident Funds) (Investment Rules Applicable to Institutional Entities) (Amendment), 2021 was published. The regulations stipulate provisions on "additional holding" (in excess of 20%) in

means of control of companies operating in the field of infrastructure in Israel; provisions regarding investment in hybrid bonds and provision regarding investment in ETFs.

2.2.6. In June 2021 an Amendment of the Provisions of the Consolidated Circular - Chapter 4 of Title 5 "Management of Investment Assets" (Cooperation with a Related Fund) was published, which defined and outlined conditions for cooperation between an insurer and an investment fund which is a related party thereof.
2.2.7. In July 2021, the Commissioner of the Capital Market published a letter addressed to insurance companies' managers, dealing with principles for recognizing an investment in insurtech when calculating economic solvency ratio. In his letter, the Commissioner lists the principles that will be taken into consideration when assessing insurance companies' applications to recognize in their economic balance sheet an intangible asset due to investment in insurtech, as well as the procedure for approval of such applications.
2.2.8. in July 2021 a Circular on Supervising Actuary - Amendment of the Consolidated Circular - was published. The amendment stipulates that a Supervising Actuary who is appointed for the first time in a certain insurance segment or a pension fund, shall be supported by another actuary with relevant experience in that field during his/her first year in office, based on a detailed support program to be approved by the Commissioner of the Capital Market. It was also stipulated that the Supervising Actuary shall report to the Commissioner about the progress of the implementation of the support program; such report will be submitted once a quarter; the Supervising actuary shall also report to the Commissioner on the support program at the end of the support period and upon filing the annual financial statements.
2.2.9. In August 2021, a document entitled Procedure for Selecting the Selected Pension Funds was published. The document lists the rules of the new competitive process whereby the Commissioner of Capital Market will select default funds for the period from November 1 2021 through October 31 2024; the document lists the number of the funds to be selected, the parameters for selection, prioritizing small funds, minimum and maximum management fees that may be offered, and the offering discount in management fees to senior citizens.
2.2.10. In August 2021, a Circular on Provisions regarding the Selection of Provident Funds - Amendment was published, which sets additional criteria according to which an employer will be allowed to conduct a competitive process for the selection of default funds for its employees.
2.2.11. In August 2021, a Circular on Online Interface for Searching Insurance Products - Amendment was published. The purpose of the amendment is to enhance authentication measures when logging-in to the Har Habituach portal through the government's i.d. authentication system, in order to prevent impostors and others who are not authorized to act on behalf of the policyholders from submitting queries to the system. The amendment

stipulates, among other things, that the only employees of an insurance company who will be authorized to view data on the Har Habituach portal are those engaged in signing-on of insurance candidates, and that such employees can gain access to the portal by the insurance company's reporting their details on a quarterly basis to the Capital Market, Insurance and Savings Authority. It was also stipulated that insurance companies are required to have in place controls to ensure compliance with the circular's provisions regarding this matter.

2.3. Draft laws, regulations and bills

Set forth below are drafts of material regulatory provisions published during the reporting period and thereafter, which are not included in the 2020 Report on the Corporation's Business or in the Report of the Board of Directors for the first quarter of 2021. For further details regarding additional drafts of material regulatory provisions published during the reporting period, please see Section 4.1 to the 2020 Report on the Corporation's Business as well as Section 2.3 of the Report of the Board of Directors for the first quarter of 2021.

2.3.1. A draft circular revising the provisions of the Consolidated Circular on Compensation, was published in May 2021; the draft suggests allowing the payment of retention bonuses also to officers who were defined as "key employees", provided that they engage mainly in the field of investment, investment advice or investment-related research.
2.3.2. In May 2021 an Amendment of the Provisions of the Consolidated Circular - Chapter 4 of Title 5 "Management of Investment Assets" - Debt Settlement Arrangements and Rating Companies was published. The draft includes suggested amendments that aim to alleviate the regulatory burden imposed on institutional entities investing in debt; this includes reducing the scope of the definition of "debt settlement arrangement", such that the provisions of the Management of Investment Assets Chapter shall only apply when the relevant arrangement deals with troubled debt; cancellation of the exception regarding debt issued outside Israel; and clarifying the powers of the Investment Committee.
2.3.3. In May 2021, a draft circular on Services Rendered to Customers by Agents and Advisors - Amendment - was published. The amendment suggests promulgating provisions whose purpose is to tackle inappropriate practices that should not be used by insurance agents when rendering services to customers; this includes: the requirement to inform customers as to the manner of receiving the service from the agent; the requirement to record telephone conversations under the circumstances listed in the draft; disclosing to the customer the option of receiving information free of charge; the manner of presenting the price to the customer; and obtaining customer's consent for the purpose of purchasing the contact details of a potential customer (leads).
2.3.4. In May 2021 the draft Supervision of Financial Services Regulations (Insurance) (Collective Permanent Health Insurance), 2021 was published. The draft suggests

promulgating further provisions regarding collective permanent health insurance plans, including obtaining consent for joining a collective permanent health insurance plan; limiting the insurer's ability to increase the insurance fees; determining the policyholder's duties in connection with the collective insurance policy and its duty to send messages to the policyholder.

2.3.5. In April 2021 the Israel Securities Authority published a suggested outline for a Corporate Social Responsibility and ESG Risks Disclosure. In its suggested outline the Israel Securities Authority calls upon all reporting corporations whose securities are listed on the Stock Exchange to publish an annual corporate social responsibility report to their investors and other stakeholders; the Israel Securities Authority emphasized the fact that such a report will be published on a voluntary basis. The Israel Securities Authority calls upon every reporting corporation that will opt to publish such a corporate social responsibility report to draw up such a report based on generally accepted international standards and publish its close to the publication date of the periodic report in respect of the relevant reporting year. See also Section 1.3.8 above.
2.3.6. In June 2021 a number of draft circulars where published which suggest the promulgation of special provisions in connection with "senior citizens" or a "disabled persons", including: provisions on providing answers to the Capital Markets Authority regarding inquiries of "senior citizens" or "disabled persons" (draft circular on Regulating the Conduct of Supervised Entities when Dealing with Public Inquiries - Amendment); provisions regarding settlement of claims filed by "senior citizens" and "disable persons", such as the appointment of a specific representative who will serve as the contact person for the claimant throughout the claim process, giving claimants the option to submit a claim orally, reducing reply times and delivering messages orally (draft circular on Dealing with and Settling of Claims and Inquiries (Amendment)); requiring institutional entities to appoint an "officer in charge of senior citizens and disabled persons" (draft circular on Service to Institutional Entities' Customers (Amendment)); and setting rules on marketing phone calls with "senior citizens" and "disabled persons" (draft of the Signing-On to Insurance Plans Circular - Amendment).
2.3.7. The draft of the Signing-On to Insurance Plans Circular - Amendment was published in June 2021; the draft suggests, among other things, to require that the audio from conversations with policyholders or insurance candidates be recorded, to set provisions regarding the process in which the insurance needs of the candidate are reviewed, including the cancellation of an existing policy, and to set provisions regarding the purchase of "leads".
2.3.8. The Report of the Committee Advising to the Commissioner on Reviewing Direct Expenses was published in June 2021 The key recommendations listed in the draft report include: changing the structure of management fees and a transition to a single predetermined price, which includes both management fees and all other expenses and

calculated only as a rate of accruals; and giving institutional entities the option to offer customers investment tracks with performance-based management fees, which will be calculated symmetrically on a long-term basis above and below benchmarks. Furthermore, in July 2021 the draft Supervision of Financial Services Regulations (Provident Funds) (Direct Expenses Incurred as a Result of Execution of Transactions) (Temporary Order), 2021 was published; the draft suggests extending by further six month the temporary order whereby institutional entities may collect direct expenses subject to an expenses cap and on a retroactive basis as of July 7 2021 in order to allow the committee to complete its work and submit its recommendations.

2.3.9. In July 2021 a draft circular on Rules regarding Appropriate Traineeship - Draft was published. The circular suggests setting provisions and rules for the supervisor and the trainee; such provisions and rules shall constitute threshold requirements for appropriate traineeship as part of the legal requirements for receiving an insurance agent license, a pension advisor license or a pension marketing agent license; the rules and provisions will include, among other things: requiring the supervisor to assess the trainee's suitability for the role and clarify to him/her what is expected of him/her; appropriate conditions for the traineeship, such as the number weekly working days and the extent to which the trainee will work closely with the supervisor; and a minimum number of mandatory contents that will constitute the professional basis for appropriate traineeship.
2.3.10. In July 2021 a draft circular on Reporting Cyber Events and Technological Failure was published. The circular suggests determining the types of incidents which an institutional entity is required to report to the Commissioner as cyber events and technological failure, and further provisions on reports with material impact, so as to ensure that the entity takes the steps required to mitigate the damage caused by such an incident, to ensure the performance of appropriate recovery processes and the drawing of lessons from the incident; and to allows the Capital Market, Insurance and Savings Authority to take supplementary steps when there are concerns that an incident will have an extensive impact.
2.3.11. In July 2021 a draft circular on Revision of the Consolidated Circular on Reporting to the Public - Illustrative Financial Statements of an Insurance Company under IFRS 17 was published. The draft suggested modifying the format of the disclosure required in the annual financial statements of insurance companies in accordance with the expected changes in IFRSs. According to the draft, the format of the suggested disclosure was formulated based on the disclosure provisions set in the new standards, the disclosure format included in illustrative financial statements published by international auditing firms and the disclosure provisions currently included in illustrative annual financial statements of insurance companies.
2.3.12. In August 2021 and as part of the proposed 2021-2022 Government budget, the Government published the memorandum of the Economic Efficiency Law (Legislative Amendments for

Achievement of Budgetary Targets for Budget Years 2021 and 2022), 2021, which includes, inter alia, a chapter on "Ensuring the Stability of Yields in Pension Funds". In this context, it is proposed to replace the existing mechanism for ensuring the stability of pension fund savings through designated bonds with a new mechanism that ensures stability by supplementing returns. According to the proposal, for pension fund assets accrued as from the effective date of the amendment, the state will undertake to supplement pension fund returns up to a rate of 5%, linked to the CPI, and the pension fund assets underlying the commitment to supplement the returns will be invested in the capital market.

2.3.13. On August 2021 and as part of the proposed 2021-2022 Government budget, the Government published the memorandum of the Economic Efficiency Law (Legislative Amendments for Achievement of Budgetary Targets for Budget Years 2021 and 2022), 2021, which includes, inter alia, a chapter on the National Insurance Institute. In this chapter it is suggested that all insurers, other than Karnit, shall be required to transfer to Karnit every month - a certain rate of the insurance fees they collected in the previous month; this will be an alternative to the option now available to the National Insurance Institute, whereby it can submit a claim against insurers which are liable to pay damages. In the first stage, the amount to be transferred as above shall constitute 10% of insurance fees collected by insurers, and as from January 1 2025, the said rate will be 10.95%.
2.3.14. On August 2021 and as part of the proposed 2021-2022 Government budget, the Government published the memorandum of the Economic Efficiency Law (Legislative Amendments for Achievement of Budgetary Targets for Budget Years 2021 and 2022), 2021, which includes, inter alia, a chapter on the Regulation Reform. As part of the regulation reform, it is suggested to set up a regulation authority, whose main functions will be, inter alia, oversight of new and existing regulatory measures, promotion and coordination of collaboration between regulators and professional training of regulators. It is suggested that the law's applicability to "financial regulators" (including the Capital Markets Authority and the Israel Securities Authority) shall be limited in scope, i.e., those regulators will not report to the regulation authority in its capacity as an entity issuing guidance or as an auditor; those regulators shall be required to conduct Regulatory Impact Assessment (RIA) upon the publication of new regulations; however, such RIA will vary from that which will apply to the other regulators; furthermore, the Capital Markets Authority and the Israel Securities Authority will be required to draw up and publish an "Annual Regulation Plan".

3. Developments in the Macroeconomic Environment

Set forth below is a summary description of trends, events and developments in the Group's macroeconomic environment, that have or are expected to have an effect on the Group.

3.1. Financial markets in Israel

After the 6.2% contraction in GDP in the first quarter due to a third lockdown and the timing of placing vehicle orders (which were brought forward to the end of 2020 due to tax considerations), the indications are that there has been a strong recovery in economic activity in Q2. Those indications include the Bank of Israel's Composite State-of-the-Economy Index, which increased to average monthly levels of 0.25% in the second quarter. The unemployment rate increased slightly to 5.1% in May, but the rate of furloughed employees decreased in May to 1.7%. The Bank of Israel estimates that in 2021, growth will reach 6.3%; in its monetary decision, it left the interest rate unchanged. In addition, the Governor of the Bank of Israel explained that it had no intention of withdrawing from its bond purchase plan ahead of schedule, before its end date in the fall, and would even consider extending it if necessary. The Governor of the Bank of Israel added that it had patience in terms of allowing inflation to reach the target range. Following a state deficit of 12% during the coronavirus year, the Bank of Israel predicted an 8% deficit in 2021; in addition, it suggested that following the coronavirus period, the economy will reach a higher debt level of 80%. The Bank of Israel's foreign exchange reserves reached USD 200 billion. The inflation environment continued to rise, with the CPI up by 0.4% in May and 1.5% annually. Inflation expectations continued to soar, in line with the global trend, rising a sharp 1.9% - higher than the average 10-year inflation expectations, which were up 1.7% (in OTC trading).

The increase in inflation is mainly attributed to global factors, the most prominent of which are the increase in raw materials prices and the increase in freight costs. During May, Israel launched a military operation called Guardian of the Walls, which lasted 11 days; during the operation, rockets were fired into central Israel. However, the disruptions to economic activity were negligible and the capital market continued to operate relatively similar to the global trend. Towards the end of the quarter (June 13) a new government was formed, supported by a coalition, which is different than the former government.

The TA 125 index was up by 6.0%, the Tel Bond 60 index was up by 2.0%, the 10-year yield increased to 1.34%; the real 10-year yield increased to -0.56%. The USD has weakened by 2.5% against the shekel.

Subsequent to the balance sheet date

Subsequent to balance sheet date, there were further indications of an accelerated expansion of the economy in the second quarter, albeit at a slower pace, perhaps also due to the Guardian of the Walls operation. The Consumer Confidence Index decreased from 138 points in May to 137 points in June; industrial production declined by 1.7% in May, and the Bank of Israel's Composite State-of-the-Economy Index increased at a slower monthly rate of 0.14%. The unemployment rate increased to 5.4% in June, but the rate of furloughed employees decreased to 1.2% (compared with 1.7% in May). In July, the Bank of Israel reduced its 2021 growth forecast from 6.3% to 5.5% (but increased its 2022 growth forecast to 6.0%). In accordance with the Bank of Israel's monetary decision, interest rates remained unchanged, but the Bank explained that the bonds purchase program is now expected to continue until the end of the year, at which point the Bank may extend it. The Governor of the Bank of Israel also explained the Bank's willingness to be patient in terms of its monetary policy even after the latest increase in inflation. In June, the government deficit decreased to 10.1% of GDP, mainly due to a rapid increase in the treasury's tax revenues. The inflation environment in Israel continued to rise, with the CPI up by 0.1% in June and 1.7% annually. Inflation expectations abated; expectations for the 12-month period decreased from 1.9% to 1.8% and expectations for the 10-year period decreased from 1.8% to 1.7%, in line with the global trend. In the background, the Economic Arrangements Law that is currently being drawn up is set to include a number of reforms that may have a considerable effect on price levels; the law includes suggestions to tax private medicine and disposable tableware, reducing the rates of customs payable on fruit, vegetable and eggs, recognizing European and American standards, kashrut reforms, and more. The Delta variant of the coronavirus is spreading in Israel and increases the risk that restrictions will be reimposed.

The TA 125 index was down by 1.1%, the Tel Bond 60 index was up by 0.3%, the 10-year yield decreased to 1.25%; the real 10-year yield decreased to -0.69%. The USD has weakened by 0.3% against the shekel.

3.2. Capital markets abroad

The coronavirus pandemic - in most western countries, especially in the USA, infection rates decreased during the quarter, which allowed further lifting of restrictions. On the other hand, infection rates in Asia were on the increase, with the highest increase recorded in India (due to the Delta variant). The International Monetary Fund updated its growth forecast for the global economy in 2021 from 5.5% to 6.0%. In the US, GDP data for the first quarter showed a 6.4% expansion, following President Biden's sizable fiscal plan - which totals USD 2.3 trillion for ten years, primarily for infrastructure projects, but was met by opposition from Republicans, and is expected to be cut down substantially. The global economy continued to expand at a rapid pace, but growth was restricted by bottlenecks in the form of freight and in access to raw materials; this was reflected in a surprising decrease in the Purchasing Managers Index (PMI) for the USA's manufacturing sector.

Inflation expectations soared, but the increase was more prominent in the short-term where they increased to levels higher than expectations for the long-term. The 10-year inflation expectation in the USA increased in to 2.4%, while actual inflation rates in the USA increased in May by an annual rate of 5.0%, mainly due to a sharp increase in the prices of used car and energy. Central bank governors in Europe and the US have made it clear that they, too, regard the outbreak of inflation as an event with "temporary" indications and that they do not intend to deviate from their intention to leave that interest rates low for a significant period of time. In the US, Governor Powell made it clear that the Fed has not even considered when would be the right time to begin discussing a reduction in the bond purchase plan. The Fed's insistence has contributed to the stabilization of bond yields. Later on, the Fed's minutes showed that several participants supported such a discussion taking place as soon as the next meetings, raising concerns that inflation will be higher or last longer than currently estimated.

In the USA, the S&P 500 increased by 8.4%, in Europe, the Euro Stoxx increased by 3.7% and the emerging markets index MSCI EM increased by 4.4%. The 10-year yield in the US dropped to 1.47% and in Germany - rose to -0.21%.

Subsequent to the balance sheet date

The spread of the Delta variant of the coronavirus continued, and the virus now spreads in western countries; this raises concerns that restrictions on the economy may be reintroduced. Furthermore, price increases - led by soaring prices of goods, freight and difficulties to source chips - started to erode consumers' confidence and the expansion of companies. The index of leading indicators in the USA slowed in July to a level of 0.7%. On the other hand, the second quarter reporting season was exceptionally good for many companies; 87% of S&P 500 companies that have already published their financial statements achieved better than expected results, and consequently see the US stock market on the increase. On the other hand, in China it appears that the government decided to "discipline" the country's tech giants through, among other things, fines, investigations, sanctions, regulation and nationalization, and this led to a sharp slump in stock prices in the local stock exchange.

The oil cartel OPEC reached an agreement on increasing oil quotas; this contributed to the decline in oil prices down to levels of USD 68 per barrel; however, prices increased to USD 72, which supported further increases in prices of goods. Inflation rates continued to increase; in the USA annual inflation increased in June to 5.4%, but the 10-year average inflation remained relatively stable at 2.4%. In terms of monetary policies, the Chair of the Federal Reserve, Jerome Powell, said to a Congress committee that he still views current inflation levels as temporary, and that in case of an error the downside risk is higher than the upside risk, since in such a scenario his arsenal of policy tools is restricted. It is estimated that the Delta variant will delay the reduction of bonds purchases.

As to stock markets around the world, in the USA the S&P 500 increased by 2.4%, in Europe the Euro Stoxx increased by 0.7% and in emerging markets the MSCI EM declined by -8.9%. The 10-year yield in the USA deceased to 1.26% and in Germany it decreased to -0.45%.

4. The Board of Directors' Explanations for the State of the Corporation's Business

4.1. General

The Group's operations are affected by constant changes in regulations and regulatory reforms that are executed gradually. The Group operates in a complex, changing reality in which it must prepare for such regulatory changes.

In addition, as the controlling shareholder of institutional entities, the Group must also deal with proposed changes in the minimum capital requirements that apply to its institutional entities, which impose, among other things, restrictions on dividend distribution by institutional entities.

The Group's operations and results are significantly affected by the capital markets, including, among other things, the low-interest environment that has implications for its insurance liabilities and on the

returns embodied in the Group's financial asset portfolios, and consequently - on the management fees and financial margins from investments as well.

4.2. Summary of data from the Group's consolidated Financial Statements

Assets under management as of June 30 2021

Premiums, gross, contributions towards benefits and proceeds

Total assets under management by provident funds, excluding guaranteed return provident fund tracks, pension funds, ETFs, mutual funds, and customers' investment portfolios are not included in the Company's consolidated Financial Statements. Proceeds in respect of investment contracts are not included in premiums; rather, they are charged directly to liabilities in respect of insurance contracts and investment contracts.

For further details on the premiums in the various segments, please see Note 3 to the Financial Statements.

Income for 1-6/2021

4.3. Description of the development of the Group's financial position

Set forth below are key data from the consolidated balance sheets (in NIS billion):

Assets:

Total financial assets in respect of yield-dependent contracts and cash and cash equivalents in respect of yield-dependent contracts as of June 30 2021, amounted to approximately NIS 87.3 billion, compared to approximately NIS 68.1 billion as of June 30 2020 and NIS 78 billion as of December 31 2020.

Other assets as of June 30, 2021 amounted to NIS 45.6 billion, compared with NIS 41.1 billion as of December 31, 2020. The increase was mainly due to the first-time consolidation of the Gama's assets in the amount of approximately NIS 2.3 billion; for further details about the IPO and the Company's becoming a controlling shareholder in Gama, please see Section 1.3.4 above.

Liabilities:

Liabilities in respect of insurance contracts and yield-dependent investment contracts amounted to approximately NIS 86.2 billion as of June 30 2021, compared to approximately NIS 67.8 billion as of June 30 2020 and NIS 76.9 billion as of December 31 2020.

Other liabilities as of June 30, 2021 amounted to NIS 37.9 billion, compared with NIS 34.2 billion as of December 31, 2020. The increase was mainly due to the first-time consolidation of the Gama's liabilities in the amount of approximately NIS 2.1 billion; for further details about the IPO and the Company's becoming a controlling shareholder in Gama, please see Section 1.3.4 above.

4.4. Description of the development of the Group's comprehensive income:

4.4.1. General

4.4.1.1 At each reporting period, the Company reviews its sources of income, according to the segments breakdown, as outlined in Section 4.4.2. The Company also reviews its profitability by separating gains from activity which assume a real return of 3%, and gain from capital market effects above or below a real return of 3%, effects of interest and other special items as described in Sections 4.4.1.2, 4.4.3-4.4.4.

4.4.1.2 Special effects are considered by the Company as changes in profit or loss outside the ordinary course of the Company's business, including actuarial changes as a result of studies, changes in actuarial models, extraordinary effects due to structural changes and acquisition expenses following the implementation of the financial services strategy (hereinafter - "Special Items").
4.4.1.3 In the health insurance and in property and casualty insurance segments, the profitability analysis is based on a breakdown to underwriting earnings, which assumes a real return of 3%, and earnings stemming from capital market effects, which include income from nostro investments above or below a real return of 3%, the effect of the interest rate curve and other special items.
4.4.1.4 In the life insurance and long-term savings segment, the profitability analysis is based on a breakdown to underwriting earnings - which assumes a real return of 3%, including income from variable management fees in the profit participating portfolio based on said rate, fixed management fees and a financial margin in guaranteed return policies, which assumes said return both for the free portion and non-free portion of the portfolio, investment income after offsetting return credited to policyholders, and earnings stemming from capital market effects, which include income from nostro investments and management fees above or below a real return of 3%, the effect of the interest rate curve, including changes in the K factor, and other special items.
4.4.2. Set forth below is an analysis of the Company's financial performance by segment for the 6-month reporting period compared to the corresponding period last year (in NIS million):

In the reporting period, investment income, including pre-tax other comprehensive income, amounted to earnings of NIS 8,486 million compared with a loss of NIS 4,352 million in the corresponding period last year. The loss last year was due to the declines in financial markets in Israel and around the world following the spread of the coronavirus.

It should be noted that a significant portion of the said investment gains or losses was carried to participating policies and had no direct effect on the Company's results. The Company's results are mainly impacted by investment income from its nostro portfolio, as reflected in Sections 4.4.3-4.4.4 below.

Income from management fees increased in the reporting period by approximately NIS 489 million compared to the corresponding period last year. Most of the increase stems from the collection - during the reporting period - of NIS 372 million in variable management fees as a result of the positive trend in financial markets in Israel and across the world, whereas during the corresponding period last year such management fees were not collected and the K factor was adversely affected in the amount of NIS 175 million, due to the negative trend in financial markets in Israel and across the world as a result of the coronavirus crisis.

During the reporting period, the Company recorded a NIS 220 million profit from obtaining control in Gama; for more information, see Section 1.3.4.

For the effects on the results at the segment level, please see details in Sections 4.6-4.12 below.

Set forth below is an analysis of the Company's financial performance by segment in the second quarter of 2021 compared with the same period last year (in NIS million):

4.4.3. Set forth below is an analysis of the sources of the Company's pre-tax income by earnings per activity and earnings from capital market effects, interest rate and special items for the 6-month period ended in June 2021 (in NIS million):

(*) Please see Section 4.4.1.

Set forth below is an analysis of the sources of the Company's pre-tax income by earnings per activity and earnings from capital market effects, interest rate and special items in the second quarter of 2021 (in NIS million):

(*) Please see Section 4.4.1.

4.4.4. Set forth below is an analysis of the difference between the sources of the Company's pre-tax income by earnings per activity and earnings from capital market effects, interest and special items for the 6-month period in the reporting period relative to the corresponding period last year (in NIS million):

^(*) Please see Section 4.4.1.

Set forth below is an analysis of the difference between the sources of the Company's pre-tax income by earnings per activity and earnings from capital market effects, interest and special items in the second quarter of 2021 compared to the corresponding period last year (in NIS million):

1,130	40 (19) (27) (6)				(39)	174 (80) (53) (190)	(44) (46)	194 14-1 223 (7) (37)	1,104
						(149)			797


									295	Tax
									12	, Miniority
Total profit 4-6/20	Underwriting profit(*)	AM	Agencies	Credit	CO	Investments income (*)	Interest	Special items (*)	Total profit 4-6/21
			(25)					(1)
Results			Operation profit					Capital market and special items
Q2-21	185	38	59	12	(33)	553	(37)	327	1,104
Q2-20	191	40	44	5	6	702	g	133	1,130


P&C	LTS	Credit

(*) Please see Section 4.4.1.

4.4.5. Set forth below is an analysis of the differences between the interest rate effects and main special items on pre-tax insurance liabilities between the 6 months in the reporting period and the corresponding period last year (in NIS million):

+113 (+106%)
107	2	-- 25	(184)				445	220
					(351)	175
1-6/20		Interest		Winograd(*)		K- Other Reseach and Others 1-6/21
				△ H1/20 - H1/21
Results			-70 Interest			+290 Special items
1-6/2021	(16)	(54)			(218)		508	220
P&C
Health		(54)			(218)		168	(104)
LAT	(16)						128	112
AM							(8)	(8)
Credit							220	220
1-6/2020	(18)	(79)	184	(1)	133	(175)	ਦਤੋ	107
P&C	(10)			(1)				(11)
Health		(79)			133		રક	119
LAT	(8)		184		-	(175)	(5)	(4)
AM							3	3

Set forth below is an analysis of the difference between the interest effects and main special items on pre-tax insurance liabilities in the second quarter of 2021 compared with the corresponding quarter last year (in NIS million):

4.5. Set forth below are data regarding the Company's return on equity:

	1-6/2021	1-6/2020	4-6/2021	4-6/2020	1-12/2020
Return on shareholders' equity for the period (comprehensive income for the period) )*(	29.6%	5.2%	44.2%	55.3%	18.5%

(*) Return on equity is calculated based on the income for the period or comprehensive income for the period attributed to Company's shareholders, adjusted to reflect a one-year period and divided by the average equity for the period

Set forth below is a description of the developments in the Group's financial performance, by operating segment (in NIS million, before tax):

4.6. Developments in the life insurance and long-term savings (LTS) operating segment

Set forth below is an analysis of the main effects and changes on the results of the life insurance and long-term savings subsegment for the reporting period compared to the corresponding period last year (in NIS million):

4.6.1. Set forth below is an analysis of the main effects and changes on the results of the life insurance and long-term savings subsegment for the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

4.6.2. Life insurance subsegment

Earnings on investments have a material effect on the profitability of this segment, which is characterized by accrual of significant reserves over long periods. Investment earnings are affected by capital market fluctuations, as well as changes in interest rates and the rate of change in the Israeli consumer price index, which affect the yields on liquid financial asset portfolios held against insurance and contingent claims reserves. It should be noted that a significant portion of the investment income was carried to participating policies and has no direct effect on the Company's results.

Set forth below is an analysis of the main effects and changes on the results of the life insurance subsegment for the reporting period compared to the corresponding period last year (in NIS million):

Compared with the corresponding quarter last year, the results in the reporting period were mainly impacted by the increase in income from nostro investments and special items. The NIS 636 million increase in income from nostro investments stemmed mainly from the positive trend in financial markets in Israel and across the world which resulted with collection of variable management fees at a total amount of NIS 372 million in the reporting period, whereas during the corresponding period last year such management fees were not collected due to the coronavirus crisis; the said increase in income from nostro investments was also caused by an increase in the financial margins on guaranteed return policies.

The impact of interest in the reporting period compared with the corresponding period last year caused a NIS 192 million decrease in earnings mainly due to the increase in the interest curve in the corresponding period last year.

The NIS 308 million increase in special items stemmed from changes to model assumptions and updates in the reporting period totaling NIS 128 million compared with the corresponding period last year, with the sharp decline in variable management fees impacting the K factor and triggering a NIS 175 million increase in insurance liabilities.

For further details regarding sensitivity of the insurance liabilities to a change in the interest rates, please see Note 40 to the Annual Financial Statements.

Set forth below is an analysis of the main effects and changes on the results of the life insurance subsegment for the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

Compared with the corresponding quarter last year, the results in the second quarter were mainly impacted by the increase in income from nostro investments. The increase in income from nostro investments stemmed mainly from the positive trend in financial markets in Israel and across the world, which resulted with collection of variable management fees at a total amount of NIS 173 million, whereas during the corresponding period last year such management fees were not collected due to the coronavirus crisis.

The NIS 14 million increase in special items stemmed from changes to the actuarial model assumptions and from updates to the actuarial model in the reporting period at the total amount of NIS 141 million compared with the corresponding period last year, which when offset against the sharp decline in variable management fees impacted the K factor and triggered a NIS 127 million decrease in insurance liabilities.

4.6.3. The rate of redemptions out of the average reserve (in annual terms) was approximately 3.7% compared with 2.7% in the corresponding period last year. Most of the increase in the redemption rate is due to transfer from one provident fund product to another within the Company. It should be noted that the general state of the economy, transition from product to product, employment rates, the coronavirus crisis, employees' wages, and market competition all affect this rate.

4.6.4. Weighted returns on participating policies

Set forth below are details concerning estimated net investment earnings attributed to policyholders of participating policies and management fees calculated according to the Insurance Commissioner's guidelines, based on insurance reserve balances and returns:

	1-6/2021	1-6/2020	4-6/2021	4-6/2020	1-12/2020
			In NIS million
Investment gains (losses) attributed to policyholders after management fees(*)	5,916	(4,224)	3,071	3,127	3,333
Management fees	631	213	307	102	740

(*) Excluding investment income (losses) credited (debited) to policyholders in the health insurance segment.

Set forth below are the nominal returns on participating policies in respect of policies issued from 1992 to 2003:

	Policies issued up to 2004 (Fund J)
	1-6/2021	1-6/2020	4-6/2021	4-6/2020	1-12/2020
Nominal returns before payment of management fees	9.55%	(6.57%)	5.00%	5.15%	6.61%
Nominal returns after payment of management fees	8.01%	(6.87%)	4.31%	5.00%	4.99%
Real returns before payment of management fees	8.03%	(5.92%)	3.65%	5.36%	7.25%
Real returns after payment of management fees	6.52%	(6.22%)	2.97%	5.21%	5.61%

Fluctuations in these returns are a function of capital market returns in Israel and abroad, changes in the consumer price index, and changes in the exchange rate of the shekel against major currencies.

Set forth below are the nominal returns on participating policies in respect of policies issued from 2004 and thereafter:

	Policies issued from 2004 and thereafter
	1-6/2021	1-6/2020	4-6/2021	4-6/2020	1-12/2020
Nominal returns before payment of management fees	8.78%	(6.31%)	4.40%	5.77%	7.03%
Nominal returns after payment of management fees	8.25%	(6.77%)	4.15%	5.52%	5.97%
Real returns before payment of management fees	7.27%	(5.65%)	3.06%	5.99%	7.67%
Real returns after payment of management fees	6.75%	(6.12%)	2.81%	5.73%	6.61%

4.6.5. Provident funds subsegment

The Group manages provident and advanced education funds through The Phoenix Excellence, a wholly owned subsidiary of the Company, which manages benefits and severance pay funds, advanced education funds, a central benefits and severance pay fund, a yield-guaranteed provident fund, an investment provident fund, a child long-term investment provident fund for savings, a self-directed benefits provident fund, and a personally managed advanced education fund.

For further details regarding the transfer of the shares of Phoenix Excellence Pension and Provident Funds Ltd. by way of a dividend in kind to the Company in the reporting period, please see Section 1.3.5 above.

As part of the implementation of its strategy and its wish to expand its asset management activities, in provident and pension funds activities in particular, on February 28 2021, the merger transaction - under which the Company acquired Halman Aldubi - was completed. For further details, please see Section 1.3.7 below.

Set forth below are key data as to the financial results of the provident funds subsegment; for further details please see Note 3 to the Financial Statements.

The pre-tax comprehensive income in the reporting period amounted to approximately NIS 20 million compared to approximately NIS 15 million during the corresponding period last year.

The increase in profit over the corresponding period last year is mainly due to the increase in capital market yields, which affected both the margin in guaranteed return provident funds and in the investment income from the management company's nostro portfolio. The effect was partially offset by the increase in general and administrative expenses and in marketing and purchase expenses.

Set forth below are developments in contributions towards benefits and total assets under management:

(*) Excluding the assets of the IEC provident funds in the amount of NIS 43 billion).

Based on Ministry of Finance data,5 aggregate contributions towards benefits in the provident funds subsegment in the first half of 2021 totaled approximately NIS 26,949 million, compared to a total of approximately NIS 20,836 million in the first half of last year, reflecting an increase of approximately 29.3%. According to the Ministry of Finance data, as of June 30 2021, total assets under management in the provident funds subsegment amounted to approximately NIS 638 billion, compared to approximately NIS 516 billion as of June 30 2020, an increase of approximately 23.7%.

4.6.6. Pension funds subsegment

The Group's pension subsegment is conducted through the Phoenix Excellence, a whollyowned subsidiary of the Company.

For further details regarding the transfer of the shares of Phoenix Excellence Pension and Provident Funds Ltd. by way of a dividend in kind distribution to the Company in the reporting year, please see Section 1.3.5 above.

As part of the implementation of its strategy and its wish to expand its asset management activities in general and its pension funds activities in particular, on February 28 2021, the merger transaction - under which the Company acquired Halman Aldubi - was completed. The sale to Meitav Dash Provident of the new pension funds managed by Halman Provident was completed on June 30 2021. For further details, please see Section 1.3.7 below.

Set forth below are key data as to the financial results of the pension subsegment; for further details please see Note 3 to the Financial Statements.

The pre-tax earnings in the reporting period amounted to NIS 9 million compared with a pretax loss of NIS 8 million in the corresponding period last year. The increase in earnings

⁵ Based on Gemel Net data.

stemmed mainly from increase in returns in the capital markets, which resulted in a NIS 5 million increase in the management company's income from nostro investments compared with the corresponding period last year, and from a NIS 18 million increase in management fees, offset by the NIS 6 million increase in general and administrative expenses and marketing and purchase expenses.

Set forth below are developments in contributions towards benefits and total assets under management:

Based on Ministry of Finance data,6 aggregate contributions towards benefits in the new comprehensive provident funds subsegment in the first half of 2021 totaled approximately NIS 23,718 million, compared to a total of approximately NIS 21,534 million in the first half of last year, reflecting an increase of approximately 10.1%.

According to Ministry of Finance data, as of June 30 2021, total assets under management in the new comprehensive pension funds subsegment amounted to a total of approximately NIS 523 billion, compared to approximately NIS 401 billion on June 30 2020, an increase of approximately 30.3%.

4.7. Health insurance

Earnings on investments affects the profitability of this segment, some of whose products (such as long-term care insurance) are characterized by accrual of significant reserves over long periods. Investment earnings are affected by capital market fluctuations, as well as changes in interest rates and the rate of change in the Israeli consumer price index, which affect the yields on liquid financial asset portfolios held against insurance and contingent claims reserves. It should be noted that at this stage, the Company has ceased to market long-term care insurance policies in view of the guaranteed return in long-term care insurance plans, and the complexity of the related reinsurance in this area.

4.7.1. Set forth below is an analysis of the main effects and changes on the results of the health insurance subsegment for the reporting period compared to the

⁶ Based on Pension Net data.

The results in the reporting period compared with the corresponding period last year were mainly from a NIS 248 million decrease in earnings as a result of special items. During the reporting period, the Company increased individual and group long-term care reserves as a result of changes in morbidity assumptions and model updates in the amount of NIS 154 million, compared with the corresponding period last year, in which the Company reduced the individual and group long-term care reserves as a result of changes in expense assumptions and model updates in the amount of NIS 133 million. Furthermore, during the reporting period, the Company reduced the individual health insurance reserve as a result of changes in morbidity assumptions and model updates in the amount of NIS 103 million, compared with a decrease in the individual health insurance reserve in the amount of approximately NIS 19 million in the corresponding period last year. In addition, the profit in the corresponding period last year includes a decrease in the individual long-term care and health insurance reserve due to the profitability embodied in the present value of the current fees and commissions in respect of agencies owned by the Company in the amount of NIS 46 million. For further details, please see Note 8 to the Financial Statements.

Net of said effect, the decrease in underwriting earnings in the reporting period compared to the corresponding period last year is mainly due to a decrease in profit in individual and group health insurance policies as a result of a decrease in the incidence of claims filed last year mostly due to the effect of the coronavirus and a decrease in profit in respect of foreign travel.

Set forth below is an analysis of the main effects and changes on the results of the health insurance subsegment for the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

The results of the current quarter compared with the corresponding quarter last year were affected mainly by a decrease of approximately NIS 80 million in investment income following the rallies in financial markets in Israel and across the world, which were higher last year compared with the current quarter; the results were also affected by the changes in the interest rate curve and illiquidity premium compared with the corresponding quarter last year, which totaled NIS 44 million. In addition, the loss in the current quarter includes updates to assumptions and models that increased individual and group long-term care reserves by NIS 142 million, while an update to assumptions and models reduced individual health insurance reserves by NIS 112 million. For further details, please see Note 8 to the Financial Statements.

Net of said effect, the decrease in underwriting earnings in the current quarter compared to the corresponding quarter last year is mainly due to a decrease in profit in individual and group health insurance policies as a result of a decrease in the incidence of claims last year, primarily due to the effect of the coronavirus.

4.8. Property and casualty insurance

4.8.1. Set forth below is an analysis of the main effects and changes on the results of the property and casualty insurance subsegment for the reporting period compared to the corresponding period last year (in NIS million):

The increase in underwriting earnings in the reporting period compared to the corresponding period last year is due to the decrease of the insurance liabilities for previous years mainly due to the effect of weather damage and losses in the flight cancellation subsegment following the spread of the coronavirus during the corresponding period last year.

Set forth below is an analysis of the main effects and changes on the results of the property and casualty insurance subsegment for the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

Compared with the results of the corresponding period last year, the results in the second quarter were affected mainly by a NIS 53 million decrease in investment income since the trend in financial markets in Israel and across the world was more positive in the second quarter last year compared with the second quarter this year.

The decrease in underwriting earnings in the second quarter compared to the corresponding quarter last year stems primarily from a positive trend in motor property insurance in the corresponding quarter last year, as a result of a decline in claims due to the low scope of economic activity following the coronavirus restrictions.

4.8.2. Set forth below is the pre-tax comprehensive income in the various subsegments of property and casualty insurance (P&C) for the reporting period compared with the corresponding period last year (in NIS million):

Set forth below are the results of the (pre-tax) underwriting earnings in the various subsegments of property and casualty insurance for the reporting period compared with the corresponding period last year (in NIS million):

4.8.3. Set forth below is the pre-tax comprehensive income in the various subsegments of property and casualty insurance for the second quarter of 2021 compared with the corresponding quarter last year (in NIS million):

Set forth below are the results of the (pre-tax) underwriting earnings in the various subsegments of property and casualty insurance for the second quarter of 2021 compared with the corresponding quarter last year (in NIS million):

	Motor property
			In NIS million
	1-6/2021	1-6/2020	4-6/2021	4-6/2020	1-12/2020
Gross loss ratio	71.0%	62.4%	76.9%	53.0%	66.9%
Retention loss ratio	71.0%	62.4%	76.9%	53.0%	66.9%
Gross combined ratio	98.7%	90.5%	107.7%	81.6%	96.4%
Retention combined ratio	98.7%	90.5%	96.4%
	107.7% 81.6% Property and other subsegments
			In NIS million
	1-6/2021	1-6/2020	4-6/2021	4-6/2020	1-12/2020
Gross loss ratio	31.1%	50.7%	32.9%	42.8%	40.7%
Retention loss ratio	21.2%	49.6%	22.5%	35.2%	37.8%
Gross combined ratio	57.5%	76.8%	61.4%	69.8%	68.9%
Retention combined ratio	56.6%	81.1%	67.7%	70.4%	76.4%

4.8.4. Set forth below is the gross loss ratio and combined ratio, and retention loss ratio in the motor property and other subsegments:

4.9. Financial services segment

Most of the segment's activities are carried out through Excellence.

Set forth below is an analysis of the main effects and changes on the results of the financial services segment for the reporting period compared to the corresponding period last year (in NIS million):

The decrease in profit in the reporting period compared to the corresponding period last year was mainly due to a significant gain in market-making activity as a result of the outbreak of the coronavirus in the corresponding period last year in the amount of NIS 19 million, in addition to NIS 12 million as a result of a decline in spreads on foreign currency deposits. The increase in special items stems mainly from an increase in the acquisition expenses as a result of the growth strategy in the retail brokerage portfolio.

Set forth below is an analysis of the main effects and changes on the results of the financial services segment for the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

The insurance agencies segment

Set forth below is an analysis of the main effects and changes on the results of the insurance agencies segment for the reporting period compared to the corresponding period last year (in NIS million):

Set forth below is an analysis of the main effects and changes on the results of the insurance agencies segment for the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

The increase in profits stems primarily from continued growth and increase in agencies' sales further to the implementation of the Company's strategy of purchasing new agencies.

4.10. The credit segment

In June 2021, Gama Management and Clearing Ltd. completed its IPO on the TASE following the Supplementary Prospectus for of the sale offer and initial public offering of shares, and listing of its shares on the TASE, dated May 31 2021. Simultaneously with the execution of the offering in accordance with the Prospectus, The Phoenix Investments purchased additional Gama shares, such that after the Offering and the acquisition of the purchased shares, The Phoenix Investments holds approximately 61.6% of Gama's issued and paid-up share capital and voting rights therein (approximately 60% on a fully diluted basis) and became the controlling shareholder in Gama. During the reporting period, the Company consolidated Gama's financial statements for the first time. For more information about Gama's activity, see Appendix A to the Report.

Set forth below is an analysis of the main effects and changes on the results of the credit segment for the reporting period compared to the corresponding period last year (in NIS million):

Set forth below is an analysis of the main effects and changes on the results of the credit segment for the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

The special items include a one-time capital gain in the amount of approximately NIS 220 million as a result assuming control as detailed above.

4.11. Other segments and operation not attributed to the operating segments

Set forth below is an analysis of the main effects and changes on the results of "other" segment and activity that is not attributed to activity segments in the reporting period compared to the corresponding period last year (in NIS million):

The increase in investment income in the reporting period was due to the rally in financial markets in Israel and around the world compared with the decline therein in the corresponding period last year, mainly on the back of the spread of the coronavirus. The decrease in the financial margin resulted from the increase in the CPI, which led to an increase in finance expenses.

Set forth below is an analysis of the main effects and changes on the results of "other" segment and activity that is not attributed to activity segments in the second quarter of 2021 compared to the corresponding quarter last year (in NIS million):

The decrease in investment earnings in the second quarter compared to the corresponding quarter last year is due to a higher increase in earnings in the second quarter last year as a result of the positives trends in financial markets in Israel and across the world compared to the current quarter.

4.12. Analysis of cash flow development

The consolidated cash flows from operating activities in the reporting period amounted to approximately NIS 1,903 million. The consolidated cash flows used for investing activities in the reporting period amounted to NIS 593 million and mainly included a total of NIS 106 million used for software development and purchase, a total of NIS 29 million used to purchase property, plant and equipment, and a total of NIS 458 million used to acquire companies consolidated for the first time.

The consolidated cash flow provided by financing activities in the reporting period amounted to approximately NIS 117 million; the cash flows included, among other things, a total of NIS 348 million arising from the issuance of a financial liability, a total of NIS 188 million used to repay financial liabilities, and a total of NIS 193 million used to assume financial liabilities, as well as a total of NIS 380 million used for a dividend distribution to the Company's shareholders.

The Group's cash and cash-equivalent balances increased from a total of approximately NIS 12,010 million at the beginning of the reporting period to approximately NIS 13,203 million at the end of the reporting period.

5. Disclosure on Exposure to, and Management of, Market Risks

During the reporting period, there were no material changes in exposure to market risks and management methods thereof in relation that which is described in the 2020 Periodic Report, except as follows:

In February 2021, the Company expanded Bonds (Series 5) by NIS 222,616 thousand bonds of NIS 1 p.v. each, for a total of NIS 222,616 thousand, gross. The bonds (principal and interest) are linked to the CPI, and carry a linked annual interest, as stated, of 0.44%, payable in two semi-annual installments, in April and October of each calendar year from 2021 to 2030. Following the expansion, there has been a change in the exposure to linked interest rates in relation to the data as of December 31 2020.

The following table summarizes the results of the sensitivity tests to the linked interest rate on comprehensive income before tax, as of in June 30 2021. The results are presented in NIS million, and do not include the insurance company:

		Profit (loss) from changes in the risk factor			Profit (loss) from changes in the risk factor
Type of instrument	Absolute increase of 2%	10% increase	5% increase	Fair value	5% decrease	10% decrease	Absolute decrease of 2%
Government bonds	(0.2)	-	-	4.5	-	-	0.3
Corporate bonds	(0.9)	(0.1)	-	15.1	-	0.1	1.0
Capital note to the insurance company	(80.9)	(4.0)	(2.0)	702.7	2.0	4.0	95.4
Total assets	(82.0)	(4.1)	(2.0)	722.4	2.0	4.0	96.8
The Phoenix bonds	76.1	4.4	2.2	(845.6)	(2.2)	(4.4)	(88.1)
Total liabilities	76.1	4.4	2.2	(845.6)	(2.2)	(4.4)	(88.1)
Total	(5.9)	0.4	0.2	(123.2)	(0.2)	(0.4)	8.6

(*) The value of The Phoenix's bonds under the model is 1.34% lower than their market value (857.2).

In February 2021, the Company expanded Bonds (Series 4) by NIS 127,384 thousand bonds of NIS 1 p.v. each, for a total of NIS 127,384 thousand, gross. The bonds (principal and interest) are not linked to the CPI, and carry a non-linked annual interest, as stated, of 1.38%, payable in four quarterly installments, in January, April, July and October of each calendar year from 2021 to 2028. Following the expansion, there has been a change in the exposure to non-linked shekel interest rates in relation to the data as of December 31 2020.

The following table summarizes the results of the sensitivity tests to the non-linked shekel interest rate on comprehensive income before tax, as of in June 30 2021. The results are presented in NIS million, and do not include the insurance company:

		Profit (loss) from changes in the risk factor			Profit (loss) from changes in the risk factor
Type of instrument	Absolute increase of 2%	10% increase	5% increase	Fair value	5% decrease	10% decrease	Absolute decrease of 2%
Government bonds	-	-	-	3.2	-	-	-
Corporate bonds	(0.2)	-	-	4.2	-	-	0.2
Capital note to the insurance company	(38.4)	(1.8)	(0.9)	334.1	0.9	1.8	45.4
Total assets	(38.6)	(1.8)	(0.9)	341.5	0.9	1.8	45.6
The Phoenix bonds	19.5	0.4	0.2	(680.7)	(0.2)	(0.4)	(21.6)
Total liabilities	19.5	0.4	0.2	(680.7)	(0.2)	(0.4)	(21.6)
Total	(19.1)	(1.4)	(0.7)	(339.2)	0.7	1.4	24.0

(*) The value of The Phoenix's bonds under the model is 0.73% lower than their market value (685.7).

Assumptions underlying the calculations

Fair value: Fair value was calculated using the discounted cash flow model, using the appropriate interest rate for the cash flow period. The discount rate was calculated based on the market interest rate for the cash flow period, plus the risk premium derived from the security's rating. Market interest rate data was taken from the Reuters' database, that feeds The Phoenix's risk management system, and risk premium data (credit spreads) were taken from Fair Spread.

Scenarios: Daily historical changes in the past ten years were tested for each of the relevant risk factors (such as exchange rates and shares). The maximum and minimum daily changes were calculated for each risk factor, excluding interest rate risk, for which the calculation was based on a 2% absolute increase/decrease during a single day. This scenario was selected after a study of the yield curve database found that in the past 10 years, no absolute change exceeding 2% was observed in any single day. These changes served as scenarios for potential changes in each of the risk factors. Scenario outcomes were calculated at the single asset level, so as to avoid distorting results by aggregating different instruments.

Linkage bases of assets and liabilities in the consolidated balance sheet (in NIS thousand) as of June 30 2021

1-53

	NIS			Non	Provident	Credit	ETNs -	Israeli
			Foreign currency	monetary	and pension	companies	linkage to	insurance
	Non-linked	CPI-linked		items	companies	in Israel	various	company	Total
Intangible Assets		-	- -	1,514,265	441,313	3,577	-	696,110	2,655,265
Deferred tax assets		-	- -	54,992	607	3,239	-	-	58,838
Deferred acquisition costs		-	- -	-	432,498	-	-	1,437,910	1,870,408
Property, plant & equipment		-	- -	149,732	21,954	9,242	-	663,770	844,698
Investments in investees	32,118	16,810	-	43,643	762	-	-	482,215	575,548
Investment property in respect of yield-dependent contracts		-	- -	-	-	-	-	1,938,918	1,938,918
Investment property - other		-	- -	-	-	-	-	1,060,819	1,060,819
Reinsurance assets		-	- -	-	-	-	-	2,605,989	2,605,989
Credit for purchase of securities	430,000		- 48,000	-	-	-	-	-	478,000
Current tax assets		- 17,678	-	-	1,702	8,750	-	152	28,282
Receivables and debit balances	207,001		- -	-	50,099	6,691	-	430,527	694,318
Credit in respect of factoring, clearing and financing		-	- -	-	-	2,283,531	-	-	2,283,531
Premiums collectible		-	- -	-	-	-	-	699,620	699,620
Held-for-sale assets of disposal group		-	- -	40,957	3,447	-	-	1,836,709	1,881,113
Financial investments in respect of yield-dependent contracts		-	- -	-	-	-	-	74,114,354	74,114,354
Financial investments for holders of bonds, ETNs, short ETNs,
composite ETNs, deposit certificates and structured bonds		-	- -		-	- -	229,000	-	229,000
Liquid debt assets	13,090	13,816	-	-	68,500	-	-	7,167,362	7,262,768
Non-liquid debt assets	537,254	235,656	14,000	-	904,997	11,500	-	12,248,364	13,951,771
Shares		-	- -	98,619	18,662	994	-	2,570,777	2,689,052
Other	13,001		- -	15,330	37,963	-	-	3,684,537	3,750,831
Cash and cash equivalents in respect of yield-dependent contracts
		-	- -	-	-	-	-	11,098,327	11,098,327
Other cash and cash equivalents	312,301		- 29,712	-	68,458	3,558	-	1,690,949	2,104,978
Total assets	1,544,765	283,960	91,712	1,917,538	2,050,962	2,331,082		229,000 124,427,409 132,876,428

Liabilities in respect of insurance contracts and non-yield
dependent investment contracts		-	- -		- 936,175	-		- 23,360,868	24,297,043
Liabilities in respect of insurance contracts and yield-dependent
investment contracts		-	- -		-	- -		- 86,163,297	86,163,297
Liabilities in respect of deferred taxes		-	- -	23,670	63,824	-	-	741,093	828,587
Liability for employee benefits, net	17,495		- -	-	4,736	5,428	-	54,392	82,051
Liability in respect of current taxes		- 18,533	-	-	8,577	-	-	52,996	80,106
Payables and credit balances	295,344		- -	-	121,972	27,561	-	2,124,333	2,569,210
Held-for-sale liabilities of disposal group		-	- -	9,113	1,348	-	-	869,904	880,365
Liabilities for bonds, ETNs, short ETNs, composite ETNs and
structured bonds		-	- -		-	- -	228,000	-	228,000
Financial liabilities	1,484,427	1,100,411	59,500	-	18,635	2,021,233	-	4,129,544	8,813,750
Total liabilities	1,797,266	1,118,944	59,500	32,783	1,155,267	2,054,222		228,000 117,496,427 123,942,409
Total exposure	(252,501)	(834,984)	32,212	1,884,755	895,695	276,860	1,000	6,930,982	8,934,019

Linkage bases of assets and liabilities in the consolidated balance sheet (in NIS thousand) as of June 30 2020

1-54

	NIS			Non	ETNs -	Israeli
	Non-linked	CPI-linked	Foreign currency	monetary items	linkage to various	insurance company	Total
Intangible Assets	-		- -	818,460	-	975,386	1,793,846
Deferred tax assets	-		- -	28,713	-	-	28,713
Deferred acquisition costs	-		- -	-	-	1,724,021	1,724,021
Property, plant & equipment	-		- -	79,444	-	682,388	761,832
Investments in investees	73,066	15,311	-	163,313	-	487,639	739,329
Investment property in respect of yield-dependent contracts	-		- -	-	-	1,759,422	1,759,422
Investment property - other	-		- -	54,888	-	2,665,532	2,720,420
Reinsurance assets	-		- -	-	-	2,544,932	2,544,932
Credit for purchase of securities	316,500		- 8,500	-	-	-	325,000
Current tax assets	-	10,516	-	-	-	38,833	49,349
Receivables and debit balances	177,558		- -	-	-	275,453	453,011
Premiums collectible	-		- -	-	-	736,632	736,632
Financial investments in respect of yield-dependent contracts	-		- -	-	-	56,974,193	56,974,193
Financial investments for holders of bonds, ETNs, short ETNs,
composite ETNs, deposit certificates and structured bonds	-		- -	-	271,000	-	271,000
Liquid debt assets	19,424	45,321	69	-	-	8,022,629	8,087,442
Non-liquid debt assets	257,947	333,062	9,012	-	-	13,072,349	13,672,370
Shares	-		- -	52,362	-	1,395,785	1,448,147
Other	10,534		- -	-	-	2,564,829	2,575,363
Cash and cash equivalents in respect of yield-dependent contracts
	-		- -	-	-	9,185,575	9,185,575
Other cash and cash equivalents	438,101		- 14,000	-	-	1,467,411	1,919,512
Total assets	1,293,130	404,209	31,581	1,197,180		271,000 104,573,009 107,770,109
Liabilities in respect of insurance contracts and non-yield
dependent investment contracts	-		- -	-		- 23,388,028	23,388,028
Liabilities in respect of insurance contracts and yield-dependent
investment contracts	-		- -	-		- 67,830,848	67,830,848
Liabilities in respect of deferred taxes	-		- -	6,324	-	604,925	611,249
Liability for employee benefits, net	13,470		- -	-	-	50,830	64,300
Liability in respect of current taxes	-	15,302	-	-	-	11,634	26,936
Payables and credit balances	159,314		- -	-	-	1,874,142	2,033,456
Liabilities for bonds, ETNs, short ETNs, composite ETNs and
structured bonds	-		- -	-	270,000	-	270,000
Financial liabilities	1,219,108	619,792	31,023	-	-	4,749,265	6,619,188
Provision for payment for acquisition of an investee	-		- -	-	-	-	-
Total liabilities	1,391,892	635,094	31,023	6,324	270,000		98,509,672 100,844,005
Total exposure	(98,762)	(230,885)	558	1,190,856	1,000	6,063,337	6,926,104

Linkage base reports

Linkage bases of assets and liabilities in the consolidated balance sheet (in NIS thousand) as of December 31 2021

1-55

	NIS			Non	ETNs -	Israeli
	Non-linked	CPI-linked	Foreign currency	monetary items	linkage to various	insurance company	Total
Intangible Assets	-		- -	1,013,232	-	1,003,436	2,016,668
Deferred tax assets	-		- -	55,104	-	-	55,104
Deferred acquisition costs	-		- -	-	-	1,712,630	1,712,630
Property, plant & equipment	-		- -	138,924	-	722,941	861,865
Investments in investees	81,320	15,319	6,170	150,933	-	503,127	756,869
Investment property in respect of yield-dependent contracts	-		- -	-	-	1,839,576	1,839,576
Investment property - other	-		- -	-	-	2,728,710	2,728,710
Reinsurance assets	-		- -	-	-	2,531,659	2,531,659
Credit for purchase of securities	374,000		- 29,000	-	-	-	403,000
Current tax assets	-	6,226	-	-	-	196	6,422
Receivables and debit balances	129,220		- -	-	-	400,572	529,792
Premiums collectible	-		- -	-	-	651,825	651,825
Financial investments in respect of yield-dependent contracts	-		- -	-	-	65,570,447	65,570,447
Financial investments for holders of bonds, ETNs, short ETNs,
composite ETNs, deposit certificates and structured bonds	-		- -	-	239,000	-	239,000
Liquid debt assets	12,809	29,326	2,067	-	-	8,051,266	8,095,468
Non-liquid debt assets	579,900	195,392	-	-	-	13,231,897	14,007,189
Shares	-		- -	39,520	-	1,860,473	1,899,993
Other	21,597	511	-	25,297	-	3,200,064	3,247,469
Cash and cash equivalents in respect of yield-dependent contracts
	-		- -	-	-	10,464,216	10,464,216
Other cash and cash equivalents	557,159		- 26,596	-	-	962,148	1,545,903
Total assets	1,756,005	246,774	63,833	1,423,010		239,000 115,435,183 119,163,805

Liabilities in respect of insurance contracts and non-yield
dependent investment contracts	-		- -	-		- 23,469,887	23,469,887
Liabilities in respect of insurance contracts and yield-dependent
investment contracts	-		- -	-		- 76,856,913	76,856,913
Liabilities in respect of deferred taxes	-		- -	50,567	-	847,237	897,804
Liability for employee benefits, net	14,035		- -	-	-	45,327	59,362
Liability in respect of current taxes	-	20,422	-	-	-	43,022	63,444
Payables and credit balances	228,498		- -	-	-	2,224,353	2,452,851
Liabilities for bonds, ETNs, short ETNs, composite ETNs and
structured bonds	-		- -	-	238,000	-	238,000
Financial liabilities	1,267,180	864,958	45,500	8,000	-	4,858,076	7,043,714
Total liabilities	1,509,713	885,380	45,500	58,567		238,000 108,344,815 111,081,975
Total exposure	246,292	(638,606)	18,333	1,364,443	1,000	7,090,368	8,081,830

7. Corporate Governance Aspects

7.1. Effectiveness of Internal Control over Financial Reporting and Disclosure

7.1.1 The Securities Regulations

Amendment No. 3 to the Securities Regulations (Periodic and Immediate Reports), 2009 (hereinafter - "ISOX"), which deals with internal controls over financial reporting and the disclosure thereof (hereinafter - the "Regulations"), was published in December 2009. The amendment enacts a number of changes aimed at improving the quality of financial reporting and disclosure by reporting corporations.

As from the publication date of the ISOX amendment, and as set out in the Company's previous Reports of the Board of Directors, the Company has acted and is acting on an ongoing basis to implement the required procedure in The Phoenix Group in accordance with the provisions of the ISOX amendment. In accordance with the provisions of the ISOX amendment, the Company opted to implement to the internal controls of all of its consolidated institutional entities the provisions of the circulars of the Commissioner of the Capital Market, Insurance and Savings applicable thereto - the Institutional Entities Circular 2009-9-10, "Management's Responsibility for Internal Controls over Financial Reporting"; Institutional Entities Circular 2010-9-6, "Management's Responsibility for Internal Controls over Financial Reporting - Amendment"; Circular 2010-9-7 "Internal Controls over Financial Reporting - Statements, Reports and Disclosures"; Circular 2012-9-5 "Internal Controls over Financial Reporting - Statements, Reports, Disclosures and Management's Responsibility for Internal Controls over Financial Reporting - Amendments"; and Circular 2015-9-15, "Internal Controls over Financial Reporting - Statements, Reports, Disclosures and Management's Responsibility for Internal Controls over Financial Reporting - Amendments" (hereinafter - "Management's Responsibility Circulars").

The reports and statements required in accordance with the ISOX amendment are attached below to the periodic financial statements, please see Part 5 - Report on the Effectiveness of Internal Controls over Financial Reporting and Disclosure.

The processes relating to the activities of institutional entities are also addressed in the Insurance Commissioner's Circulars, please see Section 7.1.2. below.

7.1.2 The Insurance Commissioner's Circulars

Alongside the process described in Section 7.1.1 above, The Phoenix Group's institutional entities apply the provisions of Management's Responsibility Circulars pertaining to controls and procedures regarding disclosure and internal controls over financial reporting of an institutional entity, and implement the procedures required in connection therewith, as described below; this is done in accordance with the stages and dates set out in the abovementioned circulars and in collaboration with external consultants engaged for that purpose. As part of this process, the Group's institutional entities adopted the internal control model of COSO - the Committee of Sponsoring Organization of the Treadway Commission - which is a generally accepted framework for assessment of internal controls.

Disclosure controls and procedures

Managements of the institutional entities, together with their CEOs and CFOs, assessed the effectiveness of the controls and procedures concerning the said institutional entities' disclosure in their financial statements as of the end of the period covered in this report. Based on this assessment, the CEOs and CFOs of the institutional entities in The Phoenix Group concluded that, as of the end of this period, the controls and procedures as to the institutional entities' disclosure are sufficiently effective for recording, processing, summarizing, and reporting the information that the institutional entities are required to disclose in their quarterly report in accordance with the provisions of the law and the reporting provisions set by the Commissioner of the Capital Market, Insurance, and Savings and on the date set out in these provisions.

Internal controls over financial reporting

During the quarter ending June 30 2021, no changes took place in the internal control over financial reporting of the Group's institutional entities that had a material effect, or is expected to have a material effect, on the institutional entities' internal control over financial reporting. Furthermore, the Group's institutional entities are improving and streamlining processes and/or internal controls and/or customer service.

The reports and statements relating to the relevant processes are attached to the financial statements of The Phoenix Group's institutional entities, in accordance with the provisions of Management's Responsibility Circulars.

8. Disclosure Provisions Relating to the Corporation's Financial Reporting

8.1. Subsequent events

For further details regarding events subsequent to the balance sheet date, please see Note 9 to the Financial Statements.

8.2. Dedicated disclosure for the Company's bondholders

Series/issuance date	Bonds Series 3	Bonds Series 4	Bonds Series 5
Rating agency	Midroog / Ma'alot	Midroog / Ma'alot	Midroog / Ma'alot
Rating as of the report date	Aa3.il ilAA /-	Aa3.il ilAA /-	Aa3.il ilAA /-
Par value on issuance date	NIS 272,191,000	NIS 391,384,000	NIS 822,616,000
Interest type	Non-linked	Non-linked	CPI-linked
Nominal interest	2.22%	The Bank of Israel's variable quarterly interest rate plus a 1.28% spread	0.44%
Effective interest rate on issuance date	Approximates the nominal interest	1.7%	0.55%
Listed on the TASE	Yes	Yes	Yes
Principal payment dates	5 equal annual installments of 16.66% on July 31 of each of the years 2022 through 2026, and one installment of 16.7% on July 31 2027.	2 equal annual installments of 12% on July 31 of each of the years 2020 and 2021 and 4 equal annual installments of 19% on July 31 of each of the years 2025 through 2028.	3 equal annual installments of 4% on July 1 of each of the years 2022 through 2024, one installment of 28% on May 1 2028, and 2 equal annual installments of 30% on May 1 of each of the years 2029 through 2030.
Interest payment dates	Semi-annual interest on January 31 and July 31	Quarterly interest on January 31, April 30, July 31, and October 31	Semi-annual interest on May 1 and November 1
Nominal p.v. as of June 30 2021	NIS 272 million	NIS 391 million	NIS 822 million
CPI-linked nominal p.v. as of June 30 2021	NIS 272 million	NIS 391 million	NIS 832 million
Carrying amount of bonds' outstanding balances as of June 30 2021	NIS 271 million	NIS 389 million	Approximately NIS 819 million
Carrying amount of interest payable as of June 30 2021	NIS 0.6 million	NIS 0.9 million	Approximately NIS 2.48 million
Market value as of June 30 2021 (*)	Approximately NIS 286 million	Approximately NIS 399 million	Approximately NIS 857 million
Series' materiality	The series is material as this term is defined in Regulation 10(b)13(a) of the Securities Regulations (Periodic and Immediate Reports), 1970.	The series is material as this term is defined in Regulation 10(b)13(a) of the Securities Regulations (Periodic and Immediate Reports), 1970.	The series is material as this term is defined in Regulation 10(b)13(a) of the Securities Regulations (Periodic and Immediate Reports), 1970.

(*) The market value includes interest accrued as of June 30 2021.

Contractual restrictions and financial covenants

As part of the deed of trust of the Company's Series 3 bonds, the Company undertook not to place a general floating charge on its assets as long as Series 3 bonds are not repaid in full, unless it obtained the bondholders' consent in advance and placed on that date a lien of the same rank in favor of Series 3 bondholders. Furthermore, with respect to Series 3 bonds, the Company assumed restrictions on distribution of dividends and expansion of the bonds series; the Company also undertook to comply with financial covenants whereby its shareholders' equity will not fall below NIS 2.5 billion for two consecutive quarters, and that the Company's net financial debt to total assets ratio will not exceed 50% for two consecutive quarters. For further details, please see the Shelf Offering Report dated January 22 2018.

As part of the deed of trust of the Company's Series 4 bonds, the Company undertook not to place a general floating charge on its assets as long as Series 4 bonds are not repaid in full, unless it has obtained the bondholders' consent in advance and placed on that date a lien of the same rank in favor of Series 4 bondholders. Furthermore, with respect to Series 4 bonds, the Company assumed restrictions on distribution of dividends and expansion of the bonds series; the Company also undertook to comply with financial covenants whereby its shareholders' equity will not fall below NIS 2.9 billion for two consecutive quarters, and that the Company's net financial debt to total assets ratio will not exceed 50% for two consecutive quarters. For further details, please see the Shelf Offering Report dated May 7 2019.

As part of the deed of trust of the Company's Series 5 bonds, the Company undertook not to place a general floating charge on its assets as long as Series 5 bonds are not repaid in full, unless it has obtained the bondholders' consent in advance and placed on that date a lien of the same rank in favor of Series 5 bondholders.

Furthermore, with respect to Series 5 bonds, the Company assumed restrictions on dividend distribution; the Company also undertook to comply with financial covenants whereby its shareholders' equity will not fall below NIS 3.2 billion for two consecutive quarters, and that the Company's net financial debt to total assets ratio will not exceed 50% for two consecutive quarters. In addition, a mechanism for adjusting the rate of change in interest rate due to noncompliance with financial covenants was set: In the event that the Company's shareholders' equity falls below NIS 3.5 billion, the annual interest rate will increase by the rate set in Section 5.9 of the Deed of Trust. For further details, please see the Shelf Offering Report dated February 20 2020.

As of balance sheet date, the Company complies with the financial covenants described above. On June 30 2021, the net financial debt ratio was approximately 14%, and the Company's shareholders' equity as per its standalone financial statements as of June 30 2021, was approximately NIS 8,685 million, which is higher than the above required shareholders' equity.

For further details – please see Note 26 to the Company's financial statements as of December 31 2020.

The members of the Board of Directors thank the Company's management, employees and agents for their contribution to the Company.

Benjamin Gabbay Chairman of the Board of Directors

Eyal Ben Simon Chief Executive Officer

August 24, 2021

Appendix A – Gama The Credit Segment

1. General information about the segment

General

As from June 2021, the Phoenix Group is the controlling shareholder of Gama Management and Clearing Ltd. (hereinafter - "Gama") with a stake of 61.67% in this company (60% on a fully diluted basis); Gama's shares were first listed on the Tel Aviv Stock Exchange in June 2021.

Due to the materiality of Gama's credit activity in terms of the Phoenix's activity, it was decided to open the credit segment, the core activity of which as of the report's date is Gama's activity. Gama renders financial services and credit services to companies and businesses.

The average value of Gama's credit portfolio at any given time (in all operating segments, including a portfolio sold to banking corporations) exceeds NIS 4 billion.

Gama's management has extensive experience in the field of credit and a highly skilled sales division with vast experience in all of Gama's areas of activity.

Gama has approximately 10,000 customers to whom it provides credit solutions as well as comprehensive financial solutions, which are uniquely based on the various types of credit products offered by Gama through a single dedicated platform.

Gama has a customer base comprising thousands of customers in the field of payment cards clearing and factoring (as an aggregator); among its customers are leading Israeli commerce and retail companies, including leading chain stores and leading Israeli commerce and services companies. Those customers opt to use Gama's services due to it unique dedicated solutions and its one-stopshop systems. In the field of payment cards, Gama has independently-developed information systems it uses to manage its activity and to provide services and information to customers, including systems for payment cards reconciliations. Alongside its credit card clearing activity (as an aggregator), Gama also offers credit to be used for its customers' business activity.

Gama leverages the synergy between its range of credit products to generate added value to its customers, such as in the form of various types of credit offerings in a seamless way using a single financial system that addresses all of the customer's credit and financial needs.

Gama offers customers loans to finance their current business activity, such as funding of working capital and inventory; it also offers loans to fund customers' growth and development. Gama also provides customers with check discounting solutions, factoring solutions in respect of invoices that Gama's customers issued to their own customers and against third-party undertakings, financing of equipment and imports. Gama also provides customers with credit against pledged real-estate, land and other assets.

Gama operates in the field of clearing (as an aggregator), factoring and financing solutions to businesses; this is a growing market that has great potential for Gama's development.

Gama has an in-house software department that allows it to develop new products on an ongoing basis, and to adapt its activities to new emerging technologies while meeting regulatory requirements.

Subsidiaries

Gama has two wholly-owned subsidiaries (100%): Gama Personal Direct Financing Ltd. (hereinafter - "Gama Financing") and Control Credit Adjustments Ltd. (hereinafter - "Control"); both companies were incorporated in Israel. Furthermore, Gama has a 50% stake in Caspogama Advanced Payment Solutions (2014) Ltd., which was incorporated in Israel.

Areas of activity

Gama operates on its own and through its subsidiaries in the following operating segments:

Clearing aggregator and factoring of payment card vouchers

This activity is carried out by Gama and by Gama Financing. As part of this activity, Gama operates as a clearing aggregator; that is to say, it aggregates payment card debit and credit transactions for many bushinesses, with the clearing fee paid by the business being agreed upon between the business and Gama.

Furthermore, as part of its payment cards activity, Gama provides businesses with the service of factoring payment cards vouchers.

Financing against deferred receivables (checks discounting)

This activity is carried out by Gama and by Gama Financing. As part of this activity, Gama provides funding to companies, businesses or credit providers against the assignment or delivery of deferred receivables issued by third parties - this activity is also known as checks discounting.

Financing provided against real estate assets

This activity is carried out by Gama and by Gama Financing. As part of this activity, Gama provides customers with loans against a pledge which is placed (mostly first-ranking pledge) on assets, land and real estate.

Other areas of activity

Gama also operates in a number of other areas of activity, such as: loans and credit to businesses, factoring (financing against invoices) and financing of equipment.

The following table provides data as to Gama's overall annual transaction turnover in millions of NIS in 2018-2020, and as of June 30 2021:

2018	2019	2020	1-6/2021
25,842	28,658	28,341	15,942

Financial information about Gama's areas of activity

For a 6 months period ended July, 30 2021
In NIS thousand	Credit cards*)	Checks discounting	Financing provided against real estate assets	Total reportable segments	Adjustments to consolidated	Other Activities	Total consolidated
Income under the effective interest method	36,252	14,290	13,923	28,772	-	6,316	35,088
Finance expenses	-	3,869	4,471	8,340	-	2,224	10,564
Segment profit	36,252	10,421	9,452	56,125	-	4,092	60,217
Change in loan loss provision	(802)	688	(514)	(628)	-	(1,446)	(2,074)
Gross profit	37,054	9,733	9,966	56,753	-	5,538	62,291
General and administrative expenses	-	-	-	-	34,057	-	34,057
Listing expenses	-	-	-	-	32,871	-	32,871
Selling and marketing expenses	-	-	-	-	784	-	784
Loss before income taxes							(5,421)
Segment assets **)	1,213,795	453,538	482,593	2,149,926	-	181,183	2,331,109 Total
Turnvoers	14,498,557	1,047,642	243,392	15,789,591	-	152,563	15,942,154

*) The total amount of gross interest and fees and commissions income from the credit card segment recorded during the reporting period was NIS 167,204 thousand.

**) The balance of vouchers sold to banks but still outstanding as of June 30 2021 is NIS 3,588,379.

Breakdown of financial data as of December 31, 2020 or Y2020 (as the case may be) (in NIS

thousand)

	Clearing and discounting credit vouchers	Checks discounting	Financing activities subsegment vs. real estate		Unattributed and
	subsegment	subsegment	properties	Other	adjustment	Total
Finance income	322,913	26,010	23,413	14,906	(252,621)	134,621
Finance expenses	252,621	5,579	6,678	4,444	(252,621)	16,701
Net finance income	70,292	20,431	16,735	10,462	-	117,920
Expenses for dountful and bad debts	(781)	(232)	2,184	1,538	-	2,709
Selling and marketing expenses	-	-	-	-	1,951	1,951
General and administrative expenses	-	-	-	-	61,428	61,428
Other income	-	-	-	-	97	97
Profit before tax in the period						51,735
Taxes on income	-	-	-	-	12,746	12,746
Net income						38,989
Comprehensive income						39,602
Total Assets	1,356,435	326,653	431,720	180,333	-	2,295,141

Breakdown of financial data as of December 31, 2019 (in NIS thousand)

	Clearing and discounting credit vouchers subsegment	Checks discounting subsegment	Financing activities subsegment vs. real estate properties	Other	Unattributed and adjustment	Total
Finance income	334,517	16,186	36,138	18,085	(265,452)	139,474
Finance expenses	265,452	3,269	6,055	3,697	(265,452)	13,021
Net finance income	69,065	12,917	30,083	14,388	-	126,453
Expenses for dountful and bad debts	320	683	1,733	3,080	-	5,816
Selling and marketing expenses	-	-	-	-	2,857	2,857
General and administrative expenses	-	-	-	-	63,405	63,405
Other income	-	-	-	-	164	164
Profit before tax in the period						54,211
Taxes on income	-	-	-	-	13,323	13,323
Net income						40,888
Comprehensive income						39,883
Total Assets	837,690	303,193	522,834	326,548	-	1,990,265

The nature of adjustments made to the financial data as of December 31 2020 and December 31 2019 is as follows:

In the field of credit vouchers clearing and factoring - financing income against finance expenses presented in the table reflect Gama's turnover of activity with the businesses and financing entities; Selling and marketing, general and administrative expenses are presented in the adjustments column since Gama does not allocate those expenses to the different operating segments.

General environment and effect of external factors on Gama's activity

The Israeli corporate credit market - covering the provision of credit to wholesale and retail companies and businesses from all operating segments of the Israeli economy - is mainly controlled by banking corporations and institutional entities. Other market players include the payment card companies, credit funds and non-bank credit companies.

In recent years, regulators introduced many regulatory measures aimed at regulating the field of financial services in Israel in general and the field of non-financial credit in particular, while increasing competition in these fields and providing consumers with a regulated alternative alongside and in collaboration with the services currently provided by banking corporations and institutional entities; those regulatory measures are also aimed at issuing licenses to entities operating in the market in order to prevent entities involved in illegal activity from operating in this field.

In recent years regulators have also introduced regulatory measures aimed at increasing competition among entities providing the most common financial and banking services (following the recommendations of the "Shtrum Committee"); those new regulatory measures included legislation whose aim was to increase competition and reduce concentration in the Israeli banking market, as well as to increase the competition in the clearing market by regulating the activity of clearing aggregatros - a field in which Gama operates under agreements with Israel Credit Cards Ltd. and Diners Club Israel Ltd. (hereinafter jointly - "CAL") and Isracard Ltd. (hereinafter - "Isracard"), alongside the legislation that led in the past to the regulation of the factoring market.

Furthermore, in recent years we witnessed a trend of expansion in technological financial services and solutions; those included local and international payment apps, the entry of multinationals such as Apple Pay and Google Pay to the payments market, and the provision of credit through technological platforms. This trend expanded the services offering and the potential of creating other regulated market players that will operate as an alternative to, alongside or in collaboration with banking corporations and institutional entities. This potential expansion of the means of payment offered to businesses is in line with Gama's activity to date; Gama's objective is to provide businesses solutions that facilitate their activity by providing them with a range of financial services and payment options.

In the opinion of the Company, in the next few years these trends will lead to increased growth in the non-banking credit market and the financial services market, as an alternative to, alongside or in collaboration with banking corporations and institutional entities.

It should be noted that the information stated in this section regarding the trends in the credit market constitutes forward-looking information as defined in the Securities Law, 1968, which is based, inter alia, on information available to Gama as of the date of this report. Therefore, there is no certainty that the above will indeed materialize, or that is shall materialize in a manner similar to that which is described above, and the actual results may be materially different from the results assessed or implied by this information.

Impact of the coronavirus crisis

Following the outbreak of the coronavirus pandemic and as from the first quarter of 2020 Gama took measures to reduce credit exposures and increase liquidity levels, mainly in the field of check discounting, as well as to prevent liquidity problems, including reducing the scope and stopping the growth of its credit portfolio, mainly in the field of check discounting. Despite the aforesaid and throughout the crisis period, until the report date, Gama continued to provide its customers with loans and financing across all its areas of activity, and did not reduce the scope of its customer recruitment efforts.

Towards the end of the second quarter of 2021, coronavirus infection rates started increasing (hereainafter - the "Fourth Wave") due to the spread in Israel of the Delta variant of the coronavirus. As of the publication date of this report, the Fourth Wave did not have an effect on the Company's activity. Since this is an event which is not under the Company's control, at this stage the Company is unable to assess the future effects the Fourth Wave will have on its activity.

After reviewing the actual credit default data in 2020 and during the first half of 2021, the provisions for impairment of receivable balances were adjusted to reflect the expected effect of the coronavirus pandemic on expected credit losses, such that as of June 30 2021 there was no adjustment to the provision in respect of the effect of the coronavirus pandemic (as of June 30 2020 the provision amount was NIS 4,141 thousand).

In the opinion of Gama and in accordance with information available to it Gama expects - as of the approval date of its financial statements for the second quarter of 2021 - that it will be able to meet all of its obligations and that the provision for expected credit losses as per its books of accounts is appropriate.

It should be noted that which is stated in this section regarding the potential effects of the coronavirus crisis on Gama constitutes forward-looking information within its meaning in the Securities Law, 1968, and is based, inter alia, on information available to the Gama as of the date of this report. Therefore, there is no certainty that the above will indeed materialize, or that is shall materialize in a manner similar to that which is described above, and the actual results may be materially different from the results assessed or implied by this information.

2. General information about the segment

A. Clearing aggregator and factoring of payment card vouchers

For businesses to be able to offer their customers paying using payment cards they are required to enter into engagement with one or more entity offering clearing services. To the best of the Company's knowledge, the principal actors in the Israeli clearing services market are Isracard (which provides clearing services to the brands Isracard, Visa and Mastercard and also provides clearing services to the American Express brand through a related company - Premium Express Ltd.), CAL (which provides clearing services to the brands Isracard, Visa and Mastercard and also provides clearing services to the Diners Club brand through a related company - Diners Club Israel Ltd.), and Max It Finance Ltd. (formerly: Leumi Card Ltd., which provides clearing services to the brands Isracard, Visa and Mastercard) (hereinafter - "Max"). Alongside each of the payment card brands listed below, each of the above entities also provides clearing services to private label brands it issues, gift cards, top-up cards, various credit cards issued as part of loyalty programs, and more. The Banking (Licensing) Law stipulates that a card issuer with wide ranging activity shall not refuse - on unreasonable grounds - entering into engagement with an entity providing clearing services to carry out cross-clearing of transactions conducted with payment cards issued by the latter. Accordingly, entities providing payment card clearing services in Israel provide bilateral clearing services involving the brands Visa, Isracard and Mastercard. No bilateral clearing arrangement is in place in respect of the brands American Express and Diners.

The Law for the Promotion of Competition and Reduction of Concentration in the Israeli Banking Market (Legislative Amendments), 2017 was published in 2017 as part of the "Shtrum Reform" (hereinafetr - the "Competition Promotion Law"), whereby an entity providing clearing services shall only be allowed to refuse entering into engagement with clearing aggregators for reasonable reasons and as provided by law. After the legislation of the Shtrum Reform and the Competition Promotion Law, Gama entered into a clearing aggregation agreement with CAL.

Gama, on its own and through its subsidiary - Gama Financing - operates as a clearing aggregator. As of the date of this report, Gama has a material clearing aggregation agreement in place with CAL, and an immaterial clearing aggregation agreement with Isracard.

Furthermore, as part of its activity in the payment cards market, Gama provides merchants with a service whereby it factors debit card vouchers; that is to say, Gama brings forward payments to merchants in respect of clearing proceeds payable thereto by entities providing clearing services as a result of debit card transactions conducted by customers of those merchants, against the merchant's assigning to Gama its right to those proceeds.

In order to provide the vouchers factoring services outside its activity as a clearing aggregator, Gama has in place agreements with the entities providing clearing services: (CAL (including Diners), Isracard (including Premium Express Ltd. - American EXpress) and Max; those agreements allow Gama to provide payment card vouchers factoring services to merchants that have in place agreements with any of the said entities providing clearing services, with the latter undertaking - as part of the agreements - to pay Gama the clearing proceeds assigned to Gama by the merchant.

In this field of activity Gama also offers to its customers - and sometimes also to merchants that do not receive from Gama clearing aggregation and factoring services - the option to receive credit voucher reconciliation services through its subsidiary Control; as part of this service a reconciliation is made between the merchant's records regarding transactions it conducted with payment cards and its proceeds as per its books of accounts, including journal entries in its bookkeeping software.

B. Changes in the scope of operations and profitability of the subsegment

CAL's clearing aggregation agreement with Gama triggered competition in terms of the clearing fees paid by merchants to clearing aggregators and to entities providing the clearing services; the said agreement caused a decrease in clearing fees and reduced many merchants' costs relating to transactions conducted with payment cards, especially small and medium merchants.

In August 2018, the Competition Authority instructed credit companies (both those issuing payment cards and those clearing transactions) to switch - as from July 2021 - into daily clearing of single-instalment transactions (as opposed to transactions comprising two or more monthly payments). As from the above date, issuers are required to transfer the proceeds in respect of single-instalment transaction vouchers to the clearing entities no later than one day after the transmission of the transaction by the merchant, rather than once a month as was the normal practice thus far. The Competition Authority's directive did not advise clearing entities as to the date on which they should transfer to merchants the proceeds in respect of single-instalment transaction vouchers; furthermore, the Competition Authority did not advise issuers as to the date on which they are required to charge cardholders for single-instalment transaction vouchers. As of the report date, it is not yet clear how clearing entities and merchants will conduct themselves regarding the date on which merchants will get paid for single-instalment transaction vouchers. The daily clearing may have an adverse effect on Gama's factoring services, including due to the shortening of the factoring period in respect of single-instalment transactions. In 2020, Gama's income from factoring single-instalment transaction vouchers amounted to NIS 6 million. However, it is impossible to know whether this will be amount that Gama will lose as a result of the introduction of daily clearing arrangements, since it is not yet clear what impact the Competition Authority's directive will have on the entire market, including the behaviour of clearing entities, merchants, issuers and the general public; therefore, the adverse effect may vary from the amount specified above.

The above assumption is an assessment and an estimate constituting "forwardlooking information" as defined in the Securities Law, based on information available to the Company, and includes Gama's assessments or estimates as of the report's date. Actual results may differ from the results estimated or expected by Gama due

to, among other things, the lack of clarity as to the effect of the Competition Authority's directive on the entire market.

C. Development in the subsegment's market, or changes in its customers' characteristics

The payment card vouchers clearing and factoring market benefited from organic growth over the years as a result of population growth and improved living standards. Furthermore, in view of regulatory measures encouraging reduced use of cash, there is a transition from payment in cash to payment using other means of payments, such as payment cards.

In addition, the Shtrum Reform and the changes in triggered in the market resulted with a less concentrated clearing market and an increase in the market share of new players in the field of payment clearing - clearing aggregators, including Gama.

D. Technological changes that may have a material effect on the clearing aggregator and factoring of payment card vouchers subsegment

The adoption of the EMV standard has made the use of payment cards even more secure. This process allows the introduction of other innovative technologies and payment methods, such as contactless payments. The development of other innovative technologies in the field of payment cards accelerated the transition to e-commerce. The payment cards market adopts new clearing technologies, both in physical terminals and online, alongside the development of advanced digital payment options such as local and international payment apps (such as Apple Pay and Google Pay) and local and international digital wallets that offer various payment apps, through which transactions may be conducted both in physical terminals and online.

Currently, payment apps and digital wallets operates through payment cards; accordingly, Gama's services are also required for payments made using such methods. The introduction of technological and regulatory changes that will allow direct payment from one account to another, rather than through a payment card, both in terms of payments for goods and services bought physically in businesses and regarding online payments for such goods and services, may adversely affect the Israeli payment cards market.

E. Financing against deferred receivables (check discounting)

Deferred receivables (deferred checks) are a type of a bill whose characteristics are set in the Bills of Exchange Ordinance. Pursuant to the Bills of Exchange Ordinance, the person or entity writing the check is defined as the "drawar", and the check's payee, or the person or entity to whom the check was lawfully endorsed is defined as the "check holder".

For the purpose of discounting the check Gama can become the check holder in a number of ways: (a) when the check in question is a negotiable check (for instance if it is not marked as "A/C payee only") - the check can be endorsed (by the check holder's (the endorser) signing the back of the check), and then delivered to the endorsee (in the case discussed here, Gama in its capacity as the service provider); the endorsement transfers the proprietary right in the check to the endorsee (Gama); or (b) when the checks in question are both negotiable and non-negotiable checks - adding Gama as an additional payee alongside the relevant merchant or as the only payee of the check when the check is written. In all of the above methods, Gama can become, and in most cases, does, indeed, become a "holder in due course" of the checks it holds, in accordance with the Bills of Exchange Ordinance.

In the event that a check held by Gama is not honoured, Gama can demand payment both from the customer and from the drawer of the check (and where relevant also from a person/entity that provided it with a personal guarantee to secure the payment of the check). In most transactions of this type in which Gama is involved, the endorsers are merchants or providers of credit services, which are corporations. In many cases Gama demands a personal guarantee from the endorsing corporation's controlling shareholder, and sometimes also from the controlling shareholders of the drawer.

When one is a "holder in due course" of a check, he retains the right to demand payment both from the customer and from the drawer if the check is not honoured; this right is retained even if the drawer claims that he has a commercial dispute with the business to whom the check was issued (for example when the goods were not supplied against the payment of the check); this is possible since Gama has a "holder in due course" status with regard to the check. In certain cases, Gama checks with the drawer of the check whether the commercial transaction between him and the merchant is valid; however, Gama is not required to do so; in most cases those checks are documented.

F. Segment structure and changes therein

The principal players in this field are banking corporations and entities licensed to provide credit services.

G. Changes in the scope of operations and profitability of the subsegment

Previously, the check discounting market was mostly controlled by banking corporations or unregulated. The following changes have taken place in this field in recent years: (1) the nonbank credit market became regulated following the enactment - in 2016 - of the Financial Services Supervision Law (Regulated Financial Services), 2016 (hereinafter - the "Financial Services Law"), which required companies operating in this area of activity to obtain licenses from the Capital Market Authority and to meet higher business standards than those they were required to meet in the past; this move reduced the number of existing players in the market and enabled the entry of regulated non-bank players; (2) the margins in the market declined since institutional entities and banking corporations extended credit at interest rates, which were relatively lower than those charged by companies engaged in check discounting.

H. Development in the subsegment's market, or changes in its customers' characteristics

In recent years competition in this subsegment intensified; this is reflected in an improvement of the services offered to customers and in lower factoring prices. One of the key factors that impacted the expansion of the non-bank credit market in general and the area of check discounting in particular is the enactment of the Financial Services Law in 2016; this law was enacted in order to significantly regulate non-bank financial services thereby increasing efficiency levels in the market as well as the ability of non-bank entities to compete with banks and with one another. This regulation supports the expansion of the non-bank credit market and increases companies and businesses' awareness to the option of obtaining credit from such sources.

I. Technological changes that may have a material effect on the subsegment

The check discounting market is a traditional market that relies on the Bills of Exchange Ordinance. Currently, there are no digital checks and Gama has no information indicating that the development of such checks is expected.

J. Financing provided against real estate assets

This activity is conducted by Gama itself and by Gama financing. Such financing is open to businesses, businessmen, entrepreneurs and individuals seeking to obtain credit (not necessarily for the purpose of buying real estate) against the mortgaging of land, an apartment or another real estate asset they own.

Gama reviews the transaction; such review includes, inter alia, legal and economic checks, both with regard of the asset itself and its realization value, and with regard to the financial position of the borrower and it ability to pass affordability checks.

K. Segment structure and changes therein

The scope of the financing against real estate assets subsegment is very wide; the subsegment includes, inter alia, residential mortgages, support of building projects, investments in building projects, National Planning Scheme No. 38 projects, purchasing groups, and more. As of the report date, Gama's activity in this subsegment focuses on financing against the provision of a real estate asset as a collateral, and the credit extended may be used for real estate-related purposes or for any other purpose of the borrower. For many years, this subsegment was controlled by banks. In recent years, there has been a growth in this field among non-bank entities that extend loans against real estate assets, especially to businessmen, entrepreneurs and investors. Non-bank entities which are regulated by the Capital Market Authority may be more flexible with regard to the loan to value (LTV) rate; they process applications more efficiently and quickly, and therefore, their market share has increased.

L. Changes in the scope of operations and profitability of the subsegment

Gama started operating in this subsegment in 2017. This subsegment has driven growth in Gama's activity, and its scope increased year on year both in terms of amounts of credit extended and in terms of Gama's revenues from this subsegment.

M. Development in the subsegment's market, or changes in its customers' characteristics

As a company which has not been active in the field of real estate financing for many years, and which focused mainly on a specific niche of this field, Gama's growth in this subsegment stems mainly from the expansion of the existing relevant market.

N. Technological changes that may have a material effect on the subsegment

In the opinion of Gama, as of the report date there are no technological changes that are expected to have a material effect on this subsegment.

O. Critical success factors in the areas of activity

The following success factors may be listed in connection with Gama's activity:

Reputation the reputation of Gama and its managers is of crucial importance due to the nature of Gama's activity. Gama is a long-standing market player; over the years, it forged a reputation as a reliable and professional company.
Liquidity and availability of services as a rule, services of the type provided by Gama require liquidity levels that will allow the conducting of a large number of transactions, the recruitment of new customers and the provision of services to customers with large-scope activities. Liquidity is also a crucial factor when it comes to the availability of the service and to Gama's ability to provide quick, simple and efficient solutions that meet its customers' needs.
High-quality underwriting mechanisms and compliance capabilities supported by a professional, long-serving and highly qualified team, Gama implements its underwriting and risk assessment policies. Gama conducts ongoing controls over and monitoring of credit and money laundering risks, relying for that purpose on its knowhow and capabilities in this area.
Nationwide deployment of people on the ground Gama has 25 customer portfolio managers across the country; many of them are highly experienced and long-serving; this team of portfolio managers provides personal and highly professional service with short response time and high degree of availability.
Excellent customer services high-quality and efficient customer services (both human and automated); the combination of top-class customer service representativeness and an advanced automated system used both by customers and by Gama's representatives, enables Gama to provide high-quality services with a high degree of availability.
Familiarity with the market and customization of solutions Gama's extensive and in-depth familiarity with the market allows it to understand the unique needs of its sub-markets, thereby giving its the insight required to customize solutions that meet the unique needs of its different customers.

P. Major entry and exit barriers in areas of activity

The following entry and exit barriers apply to Gama's activity:

Meeting regulatory thresholds generally, the engagement in Gama's various areas of activity requires companies to comply with the provisions of the Financial Services Law and the regulations promulgated thereunder, including obtaining a financial services provider license, a permit to hold means of control in a financial services provider, and compliance with the relevant requirements of the Financial Services Law, including meeting the regulatory capital requirements applicable to financial services providers.
Financing sources Gama's various areas of activity require financial resources, including equity, the ability to raise funds from external sources and compliance with regulatory requirements.

3. Products and services

A. Clearing aggregator and factoring of payment card vouchers

The two key services in this subsegment are clearing aggregator of payment cards and factoring of payment card vouchers. The services are provided to businesses with whom Gama enters into engagements.

In addition, Gama offers businesses the option to receive credit voucher reconciliation services through an independently-developed system; this service is provided by Control - a Gama subsidiary. As part of this service, Control analyzes information from various parties involved in the clearing process and presents customers with an analysis of the business's payment card activity, including information regarding transactions that were not paid by the clearing services providers, cancelled and disputed transactions and more. The reconciliation system can interface with many of the bookkeeping systems used in Israel; it transmits data into the customer's systems in a seamless and transparent manner. This service gives customers the ability to monitor and control its income from transactions conducted with payment cards. A significant part of the customers also use the system in order to enter journal entries into their bookkeeping systems in connection with payment card transactions they transmitted and which were paid to them.

	For the six-months ended June 30 2021		For the three-months ended June 30 2021		For the year ended December 31 2020
	In NIS thousand	In %	In NIS thousand	In %	In NIS thousand	In %
Clearing aggregator services	5,699	18.8%	3,079	16.8%	7,854	11.1%
Discounting of debit vouchers	29,444	81.2%	15,287	83.2%	62,438	88.9%
Total	36,252	100%	18,366	100%	70,292	100%

Breakdown of net income from products and services

B. Financing against deferred receivables (check discounting)

The service in this subsegment is the provision of credit to businesses against the discounting of checks, with the check's drawer being a third party. This subsegment developed as an organic byproduct of Gama's expanding its financing services offering to businesses and companies with whom it worked as part of its factoring of payment cards vouchers activities. Over time, as Gama's check discounting activities expanded, the activity also expanded to other customers, who were not involved in the payment cards vouchers activities.

As of 2019-2020 and the first half of 2021, Gama's income from provision of credit against deferred receivables received directly from third parties constitutes most of Gama's income in this area.

C. Financing provided against real estate assets

Financing provided against real estate assets is used for various purposes, such as financing the purchase of a real estate asset, bridge loans used to develop and improve real estate, financing the development of the commercial business of a business owner who owns real estate, and any other purpose of the borrowers. Normally, financing is provided for a period of up to five years. As of the report date, Gama does not have income from this subsegment, other than income from financing provided against pledged real estate assets.

4. Customers

A. Clearing aggregator and factoring of payment card vouchers

During the 18 months to December 31 2020, approximately 10,000 customers conducted transactions with Gama.

Gama's customers in this subsegment are Israeli retailers, chain stores and service providers operating in various sectors, such as household electrical and electronics, food, fashion and clothing, tourism, garages, air-conditioning, jewelery, medicine, homeware and gifts, coffee shops and restaurants and service providers. Gama's customers in this subsegment are mainly limited liability companies and licensed dealers.

B. Financing against deferred receivables (check discounting)

Most of Gama's customers in this subsegment have similar characteristics. Gama's customers in this subsegment are Israeli businesses from various sectors, such as household electrical and electronics, finance, department stores, food, furniture, fashion and clothing, computers, airconditioning and jewelery. Gama's customers in this subsegment are mainly corporations and a small portion of customers are licensed dealers. Gama does not monitor the breakdown of drawers' balance by areas of activity.

C. Financing provided against real estate assets

As of December 31 2020, the credit portfolio comprises 85 customers and 100 loans.

In the opinion of Gama, it is not dependent on a single customer or on a small number of customers, the loss of which will have a material impact on Gama's activity.

5. Competition

A. Clearing aggregator and factoring of payment card vouchers

Gama's key competitors in the field of factoring of payment card vouchers are the clearing companies that bring forward payments to merchants or conduct factoring of payment card vouchers, both directly and through subsidiaries (Isracard and its subsidiary "Tzameret Mimunim", Max and its subsidiary "Max It Discounting Ltd.", CAL and its subsidiary "Iatzil Finance").

In order to beat its competitors, Gama operates on a number of levels - price, reputation and quality of service, while leveraging its in-depth familiarity with the business and retail markets. Gama also leverages its knowhow, reputation, long-serving and experienced staff, high-quality service and professional experience with regard to the advanced IT systems it puts at the disposal of its customers in its capacity as an entity factoring payment cards vouchers for thousands of Israeli businesses - in favor of promoting its clearing aggregator activity.

B. Financing against deferred receivables (check discounting)

Gama is of the opinion the market share of non-bank players is on the increase due to the regulation of the market by the legislature. Competition in the market - in accordance with the risk levels of each player - revolves around a number of key parameters: reputation, quality of services and interest rates.

Gama is unable to quantify its market share in the field of financing against deferred receivables, since it does not have access to the data of other players in this field.

Gama believes that its advantages in this subsegment stem from its many years of experience in the field of credit, its relationships with thousands of businesses, including credit card clearing entities, its high and strict professional standards in the field of compliance and mitigation of money laundering risks, and its exacting corporate governance practices.

C. Financing provided against real estate assets

Gama's key competitors in this field are mainly banks, institutional entities, credit funds and various non-bank financing companies.

Gama is unable to quantify its market share in this field, since it does not have access to its competitors' data or to the data of other players in this field; however, it believes that its market share is very small.

Gama believes that its advantages in this subsegment stem from its reputation as a solid and stable company, that has been serving thousands of Israeli businesses for many years, and has a large-scope credit portfolio.

6. Seasonality

A. Clearing aggregator and factoring of payment card vouchers

This subsegment is related to the activity of the Israeli retail market, and as such it is impacted from changes in trade volumes; thus, for example, sales increase before the Jewish festivals (High Holidays and Passover) and as a result the volume of Gama's activities in this subsegment increases accordingly.

B. Financing against deferred receivables (check discounting) and financing provided against real estate assets

These subsegments are not impacted by seasonality; therefore seasonality is not expected to have a material effect on Gama's activities in these subsegments.

7. Specific regulation

Gama is subject to the following regulatory requirements and restrictions by virtue of the regulations relevant to all its areas of activity:

Financial Services Law

The Financial Services Law stipulates, among other things, that entities engaged in the provision of financial services are required to have the relevant license; the said law also imposes restrictions and sets provisions applicable to those entities in connection with the management of their business activity in the field of provision of financial services.

Obtaining a license to provide financial services may take a long time, and companies that wish to obtain such a license are required to adopt certain procedures (as set out in the procedure pertaining to the licensing of service providers in financial assets or credit providers published by the Capital Market Authority); such companies are also required to meet minimum capital requirements in accordance with the provisions of the Financial Services Law.

The Commissioner of the Capital Market, Insurance, and Savings is charged with the application of the provisions of the Financial Services Law. In its capacity as the official charged with the application of the provisions of the said law, the Commissioner has extensive regulatory, enforcement, and administrative review powers, including the power to impose monetary sanctions. Providers of financial services are required to comply with the Commissioner's directives and guidance as published from time to time.

As of the report date both Gama and Gama Financing hold an expanded license for the provision of credit and an extended license for the provision of services in financial assets.

The Prohibition of Money Laundering Law, 2000

The purpose of the Prohibition of Money Laundering Law is to prevent money laundering in Israel through, inter alia, institutional entities and financial services providers. The provisions of the said law include three key requirements applicable to companies engaged in the provision of credit against deferred receivables:

The Prohibition of Money Laundering (Credit Providers' Requirements regarding Identification, Reporting and Record-Keeping for the Prevention of Money Laundering and the Financing of Terrorism) Order, 2018 (hereinafter in this section - the "Order") came into effect in 2018. The Order requires all credit providers (including Gama) to identify the customer and verify his details, implement a "know your cuctomer" procedure, report certain actions to the Israel Money Laundering and Terror Financing Prohibition Authority in accordance with the Order, have in place controls regarding the activity of the service recipient, ensure that customers are not included in the list of terror organizations and terror activists, and meet documentation and document retaining requirements. The Prohibition of Money Laundering (Credit Providers' Requirements regarding Identification, Reporting and Record-Keeping for the Prevention of Money Laundering and the Financing of Terrorism) Order, 2020 was issued in 2021; this order amends the 2018 Order and imposes, inter alia, similar requirements on provision of services in financial assets.

Bills of Exchange Ordinance [New Version]

A deferred receivable is a bill that has the characteristics set in the Bills of Exchange Ordinance. The Bills of Exchange Ordinance regulates the endorsement of the receivable (the check) by one person to another, such that the rights attached to the receivable (the check) are transferred to the endorsee; the Bills of Exchange Ordinance also regulates the rights of a "holder in due course" of a bill.

Law for Reducing the Use of Cash, 2018

In accordance with the recommendations of the Locker Committee, the Law for Reducing the Use of Cash outlines a policy for reducing and limiting the use of cash as a means of payment in the Israeli economy, with the main objectives being taking action against "black capital", economic crimes and money laundering, and expanding the tools available to the government in its efforts to achieve those objectives.

Furthermore, the Law for Reducing the Use of Cash sets restrictions on endorsement of checks whose amount is higher than NIS 10,000; however, the said restrictions do not apply to endorsement in favor of a regulated financial entity; nevertheless, restrictions have been placed as to the number of endorsements and the identity of the endorsers. The Ministry of Finance may prescribe that such an endorsement shall only be allowed with respect to services he specifies; however, as of the report date no such restrictions were placed.

The Fair Credit Law, 1993

The Fair Credit Law applies to loans extended by lenders to individuals or licensed dealers (that is to say - it does not apply to loans extended to corporations other than those types of corporations specified by the Minister of Justice).

The objective of the Fair Credit Law is to protect consumers in the credit market and increase the competition in this field by setting the maximum cost of a loan, which is not linked to the consumer price index, and by prescribing that the actual cost of the loan, as defined in the Fair Credit Law, shall not exceed the said maximum cost.

It is also prescribed that the maximum rate of arrears interest imposed on such loans shall not exceed 1.2 times the interest payable on the loans.

Furthermore, the Fair Credit Law prescribes disclosure requirements applicable to lenders in respect of each credit transaction; the aim of this provision is to protect borrowers.

The Credit Data Law, 2016

The Credit Data Law aims to reduce any asymmetry in connection with financial information, increase the competition in the retail credit market as well as the accessibility of credit, reduce the discrimination in the process of granting credit as well as the economic gaps, and create a database of non-identifying information to be used by the Bank of Israel in carrying out its functions.

Gama operates as an Information Source as per the Credit Data Law; as such, it transfers information to the database run by the Bank of Israel, and on the other hand it is entitled to receive information from the said database, all in accordance with the provisions of the Credit Data Law and the provisions applicable to Gama thereunder.

The Payment Services Law, 2019

The law, which came into force in October 2020, cancels the Payment Cards Law, 1986, and regulates, among other things, various aspects of the relationships between the provider of payment services and a payer, and between the provider of payment services and a beneficiary (the merchant), when means of payment are used; this law includes provisions whereby the provider of payment services shall transfer funds to the merchant immediately or within a reasonable period of time agreed upon with the merchant; the law also prescribes general provisions regarding the execution of payment instructions and liability arrangements pertaining thereto. As of the report date Gama is unable to assess the expected impact that the changes arising from the Payment Services Law will have on its activity.

The Protection of Privacy Law, 1982

The Protection of Privacy Regulations require each company to assess its databases and determine the level of security required. Gama has lawfully registered databases. Gama operates in accordance with the regulations in order to ensure that the appropriate security level is maintained and that the information it holds is protected in accordance with the provisions of the law.

The Insolvency and Economic Rehabilitation Law, 2018

The provisions of the Insolvency and Economic Rehabilitation Law focus or rehabilitation of corporations and debtors. The provisions of the Insolvency Law work for the benefit of debtors, but do not allow them to evade paying debts; therefore, Gama believes that the law's impact on its activities shall not be material or different than its impact on other financial entities.

Banking Law (Licensing), 1981

Section 21 to the Banking Law (Licensing) Law allows non-bank corporations to extend credit originating, inter alia, from the issuance of bonds (as defined in Section 35a to the Securities Law), the issuance of which requires the publication of a prospectus in accordance with Section 15 to the Securities Law, subject to compliance with certain conditions. The said section sets, among other things, a cap on the maximum amount that can be raised by way of issuing bonds; it also stipulates that the loan extended does not constitute a residential loan whose repayment is secured by a mortgage, an undertaking to register a mortgage or the mortgaging of rights in land.

The Payment Card Industry Data Security Standard (PCI)

Gama is PCI compliant. The purpose of the PCI standard is to secure the sensitive data handled by organizations operating in the payment card industry (data that allow the execution of transactions). The standard defines the security level required from entities handling payment cards numbers, with the level of security being in line with the amount of data. Gama is classified to the highest security level.

The standard defines how data are to be saved and the requirements an entity needs to comply with in order to expose them. The standard requires entities to pass a strict annual assessment by a Qualified Security Assessor, at the end of which organizations receive an annual certificate saying that they are PCI compliant.

8. Financing

Gama funds its activity using own sources, funds received from banks and institutional entities (mainly loans and capital raising by way of issuing bonds to institutional entities).

Details about the effective interest rate and the average interest on loans received from banks and non-bank entities, divided into short-term and long-term loans:

		Effective interest rate (range)		Effective interest rate (range)
		For 2020	For 2019	For 2020	For 2019
Bank credit sources	Short-term borrowings	1%-2%	1%-2%	1%-2%	1%-2%
Institutionals	Short-term borrowings	-	1%-2%	-	1%-2%
	Long-term borrowings	2%-3%	-	2%-3%	-
Bonds (Series A)		1.68%	1.68%	1.45%	1.57%

Date of loan provision	Purpose of the loan	The loan amount is NIS million	Balance as of Dec. 31 2020 (estimated value)	Balance as of Dec. 31 2019 (estimated value)	Loan term in years	Annual interest (range)	Collateral (+)
8/2020	Receivables financing	250	250	-	4.5	Between Prime and Prime + 1%	Pledging of receivables
6/2019	Receivables financing	100	-	100	1	Between Prime and Prime + 1%	Pledging of receivables
1/2018	Receivables financing	100	-	100	1	Between Prime and Prime + 1%	Pledging of receivables
6/2020	Financing a real estate portfolio	100	98	-	3	Between Prime and Prime + 1%	Pledging of receivables + financing agreements

Loans taken by Gama from institutional entities (in NIS thousand), interest rates payable thereon and their term:

(*) The amount of pledged receivables provided as collateral to the credit providers exceeds the balance of Gama's debt to those credit providers. In the event that the collaterals are realized, the institutional entities that provided the loan can use them to repay the debt owed to them, and the remaining balance of pledged receivables shall be used to repay Gama's debts to its unsecured creditors.

Credit facilities

By virtue of a credit facility's instrument of approval of July 2020, Gama has in place a NIS 200 million credit facility from a bank; the facility will expire at the end of 2021; the instrument of approval sets out a number of preliminary conditions for the utilization of the credit facility, including, inter alia, a requirement whereby the credit will be extended against receivables deposited with Gama's accounts with that bank, with those receivables being pledged in favor of the said bank.

In April 2021, Gama's Board of Directors approved the receipt of a fixed credit facility from another bank; the amount of the credit facility is NIS 100 million, and it is due to expire on April 30 2022. The credit facility's instrument of approval sets out a number of preliminary conditions for the utilization of the credit facility, including, inter alia, a requirement whereby the credit will be extended against receivables deposited with Company's accounts with that bank, with those receivables being pledged in favor of the said bank.

Furthermore, The Phoenix Investments extended a NIS 50 million shareholders' loan to Gama. The loan's principal shall be repaid in 6 equal annual instalments, with the first payment due in October 2022, provided that prior to any repayment on account of the loan's principal there is no impediment on behalf of the entities providing funding to Gama to make repayments on account of the loan's principal (in accordance with the terms of the subordination letters).

9. Material agreements

Clearing aggregator agreement

In July 2017 Gama and CAL signed an agreement whereby Gama shall act as a clearing aggregator. The parties also signed addendums to the agreement. In view of the provisions of Section 7b to the Banking (Service to Customers) Law, a clearing entity is prohibited from terminating its agreement with the aggregator on unreasonable grounds.

By virtue of the agreement, Gama shall provide clearing agggregator services to merchants through CAL, which delivers to GAma the transactions' proceeds less a variable fee, which is derived from the overall turnover of all merchants that worked with CAL using Gama's clearing aggregator services during that month. Gama credits the merchants in accordance with the agreements between the merchants and Gama.

The agreement sets out instances in which CAL will be allowed to terminate the agreement with immediate effect, including if the regulations or tariffs of the international payment cards organizations will be modified in a way that will impact the execution of the agreement; if the agreement between CAL and the other payment cards companies shall be changed in a manner which makes it impossible or difficult to execute the agreement; if an instruction or a decision to do so is issued by the Competition Authority; if an issuer refuses to pay CAL the vouchers' proceeds, and if the interchange fee increases.

CAL is required to approve each of Gama's engagements with merchants, provided that its decision is reasonable and lawful.

Agreement with Matrix I.T.E.R.P Solutions Ltd. R.P. Ltd.

For information about the agreement, see Section 13 below.

Engagements with payment card companies for the provision of payment card vouchers factoring services

In November 1999 Gama and Isracard entered into an agreement whereby Gama shall provide payment card vouchers factoring services to merchants who use Isracard's clearing services; under the said agreement, Isracard has undertaken to pay Gama the vouchers' proceeds that will be assigned to Gama by the merchants. Each of the parties may terminate the agreement by giving a 30-day advance notice.

In November 2004 Gama and Max signed an agreement whereby Gama may provide payment card vouchers factoring services to merchants who use Max's clearing services; under the said agreement, Max has undertaken to pay Gama the vouchers' proceeds that will be assigned to Gama by the merchants. Subject to the terms of the agreement, it shall be renewed automatically every two years, unless one of the parties has informed the other (by giving it a 60-day advance notice) that it does not wish to extend the term of the agreement.

In March 2011 Gama and CAL signed an agreement whereby Gama may provide payment card vouchers factoring services to merchants who use CAL's clearing services; under the said agreement, CAL has undertaken to pay Gama the vouchers' proceeds that will be assigned to Gama by the merchants. Subject to the terms of the agreement, it shall be renewed automatically every two years, unless one of the parties has informed the other (by giving it a 60-day advance notice) that it does not wish to extend the term of the agreement.

It should be noted that in August 2011, subsequent to the signing of the said agreements, Section 7a to the Banking (Service to Customers) Law was enacted whereby an entity providing clearing services shall only be allowed to refuse entering into engagement with entity providing debit card vouchers factoring services for reasonable reasons and as provided by law.

Agreements for assignment by way of sale of payment card transaction vouchers to banks

In 2015-2016 Gama entered into separate agreements with Bank Leumi le-Israel B.M., Bank Hapoalim Ltd., Israel Discount Bank Ltd., and Bank Mizrahi Tfahot Ltd., for the execution of assignment transactions by way of sale of Gama's rights to receive funds in respect of the factoring of payment card transaction vouchers, which were assigned to Gama by merchants.

As part of the agreements with the banks, it was agreed that Gama shall irrevocably assign to each of the banks, by way of sale, its rights to receive funds in respect of vouchers cleared for certain merchants by a certain clearing services entity, in connection with management and factoring agreements signed between Gama and the merchants, whereby the merchants assigned to Gama their rights to receive funds from the clearing services entities in respect of payment card transaction vouchers executed with cardholders. Pursuant to the provisions of the agreements with the banks, Gama gave the clearing entities an irrevocable order to deposit the proceeds in respect of the vouchers directly with the bank. Each of the agreements with the banks may be terminated by each of the parties, at any given time and for any reason, by giving a 30-day advance notice.

Subject to the agreements for the sale of the payment card transaction vouchers, Gama entered into agreements with each of the said banks for the purpose of regulating Gama's activities with the relevant bank.

10. Marketing and distribution

Gama's marketing, distribution and support activities are conducted through a number of channels: Gama has a team of highly-experienced portfolio managers, who are deployed nationwide. In addition, Gama has a telemarketing call center providing services through inbound and outbound calls. Furthermore, Gama has a website, which provides its customers with useful financial information on a daily basis about the merchant's transactions, their reception after transmission and the payment thereof. Furthermore, Gama has in place business collaborations with professional organizations that represent many businesses and refer members to use Gama's services. Gama also conducts targeted media campaigns for the business sector.

11. Intangible assets

Gama has established an in-house computing function charged with the running of Gama's computer systems which are based on Matrix's systems. Every year, Gama invests many resources in upgrading and maintaining its computer systems and infrastructures, and in adapting them to the company's needs.

Gama maintains a remote disaster recovery site and practices the use of that site that will be used as its main site in case of an emergency (the shutdown of the main site).

In March 2021, Gama filed an application to register 6 verbal trademarks and a logo. As of the report date the said application has not yet been approved.

12. Human capital

Gama's workforce comprises approximately 130 employees and managers (including service providers and outsourced IT employees) working full or part-time. Work relations in Gama are positive and constructive. Gama is dependent on a number of key employees, as described in Section 17(o) below.

Description of the organizational structure

Benefits and the nature of Gama employees' employment agreements

Gama's employees are employed through personal agreements. Employees' terms of employment include, among other things, wages, provisions for pension fund, managers insurance policies and advanced education fund. The employees are also entitled to paid sick leave, paid annual leave and recreation pay as is generally accepted in Gama and based on the number of years they have been employed by Gama. From time to time Gama awards bonuses to its employees subject to the discretion of its management.

The entire amount of Gama's current liabilities for employee rights upon retirement is covered by contributions to executive insurance polices and pension funds. The remaining balance of Gama's liabilities for employee rights upon retirement beyond the amounts contributed to managers insurance polices and pension funds are provided for as a liability in the financial statements.

13. Suppliers and service providers

As of the report date, Gama has an engagement with a material supplier - Matrix I.T.E.R.P Solutions Ltd. (hereinafter - "Matrix").

In 1998 Matrix granted Gama a non-exclusive license to use a software it developed. Over the years software were developed that are used exclusively by Gama as part of its payment card factoring activities. The development is conducted, inter alia, through Matrix's software developers who work at Gama's offices.

In July 2005 Matrix signed a document titled "Continued Joint Work Relations" in which it clarified that the systems and code that were developed for Gama are exclusive to Gama and Gama has exclusive rights of use therein, such that those systems and code shall not constitute part of Matrix's systems, without first obtaining Gama's written consent.

14. Legal proceedings

As of the report date, Gama and its subsidiaries are not parties to material legal proceedings.

15. Objectives and strategy

Gama's strategy is assessed and impacted by, among other things, the changes taking place in its areas of activity and the continued increase in the number of competitors in each of those areas.

Gama aims to sustain continued growth in its areas of activity by marketing and promoting the credit and financing solutions it provides businesses through its range of platforms.

Gama works to strengthen and enhance its direct relationships with all its customers while increasing its service offering and providing solutions to its customers' varied needs, and at the same time increasing the added value it generates to its customers. Gama's extensive range of services, its position in the field of credit card clearing aggregation and factoring, its many years of experience and its high professional standards constitute an excellent basis for continued growth in its existing areas of activity and for entering into new related fields. As of the report publication date, Gama is in the process of considering and formulating a strategy for promoting its various activities in the next few years.

16. Credit risk management

Generally, Gama is engaged in extending credit to licensed dealers and corporations through a range of products; credit to individuals constitutes a very small portion of Gama's business. As part of its activity, Gama is exposed to the risk that borrowers will fail to repay the credit or become insolvent. Gama works to reduce the said exposures based on its experience, while implementing an underwriting, control and risk-monitoring methodology it developed over the years. The provision of credit is assessed by a skilled and highly-experienced team and approved by the competent functions in accordance with the hierarchy of authority Gama has in place.

17. Discussion of risk factors

Set forth below are the key risk factors pertaining to Gama's activity:

Macro risks

A. Deterioration in the Israeli economy

Deterioration in the Israeli economy, the imposition of further lockdowns due to the coronavirus crisis, or a deterioration in the Israeli economy due to the coronavirus crisis or for any other reason may impact Gama's business, mainly with regard to the following aspects: (1) decrease in the number of purchase transactions conducted by consumers - which may result in a reduced demand to Gama's services; (2) deterioration in the financial position of Gama's existing customers, which may harm their repaymeng capacity for the credit extended to them by Gama; (3) decrease in the value of real estate assets used as collaterals to credit extended by Gama, and reduced ability to realize such collaterals; (4) material decline in banks and institutional entities' ability to provide financing, including by way of purchasing payment card vouchers financed by Gama. The Israeli economy suffered significantly from the coronavirus pandemic; in 2020 the Israeli economy contracted. Nevertheless, in accordance with the Bank of Israel's forecasts, the Israeli economy is expected to recover and start growing as of 2021; Gama is of the opinion that this will have a positive effect on Gama's results.

B. Interest rate change

The credit raised by Gama bears unlinked interest. Gama is of the opinion that an increase in the interest rates prevailing in Israel may give rise to a certain exposure in connection with deferred receivable transactions that have not yet been repaid. Gama believes that in view of the short average duration of its credit portfolio and the structure of its financing transactions this exposure is immaterial.

C. Liquidity and funding sources

Gama's ability to conduct is operations depends to a great extent on its ability to raise credit, including from outside sources. Changes in interest rates, changes in the Israeli economy in general and a deterioration in the economic factors affecting Gama's areas of activity may have an adverse effect on Gama's ability to obtain credit to fund its activities, or on the terms of such credit, and as a result on its ability to offer its customers credit at attractive terms. Deterioration in customers' liquidity, due to, inter alia, significant deterioration in the Israeli economy, may have an adverse effect on Gama's liquidity.

D. CPI risk and foreign currency risk

The credit raised by Gama and the credit it extends to its customers is not linked to any index or foreign currency; therefore, Gama's exposure to CPI and foreign currency risk is negligible.

Industry-specific risks

A. Increased competition

The field of financial services in which Gama operates is characterized with intensifying competition and the entry of many new players, such as banks, institutional entities and nonbank entities which raise funds in the capital market. Gama's position depends to a great extent on its reputation and on its ability to significantly differentiate itself from its competitors. To the extent that the competition in the market will intensify and new players will enter into all areas of activity in which Gama operates as mentioned above, whether directly or by providing funding to existing and new market players, Gama will find it harder to increase and retain its market share.

B. Technological changes

The Israeli payments market is undergoing significant changes; in recent years new players entered the market offering advanced digital payment options such as local and international payment apps (such as Apple Pay and Google Pay), as well as local and international digital wallets; some digital wallets, such as "bit" and "PayBox", are owned by Israeli banks and others are owned by credit card companies and/or other companies. These players may change the means of payment landscape in Israel, including by diverting payments to systems that bypass payment cards. Furthermore, in addition to their entering into the fields of issuance and clearing of means of payments, these entities may also engage in providing credit to businesses and individuals and in conducting banking and financial activities. These changes may affect Gama's activity and its results of operations.

C. Regulatory risks

The field of financial services in which Gama operates is highly regulated; companies operating in this field are subject to a considerable amount of ongoing regulation, and are required to invest resources in ensuring compliance with regulation on an ongoing basis. Furthermore, the imposition of new regulatory provisions (including in fields that are currently not regulated), as well as the introduction of primary and secondary legislation may impose restrictions on Gama's activities or require Gama to make modifications to various business processes (including in terms of its systems and infrastructures); this may give rise to operational difficulties for Gama alongside significant additional costs, which may, in turn, adversely affect its results of operations. Furthermore, occasionally, the provisions of laws and regulations may significantly change the profitability of credit-related activities or give advantage to certain type of entities over others in the provision of such services.

Gama has a number of functions charged with ensuring that the company complies with the regulatory provisions it is subject to: a Compliance Officer and an officer in charge by virtue of the Prohibition of Money Laundering Law, a Chief Risk Officer, and an Internal Auditor.

D. Legal risks

In view of the nature of Gama's activity, which involves working with thousands of customers, Gama is exposed to the risk of lawsuits by different parties, including motions filed by such costumers to approve lawsuits as class actions, which potentially involve material amounts. In addition, Gama has relationships with various commercial entities (merchants, funding entities, entities with which it collaborates, etc.); these relationships may give rise to legal exposures due to, inter alia, errors in documents or in customers' signing documents. In order to mitigate this risk, legal advisors support Gama's activities on an ongoing basis; furthermore, risk surveys, internal audits and compliance surveys are carried out in Gama on a periodic basis.

Risks specific to Gama

E. Deterioration in customers' payment ethics

Gama has a certain exposure to its customers' solvency and to the solvency of the respective customers of said customers. With regard to the financing of payment cards vouchers, Gama's exposure is limited to the causes for cancellation of vouchers as per the provisions of Payment Services Law and the provisions of Gama's agreements with the clearing entities and with those that provided funding. With regard to financing against deferred receivables (check discounting), Gama strives to obtain the status of a holder in due course in order to avoid, to the extent possible, any exposure pertaining to the original transaction. Furthermore, in some of the cases Gama requires the provision of pledges and other collaterals against the provision of funding.

F. Fraud and embezzlement

Gama, like other companies operating in the field of financial services, is exposed to fraud risks; those risks include fraud or forgery of documents by customers and suppliers, embezzlement or forgery or fraud by employees and suppliers or a combination of the two. Therefore, Gama takes action to: (1) identify the risks - Gama carries out a fraud and embezzlement survey in order to identify and assess the risks and check the appropriateness of the controls it has in place to mitigate those risks; (2) mitigate the risk - Gama has in place processes whose aim is to reduce the exposure to fraud and embezzlement; Gama balances those mitigation processes against its need to conduct itself competitively and with a good degree of operational flexibility.

G. IT, information security and cyber risks

Gama is exposed to potential damages due to technical faults involving the software it uses or as a result of cyber attacks. In recognition of the importance of protecting its customers' privacy and as required by law, Gama invests resources in reinforcing the security of its systems and technologies; as part of these activities, Gama implements a range of protection and control measures designed to secure its systems and the information stored therein. Gama conducts checks to test the effectiveness of the said protections and controls. Gama's backed-up data is restored periodically into its core systems that use it.

H. Goodwill

Gama's activity is based on its excellent reputation forged over the years by the company itself and by its managers. Building up and maintaining its reputation among its customers is essential for Gama's success and business development.

Any damage to Gama's image as a stable and reliable service provider, and specifically any negative public perception of the company, may impair its ability to recruit new customers and even cause attrition of existing customers, thereby adversely impacting Gama's results and profitability.

I. Liquidity risk

The scope, availability and cost of Gama's financing sources directly impact its turnover and profitability as well as its stability. The resources required to maintain Gama's loan making capacity and its operating capabilities are larger than its own sources. Therefore, Gama engages - on an ongoing basis - in developing and maintaining diverse financing resources - including credit from banks and institutional entities, bonds and agreements for the sale of payment cards transaction vouchers.

A decrease in the scope of Gama's financing sources or an increase in the cost of those sources may have an adverse effect on the scope of services it will be able to provide.

Furthermore, any deterioration in the economic conditions in Israel may lead to a situation where Gama's customers encounter difficulties in repaying credit due to liquidity issues they may experience; this may adversely affect Gama's liquidity levels and its loan making capacity.

J. Regulatory Risk

Gama's ability to collect in full any debts in respect of transactions it conducts has a significant effect on its results of operations. Bad debts may have an adverse effect on Gama's profitability. Furthermore, legislation, regulations and insolvency-related legal proceedings, which hinder the collection of debts and work for the benefit of debtors (individuals or companies), as well as applications for court debt arrangements that do not come to fruition, may adversely impact Gama's ability to collect debts and its profitability. The ability to collect debts depends on the actual value of collaterals such as pledged real estate and equipment or guarantees given, and on the actual ability to realize such collaterals. This ability is impacted from the assumptions that the appraisals of the value of the collaterals as received by Gama prior to providing the credit were correct and free of errors, that this value will, indeed, be realized, and that the courts will not decide to prevent the realization of the collaterals under debt arrangements for companies, businesses and owners thereof who provided the personal guarantees, such that some of the debt is cancelled, or where the parties fail to comply with terms of the debt arrangement and the collateral was impaired or the debt is cancelled under the debt arrangement. Gama has an employee who is charged with monitoring the collection of customers' debts and where necessary transferring debts to be dealt with by attorneys.

K. Key person dependency

Mr. Ariel Genut, CEO of and Director in Gama, Mr. Eli Unger, Chairman of the Board of Directors of Gama, and a number of long-serving VPs of Gama are considered key persons in Gama by virtue of their business and managerial skills, the extensive information they accumulated, their relationships with customers, and their understanding of and experience in matters pertaining to Gama's area of activity. If any of the aforesaid persons will stop working for Gama, this might adversely affect its revenues and profits.

L. Operational risk

Gama's areas of activity are characterized with increased operational complexity, which stems, inter alia, from the many areas of activity it is involved in; operating in those areas of activity is based on work processes, systems, software and hardware interfaces and complex control processes. The increased operational complexity of Gama's activities stems from the large number of customers and merchants with whom it is engaged in different clearing, credit, funding and reconciliation agreements; the mechanical and operational complexity of the different funding transactions and the complexity of the calculations they involve, as well as the complexity of operating such transactions, collecting their proceeds and placing controls thereon; the interfaces with the computer systems of each of the payment card companies, customers, banks and funding entities; the complex reporting and control systems operated by Gama; the legal complexity of Gama's agreements with its customers, suppliers and funding entities, and the complexity of its relationships with those parties; the need to maintain ongoing survivability of the interface with customers and suppliers' systems; the need to enforce complex manual and automated work processes; exposure to human errors as part of work and control processes; errors or faults in signing of documents and agreements and in registering collaterals; software and hardware malfunctions; errors in settling of accounts; errors and malfunctions in the delivery of data and files to customers, suppliers and compliance-related parties; frustration of agreements with customers or suppliers; errors or malfunctions in the transfer of funds; errors in appraisals and in assessment of the value of collaterals; errors in registering collaterals, pledges and assignments; physical damage to Gama's offices; changes, from time to time, in the terms of Gama's engagements with its customers; changes in the market, in legislation and in regulations - which Gama is required to adapt to and integrate into its operating systems; and the complexity of the way Gama settles its accounts with its different customers and suppliers (arrangements which change from time to time).

From time to time, the aforesaid operational complexity may cause various difficulties and malfunctions and give rise to various threats, and accordingly expose Gama to various risks. Gama takes measures to put in place controls with respect of the operational risks with the aim of mitigating those risks.

	Effect of the risk factor on Gama
Risk factor	Significant effect	Moderate effect	Minor effect
Macroeconomic risks
Deterioration of the state of the economy	X
Interest rate change			X
Liquidity and funding sources	X
CPI risk and foreign currency risk			X
Industry-specific risks
Intensification of competition		X
Technological changes		X
Regulatory risks	X
Legal risks		X
Unique risks
Deterioration in customer payment ethics	X
Fraud and embezzlement		X
IT systems, information security and cyber risks		X
Goodwill		X
Liquidity risk		X
Collection risk		X
Dependence on key persons		X
Operational risk		X

The information presented above in this section includes forward-looking information, as defined in the Securities Law, 1968. This information contains, inter alia, forecasts, targets, assessments and estimates relating to future events or matters, including reference to various risk factors and developments as described in the report, the materialization of which is uncertain and may be impacted by various factors which are not under the Company's control. Forward-looking information is not a proven fact and is based, in part, on the Company's estimates, which are based on various, diverse data and entities that have not been verified or confirmed by the Company. It is hereby clarified that actual results may differ from that which is described herein. Forwardlooking information refers exclusively to the date on which the report was written, and the Company is under no obligation to revise and/or change any information pertaining to forward-looking information as presented here, insofar as it becomes aware of any additional information in connection with such information.

Condensed Consolidated Interim Financial Statements

Part 2

	Page
Review Report of the Independent Auditors	2-3
Condensed Consolidated Interim Statements of Financial Position	4-5
Condensed Consolidated Interim Income Statements	6
Condensed Consolidated interim Statements of Comprehensive Income	7
Condensed Consolidated Interim Statements of Changes in Equity 8-12
Condensed Consolidated Interim Statements of Cash Flow 13-15
Notes to the Condensed Consolidated Interim Financial Statements 16-127
Appendix to the Condensed Consolidated Interim Financial Statements 128-131

Kost Forer Gabbay & Kasierer Menachem Begin Road 144A, Tel Aviv 6492102

Tel. +972-3-6232525 Fax +972-3-5622555 ey.com

Auditors' Review Report to the Shareholders of The Phoenix Holdings Ltd.

Introduction

We have reviewed the accompanying financial information of The Phoenix Holdings Ltd. and subsidiaries ("the Company"), the condensed consolidated statement of financial statement of financial position as of June 30, 2021 the related condensed consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the six and three months period then ended. The Company's Board of Directors and management are responsible for the preparation and presentation of interim financial information for this interim period in accordance with IAS 34, "Interim Financial Reporting", and are responsible for the disclosure requirements set by the Commissioner of the Capital Market, Insurance and Savings and in accordance with the Financial Services (Insurance) Supervision Law, 1981 and they are also responsible for preparing financial information for this interim period under Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970, insofar as these regulations apply to a corporation that consolidates insurance companies. Our responsibility is to express a conclusion regarding the financial information for this interim period based on our review.

We did not review the condensed interim financial information of certain subsidiaries, whose ass ets included in consolidation constitute approximately 1.8% of a total consolidated assets as of June 30, 2021 and whose revenues included in consolidation constitute approximately 1.4% and 1.9% of total consolidated revenues for the six and three months period then ended, respectively. Furthermore, we did not review the condensed interim financial information of certain companies accounted for at equity, the investment in which, at equity, amounted to approximately NIS 195,877 thousand as of June 30, 2021 and the Company's share of their earnings (losses) amounted to approximately NIS 4,489 thousand and NIS (4,393) thousand for the six and three months period then ended, respectively. The condensed interim financial information of those companies was reviewed by other auditors, whose review reports have been furnished to us, and our conclusion, insofar as it relates to financial information in respect of those companies, is based on the review reports of the other auditors.

Scope of Review

We conducted our review in accordance with Review Standard (Israel) 2410 of the Institute of Certified Public Accountants in Israel, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit performed pursuant to Israeli GAAP and, as a result, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Kost Forer Gabbay & Kasierer Menachem Begin Road 144A, Tel Aviv 6492102

Tel. +972-3-6232525 Fax +972-3-5622555 ey.com

Conclusion

Based on our review and the review reports of other auditors, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34 and in accordance with the disclosure requirements prescribed by the Commissioner of the Capital Market, Insurance and Savings, pursuant to the Financial Services Supervision Law (Insurance), 1981.

In addition to that which is stated in the previous paragraph, based on our review and the review reports of other auditors, nothing has come to our attention that causes us to believe that the abovementioned financial information does not comply, in all material respects, with the disclosure provisions of Chapter D of the Israel Securities Regulations (Periodic and Immediate Reports), 1970, insofar as these regulations apply to a corporation consolidating insurance companies.

Emphasis of matter

Without qualifying the above conclusion, we draw attention to Note 7 to the financial statements regarding exposure to contingent liabilities.

Tel Aviv, Kost Forer Gabbay & Kasierer August 24, 2021 Certified Public Accountants

		As of
		June 30 2021	June 30 2020
		Unaudited		Audited
	Note		NIS thousand
Assets
Intangible assets	4	2,655,265	1,793,846	2,016,668
Deferred tax assets		58,838	28,713	55,104
Deferred acquisition costs		1,870,408	1,724,021	1,712,630
Property, plant & equipment		844,698	816,720	861,865
Investments in associates	4B	575,548	739,329	756,869
Investment property in respect of yield-dependent
contracts		1,938,918	1,759,422	1,839,576
Investment property - other	1E	1,060,819	2,665,532	2,728,710
Reinsurance assets		2,605,989	2,544,932	2,531,659
Credit for purchase of securities		478,000	325,000	403,000
Current tax assets		28,282	49,349	6,422
Receivables and debit balances		694,318	453,011	529,792
Premiums collectible		699,620	736,632	651,825
Credit assets in respect of factoring, clearing and financing	4B, 5C	2,283,531	-	-
Held-for-sale assets of disposal group	1E, 4A	1,881,113	-	-
Financial investments in respect of yield-dependent contracts	5A	74,114,354	56,974,193	65,570,447
Assets for holders of bonds, ETFs, short ETFs, composite ETNs, deposit certificates and structured
bonds.		229,000	271,000	239,000
Other financial investments:
Liquid debt assets		7,262,768	8,087,442	8,095,468
Illiquid debt assets		13,951,771	13,672,370	14,007,189
Shares		2,689,052	1,448,147	1,899,993
Other		3,750,831	2,575,363	3,247,469
Total other financial investments	5B	27,654,422	25,783,322	27,250,119
Cash and cash equivalents in respect of yield dependent contracts		11,098,327	9,185,575	10,464,216
Other cash and cash equivalents		2,104,978	1,919,512	1,545,903
Total assets		132,876,428	107,770,109	119,163,805
Total assets in respect of yield-dependent contracts		87,342,815	68,124,853	78,034,084

		As of
		June 30 2021	December 31 2020
		Unaudited		Audited
	Note		NIS thousand
Equity
Share capital		310,059	309,951	309,951
Premium and capital reserves in respect of shares		839,186	823,281	833,592
Treasury shares	8L	(93,271)	-	(26,411)
Capital reserves		1,139,769	615,858	913,036
Retained earnings		6,489,114	5,052,000	5,939,754
Total equity attributed to the Company's
shareholders		8,684,857	6,801,090	7,969,922
Non-controlling interests		249,162	125,014	111,908
Total equity		8,934,019	6,926,104	8,081,830
Liabilities
Liabilities in respect of insurance contracts and non yield-dependent investment contracts		24,297,043	23,388,028	23,469,887
Liabilities in respect of insurance contracts and yield dependent investment contracts		86,163,297	67,830,848	76,856,913
Liabilities in respect of deferred taxes		828,587	611,249	897,804
Liability for employee benefits, net		82,051	64,300	59,362
Liability in respect of current taxes		80,106	26,936	63,444
Payables and credit balances		2,569,210	2,033,456	2,452,851
Held-for-sale liabilities of disposal group	1E, 4A	880,365	-	-
Liabilities in respect of bonds, ETFs, short ETNs, composite ETNs, deposit certificates and structured
bonds		228,000	270,000	238,000
Financial liabilities	4B, 5D	8,813,750	6,619,188	7,043,714
Total liabilities		123,942,409	100,844,005	111,081,975
Total equity and liabilities		132,876,428	107,770,109	119,163,805

Benjamin Gabbay	Eyal Ben Simon	Eli Schwartz
Chairman of the Board of	Chief Executive Officer	Executive Vice President, CFO
Directors

Date of approval of the financial statements - August 24, 2021

		For the six months ended June 30	For the three months ended June 30		For the year ended December 31
	2021 2020		2021	2020	2020
		Unaudited			Audited

Premiums earned, gross	5,361,420	5,248,200	2,743,098	2,528,587	10,382,652
Premiums earned by reinsurers	647,233	678,207	336,289	331,826	1,328,978
Premiums earned - retention	4,714,187	4,569,993	2,406,809	2,196,761	9,053,674
Gains (losses) on investments, net and
finance income	8,144,333	(4,180,641)	4,289,738	3,972,927	5,479,706
Income from management fees	1,015,551	526,982	528,678	252,585	1,357,189
Income from fees and commissions	338,671	275,238	171,044	134,867	556,051
Income from other financial services	76,000	90,000	35,000	44,000	159,000
Other income (see Note 4B)	263,351	33,295	250,445	7,343	131,846
Total income	14,552,093	1,314,867	7,681,714	6,608,483	16,737,466
Payments and change in liabilities in
respect of insurance contracts and investment contracts, gross	11,835,806	(216,560)	6,029,877	5,366,722	12,529,564
Reinsurers' share in payments and in
changes in liabilities in respect of
insurance contracts	307,691	485,745	103,828	229,013	826,690
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	11,528,115	(702,305)	5,926,049	5,137,709	11,702,874
Fees and commissions, marketing expenses and other purchase expenses	816,329	887,197	435,906	428,659	1,750,103
General and administrative expenses	788,743	647,528	425,012	323,553	1,360,028
Other expenses	27,923	21,150	17,178	20,318	54,885
Finance expenses	103,433	54,926	61,888	28,566	146,509
Total expenses	13,264,543	908,496	6,866,033	5,938,805	15,014,399
Company's share in the net results of investees	23,226	20,882	7,199	5,578	39,697
Profit before taxes on income	1,310,776	427,253	822,880	675,256	1,762,764
Taxes on income	359,422	123,608	197,653	218,406	553,829
Profit	951,354	303,645	625,227	456,850	1,208,935
Attributed to:
The Company's shareholders	928,252	282,649	612,848	448,716	1,169,023
Non-controlling interests	23,102	20,996	12,379	8,134	39,912
Profit	951,354	303,645	625,227	456,850	1,208,935
Earnings per share attributable to the Company's shareholders (in NIS): Basic earnings per share
Earnings per ordinary share of NIS 1 par
value (NIS)	3.70	1.10	2.46	1.75	4.57
Diluted earnings per share
Earnings per ordinary share of NIS 1 par value (NIS)	3.66	1.10	2.43	1.75	4.57

	For the six months ended June 30		For the three months ended June 30	For the year ended December 31
	2021	2020	2021	2020	2020
	Unaudited		Unaudited	Audited
			NIS thousand
Profit	951,354	303,645	625,227	456,850	1,208,935
Other comprehensive income (loss):
Amounts that will be or that have been reclassified to profit or loss when specific conditions are met
Net change in fair value of financial assets classified as available for sale, carried to capital reserves	696,124	(272,574)	442,948	533,745	455,703
Net change in fair value of financial assets classified as available for sale, carried to the income statement	(393,418)	(187,946)	(163,308)	(101,875)	(516,761)
Impairment loss of financial assets classified as available for sale,
carried to the income statement	41,036	287,597	5,128	27,274	324,220
Company's share in other comprehensive income (loss), net, of equity-accounted companies	(2,495)	1,534	(3,552)	(3,651)	(3,412)
Tax effect	(116,657)	58,577	(97,128)	(156,471)	(89,697)
Total components of net other comprehensive income (loss) subsequently reclassified to profit or loss	224,590	(112,812)	184,088	299,022	170,053
Amounts that shall not be
subsequently reclassified to profit or loss
Revaluation of property, plant and equipment	-	1,621	-	-	17,314
Actuarial loss in respect of defined benefit plans	-	-	-	-	497
Tax effect	-	(373)	-	-	(4,190)
Total components of other comprehensive income, net, that shall not be subsequently
reclassified to profit or loss	-	1,248	-	-	13,621
Total other comprehensive income (loss), net	224,590	(111,564)	184,088	299,022	183,674
Total comprehensive income for the period	1,175,944	192,081	809,315	755,872	1,392,609
Attributed to:
The Company's shareholders	1,152,842	171,085	796,936	747,738	1,352,697
Non-controlling interests	23,102	20,996	12,379	8,134	39,912
Comprehensive income	1,175,944	192,081	809,315	755,872	1,392,609

	Attributed to Company's shareholders
	Share capital	Premium and capital reserves in respect of shares	Treasury shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder - bonus	Capital reserve from share based payment	Revaluation reserve	Principal from translation differences	Capital reserve in respect of available for-sale assets	Total	Non controlling	interests Total equity
							NIS thousand
Balance as of January 1 2021 (audited) Net income	309,951 -	833,592 -	(26,411) -	5,939,754 928,252	(43,622) -	11,000 -	44,943 -	114,614 -	(23,338) -	809,439 -	7,969,922 928,252	111,908 23,102	8,081,830 951,354
Other comprehensive income (loss)	-	-	-	-	-	-	-	-	(2,495)	227,085	224,590	-	224,590
Total comprehensive income (loss)	-	-	-	928,252	-	-	-	-	(2,495)	227,085	1,152,842	23,102	1,175,944
Share-based payment		4,638	-		-		4,315	-	-	-	8,953	-	8,953
Dividend paid to non-controlling interests	-	-	-	-	-	-	-	-	-	-	-	(7,549)	(7,549)
Purchase of treasury shares (see Note 8L)	-	-	(66,860)	-	-	-	-	-	-	-	(66,860)		(66,860)
Commencement of consolidation (please see Note 4)	-	-	-	-	-	-	-	-	-	-	-	121,701	121,701
Exercise of employee options	108	956	-	-	-	-	(1,064)	-	-	-	-	-	-
Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation amount	-	-	-	1,108	-	-	-	(1,108)	-	-	-	-	-
Cash dividend (see Note 8J)	-	-	-	(380,000)	-	-	-	-	-	-	(380,000)	-	(380,000)
As of June 30 2021 (unaudited)	310,059	839,186	(93,271)	6,489,114	(43,622)	11,000	48,194	113,506	(25,833)	1,036,524	8,684,857	249,162	8,934,019

		Attributed to Company's shareholders
	Share capital	Premium and capital reserves in respect of shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder - bonus	Capital reserve from share based payment	Revaluation reserve	Principal from translation differences	Capital reserve in respect of available for-sale assets	Total	Non controlling interests	Total equity
							NIS thousand
Balance as of January 1 2020 (audited)	309,951	830,437	4,768,261	(43,622)	11,000	40,047	103,463	(19,926)	635,974	6,635,585	106,939	6,742,524
Net income	-	-	282,649	-	-	-	-	-	-	282,649	20,996	303,645
Other comprehensive income (loss)	-	-	-	-	-	-	1,248	1,534	(114,346)	(111,564)	-	(111,564)
Total comprehensive income (loss)	-	-	282,649	-	-	-	1,248	1,534	(114,346)	171,085	20,996	192,081
Share-based payment Dividend paid to non	-	(7,156)	-	-		1,576	-	-	-	(5,580)	-	(5,580)
controlling interests	-	-	-	-	-	-	-	-	-	-	(2,921)	(2,921)
Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation amount	-	-	1,090	-	-	-	(1,090)	-	-	-	-	-
As of June 30 2020 (unaudited)	309,951	823,281	5,052,000	(43,622)	11,000	41,623	103,621	(18,392)	521,628	6,801,090	125,014	6,926,104

	Attributed to Company's shareholders
	Share capital	Premium and capital reserves in respect of shares	Treasury shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder - bonus	Capital reserve from share based payment	Revaluation reserve	Principal from translation differences	Capital reserve in respect of available for-sale assets	Total	Non controlling	interests Total equity
							NIS thousand
Balance as of April 1 2021 (unaudited)	309,961	837,324	(26,411)	5,875,712	(43,622)	11,000	47,150	114,060	(22,281)	848,884	7,951,777	117,861	8,069,638
Net income Other comprehensive income (loss)	- -	- -	- -	612,848 -	- -	- -	- -	- -	- (3,552)	- 187,640	612,848 184,088	12,379 -	625,227 184,088
Total comprehensive income (loss)	-	-	-	612,848	-	-	-	-	(3,552)	187,640	796,936	12,379	809,315
Share-based payment Dividend to non-controlling	-	1,003	-	-	-	-	2,001	-	-	-	3,004	-	3,004
interests	-	-	-	-	-	-	-	-	-	-	-	(2,371)	(2,371)
Purchase of treasury shares (see Note 8L)	-	-	(66,860)	-	-	-	-	-	-	-	(66,860)	-	(66,860)
Commencement of consolidation (please see Note 4)	-	-	-	-	-	-	-	-	-	-	-	121,293	121,293
Exercise of employee options	98	859	-	-	-	-	(957)	-	-	-	-	-	-
Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation amount	-	-	-	554	-	-	-	(554)	-	-	-	-	-
As of June 30 2021 (unaudited)	310,059	839,186	(93,271)	6,489,114	(43,622)	11,000	48,194	113,506	(25,833)	1,036,524	8,684,857	249,162	8,934,019

		Attributed to Company's shareholders
	Share capital	Premium and capital reserves in respect of shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder - bonus	Capital reserve from share based payment	Revaluation reserve	Principal from translation differences	Capital reserve in respect of available for-sale assets	Total	Non controlling interests	Total equity
							NIS thousand
Balance as of April 1 2020 (unaudited) Net income	309,951 -	826,991 -	4,602,73 9 448,716	(43,622) -	11,000 -	40,732 -	104,166	(14,741) -	218,955 -	6,056,171 448,716	119,801 8,134	6,175,972 456,850
Other comprehensive income (loss)	-	-	-	-	-	-	-	(3,651)	302,673	299,022	-	299,022
Total comprehensive income (loss)	-	-	448,716	-	-	-	-	(3,651)	302,673	747,738	8,134	755,872
Share-based payment Dividend to non-controlling interests	- -	(3,710) -	- -	- -	- -	891 -	- -	- -	- -	(2,819) -	- (2,921)	(2,819) (2,921)
Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation amount	-	-	545	-	-	-	(545)	-	-	-	-	-
As of June 30 2020 (unaudited)	309,951	823,281	5,052,00 0	(43,622)	11,000	41,623	103,621	(18,392)	521,628	6,801,090	125,014	6,926,104

	Attributed to Company's shareholders
	Share capital	Premium and capital reserves in respect of shares	Treasury shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder - bonus	Capital reserve from share based payment	Revaluation reserve	Principal from translation differences	Capital reserve in respect of available for-sale assets	Total	Non controlling interests	Total equity
							NIS thousand
Balance as of January 1 2020 (audited) Net income	309,951 -	830,437 -	- -	4,768,261 1,169,023	(43,622) -	11,000 -	40,047 -	103,463 -	(19,926) -	635,974 -	6,635,585 1,169,023	106,939 39,912	6,742,524 1,208,935
Other comprehensive income (loss)	-	-	-	290	-	-	-	13,331	(3,412)	173,465	183,674	-	183,674
Total comprehensive income (loss) Transfer from revaluation reserve in respect of revaluation of property, plant, and	-	-	-	1,169,313	-	-	-	13,331	(3,412)	173,465	1,352,697	39,912	1,392,609
equipment, at the depreciation amount
Share-based payment Dividend paid to non-controlling	- -	- 3,155	- -	2,180 -	- -	- -	- 4,896	(2,180) -	- -	- -	- 8,051	- -	- 8,051
interests	-	-	-	-	-	-	-	-	-	-	-	(31,971)	(31,971)
Acquisition of treasury shares Acquisition of non-controlling interests	- -	-	(26,411)	- -	- -	- -	- -	- -	- -	- -	(26,411) -	- (3,000)	(26,411) (3,000)
Commencement of consolidation	-	-	-	-	-	-	-	-	-	-	-	28	28
Balance as of December 31 2020 (audited)	309,951	833,592	(26,411)	5,939,754	(43,622)	11,000	44,943	114,614	(23,338)	809,439	7,969,922	111,908	8,081,830

		For the six months ended June 30			For the three months ended June 30	For the year ended December 31
		2021	2020	2021	2020	2020
				Unaudited		Audited
	Appendix			NIS thousand

Cash flows from operating activities Net income for the period		951,354	303,645	625,227	456,850	1,208,935
Adjustments required to present cash flows from operating activities	(a)	952,109	3,265,256	(103,977)	1,662,077	3,562,529
Net cash provided by operating activities		1,903,463	3,568,901	521,250	2,118,927	4,771,464
Cash flows from investing activities
Purchase of property, plant and equipment		(29,455)	(68,052)	(17,066)	(59,847)	(137,587)
Proceeds from disposal of property, plant and equipment		-	-	-	-	1,158
Investment in associates		(18,498)	(32,275)	(7,866)	(11,556)	(44,845)
Dividend from associates		18,124	5,240	6,206	398	13,089
Receipt (repayment) of a loan from an associate		90	(382)	-	(142)	(8,173)
Acquisition of companies consolidated for the first time (*)	(b)	(457,876)	(39,958)	(120,805)	(3,385)	(86,665)
Acquisition of minority interest in a consolidated company		-	-	-	-	(3,000)
Proceeds from disposal of investment in associate		-	19,445	-	1,000	19,746
Acquisition and capitalization of intangible assets costs		(105,575)	(98,197)	(54,193)	(44,467)	(233,430)
Net cash used in investing activities		(593,190)	(214,179)	(193,724)	(117,999)	(479,707)
Cash flows from financing activities
Dividend to shareholders		(380,000)	-	(380,000)	-	-
Acquisition of Company shares		(66,860)	-	(66,860)	-	(26,411)
Change in liability for REPO, net		3,755	351,477	(43,665)	(105,016)	388,837
Assumption of financial liabilities		193,000	28,000	76,000	28,000	72,097
Repayment of financial liabilities		(187,699)	(167,311)	(117,000)	(21,020)	(572,121)
Repayment of lease liability principal		(14,836)	(20,535)	(2,331)	(10,880)	(41,646)
Issuance of financial liability		348,457	217,511	-	-	585,433
Dividend to non-controlling interests in a consolidated company		(7,549)	(2,921)	(2,372)	(2,921)	(31,971)
Repayment of contingent liability in respect of a put option to non controlling interests		(5,355)	-	-	-	-
Net cash provided by (used in) financing activities		(117,087)	406,221	(536,228)	(111,837)	374,218
Increase in cash and cash equivalents		1,193,186	3,760,943	(208,702)	1,889,091	4,665,975
Balance of cash and cash equivalents at beginning of period	(c)	12,010,119	7,344,144	13,412,007	9,215,996	7,344,144
Balance of cash and cash equivalents at end of period	(c)	13,203,305	11,105,087	13,203,305	11,105,087	12,010,119

(*) For further information, please see Note 4.

		For the six months ended June 30	ended June 30	For the three months	For the year ended December 31
	2021	2020	2021	2020	2020
			Unaudited		Audited
			NIS thousand
Adjustments required to present cash flows from operating activities: Items not involving cash flows
Losses (gains), net on financial investments in respect of insurance contracts and yield dependent investment contract	(7,071,901)	4,343,956	(3,638,531)	(3,486,291)	(4,356,557)
Change in fair value of investment property in respect of yield-dependent contracts	-	13,856	-	858	(25,857)
Losses (gains), net on other financial investments
Liquid debt assets	(215,324)	(45,690)	(101,735)	(75,245)	(166,427)
Illiquid debt assets	(453,367)	(253,778)	(256,830)	(137,513)	(581,800)
Shares	(206,378)	198,943	(82,970)	(63,486)	24,735
Other	(42,171)	(5,725)	(120,374)	(180,852)	(228,807)
Depreciation and amortization	163,133	140,807	86,298	69,104	300,140
Loss from disposal of property, plant and
equipment	13	6	8	-	-
Change in fair value of investment property	(36,378)	7,050	(36,378)	(651)	(53,004)
Change in provision for impairment of property, plant and equipment	(842)	(11,763)	1,387	(147)	(7,957)
Capital gain on disposal of an investment in an
associate (*)	(240,775)	-	(240,292)	-	(67,268)
Change in financial liabilities	(11,386)	463,278	(251,813)	(162,570)	853,786
Income tax expenses	359,422	123,608	197,653	218,406	553,829
Company's share in the results of associates, net	(23,226)	(20,882)	(7,199)	(5,578)	(39,697)
Payroll expenses in respect of share-based payment	4,315	1,576	2,001	891	4,896
Changes in other balance sheet line items, net:
Change in liabilities in respect of non-yield dependent insurance contracts	827,156	195,838	392,067	76,135	277,697
Change in liabilities in respect of yield-dependent
contracts	9,306,384	(3,260,029)	4,866,894	3,900,020	5,766,036
Change in liabilities for bonds, ETFs Change in financial investments for holders of	(10,000)	(12,000)	-	(2,000)	(44,000)
ETFs, certificates of deposit	10,000	13,000	2,000	4,000	45,000
Change in deferred acquisition costs	(138,731)	9,526	(50,945)	44,438	20,917
Change in reinsurance assets	(74,330)	(197,211)	44,220	(69,869)	(183,938)
Change in liabilities for employee benefits, net Change in accounts receivable, debit balances and	15,973	11,747	3,710	7,531	7,306
collectible premiums	(219,451)	12,457	(108,308)	257,458	28,325
Change in payables and credit balances	79,472	(108,773)	124,441	(206,184)	306,867
Change in credit for purchase of securities	(75,000)	(18,000)	(26,000)	(61,000)	(96,000)
Revaluation of loans granted to associates	(2,762)	(730)	(1,664)	(202)	(1,938)
Financial investments and investment property in respect of insurance contracts and yield dependent investment contracts:
Acquisition of real estate properties	(99,342)	(219,213)	(85,854)	(128,739)	(259,654)
Sales (acquisitions), net of financial investments	(1,472,006)	2,986,766	(1,345,761)	1,669,197	3,091,025
Financial investments and other investment property:
Sales (acquisitions), net of financial investments	956,935	(1,031,749)	737,356	89,132	(1,264,985)
Acquisition of real estate properties	(56,145)	(125,226)	(42,843)	(51,503)	(128,350)
Cash paid and received during the period for:
Taxes paid	(508,936)	(97,454)	(173,818)	(52,379)	(354,687)
Taxes received	187,757	151,065	9,303	9,116	142,896

(*) For further details, please see Note 4B.

		For the six months ended June 30		ended June 30	For the three months	For the year ended December 31
		2021	2020	2021	2020	2020
			Unaudited			Audited
				NIS thousand
(b)	Acquisition of companies consolidated for the first time
	Assets and liabilities of the consolidated companies as of acquisition date:
	Working capital (excluding cash and cash equivalents)	32,079	(2,011)	12,120	989	(4,288)
	Encumbered cash and cash equivalents for bond holders	(19,047)	-	-	-	-
	Other financial investments	(44,915)	-	(12,494)	-	-

	Credit assets in respect of factoring, clearing and financing	(2,283,531)	-	(2,283,531)	-	-
	Property, plant and equipment, net	(45,105)	(24)	(9,242)	(24)	(10,710)
	Goodwill arising from acquisition	(405,347)	(22,000)	(266,694)	-	(154,549)
	Intangible assets	(310,552)	(15,923)	(122,235)	(4,350)	(83,796)
	Deferred taxes	34,968	-	25,832	-	22,012

	Minority interests	121,701	-	121,293	-	28
	Accounts payable in respect of acquisition of consolidated companies	271	-	-	-	-
	Disposal of investment in an associate	340,262	-	337,485	-	78,677
	Financial liability	2,055,394	-	2,021,233	-	12,309
	Loan from parent company	50,000	-	50,000	-	46,911
	Liabilities for employee benefits	10,459	-	5,428	-	-
	Liability for payment in respect of acquisition of an investee
		5,487	-	-	-	6,741
		(457,876)	(39,958)	(120,805)	(3,385)	(86,665)
(c)	Cash and cash equivalents
	Balance of cash and cash equivalents at beginning of period:
	Other cash and cash equivalents Cash and cash equivalents in respect of yield dependent contracts	1,545,903	1,731,709	2,249,354	1,703,259	1,731,709
		10,464,216	5,612,435	11,162,653	7,512,737	5,612,435
		12,010,119	7,344,144	13,412,007	9,215,996	7,344,144
	Balance of cash and cash equivalents at end of period:
	Other cash and cash equivalents	2,104,978	1,919,512	2,104,978	1,919,512	1,545,903
	Cash and cash equivalents in respect of yield dependent contracts	11,098,327	9,185,575	11,098,327	9,185,575	10,464,216
		13,203,305	11,105,087	13,203,305	11,105,087	12,010,119
(d)	Breakdown of amounts included in operating activities
	Interest paid	1,221	4,715	505	372	1,611
	Interest received	388,737	315,188	330,155	249,924	608,612
	Dividend received	24,127	12,630	6,440	7,329	32,215
(d)	Material non-cash activities
	Recognition of right-of-use asset against a lease liability	(13,320)	(4,819)	(7,644)	(1,288)	(8,383)
	Appreciation (impairment) of available-for-sale assets against a capital reserve	343,742	(172,923)	284,768	459,144	263,162
	Appreciation (impairment) of deferred taxes in respect of available for sale assets against a
	capital reserve	(116,657)	58,577	(97,128)	(156,471)	(89,697)

NOTE 1 - GENERAL

The Phoenix Holdings Ltd. (hereinafter - the "Company") is an Israeli resident company incorporated in Israel, whose official address is 53 Derech Hashalom St., Givatayim, Israel. These financial statements were prepared in condensed format as of June 30 2021 and for the six-month and three-month periods then ended (hereinafter - the "Condensed Consolidated Interim Financial Statements"). These financial statements should be read in conjunction with the Company's annual financial statements as of December 31 2020 and for the year then ended and the accompanying notes (hereinafter - the "Consolidated Annual Financial Statements").

Definitions

The Company	The Phoenix Holdings Ltd. -
The Phoenix Insurance	The Phoenix Insurance Company Ltd., a wholly -owned -
	subsidiary of the Company.
The Phoenix	The Phoenix Investments and Finances Ltd., a wholly-owned
Investments	subsidiary of the Company.
Excellence	Excellence Investments Ltd., a wholly -owned subsidiary of -
	The Phoenix Investments Ltd.
The Phoenix Excellence	The Phoenix Excellence Pension and Provident Funds Ltd., a -
Pension and Provident	wholly-owned subsidiary of the Company.
Funds
Halman Aldubi	Halman Aldubi Investment House Ltd. is a wholly -owned -
	subsidiary of the Company. For further details, please see
	Note 4A.
Halman Aldubi	Halman Aldubi Provident and Pension Funds Ltd. is a wholly
Provident	owned subsidiary of Halman Aldubi.
Gama	Gama Management and Clearing Ltd., a subsidiary in which
	The Phoenix Investments is a controlling shareholder. For
	further information regarding gaining control, please see Note
	4B.
The Phoenix Capital	The Phoenix Capital Raising (2009) Ltd., a wholly-owned
Raising	subsidiary of The Phoenix Insurance.
Belenus Lux S.a.r.l	The controlling shareholder, held indirectly by Centerbridge
	Partners LP and Gallatin Point Capital LLC (hereinafter - the
	"Funds"). The said control is jointly held with Leolin Lux
	S.a.r.l, a sister company of Belenus.
Ad 120	Ad 120 Residence Centers for Senior Citizens Ltd. is a wholly
	owned subsidiary of The Phoenix Insurance.
The Phoenix Agencies	The Phoenix Insurance Agency 1989 Ltd. - a company wholly
	owned by the Company.

NOTE 1 GENERAL (CONTD.)

Distribution of The Phoenix Excellence Pension and Provident Funds Ltd.'s shares

On December 30 2019, the Board of Directors of The Phoenix Insurance approved the distribution of the shares of The Phoenix Excellence Pension and Provident Funds Ltd., constituting approximately 100% of the issued and paid-up share capital of Phoenix Excellence Pension and Provident Funds as dividend in kind to the Company. The actual distribution of the dividend is subject to approval by the Israel Tax Authority and the Capital Market, Insurance and Savings Authority. During 2020, the Capital Market Authority received approval to carry out the distribution. On June 1 2021, the Israel Tax Authority gave its approval. Consequently, The Phoenix Insurance executed the distribution on June 30 2021. Consequently, The Phoenix Insurance executed the distribution on June 30 2021. The balance of the investment as of the distribution date is approximately NIS 656 million. For further information, please see the Company's immediate report dated June 6 2021 (Ref. No. 2021-01-035731).

Acquisition of Halman Aldubi Investment House Ltd.

On December 7 2020, the Company entered into a merger agreement with Halman Aldubi. Under the merger agreement, a reverse triple merger was carried out, with Halman Aldubi becoming a privately-held company wholly owned by the Company. The consideration of the transaction is approximately NIS 275 million. On February 28 2021, upon meeting the conditions precedent, the merger was completed, and beginning in March 31 2021, Halman Aldubi is consolidated in the Group's financial statements. For further details regarding the transaction, please see Note 4A, "Business Combinations".

Intention of selling Ad 120

In January 2021, The Phoenix Insurance's Board of Directors decided to examine the possibility of selling its control stake in Ad 120, as part of the execution of the Company's multi-year strategic plan.

On July 29 2021, The Phoenix Insurance resolved to grant a 30-day exclusivity period to Shapir Housing and Building Ltd., a wholly owned subsidiary of Shapir Engineering and Industry Ltd. (hereinafter - (the "Acquirer"). The exclusivity period was granted in connection with the Acquirer's binding offer to acquire 53% of the shares of Ad 120 (hereinafter - the "Acquisition Offer"). The Acquisition Offer reflects a value of approximately NIS 1,350 million for Ad 120; retained earnings accrued in Ad 120 from the beginning of the year until the quarter close to the transaction completion date shall be added to said amount.

It should be clarified that the signing of binding agreements and the closing of the transaction are subject to the completion of the negotiations between the parties; as of this report's publication date, there is no certainty that the negotiations will indeed result in binding agreements.

Accordingly, as of the report date, the Company has classified the assets and liabilities of Ad 120 as held-for-sale assets and liabilities.

The balance of held-for-sale assets amounts to NIS 1,836 million, and the balance of held-forsale liabilities amounts to NIS 870 million.

In addition, during the reporting period, the Company increased the tax reserve in respect of its intention to sell the assets by a total of NIS 27 million, of which NIS 15 million in the second quarter, such that the balance of the said reserve as of June 30 2021 is NIS 61 million.

For further details, please see the Company's immediate report dated August 1 2021 (Ref. No. 2021-01-059806).

On August 23 2021, the said exclusivity period was extended. For further details, please see the Company's immediate report dated August 23 2021 (Ref. No. 2021-01-069178).

NOTE 1 GENERAL (CONTD.)

Gama - IPO and assuming control

In June 2021, Gama issued a supplementary notice, following the Supplementary Prospectus for of the sale offer and initial public offering of shares (hereinafter - the "Offering"), and listing of Gama shares on the TASE, which was published by Gama on May 31 2021 (the Prospectus together with the Supplementary Notice will be hereinafter referred to as the "Prospectus"). Simultaneously with the execution of the Offering in accordance with the Prospectus, The Phoenix Investments purchased additional Gama shares (hereinafter - the "Purchased Shares"), such that after the Offering and the acquisition of the Purchased Shares, The Phoenix Investments holds approximately 61.6% of Gama's issued and paid-up share capital and voting rights therein (approximately 60% on a fully diluted basis) and became the controlling shareholder in Gama. In exchange for the Purchased Shares, The Phoenix Investments paid a total of NIS 124 million. Following the execution of the Offering and the acquisition of the Purchased Shares, in Q2 the Company recorded a one-off post-tax profit of NIS 220 million, net of issuance expenses, as a result of becoming the controlling shareholder in Gama. For further details, please see Note 4B and the Company's report dated June 16 2021 (Ref. No. 2021-01- 039979).

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Preparation format of the consolidated interim financial statements

The Consolidated Interim Financial Statements have been prepared in accordance with generally accepted accounting principles for the preparation of interim financial statements as prescribed by IAS 34, "Interim Financial Reporting", as well as in accordance with the disclosure requirements set by the Commissioner of the Capital Market, Insurance and Savings in accordance with the Financial Services Supervision Law (Insurance), 1981. In addition, the financial statements were prepared in accordance with the disclosure provisions in Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970, insofar as these regulations apply to a corporation consolidating an insurance company.

In preparing the condensed financial statements in accordance with International Financial Reporting Standards (IFRS), the Company is required to exercise discretion in assessments, estimates and assumptions that affect the implementation of the policy and the amounts of assets and liabilities, income and expenses. It is clarified that the actual results may differ from those estimates. Management's discretion in applying the Group's accounting policies and the key assumptions used in assessments involving uncertainty is consistent with that which is applied in the preparation of the annual financial statements. For further information regarding changes in critical estimates and assumptions used to calculate the insurance reserves, please see Note 8.A.

The accounting policies applied in the preparation of the interim consolidated financial statements are consistent with those implemented in the preparation of the Consolidated Annual Financial Statements, with the exception of new standards that entered into force on January 1 2021, as detailed below:

First-time application of amendment to existing accounting standards

Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 and IAS 39 due to the IBOR reform

In August 2020, the IASB issued amendments to IFRS 9, "Financial Instruments", IFRS 7, "Financial Instruments: Disclosures", IAS 39, "Financial Instruments: Recognition and Measurement", IFRS 4, "Insurance Contracts" and IFRS 16, "Leases" (Hereinafter - the "Amendments").

The amendments provide practical expedients that address the effects the replacement of Interbank Offered Rates ((IBORs) by Risk Free Interest Rates (RFRs) on accounting treatment in the financial statements.

According to one of the practical reliefs, the Company will account for contractual amendments or amendments to cash flows resulting directly from the implementation of the reform similarly to the accounting treatment for changes in variable interest rates. In other words, companies are required to recognize the changes in interest rates by adjusting the effective interest rate without changing the book value of the financial instrument. The use of this practical expedient depends on the fact that the transition from IBOR to RFR takes place on the basis of equal economic conditions.

In addition, the amendments allow the changes required by the IBOR reform to be made for hedging designation and documentation purposes without causing hedging relationships to discontinue when certain terms and conditions are met. The amendments also provided temporary practical expedient for the application of hedge accounting relating to the identification of the hedged risk as 'separately identifiable'.

The amendments added disclosure requirements regarding the effect of the expected reform on the Company's financial statements, including reference to the manner in which the Company manages the implementation of the interest rate reform, the risks to which it is exposed as a result of the expected reform and quantitative disclosures regarding financial instruments in IBOR interest rates that are expected to change.

At this stage - since the contractual amendments have yet to be agreed upon - the Company is unable to estimate the accounting implications, if any, of the transition from IBOR interest rates to RFR interest rates on financial instrument contracts that are expected to be in place on the transition date, including the effects of the above Amendments.

Disclosure of the new IFRSs in the period prior to their application

In February 2021, the IASB issued an amendment to IAS 8: "Accounting Policies, Changes in Accounting Estimates and Errors" (hereinafter - the "Amendment). The purpose of the amendment is to introduce a new definition of the term "accounting estimates".
Accounting estimates are defined as "financial amounts in the financial statements subject to measurement uncertainty." The Amendment clarifies what changes in accounting estimates are and how they differ from changes in accounting policies and corrections of errors.
The Amendment will be applied prospectively to annual periods beginning on January 1 2023 and shall apply to changes in accounting policies and accounting estimates that occur at the beginning of that period or thereafter. Early application is allowed.

Changing the designation of Ad 120 from the health segment to the life insurance and long-term savings segment

Beginning in second quarter of 2020 - in light of the publication of the LAT circular regarding the allocation of assets other than at fair value when performing the liability adequacy test (LAT) - the Company allocated the results of Ad 120 to the life insurance and long-term savings segment as well (rather than only to the health insurance segment). The following table presents the segments' results, under the assumption that the Company would have designated Ad 120 to the life insurance and long-term savings and health segment retrospectively:

	For the 6-month period ended June 30
	2020
	Unaudited
Life insurance and long-term savings segment	NIS thousand
Premiums earned, gross	2,393,455
Premiums earned by reinsurers	46,641
Premiums earned - retention	2,346,814
Investment income, net and finance income	(3,790,806)
Income from management fees	392,665
Income from fees and commissions	18,094
Other income	14,157
Total income	(1,019,076)
Payments and change in liabilities in respect of insurance contracts and investment contracts, gross	(1,664,841)
Reinsurers' share in payments and in changes in liabilities in respect of insurance contracts	15,463
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	(1,680,304)
Fees and commissions and other purchase expenses	362,339
General and administrative expenses	266,499
Other expenses	8,465
Finance expenses	(6,800)
Total expenses	(1,049,801)
Company's share in the net results of investees	3,775
Profit before taxes on income	34,501
Other comprehensive loss before taxes on income	(78,614)
Total comprehensive loss before taxes on income	(44,113)

D. Changing the designation of Ad 120 from the health segment to the life insurance and long-term savings segment (contd.)

	For the 6-month period ended June 30
	2020
	Unaudited
Health insurance segment	NIS thousand
Premiums earned, gross	1,449,447
Premiums earned by reinsurers	165,885
Premiums earned - retention	1,283,562
Investment income, net and finance income	(298,549)
Income from fees and commissions	20,901
Other income	9,438
Total income	1,015,352
Payments and change in liabilities in respect of insurance contracts and investment contracts, gross	546,404
Reinsurers' share in payments and in changes in liabilities in respect of insurance contracts	148,330
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	398,074
Fees and commissions and other purchase expenses	278,701
General and administrative expenses	79,664
Finance expenses	(808)
Total expenses	755,631
Company's share in the net results of investees	688
Profit before taxes on income	260,408
Other comprehensive loss before taxes on income	(50,212)
Total comprehensive income before taxes on income	210,196

Details of the change rates in the Consumer Price Index and US dollar representative exchange rate

	Consumer price index	Representative
	Known CPI %	In lieu CPI %	exchange rate of US dollar %
For the six months ended on:
June 30 2021	1.4	1.6	1.4
June 30 2020	(0.7)	(0.8)	0.29
For the three months ended on:
June 30 2021	1.3	(0.8)	(2.2)
June 30 2020	(0.2)	(0.7)	(2.8)
For the year ended December 31 2020	(0.6)	(0.7)	(7.0)

NOTE 3 - OPERATING SEGMENTS

The Company operates in the following operating segments:

1. The life insurance and long-term savings segment

The life insurance and long-term savings segment includes the following subsegments: life insurance, related coverages and pension and provident funds management. The segment includes long-term savings (under various categories of insurance policies, pension funds and provident funds), as well insurance coverages in respect of various risks such as: death, disability, permanent health insurance, and more. In accordance with the Commissioner's directives, the long-term savings segment is broken down into life insurance, pension funds and provident funds. For information regarding the allocation of operating results of Ad 120 following the application of the circular regarding the procedure for allocating illiquid assets, please see Notes 2.D above.

2. Health insurance segment

The health insurance segment includes the Group's health insurance activity. The segment includes long-term care, medical expenses, surgery and transplants, dental, travel and foreign workers insurance and more.

For information regarding the allocation of operating results of Ad 120 following the application of the circular regarding the procedure for allocating illiquid assets, please see Notes 2.D above.

3. Property and casualty insurance segment

The property and casualty insurance segment includes the liability and property subsegments. In accordance with the Commissioner's directives, the property and casualty insurance segment is broken down into compulsory motor insurance, motor property, other property and other liability subsegments.

Compulsory motor insurance subsegment

The compulsory motor insurance subsegment focuses on coverage, the purchase of which by the vehicle owner or driver is mandatory, in respect of bodily injury caused as a result of the use of a motor vehicle (to the driver, passengers, or pedestrians).

Motor property subsegment The motor property subsegment focuses on coverage against property damage to the policyholder's vehicle and third-party property damage caused by the insured vehicle.

Other liability subsegments The liability subsegments provide coverage in respect of the policyholder's liability for any third-party damage he/she may cause. These subsegments include: third-party liability, employers' liability, professional liability and product liability.
Property and other subsegments Property subsegments other than motor and liability as well as other insurance subsegments.

4. Financial services segment

The financial services segment includes Excellence's results. The segment includes investment management activity, including mutual funds, ETFs, brokerage services, underwriting services, market making in various securities and other services. In addition, the results of this segment include the operations of The Phoenix's investment fund management.

5. Insurance agencies segment

The insurance agencies segment includes the activity of the pension arrangement agencies and other consolidated insurance agencies.

6. Credit segment

The credit segment includes Gama's activity - Gama is a credit aggregator providing financing, factoring, clearing, and management of credit vouchers services, financing against real estate properties, loans and credit, equipment financing and supplier financing. As of June 2021, the Company is the controlling shareholder (61.67%) of Gama through The Phoenix Investments. To date, The Phoenix Investments held approximately 49% of Gama. For further details, please see Note 1F.

7. Other segment

This segment includes operating segments that do not meet the quantitative threshold for reporting.

8. The activity is not attributed to operating segments

This activity includes part of the Group's HQ function that is not attributed to the operating segments and holding assets and liabilities against the Company's share capital in accordance with the Capital Regulations.

Reportable segment

For the 6-month period ended June 30 2021
Life insurance and long		Property and casualty					Not attributed to
(a)	Health (b)	(c)	services	agencies	Credit (e)	Other	segments	and offsets	Total


2,595,541	1,332,330	1,433,549	-	-	-	-	-	-	5,361,420
									647,233
2,537,724	1,227,362	949,101	-	-	-	-	-	-	4,714,187
7,097,584	659,698	195,043	(58)	12,294	-	2,248	190,156	(12,632)	8,144,333
870,406	-	-	142,542	380	-	23,797	1,598	(23,172)	1,015,551
16,522	25,209	107,169	-	260,458	-	-	-	(70,687)	338,671
									76,000
									263,351
10,533,588	1,912,968	1,251,313	220,484	282,033	240,292	26,491	192,106	(107,182)	14,552,093
9,272,768	1,599,697	963,341	-	-	-	-	-	-	11,835,806
21,982	(25,430)	311,139	-	-	-	-	-	-	307,691

									11,528,115
									816,329
									788,743
									27,923 103,433
									13,264,543
									23,226
									1,310,776

									341,247
									1,652,023
As of June 30 2021
Unaudited
NIS thousand
80,335,256	5,828,041	-	-	-	-	-	-	-	86,163,297
	term savings 57,817 - 11,352 9,250,786 356,317 315,871 13,579 19,315 9,955,868 19,976 597,696 93,323 691,019	104,968 - 699 1,625,127 202,837 73,347 - 553 1,901,864 1,033 12,137 6,723 18,860	insurance 484,448 - - 652,202 283,272 65,558 - 3,008 1,004,040 (628) 246,645 163,052 409,697	Financial - 76,000 2,000 - 29,886 123,841 6,000 2,067 161,794 2,467 61,157 - 61,157	Insurance - - 8,901 - 2,720 162,208 8,267 558 173,753 2,615 110,895 - 110,895	Unaudited NIS thousand - - 240,292 - - 3,966 - - 3,966 (618) 235,708 - 235,708	- - 446 - - 21,745 - 202 21,947 (1,620) 2,924 465 3,389	operating - - 352 - - 51,634 305 89,003 140,942 1 51,165 77,684 128,849	Adjustments - - (691) - (58,703) (29,427) (228) (11,273) (99,631) - (7,551) - (7,551)

Liabilities, gross in respect of insurance contracts and non-yield-dependent investment contracts 13,203,546 4,578,695 6,514,802 - - - - - - 24,297,043

(a) For additional data regarding the life insurance and long-term savings subsegments, please see Section b below. (b) For additional data regarding the health insurance subsegments, please see Section c below.

(d) Adjustments and offsets arise from fees and commissions income received from agencies owned by the Group, mainly from activities in the life insurance and long-term savings segment.

A. Reportable segment (contd.)

	For the 6-month period ended June 30 2020
	Life insurance and long term savings (a)	Health (b)	Property and casualty insurance (c)	Financial services	Insurance agencies	Credit (e)	Other	Not attributed to operating segments	Adjustments and offsets	Total
					Unaudited
					NIS thousand
Premiums earned, gross	2,393,455	1,449,447	1,405,298	-	-	-	-	-	-	5,248,200
Premiums earned by reinsurers	46,641	165,885	465,681	-	-	-	-	-	-	678,207
Premiums earned - retention	2,346,814	1,283,562	939,617	-	-	-	-	-	-	4,569,993
Gains (losses) on investments, net and finance income	(3,799,231)	(290,124)	(25,328)	-	(3,217)	-	381	(61,053)	(2,069)	(4,180,641)
Income from management fees	392,665	-	-	135,000	456	-	18,475	1,550	(21,164)	526,982
Income from fees and commissions (d)	18,094	20,901	107,718	-	187,893	-	-	-	(59,368)	275,238
Income from financial services	-	-	-	90,000	-	-	-	-	-	90,000
Other income	2,894	20,701	-	7,000	4,487	-	(298)	1,186	(2,675)	33,295
Total income	(1,038,764)	1,035,040	1,022,007	232,000	189,619	-	18,558	(58,317)	(85,276)	1,314,867
Payments and change in liabilities in respect of insurance contracts and investment
contracts, gross	(1,664,841)	546,404	901,877	-	-	-	-	-	-	(216,560)
Reinsurers' share in payments and in changes in liabilities in respect of insurance	15,463	148,330	321,952	-	-	-	-	-	-	485,745
contracts
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	(1,680,304)	398,074	579,925	-	-	-	-	-	-	(702,305)
Fees and commissions and other purchase expenses	361,584	279,456	280,194	18,000	-	-	-	-	(52,037)	887,197
General and administrative expenses	262,036	84,127	65,504	113,000	111,889	-	15,422	19,852	(24,302)	647,528
Other expenses	8,465	-	-	6,000	4,929	-	-	1,756	-	21,150
Finance expenses (income)	(5,588)	(2,020)	1,300	2,000	676	-	192	59,239	(873)	54,926
Total expenses	(1,053,807)	759,637	926,923	139,000	117,494	-	15,614	80,847	(77,212)	908,496
Company's share in the net results of investees	3,775	688	(325)	1,632	6,045	9,564	(497)	-	-	20,882
Net income (loss) before taxes on income	18,818	276,091	94,759	94,632	78,170	9,564	2,447	(139,164)	(8,064)	427,253
Other comprehensive income (loss) before taxes on income	(78,614)	(50,212)	(27,652)	-	-	-	666	(13,956)	-	(169,768)
Total comprehensive income (loss) before taxes on income	(59,796)	225,879	67,107	94,632	78,170	9,564	3,113	(153,120)	(8,064)	257,485
					As of June 30 2020
					Unaudited
	NIS thousand

Liabilities, gross in respect of insurance contracts and yield-dependent investment contracts 63,367,888 4,462,960 - - - - - - - 67,830,848 Liabilities, gross in respect of insurance contracts and non-yield-dependent

investment contracts 13,027,632 3,979,855 6,380,541 - - - - - - 23,388,028

(d) Adjustments and offsets arise from fees and commissions income received from agencies owned by the Group, mainly from activities in the life insurance and long-term savings segment.

A. Reportable segment (contd.)

	For the 3-month period ended June 30 2021
	Life insurance and long term savings (a)	Health (b)	Property and casualty insurance (c)	Financial services	Insurance agencies	Credit (e)	Other	Not attributed to operating segments	Adjustments and offsets	Total
						Unaudited
						NIS thousand
Premiums earned, gross	1,333,728	671,700	737,670	-	-	-	-	-	-	2,743,098
Premiums earned by reinsurers	29,799	53,257	253,233	-	-	-	-	-	-	336,289
Premiums earned - retention	1,303,929	618,443	484,437	-	-	-	-	-	-	2,406,809
Investment income, net and finance income	3,708,140	333,533	100,856	(114)	7,899	-	1,447	146,228	(8,251)	4,289,738
Income from management fees	447,823	-	-	78,500	152	-	11,425	836	(10,058)	528,678
Income from fees and commissions (d)	7,953	12,854	52,990	-	135,144	-	-	-	(37,897)	171,044
Income from financial services	-	-	-	35,000	-	-	-	-	-	35,000
Other income	5,861	360	-	1,000	4,599	240,292	119	(1,300)	(486)	250,445
Total income	5,473,706	965,190	638,283	114,386	147,794	240,292	12,991	145,764	(56,692)	7,681,714
Payments and change in liabilities in respect of insurance contracts and investment
contracts, gross	4,775,358	755,209	499,310	-	-	-	-	-	-	6,029,877
Reinsurers' share in payments and in changes in liabilities in respect of insurance
contracts	11,231	(80,123)	172,720	-	-	-	-	-	-	103,828
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	4,764,127	835,332	326,590	-	-	-	-	-	-	5,926,049
Fees and commissions and other purchase expenses	185,262	101,907	156,066	18,886	2,720	-	-	-	(28,935)	435,906
General and administrative expenses	171,644	35,609	34,303	62,373	82,019	1,275	10,725	41,765	(14,701)	425,012
Other expenses	9,254	-	-	3,000	5,036	-	-	1	(113)	17,178
Finance expenses (income)	15,388	501	(2,496)	1,067	422	-	122	54,456	(7,572)	61,888
Total expenses	5,145,675	973,349	514,463	85,326	90,197	1,275	10,847	96,222	(51,321)	6,866,033
Company's share in the net results of investees	9,455	418	539	1,637	1,028	(5,028)	(851)	1	-	7,199
Net income (loss) before taxes on income	337,486	(7,741)	124,359	30,697	58,625	233,989	1,293	49,543	(5,371)	822,880
Other comprehensive income (loss) before taxes on income	63,280	3,615	107,816	-	-	-	(122)	106,627	-	281,216
Total comprehensive income (loss) before taxes on income	400,766	(4,126)	232,175	30,697	58,625	233,989	1,171	156,170	(5,371)	1,104,096

						As of June 30 2021 Unaudited
						NIS thousand

Liabilities, gross in respect of insurance contracts and yield-dependent investment contracts 80,335,256 5,828,041 - - - - - - - 86,163,297

Liabilities, gross in respect of insurance contracts and non-yield-dependent investment contracts 13,203,546 4,578,695 6,514,802 - - - - - - 24,297,043

(d) Adjustments and offsets arise from fees and commissions income received from agencies owned by the Group, mainly from activities in the life insurance and long-term savings segment.

A. Reportable segment (contd.)

	For the 3-month period ended June 30 2020
	Life insurance and long term savings (a)	Health (b)	Property and casualty insurance (c)	Financial services	Insurance agencies	Credit (e)	Other	Not attributed to operating segments	Adjustments and offsets	Total
						Unaudited
						NIS thousand
Premiums earned, gross	1,134,397	685,586	708,604	-	-	-	-	-	-	2,528,587
Premiums earned by reinsurers	23,007	70,685	238,134	-	-	-	-	-	-	331,826
Premiums earned - retention	1,111,390	614,901	470,470	-		-	-	-	-	2,196,761
Investment income, net and finance income	3,400,650	366,860	48,525	-	1,649	-	703	155,948	(1,408)	3,972,927
Income from management fees	189,843	-	-	62,000	228	-	7,858	772	(8,116)	252,585
Income from fees and commissions (d)	8,760	11,433	53,609	-	90,012	-	-	-	(28,947)	134,867
Income from financial services	-	-	-	44,000	-	-	-	-	-	44,000
Other income	2,894	1,930	-	2,000	1,874	-	(291)	1,186	(2,250)	7,343
Total income	4,713,537	995,124	572,604	108,000	93,763	-	8,270	157,906	(40,721)	6,608,483
Payments and change in liabilities in respect of insurance contracts and investment
contracts, gross	4,214,772	741,814	410,136	-	-	-	-	-	-	5,366,722
Reinsurers' share in payments and in changes in liabilities in respect of insurance	13,808	60,189	155,016	-	-	-	-	-	-	229,013
contracts
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	4,200,964	681,625	255,120	-	-	-	-	-	-	5,137,709
Fees and commissions and other purchase expenses	180,289	117,512	147,646	7,000	-	-	-	-	(23,788)	428,659
General and administrative expenses	136,196	39,441	33,053	58,000	49,558	-	5,939	11,007	(9,641)	323,553
Other expenses (income)	15,279	-	-	3,000	2,215	-	-	(176)	-	20,318
Finance expenses (income)	2,188	-	(3,742)	1,000	312	-	106	29,088	(386)	28,566
Total expenses	4,534,916	838,578	432,077	69,000	52,085	-	6,045	39,919	(33,815)	5,938,805
Company's share in the net results of investees	(3,204)	688	138	1,119	2,273	4,966	(402)	-	-	5,578
Net income (loss) before taxes on income	175,417	157,234	140,665	40,119	43,951	4,966	1,823	117,987	(6,906)	675,256
Other comprehensive income (loss) before taxes on income	20,726	18,787	149,745	-	-	-	267	265,968	-	455,493
Total comprehensive income (loss) before taxes on income	196,143	176,021	290,410	40,119	43,951	4,966	2,090	383,955	(6,906)	1,130,749

						As of June 30 2020
						Unaudited
	NIS thousand

Liabilities, gross in respect of insurance contracts and yield-dependent investment contracts	63,367,888	4,462,960	-	-	-	-	-	-	-	67,830,848
Liabilities, gross in respect of insurance contracts and non-yield-dependent investment contracts	12,948,189	4,059,298	6,380,541	-	-	-	-	-	-	23,388,028

(d) Adjustments and offsets arise from fees and commissions income received from agencies owned by the Group, mainly from activities in the life insurance and long-term savings segment.

A. Reportable segment (contd.)

	For the year ended December 31, 2020
	Life insurance and long term savings (a)	Health (b)	Property and casualty insurance (c)	Financial services	Insurance agencies	Credit (e)	Other	Not attributed to operating segments	Adjustments and offsets	Total
						Unaudited
						NIS thousand
Premiums earned, gross	4,765,553	2,781,698	2,835,401	-	-	-	-	-	-	10,382,652
Premiums earned by reinsurers	99,195	286,671	943,112	-	-	-	-	-	-	1,328,978
Premiums earned - retention	4,666,358	2,495,027	1,892,289	-	-	-	-	-	-	9,053,674
Gains (losses) on investments, net and finance income	4,632,824	482,269	130,873	(91)	37	-	127	239,167	(5,500)	5,479,706
Income from management fees	1,106,546	-	-	248,930	1,361	-	44,915	3,084	(47,647)	1,357,189
Income from fees and commissions (d)	39,119	44,170	214,717	-	389,025	-	-	-	(130,980)	556,051
Income from financial services	-	-	-	159,000	-	-	-	-	-	159,000
Other income	11,673	23,999	-	9,000	89,102	-	1,137	19	(3,084)	131,846
Total income	10,456,520	3,045,464	2,237,879	416,839	479,525	-	46,179	242,270	(187,211)	16,737,466
Increase in insurance liabilities and payments in respect of insurance contracts	8,517,055	2,371,630	1,640,879	-	-	-	-	-	-	12,529,564
Reinsurers' share in payments and in changes in liabilities in respect of insurance contracts	49,450	234,439	542,801	-	-	-	-	-	-	826,690
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	8,467,605	2,137,191	1,098,078	-	-	-	-	-	-	11,702,874
Fees and commissions and other purchase expenses	727,330	498,524	597,354	40,000	-	-	-	-	(113,105)	1,750,103
General and administrative expenses	543,566	161,986	144,083	222,078	237,974	-	39,466	66,210	(55,335)	1,360,028
Other expenses (income)	26,303	-	-	12,000	9,123	-	409	7,505	(455)	54,885
Finance expenses (income)	3,397	(2,324)	(8,021)	5,000	3,314	-	402	147,191	(2,450)	146,509
Total expenses	9,768,201	2,795,377	1,831,494	279,078	250,411	-	40,277	220,906	(171,345)	15,014,399
Company's share in the net results of investees	12,006	2,055	(3,592)	3,159	8,670	18,488	(1,089)	-	-	39,697
Net income (loss) before taxes on income	700,325	252,143	402,793	140,920	237,784	18,488	4,813	21,364	(15,866)	1,762,764
Other comprehensive income (loss) before taxes on income	6,732	(33,485)	121,690	-	(332)	-	1,467	181,489	-	277,561
Total comprehensive income (loss) before taxes on income	707,057	218,658	524,483	140,920	237,452	18,488	6,280	202,853	(15,866)	2,040,325
						As of December 31 2020 Audited NIS thousand
Liabilities, gross in respect of insurance contracts and yield-dependent investment contracts	71,540,354	5,316,559	-	-	-	-	-	-	-	76,856,913
Liabilities, gross in respect of insurance contracts and non-yield-dependent investment contracts	13,047,252(*)	4,237,911	6,184,724	-	-	-	-	-	-	23,469,887

(d) Adjustments and offsets arise from fees and commissions income received from agencies owned by the Group, mainly from activities in the life insurance and long-term savings segment.

Additional data regarding the life insurance and long-term savings segment

	For the 6-month period ended June 30 2021
	Life insurance	Provident fund management (*)	Pension fund management (*)	Total
		Unaudited

Premiums earned, gross	2,595,541	NIS thousand -	-	2,595,541
Premiums earned by reinsurers	57,817	-	-	57,817
Premiums earned - retention	2,537,724	-	-	2,537,724
Investment income, net and finance
income	7,051,573	42,603	3,408	7,097,584
Income from management fees	630,190	142,177	98,039	870,406
Income from fees and commissions	16,522	-	-	16,522
Other income	10,944	-	408	11,352
Total income	10,246,953	184,780	101,855	10,533,588
Payments and change in liabilities in respect of insurance contracts and investment contracts, gross	9,237,222	35,546	-	9,272,768
Share of reinsurers in payments and changes in liabilities in respect of insurance contracts	21,982	-	-	21,982
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention Fees and commissions, marketing	9,215,240	35,546	-	9,250,786
expenses and other purchase expenses	257,693	53,651	44,973	356,317
General and administrative expenses	199,705	68,936	47,230	315,871
Other expenses	7,967	5,083	529	13,579
Finance expenses	17,243	1,604	468	19,315
Total expenses	9,697,848	164,820	93,200	9,955,868
Company's share in the net results of investees	19,976	-	-	19,976
Profit before taxes on income	569,081	19,960	8,655	597,696
Other comprehensive income before taxes on income	93,323	-	-	93,323
Total comprehensive income for the period before taxes on income	662,404	19,960	8,655	691,019

(*) The management activity of the provident funds and pension funds, for the 3-month period ended June 30 2021, includes the results of Halman Aldubi Provident. For further details, please see Note 4A.

B. Additional data regarding the life insurance and long-term savings segment (contd.)

	For the 6-month period ended June 30 2020
	Provident Life fund Pension fund
	insurance	management	management	Total
		Unaudited
		NIS thousand
Premiums earned, gross	2,393,455	-	-	2,393,455
Premiums earned by reinsurers	46,641	-	-	46,641
Premiums earned - retention	2,346,814	-	-	2,346,814
Gains (losses) on investments, net and finance income	(3,812,473)	14,289	(1,047)	(3,799,231)
Income from management fees	211,852	100,490	80,323	392,665
Income from fees and commissions	18,094	-	-	18,094
Other income	2,894	-	-	2,894
Total income	(1,232,819)	114,779	79,276	(1,038,764)
Payments and change in liabilities in respect of insurance contracts and investment contracts, gross Share of reinsurers in payments and	(1,684,231)	19,390	-	(1,664,841)
changes in liabilities in respect of insurance contracts	15,463	-	-	15,463
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	(1,699,694)	19,390	-	(1,680,304)
Fees and commissions, marketing expenses and other purchase expenses General and administrative expenses	277,564 179,486	41,232 38,669	42,788 43,881	361,584 262,036
Other expenses	7,911	366	188	8,465
Finance expenses (income)	(5,623)	7	28	(5,588)
Total expenses	(1,240,356)	99,664	86,885	(1,053,807)
Company's share in the net results of investees	3,775	-	-	3,775
Profit (loss) before income taxes	11,312	15,115	(7,609)	18,818
Other comprehensive loss before taxes on income	(78,614)	-	-	(78,614)
Total comprehensive income (loss) for the period before taxes on income	(67,302)	15,115	(7,609)	(59,796)

B. Additional data regarding the life insurance and long-term savings segment (contd.)

	For the 3-month period ended June 30 2021
	Life insurance	Provident fund management (*)	Pension fund management (*)	Total
		Unaudited
		NIS thousand
Premiums earned, gross	1,333,728	-	-	1,333,728
Premiums earned by reinsurers	29,799	-	-	29,799
Premiums earned - retention	1,303,929	-	-	1,303,929
Investment income, net and finance
income	3,678,634	27,570	1,936	3,708,140
Income from management fees	306,766	87,486	53,571	447,823
Income from fees and commissions	7,953	-	-	7,953
Other income	5,643	-	218	5,861
Total income	5,302,925	115,056	55,725	5,473,706
Payments and change in liabilities in respect of insurance contracts and investment contracts, gross Share of reinsurers in payments and	4,751,884	23,474	-	4,775,358
changes in liabilities in respect of insurance contracts	11,231	-	-	11,231
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	4,740,653	23,474	-	4,764,127
Fees and commissions, marketing expenses and other purchase expenses	130,474	31,477	23,311	185,262
General and administrative expenses	101,242	45,454	24,948	171,644
Other expenses	3,918	4,900	436	9,254
Finance expenses	13,319	1,601	468	15,388
Total expenses	4,989,606	106,906	49,163	5,145,675
Company's share in the net results of investees	9,455	-	-	9,455
Profit before taxes on income	322,774	8,150	6,562	337,486
Other comprehensive income before taxes on income	63,280	-	-	63,280
Total comprehensive income for the period before taxes on income	386,054	8,150	6,562	400,766

B. Additional data regarding the life insurance and long-term savings segment (contd.)

	For the 3-month period ended June 30 2020
	Life insurance	Provident fund management	Pension fund management	Total
		Unaudited
		NIS thousand
Premiums earned, gross	1,134,397	-	-	1,134,397
Premiums earned by reinsurers	23,007	-	-	23,007
Premiums earned - retention	1,111,390	-	-	1,111,390
Investment income, net and finance income	3,386,161	13,767	722	3,400,650
Income from management fees	101,877	49,399	38,567	189,843
Income from fees and commissions	8,760	-	-	8,760
Other income	2,894	-	-	2,894
Total income	4,611,082	63,166	39,289	4,713,537
Payments and change in liabilities in respect of insurance contracts and investment contracts, gross	4,201,947	12,825	-	4,214,772
Share of reinsurers in payments and changes in liabilities in respect of insurance contracts	13,808	-	-	13,808
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	4,188,139	12,825	-	4,200,964
Fees and commissions, marketing expenses and other purchase expenses	137,443	20,595	22,251	180,289
General and administrative expenses	93,639	21,290	21,267	136,196
Other expenses	14,830	355	94	15,279
Finance expenses (income)	2,182	(8)	14	2,188
Total expenses	4,436,233	55,057	43,626	4,534,916
Company's share in the net results of investees	(3,204)	-	-	(3,204)
Profit (loss) before income taxes	171,645	8,109	(4,337)	175,417
Other comprehensive income before taxes on income	20,726	-	-	20,726
Total comprehensive income (loss) for the period before taxes on income	192,371	8,109	(4,337)	196,143

B. Additional data regarding the life insurance and long-term savings segment (contd.)

	For the year ended December 31 2020
	Life insurance	Provident fund management	Pension fund management	Total
		Audited
		NIS thousand
Premiums earned, gross	4,765,553	-	-	4,765,553
Premiums earned by reinsurers	99,195	-	-	99,195
Premiums earned - retention	4,666,358	-	-	4,666,358
Investment income, net and finance income	4,592,667	37,459	2,698	4,632,824
Income from management fees	736,673	199,220	170,653	1,106,546
Income from fees and commissions	39,119	-	-	39,119
Other income	11,673	-	-	11,673
Total income	10,046,490	236,679	173,351	10,456,520
Payments and change in liabilities in respect of insurance contracts and investment contracts, gross	8,478,358	38,697	-	8,517,055
Share of reinsurers in payments and changes in liabilities in respect of insurance contracts	49,450	-	-	49,450
Payments and change in liabilities in respect of insurance contracts and investment contracts - retention	8,428,908	38,697	-	8,467,605
Fees and commissions, marketing expenses and other purchase expenses	554,421	85,389	87,520	727,330
General and administrative expenses	378,758	80,118	84,690	543,566
Other expenses	20,762	733	4,808	26,303
Finance expenses (income)	3,393	21	(17)	3,397
Total expenses	9,386,242	204,958	177,001	9,768,201
Company's share in the net results of investees	12,006	-	-	12,006
Profit (loss) before income taxes	672,254	31,721	(3,650)	700,325
Other comprehensive income before taxes on income	6,732	-	-	6,732
Total comprehensive income (loss) for the period before taxes on income	678,986	31,721	(3,650)	707,057

B. Additional data regarding the life insurance and long-term savings segment (contd.)

Breakdown of results by type of policy

Data for the six-month period ended June 30 2021:

	Policies including a savings component (including appendices) by policy issuance date		Policies without a savings component
			Since 2004	Risk insurance sold as a single policy
	Until 1990 (1)	Until 2003	Yield dependent	Individual	Group	Total
			Unaudited
			NIS thousand
Gross premiums	31,824	558,951	1,656,579	285,272	62,915	2,595,541
Proceeds in respect of investment contracts credited directly to insurance reserves (4)	-	-	2,774,034	-	-	2,774,034
Financial margin including management fees (2)	233,490	464,175(3)	165,572	-	-	863,237
Payments and change in liabilities in respect of insurance contracts, gross	400,489	3,601,945	4,240,515	54,021	57,028	8,353,998
Payments and change in liabilities for investment contracts	-	-	883,224	-	-	883,224
Payments and change in liabilities for guaranteed return provident fund tracks						35,546
Total liabilities from life insurance and long-term savings						9,272,768
Total comprehensive income from life insurance business	183,754	326,160	8,135	132,232	12,123	662,404
Profit from pension and provident funds (5)						28,615
Total profit from life insurance and long-term savings						691,019

1. Products issued until 1990 (including increases in respect thereof) were mainly guaranteed return policies that were backed mainly by designated bonds.
1. The financial margin does not include additional income of the Company collected as a percentage of the premium and is calculated before deducting investment management expenses. The financial margin in guaranteed return policies is based on actual investment income, for the reporting year, less the product of the annual guaranteed rate of return, multiplied by the average reserve per year in the various insurance reserves. In this matter, investment income also includes the change in the fair value of available-for-sale financial assets that is charged to the statement of comprehensive income. In yield-dependent contracts, the financial margin is the total fixed and variable management fees calculated on the basis of the yield and average balance of insurance reserves.
1. In the six-month period ended June 30 2021, variable management fees in respect of participating policies in the amount of approximately NIS 372 million were charged.
1. Mainly proceeds of non-recurring deposits.
1. The management activity of the provident funds and pension funds, for the 3-month period ended June 30 2021, includes the results of Halman Aldubi Provident. For further details, please see Note 4A.

B. Additional data regarding the life insurance and long-term savings segment (contd.)

Breakdown of results by type of policy

Data for the six-month period ended June 30 2020:

	Policies including a savings component (including appendices) by policy issuance date			Policies without a savings component
			Since 2004	Risk insurance sold as a single policy
	Until	Until	Yield
	1990 (1)	2003	dependent	Individual	Group	Total
			Unaudited
			NIS thousand
Gross premiums	37,903	572,769	1,441,953	283,353	57,477	2,393,455
Proceeds in respect of investment contracts credited directly to insurance reserves (5)	-	-	811,932	-	-	811,932
Financial margin including management fees (2)	(30,835)	84,989(3)	126,492	-	-	180,646
Payments and change in liabilities in respect of insurance contracts, gross	182,105	(1,454,286)(4)	(76,161)(4)	114,102	50,849	(1,183,391)
Payments and change in liabilities for investment contracts	-	-	(500,840)(4)	-	-	(500,840)
Payments and change in liabilities for guaranteed return provident fund tracks						19,390
Total liabilities from life insurance and long-term savings						(1,664,841)
Comprehensive income (loss) from life insurance business	(63,548)	41,912	(63,340)	15,090	2,584	(67,302)
Profit from pension and provident funds						7,506
Total loss on life insurance and long-term savings						(59,796)

Products issued until 1990 (including increases in respect thereof) were mainly guaranteed return policies that were backed mainly by designated bonds.
1. The financial margin does not include additional income of the Company collected as a percentage of the premium and is calculated before deducting investment management expenses. The financial margin in guaranteed return policies is based on actual investment income, for the reporting year, less the product of the annual guaranteed rate of return, multiplied by the average reserve per year in the various insurance reserves. In this matter, investment income also includes the change in the fair value of available-for-sale financial assets that is charged to the statement of comprehensive income. In yield-dependent contracts, the financial margin is the total fixed and variable management fees calculated on the basis of the yield and average balance of insurance reserves.
1. As of June 30 2020, no variable management fees were charged due to a negative return. The estimated total supplementary amount of the variable management fees in respect of participating policies amounted to approximately NIS 296 million.
1. This amount includes the effect of the decline in the financial markets in Israel and around the world due to the coronavirus crisis, such that as of the six-month period ended June 30 2020, there was a decrease of approximately 3.5% in assets under management in respect of participating policies.
1. Mainly proceeds of non-recurring deposits.

B. Additional data regarding the life insurance and long-term savings segment (contd.)

Breakdown of results by type of policy (contd.)

Data for the three-month period ended June 30 2021:

	Policies including a savings component (including appendices) by policy issuance date			Policies without a savings component
	Since 2004		Risk insurance sold as a single policy
	Until	Until	Yield
	1990 (1)	2003	dependent	Individual	Group	Total
			Unaudited
			NIS thousand
Gross premiums	15,470	282,469	863,504	142,946	29,339	1,333,728
Proceeds in respect of investment contracts credited directly to insurance reserves (4)	-	-	1,653,225	-	-	1,653,225
Financial margin including management fees (2)	109,201	219,652(3)	86,884	-	-	415,737
Payments and change in liabilities in respect of insurance contracts, gross	263,129	1,914,382	2,123,312	(17,412)	26,709	4,310,120
Payments and change in liabilities for investment contracts	-	-	441,764	-	-	441,764
Payments and change in liabilities for guaranteed return provident fund tracks						23,474
Total liabilities from life insurance and long-term savings						4,775,358
Comprehensive income (loss) from life insurance business	88,775	182,925	(430)	108,473	6,311	386,054
Profit from pension and provident funds (5)						14,712
Total profit from life insurance and long-term savings						400,766

Products issued until 1990 (including increases in respect thereof) were mainly guaranteed return policies that were backed mainly by designated bonds.
1. The financial margin does not include additional income of the Company collected as a percentage of the premium and is calculated before deducting investment management expenses. The financial margin in guaranteed return policies is based on actual investment income, for the reporting year, less the product of the annual guaranteed rate of return, multiplied by the average reserve per year in the various insurance reserves. In this matter, investment income also includes the change in the fair value of available-for-sale financial assets that is charged to the statement of comprehensive income. In yield-dependent contracts, the financial margin is the total fixed and variable management fees calculated on the basis of the yield and average balance of insurance reserves.
1. In the three month period ended June 30 2021, variable management fees in respect of participating policies in the amount of approximately NIS 173 million were charged.
1. Mainly proceeds of non-recurring deposits.
1. The management activity of the provident funds and pension funds, for the 3-month period ended June 30 2021, includes the results of Halman Aldubi Provident. For further details, please see Note 4A.

B. Additional data regarding the life insurance and long-term savings segment (contd.)

Breakdown of results by type of policy (contd.)

Data for the three-month period ended June 30 2020:

	Policies including a savings component (including appendices) by policy issuance date			Policies without a savings component
	Since 2004		Risk insurance sold as a single policy
	Until	Until	Yield	Individu
	1990 (1)	2003	dependent	al	Group	Total
			Unaudited
			NIS thousand
Gross premiums	18,385	277,180	669,258	141,182	28,392	1,134,397
Proceeds in respect of investment contracts credited directly to insurance reserves (5)	-	-	324,272	-	-	324,272
Financial margin including management fees (2)	108,470	40,377(3)	61,317	-	-	210,164
Payments and change in liabilities in respect of insurance contracts, gross	144,130	1,843,122(4)	1,706,965(4)	71,794	28,091	3,794,102
Payments and change in liabilities for investment contracts	-	-	407,845(4)	-	-	407,845
Payments and change in liabilities for guaranteed return provident fund tracks						12,825
Total liabilities from life insurance and long-term savings						4,214,772
Total comprehensive income from life insurance business (4)	37,903	117,124	15,423	19,929	1,992	192,371
Profit from pension and provident funds						3,772
Total profit from life insurance and long-term savings						196,143

Products issued until 1990 (including increases in respect thereof) were mainly guaranteed return policies that were backed mainly by designated bonds.
The financial margin does not include additional income of the Company collected as a percentage of the premium and is calculated before deducting investment management expenses. The financial margin in guaranteed return policies is based on actual investment income, for the reporting year, less the product of the annual guaranteed rate of return, multiplied by the average reserve per year in the various insurance reserves. In this matter, investment income also includes the change in the fair value of available-for-sale financial assets that is charged to the statement of comprehensive income. In yielddependent contracts, the financial margin is the total fixed and variable management fees calculated on the basis of the yield and average balance of insurance reserves.
As of June 30 2020, no variable management fees were charged due to a negative return. The estimated total supplementary amount of the variable management fees in respect of participating policies amounted to approximately NIS 296 million.
This amount includes the effect of the financial markets rally in Israel and around the world in the second quarter, which offset the market decline due to the coronavirus crisis, such that as of the three-month period ended June 30 2020, there was a decrease of approximately 7% in assets under management in respect of participating policies.
Mainly proceeds of non-recurring deposits.

B. Additional data regarding the life insurance and long-term savings segment (contd.)

Breakdown of results by type of policy (contd.)

Data for the year ended December 31 2020:

	Policies including a savings component (including appendices) by policy issuance date			Policies without a savings component
			Since 2004	Risk insurance sold as a single policy
	Until	Until	Yield
	1990 (1)	2003	dependent	Individual	Group	Total
			Unaudited
			NIS thousand
Gross premiums	73,020	1,133,432	2,870,641	563,776	124,684	4,765,553
Proceeds in respect of investment contracts credited directly to insurance reserves (6)	-	-	1,945,751	-	-	1,945,751
Financial margin including management fees (2)	185,503	466,855(3)	269,041	-	-	921,399
Payments and change in liabilities in respect of insurance contracts, gross	439,848	2,783,738	4,457,267	261,625	112,290	8,054,768
Payments and change in liabilities for investment contracts	-	-	423,590	-	-	423,590
Payments and change in liabilities for guaranteed return provident fund tracks						38,697
Total liabilities from life insurance and long-term savings						8,517,055
Comprehensive income (loss) from life insurance business (4)	108,190(5)	560,657(4)(5)	(74,902)	71,566	13,475	678,986
Profit from pension and provident funds						28,071
Total profit from life insurance and long-term savings						707,057

Products issued until 1990 (including increases in respect thereof) were mainly guaranteed return policies that were backed mainly by designated bonds.
1. The financial margin does not include additional income of the Company collected as a percentage of the premium and is calculated before deducting investment management expenses. The financial margin in guaranteed return policies is based on actual investment income, for the reporting year, less the product of the annual guaranteed rate of return, multiplied by the average reserve per year in the various insurance reserves. In this matter, investment income also includes the change in the fair value of available-for-sale financial assets that is charged to the statement of comprehensive income. In yield-dependent contracts, the financial margin is the total fixed and variable management fees calculated on the basis of the yield and average balance of insurance reserves.
1. As of September 30 2020, the estimated management fees which were not collected due to negative yield in respect of participating policies amounted to approximately NIS 101 million; this amount was offset against management fees in the fourth quarter of 2020.
1. Including a profit in respect of a change in the K value, amounting to approximately NIS 261 million, before tax.
1. The profit includes a profit in respect of the effect of the changes in assumptions and the effect of the change in the discount rate in the calculation of the supplementary retirement pension reserve and paid pensions totaling approximately NIS 41 million. For further details, please see Note 8A(4).
1. Mainly proceeds of non-recurring deposits.

Additional data regarding the health insurance segment

	For the 6-month period ended June 30 2021
	Long-term care		Other (2)
	Individual Group		Long-term	Short-term
			Unaudited
			NIS thousand
Gross premiums	129,682	483,298	729,028(1)	14,555(1)	1,356,563
Payments and change in liabilities in respect of insurance contracts, gross	331,218	1,090,320	168,333	9,826	1,599,697
Total comprehensive income (loss) from health insurance business	(128,000)(4)	(42,860)(4)	191,386	(1,666)	18,860

(1) Of this, individual premiums in the amount of NIS 436,808 thousand and collective premiums in the amount of NIS 306,775 thousand. The decrease in individual premiums is mainly due to a decrease in travel insurance activity following the coronavirus crisis and ceasing to market health insurance policies for Israelis staying abroad permanently or for prolonged periods (relocation) beginning in the second quarter of 2020. In January 2021, the relocation insurance portfolio was transferred from the Company to the DavidShield Insurance Company Ltd.

	For the 6-month period ended June 30 2020
	Long-term care		Other (2)
	Individual Group (3)		Long-term	Short-term	Total
			Unaudited
			NIS thousand
Gross premiums	130,474	443,324	810,681(1)	74,611(1)	1,459,090
Payments and change in liabilities in respect of insurance contracts, gross	(30,493)	112,895	398,341	65,661	546,404
Total comprehensive income (loss) from health insurance business	149,311 (4)	(18,874)	106,794	(11,352)	225,879

(1) Of this, individual premiums in the amount of NIS 549,564 thousand and collective premiums in the amount of NIS 335,728 thousand.

C. Additional data regarding the health insurance segment (contd.)

	For the 3-month period ended June 30 2021
	Long-term care		Other (2)
	Individual Group		Long-term Short-term		Total
			Unaudited
			NIS thousand
Gross premiums	64,785	243,665	356,214(1)	10,560(1)	675,224
Payments and change in liabilities in respect of insurance contracts, gross	227,221	585,205	(60,459)	3,242	755,209
Total comprehensive income (loss) from health insurance business	(137,582)(5)	(43,253) (5)	176,969	(260)	(4,126)

(1) Of this, individual premiums in the amount of NIS 222,635 thousand and collective premiums in the amount of NIS 144,139 thousand.

	For the 3-month period ended June 30 2020
	Long-term care		Other (2)
	Individual Group		Long-term	Short-term	Total
			Unaudited
			NIS thousand
Gross premiums	65,015	222,180	380,169(1)	(146)(1)	667,218
Payments and change in liabilities in respect of insurance contracts, gross	34,243	481,882	213,291	12,398	741,814
Total comprehensive income (loss) from health insurance business	99,066 (5)	14,038	67,047	(4,130)	176,021

(1) Of this, individual premiums in the amount of NIS 236,399 thousand and collective premiums in the amount of NIS 143,624 thousand.

C. Additional data regarding the health insurance segment (contd.)

	For the year ended December 31 2020
	Long-term care		Other (2)
	Individual Group		Long-term	Short-term	Total
			Unaudited
			NIS thousand
Gross premiums	259,764	891,730	1,521,350(1)	83,378(1)	2,756,222
Payments and change in liabilities in respect of insurance contracts, gross	271,231	1,224,983	796,511	78,905	2,371,630
Total comprehensive income (loss) from health insurance business	41,730	(33,016)	228,886	(18,942)	218,658

(1) Of this, individual premiums in the amount of NIS 1,001,573 thousand and collective premiums in the amount of NIS 603,155 thousand.
(2) The most material coverage included in other long-term health insurance is medical expenses; in shortterm health insurance - dental treatment expenses.
(3) The change in the liabilities and loss for the 6-month period ended June 30 2020 stem mainly from the effect of the decline in the financial markets in Israel and around the world following the coronavirus crisis.
(4) The loss in the six-month period ended June 30 2021 includes an increase in the insurance reserve (LAT) in the amount of approximately NIS 208 million, and in the six-month period ended June 30 2020 - a NIS 85 million decrease in the LAT.

The profit for the 6-month period ended on June 30 2020 includes the results of Ad 120, in the amount of approximately NIS 32 million compared to an immaterial amount during the reporting period. For further details, please see Note 2D.

(5) The loss in the three-month period ended June 30 2020 includes an increase in the insurance reserve (LAT) in the amount of approximately NIS 168 million, and the profit in the three-month period ended June 30 2020 - a decrease in LAT of NIS 25 million.

The profit for the 3-month period ended on June 30 2020 includes the results of Ad 120, in the amount of approximately NIS 6 million. For further details, please see Note 2D.

Additional data regarding the property and casualty insurance segment

	For the 6-month period ended June 30 2021
	Compulsory motor insurance	Motor property	Property and other subsegments (*)	Other liability subsegments (**)	Total
			Unaudited
			NIS thousand
Gross premiums	328,682	590,981	388,696	304,398	1,612,757
Reinsurance premiums	138,432	1,020	258,589	132,284	530,325
Premiums - retention	190,250	589,961	130,107	172,114	1,082,432
Change in unearned premium balance, retention	34,158	69,555	12,139	17,479	133,331
Premiums earned - retention	156,092	520,406	117,968	154,635	949,101
Investment income, net and finance income	79,823	29,247	8,546	77,427	195,043
Income from fees and commissions	38,468	69	56,327	12,305	107,169
Total income	274,383	549,722	182,841	244,367	1,251,313
Payments and change in liabilities in respect of insurance contracts, gross	324,824	369,677	115,416	153,424	963,341
Reinsurers' share in payments and in changes in liabilities in respect of insurance contracts	168,574	335	90,396	51,834	311,139
Payments and change in liabilities for insurance contracts - retention	156,250	369,342	25,020	101,590	652,202
Fees and commissions, marketing expenses and other purchase expenses	29,373	120,124	84,851	48,924	283,272
General and administrative expenses	14,094	24,357	13,176	13,931	65,558
Finance expenses	1,448	-	155	1,405	3,008
Total expenses	201,165	513,823	123,202	165,850	1,004,040
Company's share in the net results of investees	(256)	(96)	(27)	(249)	(628)
Profit before taxes on income	72,962	35,803	59,612	78,268	246,645
Other comprehensive income before taxes on income	66,546	24,833	7,125	64,548	163,052
Total comprehensive income for the period before taxes on income	139,508	60,636	66,737	142,816	409,697
Liabilities in respect of insurance contracts, gross, as of June 30 2021 (unaudited)	2,871,543	806,961	673,605	2,162,693	6,514,802
Liabilities in respect of insurance contracts - retention - as of June 30 2021 (unaudited)	1,756,615	805,986	193,210	1,734,889	4,490,700

(*) Property and other insurance subsegments mainly include data from the comprehensive home insurance, comprehensive business insurance and property loss insurance subsegments, whose activity constitutes 82% of total premiums in these subsegments.

(**) Other liability insurance subsegments mainly include data from the following segments: third-party insurance, professional liability insurance and employers' liability insurance, the activity of which constitutes 83% of total premiums in these subsegments.

D. Additional data regarding the property and casualty insurance segment (contd.)

	For the 6-month period ended June 30 2020
	Compulsory motor insurance	Motor property	Property and other subsegments (*)	Other liability subsegments (**)	Total
			Unaudited
			NIS thousand
Gross premiums	316,647	546,429	410,693	264,161	1,537,930
Reinsurance premiums	157,114	68	274,935	86,474	518,591
Premiums - retention	159,533	546,361	135,758	177,687	1,019,339
Change in unearned premium balance, retention	28,806	22,083	5,611	23,222	79,722
Premiums earned - retention	130,727	524,278	130,147	154,465	939,617
Losses on investments, net and
finance income	(10,600)	(3,915)	(1,060)	(9,753)	(25,328)
Income from fees and commissions	43,233	-	55,847	8,638	107,718
Total income	163,360	520,363	184,934	153,350	1,022,007
Payments and change in liabilities in respect of insurance contracts, gross	263,991	327,211	188,057	122,618	901,877
Reinsurers' share in payments and in changes in liabilities in respect of insurance contracts	164,689	(7)	123,572	33,698	321,952
Payments and change in liabilities for insurance contracts - retention	99,302	327,218	64,485	88,920	579,925
Fees and commissions, marketing expenses and other purchase expenses	30,385	122,883	81,900	45,026	280,194
General and administrative expenses	13,816	24,201	14,969	12,518	65,504
Finance expenses	644	-	64	592	1,300
Total expenses	144,147	474,302	161,418	147,056	926,923
Company's share in the net results of investees	(137)	(48)	(14)	(126)	(325)
Profit before taxes on income	19,076	46,013	23,502	6,168	94,759
Other comprehensive loss before	(11,676)	(4,066)	(1,168)	(10,742)	(27,652)
taxes on income
Total comprehensive income (loss) for the period before taxes on income	7,400	41,947	22,334	(4,574)	67,107
Liabilities in respect of insurance contracts, gross, as of June 30 2020 (unaudited)	2,795,292	740,514	724,330	2,120,405	6,380,541
Liabilities in respect of insurance contracts - retention - as of June 30 2020 (unaudited)	1,829,316	740,514	216,745	1,745,556	4,532,131

D. Additional data regarding the property and casualty insurance segment (contd.)

	For the 3-month period ended June 30 2021
	Compulsory motor insurance	Motor property	Property and other subsegments (*)	Other liability subsegments (**)	Total
			Unaudited
			NIS thousand
Gross premiums	142,754 59,365	261,540 439	160,150 107,759	140,720 69,957	705,164 237,520
Reinsurance premiums
Premiums - retention	83,389	261,101	52,391	70,763	467,644
Change in unearned premium balance, retention	2,121	(3,885)	(6,929)	(8,100)	(16,793)
Premiums earned - retention	81,268	264,986	59,320	78,863	484,437
Investment income, net and finance
income	40,986	15,643	4,502	39,725	100,856
Income from fees and commissions	19,546	53	27,641	5,750	52,990
Total income	141,800	280,682	91,463	124,338	638,283
Payments and change in liabilities in respect of insurance contracts, gross	171,814	203,860	62,700	60,936	499,310
Reinsurers' share in payments and in changes in liabilities in respect of insurance contracts	99,782	21	49,356	23,561	172,720
Payments and change in liabilities for insurance contracts - retention	72,032	203,839	13,344	37,375	326,590
Fees and commissions, marketing expenses and other purchase expenses	13,963	68,269	48,127	25,707	156,066
General and administrative expenses	6,886	13,389	6,328	7,700	34,303
Finance income	(1,205)	-	(121)	(1,170)	(2,496)
Total expenses	91,676	285,497	67,678	69,612	514,463
Company's share in the net results of
investees	220	83	23	213	539
Profit (loss) before income taxes	50,344	(4,732)	23,808	54,939	124,359
Other comprehensive income before taxes on income	44,009	16,360	4,778	42,669	107,816
Total comprehensive income for
the period before taxes on income	94,353	11,628	28,586	97,608	232,175
Liabilities in respect of insurance contracts, gross, as of June 30 2021 (unaudited)	2,871,543	806,961	673,605	2,162,693	6,514,802
Liabilities in respect of insurance contracts - retention - as of June 30 2021 (unaudited)	1,756,615	805,986	193,210	1,734,889	4,490,700

D. Additional data regarding the property and casualty insurance segment (contd.)

	For the 3-month period ended June 30 2020
	Compulsory motor insurance	Motor property	Property and other subsegments (*)	Other liability subsegments (**)	Total
			Unaudited
			NIS thousand
Gross premiums	134,578	234,327	175,089	107,378	651,372
Reinsurance premiums	65,616	34	123,204	43,907	232,761
Premiums - retention	68,962	234,293	51,885	63,471	418,611
Change in unearned premium balance, retention	1,730	(26,950)	(11,659)	(14,980)	(51,859)
Premiums earned - retention	67,232	261,243	63,544	78,451	470,470
Investment income, net and finance
income	20,349	7,418	1,987	18,771	48,525
Income from fees and commissions	21,801	-	27,934	3,874	53,609
Total income	109,382	268,661	93,465	101,096	572,604
Payments and change in liabilities in respect of insurance contracts, gross Reinsurers' share in payments and in	145,167	138,581	79,642	46,746	410,136
changes in liabilities in respect of insurance contracts	86,385	(5)	57,265	11,371	155,016
Payments and change in liabilities for insurance contracts - retention	58,782	138,586	22,377	35,375	255,120
Fees and commissions, marketing expenses and other purchase expenses	18,211	62,752	42,562	24,121	147,646
General and administrative expenses	6,808	11,919	7,718	6,608	33,053
Finance income	(1,852)	-	(182)	(1,708)	(3,742)
Total expenses	81,949	213,257	72,475	64,396	432,077
Company's share in the net results of investees	59	19	5	55	138
Profit before taxes on income	27,492	55,423	20,995	36,755	140,665
Other comprehensive income before
taxes on income	63,526	21,419	6,235	58,565	149,745
Total comprehensive income for the period before taxes on income	91,018	76,842	27,230	95,320	290,410
Liabilities in respect of insurance contracts, gross, as of June 30 2020 (unaudited)	2,795,292	740,514	724,330	2,120,405	6,380,541
Liabilities in respect of insurance contracts - retention - as of June 30 2020 (unaudited)	1,829,316	740,514	216,745	1,745,556	4,532,131

D. Additional data regarding the property and casualty insurance segment (contd.)

	For the year ended December 31, 2020
	Compulsory motor insurance	Motor property	Property and other subsegments (*)	Other liability subsegments (**)	Total
			Unaudited
			NIS thousand
Gross premiums	584,123 288,266	1,031,838 135	772,728 527,646	486,363 164,581	2,875,052 980,628
Reinsurance premiums
Premiums - retention Change in unearned premium balance,	295,857	1,031,703	245,082	321,782	1,894,424
retention	19,988	(15,965)	(6,996)	5,108	2,135
Premiums earned - retention	275,869	1,047,668	252,078	316,674	1,892,289
Investment income, net and finance
income	46,101	22,236	6,334	56,202	130,873
Income from fees and commissions	86,229	-	111,679	16,809	214,717
Total income	408,199	1,069,904	370,091	389,685	2,237,879
Payments and change in liabilities in respect of insurance contracts, gross	405,449	700,372	302,746	232,312	1,640,879
Reinsurers' share in payments and in changes in liabilities in respect of insurance contracts	271,132	(7)	207,374	64,302	542,801
Payments and change in liabilities for insurance contracts - retention	134,317	700,379	95,372	168,010	1,098,078
Fees and commissions, marketing expenses and other purchase expenses	66,377	255,818	176,843	98,316	597,354
General and administrative expenses	30,616	54,182	32,096	27,189	144,083
Finance income	(3,964)	-	(411)	(3,646)	(8,021)
Total expenses	227,346	1,010,379	303,900	289,869	1,831,494
Company's share in the net results of investees	(1,519)	(519)	(157)	(1,397)	(3,592)
Profit before taxes on income	179,334	59,006	66,034	98,419	402,793
Other comprehensive income before taxes on income	51,449	17,583	5,334	47,324	121,690
Total comprehensive income for
the period before taxes on income	230,783	76,589	71,368	145,743	524,483
Liabilities in respect of insurance contracts, gross, as of December 31 2020 (audited)	2,731,581	717,570	677,415	2,058,158	6,184,724
Liabilities in respect of insurance contracts - retention - as of December 31 2020 (audited)	1,725,755	717,570	190,626	1,710,351	4,344,302

NOTE 4 - BUSINESS COMBINATIONS

Acquisition of Halman Aldubi

General

On December 7 2020, the Company entered into a merger agreement with Halman Aldubi. Under the merger agreement, a reverse triple merger was carried out, with Halman Aldubi becoming a privately-held company wholly owned by the Company. The consideration of the transaction for Halman Aldubi is NIS 275 million. On February 28 2021, upon meeting the conditions precedent, the merger was completed. As of that date, the Company wholly-owns (100%) Halman Aldubi. The consolidation commencement date is March 31 2021. Total assets under management by Halman Aldubi, net of the assets under management by the default pension fund sold to Meitav Dash (please see Section D below), as of June 30 2021, is approximately NIS 67 billion.

Loan to Halman Aldubi Provident

On February 18 2021, the Company entered into an agreement with Halman Aldubi Provident according to which the Company would extend Halman Aldubi a loan in the amount of approximately NIS 88,633 thousand. The loan principal will be repaid in six unequal annual installments on May 1 of each year. From 2022 to 2024 - 4% of the principal in each payment; in 2028 - 28% of the principal; and in 2029- 2030 - 30% of the principal in each payment. The loan (principal and interest) is linked to the consumer price index; the loan principal will bear a fixed interest rate of 0.45% (base interest rate). If Halman Aldubi Provident does not meet the financial covenants specified in the loan agreement, the interest rate will increase by up to 0.5%. The loan to Halman Aldubi Provident, for the purpose of financing the full early redemption of all bonds (Series A) issued by Halman Aldubi Provident, in the amount of approximately NIS 73.6 million (hereinafter, respectively - the "Bonds" and the "Early Redemption"), as well as to finance the full early repayment of a loan totaling approximately NIS 15 million (hereinafter - the "Bank Loan Amount"), taken by Halman Aldubi Provident from a local banking corporation. On March 8 2021, the early redemption of the bonds was executed and the Bank Loan Amount was transferred to the local banking corporation.

In addition, on March 25 2021, the Company entered into an agreement with Halman Aldubi to grant an additional loan in the amount of NIS 5 million. The loan principal will be repaid in one lump sum on March 31 2022. The principal will bear a fixed annual interest rate of Prime + 1%. The loan is intended to cover Halman Aldubi's credit line liabilities to a local bank.

Merger of Halman Aldubi Provident into Phoenix Excellence Pension and Provident Funds

On May 23 2021, the Board of Directors of Phoenix Excellence Pension and Provident Funds approved the merger of Halman Aldubi Provident with and into The Phoenix Provident. According to the merger outline, the provident funds and the old pension funds managed by Halman Aldubi Provident will be transferred to the management of Excellence Management and Provident Funds. The merger between the companies - including the merger of the provident funds and the provident funds' investment tracks - is expected to be completed on September 30 2021, subject to obtaining the approvals required by law.

A. Acquisition of Halman Aldubi (contd.)

Default pension sale - Meitav-Dash transaction

On February 22 2021, the Company entered into an agreement with Meitav Dash Provident Funds and Pension Ltd. (hereinafter - "Meitav Dash Provident"), according to which following the completion of the agreement with Halman Aldubi, as aforesaid, the Company will exercise its influence as Halman Aldubi's sole shareholder, such that Halman Provident will sign an agreement for the sale to Meitav Dash Provident of the new pension funds managed by Halman Provident for NIS 45 million, to be paid in one lump sum on the completion date. On March 10 2021, Halman Provident signed the said agreement. After the conditions precedent have been satisfied, the transaction was completed on July 1 2021.

Accordingly, in its financial statements as of June 30 2021, the Company classified the assets and liabilities in respect of the default pension activity as a held-for-sale assets and liabilities. Pursuant to a temporary measurement by an external appraiser, the total fair value of the held-for-sale assets and liabilities is approximately NIS 34 million.

The Halman Aldubi business combination

The Company recognized the fair value of the assets acquired and the liabilities assumed as part of the business combination according to a provisional measurement. As of the date of approval of the financial statements, a final valuation has not yet been received by an external appraiser in relation to the fair value of the identified assets acquired and the liabilities assumed. A final adjustment of the consideration for the purchase as well as the fair value of the assets and liabilities purchased can be carried out up to 12 months from the acquisition date. At the final measurement date, the adjustments were made by way of a restating the comparative results previously reported according to the provisional measurement. The Company has opted to measure the non-controlling interests in the acquired company according to the proportionate share of the non-controlling interests in the fair value of the net identified assets of the acquiree.

A. Acquisition of Halman Aldubi (contd.)

5. The Halman Aldubi business combination (contd.) The fair value of the identified assets and identifiable liabilities of Halman Aldubi at acquisition date is as follows:

	Unaudited
	NIS
	thousand
Intangible assets	205,760
Deferred tax assets	2,380
Deferred acquisition costs	19,047
Property, plant & equipment	34,901
Investments in associates	(271)
Current tax assets	1,952
Receivables and debit balances	18,056
Financial investments	32,421
Cash and cash equivalents	35,239
Total assets	349,485
Liabilities in respect of deferred taxes	(55)
Liability for employee benefits, net	(5,018)
Liability in respect of current taxes	(2,637)
Payables and credit balances	(35,205)
Financial liabilities	(34,161)
Total liabilities	(77,076)
Total assets less liabilities in Halman's books of accounts	272,409
Non-controlling interests	206
Intangible assets arising from the acquisition, net of tax	96,018
Total acquisition cost, including loan to Halman Provident	368,633

Acquisition of Halman Aldubi (contd.)

5. The Halman Aldubi business combination (contd.)

The total cost of the business combination amounted to NIS 369 million, as detailed below. In addition, there are direct acquisition costs attributed to the transaction in the amount of approximately NIS 5.5 million, charged as an expense and included in the general and administrative expenses line item.

	Unaudited
	NIS thousand

Total acquisition cost in cash	275,000
Loan to Halman Provident (*)	93,633
Total investment	368,633

Cash arising from the acquisition/used for the acquisition:
Cash and cash equivalents in the acquiree as of the acquisition date	35,239
Cash paid as acquisition proceeds	(368,633)
Cash, net	(333,394)

(*) For further details regarding the terms and conditions of the loans, please see Section 2 above.

As stated above, the consolidation commencement date of Halman Aldubi is March 31 2021 and therefore, Halman Aldubi's results include the profit for the three-month period ended June 30 2021.

It should be noted that the management fee income included in the financial statements for the second quarter amounted to approximately NIS 45 million, net of included expenses in a similar amount.

Had the business combination taken place at the beginning of the year, the effect of the comprehensive income after tax and the income of Halman Aldubi on the Group's income would have been immaterial.

IPO and assuming control over Gama Management and Clearing Ltd.

General:

In June 2021, Gama issued a supplementary notice, following the Supplementary Prospectus for of the sale offer and initial public offering of shares (hereinafter - the "Offering"), and listing of Gama shares on the TASE, which was published by Gama on May 31 2021 (the Prospectus together with the Supplementary Notice will be hereinafter referred to as the "Prospectus"). Simultaneously with the execution of the Offering in accordance with the Prospectus, The Phoenix Investments purchased additional Gama shares (hereinafter - the "Purchased Shares"), such that after the Offering and the acquisition of the Purchased Shares, The Phoenix Investments holds approximately 61.6% of Gama's issued and paid-up share capital and voting rights therein (approximately 60% on a fully diluted basis) and became the controlling shareholder in Gama. In exchange for the Purchased Shares, The Phoenix Investments paid a total of NIS 124 million. Following the execution of the Offering and the acquisition of the Purchased Shares, in Q2 the Company recorded a one-off posttax profit of NIS 220 million, net of issuance expenses, as a result of becoming the controlling shareholder in Gama.

A. IPO and assuming control over Gama Management and Clearing Ltd. (contd.)

Business combination - Gama

At the final measurement date, the adjustments were made by way of a restating the comparative results previously reported according to the provisional measurement. The Company has opted to measure the non-controlling interests in the acquired company according to the proportionate share of the non-controlling interests in the fair value of the net identified assets of the acquiree.

The fair value of Gama's identified assets and identified liabilities upon assuming control is as follows:

	Unaudited
	NIS
	thousand
Intangible assets	3,577
Deferred tax assets	3,239
Property, plant & equipment	9,242
Current tax assets	8,750
Receivables and debit balances	6,691
Financial investments	12,494
Credit assets in respect of factoring, clearing and financing	2,283,531
Cash and cash equivalents	3,558
Total assets	2,331,082

Liability for employee benefits, net	(5,428)
Payables and credit balances	(27,561)
Financial liabilities	(2,021,233)
Total liabilities	(2,054,222)

Assets less liabilities in Gama's books of accounts	276,860
Non-controlling interests	(121,293)
Investment in an investee	(147,193)
Gain from assuming control	(240,292)
Intangible assets arising from the acquisition, net of tax	356,281
Total acquisition cost	124,363

The total cash cost of the business combination amounted to NIS 124 million. In addition, there are direct acquisition costs attributed to the transaction in the amount of approximately NIS 4 million, charged as an expense and included in the general and administrative expenses line item.

A. IPO and assuming control over Gama Management and Clearing Ltd. (contd.)

2. Business combination – Gama (contd.)

	Unaudited
	NIS
	thousand
Cash arising from the acquisition (used as acquisition proceeds):
Cash and cash equivalents in the acquiree as of the acquisition date	3,558
Cash paid as acquisition proceeds	(124,363)
Cash, net	(120,805)

As aforesaid, the date on which the Company became the controlling shareholder in Gama was June 30 2021 and therefore, Gama's results for the period ended June 30 2021 were included in the Company's "share in the net results of investees" line item, except for the one-off gain from assuming control that is charged to "other income".

NOTE 5 - FINANCIAL INSTRUMENTS

Assets for yield-dependent contracts

Following is a breakdown of assets held against insurance contracts and investment contracts presented at fair value through profit and loss:

	As of June 30	As of December 31
	2021	2020	2020
	Unaudited		Audited

Investment property	1,938,918	1,759,422	1,839,576
Financial investments:
Liquid debt assets	21,930,947	21,328,250	21,761,391
Illiquid debt assets	7,472,594	6,665,766	7,119,613
Shares	21,557,784	14,324,816	18,045,043
Other financial investments	23,153,029	14,655,361	18,644,400
Total financial investments	74,114,354	56,974,193	65,570,447
Cash and cash equivalents	11,098,327	9,185,575	10,464,216
Other	191,216	205,663	159,845
Total assets for yield-dependent contracts	87,342,815	68,124,853	78,034,084

A. Assets for yield-dependent contracts (contd.)

Fair value of financial assets by level:

The following table presents an analysis of assets held against insurance contracts and investment contracts presented at fair value through profit and loss. The different levels were defined as follows:

Level 1 - fair value measured using quoted prices (unadjusted) in an active market for identical instruments.

Level 2 - fair value measured using observable inputs, either directly or indirectly, that are not included in Level 1 above.

Level 3 - fair value measured using inputs that are not based on observable market inputs.

For financial instruments periodically recognized at fair value, the Company estimates, at the end of each reporting period, whether transfers have been made between the various levels of the fair value hierarchy.

During the reporting periods there were no material transfers between Level 1 and Level 2.

The Company holds the financial instruments measured at fair value according to the following classifications:

		As of June 30 2021
	Level 1	Level 2	Level 3	Total
		Unaudited
			NIS thousand
Financial investments:
Liquid debt assets	16,320,657	5,610,290	-	21,930,947
Illiquid debt assets	-	5,970,125	1,502,469	7,472,594
Shares	19,400,687	932,836	1,224,261	21,557,784
Other financial investments	9,373,504	1,422,778	12,356,747	23,153,029
Total	45,094,848	13,936,029	15,083,477	74,114,354

	As of June 30 2020
	Level 1 Level 2 Level 3		Total
		Unaudited
		NIS thousand
Financial investments:
Liquid debt assets (*)	16,610,214	4,718,036	-	21,328,250
Illiquid debt assets	-	5,454,650	1,211,116	6,665,766
Shares (*)	13,055,365	227,134	1,042,317	14,324,816
Other financial investments	5,228,153	768,442	8,658,766	14,655,361
Total	34,893,732	11,168,262	10,912,199	56,974,193

(*) Reclassified from on fair value level to another.

A. Assets for yield-dependent contracts (contd.)

2. Fair value of financial assets by level: (contd.)

	As of December 31 2020
	Level 1 Level 2 Level 3		Total
	Audited
			NIS thousand
Financial investments:
Liquid debt assets	16,507,724	5,253,667	-	21,761,391
Illiquid debt assets	-	5,427,432	1,692,181	7,119,613
Shares	16,277,954	518,085	1,249,004	18,045,043
Other financial investments	7,395,216	1,101,059	10,148,125	18,644,400
Total	40,180,894	12,300,243	13,089,310	65,570,447

Assets measured at fair value - Level 3

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of January 1 2021	-	1,692,181	1,249,004	10,148,125	13,089,310
Total gains recognized in profit and loss (*)	-	50,743	62,501	1,432,634	1,545,878
Purchases	-	421,502	146,521	2,199,139	2,767,162
Proceeds from interest and dividend	-	(23,521)	(7,306)	(393,256)	(424,083)
Redemptions / sales	-	(351,186)	(41,597)	(855,374)	(1,248,157)
Transfers from Level 3 (**)	-	(287,250)	(184,862)	(174,521)	(646,633)
Balance as of June 30 2021	-	1,502,469	1,224,261	12,356,747	15,083,477
(*) Of which:
Total unrealized gains for the period recognized in profit and loss in respect of assets held as of June 30 2021	-	26,025	55,951	1,090,158	1,172,134

(**) Transfers from level to level stem mainly from securities whose rating has changed and from securities issued for the first time.

A. Assets for yield-dependent contracts (contd.)

2. Fair value of financial assets by level: (contd.)

Assets measured at fair value - Level 3 (contd.)

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of January 1 2020	-	599,815	945,002	8,082,717	9,627,534
Total gains (losses) recognized in profit and loss (*)	-	(16,262)	44,808	88,956	117,502
Purchases	-	653,148	178,247	1,398,189	2,229,584
Proceeds from interest and dividend	-	(5,806)	(10,616)	(167,455)	(183,877)
Redemptions / sales	-	(144,557)	(115,124)	(759,186)	(1,018,867)
Transfers into Level 3 (**)	-	124,778	-	15,545	140,323
Balance on June 30 2020	-	1,211,116	1,042,317	8,658,766	10,912,199
(*) Of which:
Total unrealized gains (losses) for the period recognized in profit and loss in respect of assets held as of June 30 2020	-	(19,295)	37,039	113,425	131,169

(**) Transfer from level to level arises primarily in respect of securities the rating of which has changed.

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of April 1 2021	-	1,732,240	1,230,847	11,081,610	14,044,697
Total gains recognized in profit and
loss (*)	-	20,180	12,593	769,042	801,815
Purchases	-	64,334	76,863	1,206,658	1,347,855
Proceeds from interest and dividend	-	(9,453)	-	(238,567)	(248,020)
Redemptions / sales	-	(142,310)	-	(461,996)	(604,306)
Transfers from Level 3 (**)	-	(162,522)	(96,042)	-	(258,564)
Balance as of June 30 2021	-	1,502,469	1,224,261	12,356,747	15,083,477
(*) Of which:
Total unrealized gains for the period
recognized in profit and loss in respect of assets held as of June 30 2021	-	4,335	12,593	579,891	596,819

(**) Transfer from level to level arises primarily in respect of securities the rating of which has changed and from securities issued for the first time.

A. Assets for yield-dependent contracts (contd.)

2. Fair value of financial assets by level: (contd.)

Assets measured at fair value - Level 3 (contd.)

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of April 1 2020	-	995,963	994,958	8,508,245	10,499,166
Total gains recognized in profit and loss (*)	-	9,731	31,689	46,716	88,136
Purchases	-	169,608	55,310	590,557	815,475
Proceeds from interest and dividend	-	(1,631)	(5,635)	(75,345)	(82,611)
Redemptions / sales	-	(87,333)	(34,005)	(421,595)	(542,933)
Transfers into Level 3 (**)	-	124,778	-	10,188	134,966
Balance on June 30 2020	-	1,211,116	1,042,317	8,658,766	10,912,199
(*) Of which:
Total unrealized gains for the period recognized in profit and loss in respect of assets held as of June 30 2020	-	6,803	31,838	49,443	88,084

(**) Transfer from level to level arises primarily in respect of securities the rating of which has changed.

	Fair value measurement at the reporting date Financial assets at fair value through profit and loss

	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of January 1 2020 Total gains recognized in profit and	-	599,815	945,002	8,082,717	9,627,534
loss (*)	-	87,999	149,858	1,072,694	1,310,551
Purchases	-	1,274,640	285,357	2,804,880	4,364,877
Proceeds from interest and dividend	-	(21,774)	(20,877)	(439,476)	(482,127)
Redemptions / sales	-	(373,618)	(51,059)	(1,390,789)	(1,815,466)
Transfers into Level 3 (**)	-	125,119	-	18,099	143,218
Transfers from Level 3 (***)	-	-	(59,277)	-	(59,277)
Balance as of December 31 2020 (*) Of which:	-	1,692,181	1,249,004	10,148,125	13,089,310
Total unrealized gains for the period included in profit and loss in respect of assets held as of December 31 2020	-	54,547	119,291	606,432	780,270

(**) Transfers to Level 3 stem mainly from securities the rating of which was revised.

(***) Transfers from Level 3 stem from a security issued for the first time.

Other financial investments

Illiquid debt assets

Composition:

	As of June 30 2021
	Carrying amount	Fair value
	Unaudited
	NIS thousand
Loans and receivables:
Designated bonds and treasury deposits (*)	8,172,977	12,126,233
Other non-convertible debt assets, excluding deposits with banks	4,658,409	4,939,680
Deposits with banks	1,120,385	1,165,755
Total illiquid debt assets	13,951,771	18,231,668
Impairments carried to profit and loss (cumulative)	60,901

(*) The fair value was calculated according to the contractual repayment date.

	As of June 30 2020
	Carrying amount	Fair value
	Unaudited NIS thousand

Loans and receivables:
Designated bonds and treasury deposits (*)	8,152,102	12,098,067
Other non-convertible debt assets, excluding deposits with banks	4,608,070	4,703,137
Deposits with banks	912,198	957,337
Total illiquid debt assets	13,672,370	17,758,541
Impairments carried to profit and loss (cumulative)	64,479

(*) The fair value was calculated according to the contractual repayment date.

	As of December 31, 2020
	Carrying
	amount	Fair value
	Unaudited NIS thousand

Loans and receivables:
Designated bonds and treasury deposits (*)	8,190,398	12,193,361
Other non-convertible debt assets, excluding deposits with banks	4,708,119	5,039,280
Deposits with banks	1,108,672	1,153,929
Total illiquid debt assets	14,007,189	18,386,570
Impairments carried to profit and loss (cumulative)	60,343

(*) The fair value was calculated according to the contractual repayment date.

B. Other financial investments (contd.)

Fair value of financial assets by level

The tables below depict an analysis of the financial instruments presented at fair value. During the reporting periods there were no material transfers between Level 1 and Level 2.

	As of June 30 2021
	Level 1	Level 2	Level 3	Total
	Unaudited
	NIS thousand

Liquid debt assets	5,841,444	1,421,324	-	7,262,768
Shares	1,955,956	292,369	440,727	2,689,052
Other	776,680	540,827	2,433,324	3,750,831
Total	8,574,080	2,254,520	2,874,051	13,702,651

	As of June 30 2020
	Level 1	Level 2	Level 3	Total
		Unaudited
		NIS thousand

Liquid debt assets (*)	6,777,528	1,309,914	-	8,087,442
Shares (*)	1,111,935	52,450	283,762	1,448,147
Other	460,164	398,112	1,717,087	2,575,363
Total	8,349,627	1,760,476	2,000,849	12,110,952

(*) Reclassified from on fair value level to another.

	As of December 31 2020
	Level 1	Level 2	Level 3	Total
		Audited
	NIS thousand

Liquid debt assets	6,732,438	1,363,030	-	8,095,468
Shares	1,414,649	155,336	330,008	1,899,993
Other	716,580	493,072	2,037,817	3,247,469
Total	8,863,667	2,011,438	2,367,825	13,242,930

B. Other financial investments (contd.)

2. Fair value of financial assets by level (contd.)

Assets measured at fair value - Level 3

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss and available for-sale financial assets
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of January 1 2021 Total profits recognized:	-	-	330,008	2,037,817	2,367,825
In profit and loss (*)	-	-	16,265	62,180	78,445
In other comprehensive income	-	-	81,985	175,925	257,910
Purchases	-	-	54,172	395,560	449,732
Proceeds from interest and dividend	-	-	(1,388)	(66,015)	(67,403)
Redemptions / sales	-	-	(18,071)	(113,937)	(132,008)
Transfers from Level 3 (**)	-	-	(22,244)	(58,206)	(80,450)
Balance as of June 30 2021	-	-	440,727	2,433,324	2,874,051
(*) Of which: Total unrealized gains (losses) for the period recognized in profit and loss in respect of assets held as of June 30 2021	-	-	(1,311)	(7,960)	(9,271)

(**) Transfers from Level 3 stem primarily from a securities issued for the first time.

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss and available for-sale financial assets
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of January 1 2020 Gains (losses) recognized:	-	-	241,569	1,498,494	1,740,063
In profit and loss (*)	-	-	14,003	(12,831)	1,172
In other comprehensive income	-	-	19,226	(15,976)	3,250
Purchases	-	-	56,969	323,929	380,898
Proceeds from interest and dividend	-	-	(2,273)	(17,549)	(19,822)
Redemptions / sales	-	-	(45,732)	(68,698)	(114,430)
Transfers into Level 3 (**)	-	-	-	9,718	9,718
Balance on June 30 2020	-	-	283,762	1,717,087	2,000,849
(*) Of which:
Total unrealized gains (losses) for the period recognized in profit and loss in respect of assets held as of June 30 2020	-	-	(958)	(33,596)	(34,554)

(**) Securities classified from investment in an associate.

B. Other financial investments (contd.)

2. Fair value of financial assets by level (contd.)

Assets measured at fair value - Level 3 (contd.)

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss and available for-sale financial assets
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of April 1 2021 Total profits recognized:	-	-	328,816	2,186,140	2,514,956
In profit and loss (*)	-	-	-	24,122	24,122
In other comprehensive income	-	-	75,311	108,239	183,550
Purchases	-	-	36,600	203,076	239,676
Proceeds from interest and dividend	-	-	-	(28,604)	(28,604)
Redemptions / sales	-	-	-	(59,649)	(59,649)
Balance as of June 30 2021 (*) Of which:	-	-	440,727	2,433,324	2,874,051
Total unrealized gains (losses) for the period recognized in profit and loss in respect of assets held as of June 30 2021	-	-	-	(5,646)	(5,646)

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss and available for-sale financial assets
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
			NIS thousand
Balance as of April 1 2020 Gains (losses) recognized:	-	-	267,619	1,601,706	1,869,325
In profit and loss (*)	-	-	2,742	71,253	73,995
In other comprehensive income	-	-	15,674	(45,521)	(29,847)
Purchases	-	-	-	133,992	133,992
Proceeds from interest and dividend	-	-	(2,273)	(8,385)	(10,658)
Redemptions / sales	-	-	-	(45,676)	(45,676)
	-	-	-	9,718	9,718
	-	-	283,762	1,717,087	2,000,849
(*) Of which: Total unrealized gains for the period recognized in profit and loss in respect
Transfers into Level 3 (**) Balance on June 30 2020 of assets held as of June 30 2020	-	-	469	60,967	61,436

(**) Securities classified from investment in an associate.

B. Other financial investments (contd.)

2. Fair value of financial assets by level (contd.)

Assets measured at fair value - Level 3 (contd.)

	Fair value measurement at the reporting date
	Financial assets at fair value through profit and loss and available for-sale financial assets
	Liquid debt assets	Illiquid debt assets	Shares	Other financial investments	Total
			Unaudited
	NIS thousand
Balance as of January 1 2020	-	-	241,569	1,498,494	1,740,063
Total profits recognized:
In profit and loss (*)	-	-	15,954	65,621	81,575
In other comprehensive income	-	-	30,695	90,028	120,723
Purchases	-	-	98,720	619,384	718,104
Proceeds from interest and dividend	-	-	(6,250)	(81,452)	(87,702)
Redemptions / sales	-	-	(33,570)	(163,976)	(197,546)
Transfers into Level 3 (**)	-	-	-	9,718	9,718
Transfers from Level 3 (***)	-	-	(17,110)	-	(17,110)
Balance as of December 31 2020	-	-	330,008	2,037,817	2,367,825
(*) Of which:
Total unrealized gains (losses) for the period recognized in profit and loss in respect of assets held as of December 31 2020	-	-	(6,574)	(13,350)	(19,924)

(**) Securities classified from investment in an associate.

(***) Securities issued for the first time.

Credit assets in respect of factoring, clearing and financing

	As of June 30
	2021
	Unaudited
	NIS thousand
Trade receivables and checks for collection	726,917
Credit vouchers	17,807
Loans and checks for collection	380,072
Provision for doubtful debts	(14,040)
Credit vouchers for sale	1,172,775
Total	2,283,531

For further details regarding Gama's business combination, please see Note 4B.

Financial liabilities

Breakdown of financial liabilities

	As of June 30 2021
	Carrying amount	Fair value
	Unaudited
	NIS thousand
Financial liabilities presented at amortized cost:
Loans from banks and others (4)	434,932	434,932
Bonds (4)	1,868,831	1,933,050
Subordinated bonds (1)	3,382,991	3,659,031
Liability for REPO	392,549	392,549
Trade receivables for credit cards (4)	1,267,310	1,267,310
Other (2)	24,628	24,628
Total financial liabilities presented at amortized cost	7,371,241	7,711,500
Financial liabilities presented at fair value through profit and
loss
Derivatives (3)	317,262	317,262
Liability for short sale of liquid securities	1,004,495	1,004,495
Total financial liabilities presented at fair value through profit and loss	1,321,757	1,321,757
Lease liabilities	120,752
Total financial liabilities	8,813,750

(1) The bonds were issued in order to comply with the capital requirements.

(2) Mainly provision in respect of an option to acquire an investee.

(3) Including financial liabilities in respect of yield-dependent contracts totaling approximately NIS 220 million.

(4) For details regarding the Gama business combination, please see Note 4B; for details on the terms and conditions of the bonds and loans from others, please see Section 3 below.

D. Financial liabilities (contd.)

1. Breakdown of financial liabilities (contd.)

	As of June 30 2020
	Carrying amount	Fair value
		Unaudited
	NIS thousand
Financial liabilities presented at amortized cost:
Short-term credit from banking corporations	49,000	49,000
Bonds	1,127,898	1,137,978
Subordinated bonds (1)	3,371,070	3,569,775
Deposits from tenants	605,352	605,352
Repurchase commitment (REPO) (2)	351,775	351,775
Other	21,941	21,941
Total financial liabilities presented at amortized cost	5,527,036	5,735,821
Financial liabilities presented at fair value through profit and loss
Derivatives (3)	392,865	392,865
Liability for short sale of liquid securities	586,606	586,606
Total financial liabilities presented at fair value through profit and loss	979,471	979,471
Lease liabilities	112,681
Total financial liabilities	6,619,188

(1) The bonds were issued in order to comply with the capital requirements.

(2) In view of the effect of the coronavirus crisis, in March 2020 the Bank of Israel extended to authorized entities (pension funds, provident funds, mutual funds and insurance companies) a proposal to enter into a repurchase transaction (REPO) - for the sale and repurchase of government bonds and zero-coupon bonds. As of the balance sheet date, The Phoenix Insurance engaged in a REPO transaction totaling approximately NIS 352 million.

(3) Including financial liabilities in respect of yield-dependent contracts totaling approximately NIS 316 million.

D. Financial liabilities (contd.)

1. Breakdown of financial liabilities (contd.)

	As of December 31, 2020
	Carrying amount	Fair value
	Unaudited
	NIS thousand
Financial liabilities presented at amortized cost:
Loans from non-bank entities	80,796	80,796
Bonds	1,118,538	1,146,475
Subordinated bonds (1)	3,374,460	3,675,933
Liability for REPO	389,315	389,315
Bonds	589,726	589,726
Other (2)	24,583	24,583
Total financial liabilities presented at amortized cost	5,577,418	5,906,828
Financial liabilities presented at fair value through profit and loss
Derivatives (3)	436,818	436,818
Liability for short sale of liquid securities	924,088	924,088
Total financial liabilities presented at fair value through profit and loss	1,360,906	1,360,906
Lease liabilities	105,390
Total financial liabilities	7,043,714

(1) The bonds were issued in order to comply with the capital requirements.

(2) Mainly provision in respect of an option to acquire an investee.

(3) Including financial liabilities in respect of yield-dependent contracts totaling approximately NIS 362 million.

D. Financial liabilities (contd.)

Fair value of financial liabilities by level

	As of June 30 2021
	Level 1	Level 2	Level 3	Total
	Unaudited
		NIS thousand
Liability for short sale of liquid securities	1,004,495 176,262	- 135,251	- 5,749	1,004,495 317,262
Derivatives Financial liabilities presented at fair value	1,180,757	135,251	5,749	1,321,757

	As of June 30 2020

	Level 1	Level 2	Level 3	Total
		Unaudited
		NIS thousand
Liability for short sale of liquid
securities	586,606	-	-	586,606
Derivatives	118,068	274,797	-	392,865
Financial liabilities presented at fair value	586,606	392,865	-	979,471

		As of December 31 2020
	Level 1	Level 2	Level 3	Total
		Audited
		NIS thousand
Liability for short sale of liquid
securities	924,088	-	-	924,088
Derivatives	148,018	283,617	5,183	436,818
Financial liabilities presented at fair value	1,072,106	283,617	5,183	1,360,906

D. Financial liabilities (contd.)

Details of Gama's financial liabilities

Bonds

As of June 30 2021, the balance of the outstanding Bonds (Series A) is approximately NIS 390 million. Bonds listed for trading on TACT Institutional. The bonds' principal will be repaid in 3 installments on September 30 2021, March 30 2022 and September 30 2022. The bonds bear an annual interest of 1.34%; the principal and interest are not CPI-linked. Gama's Bonds (Series A) are rated Aa3.il by Midroog Ltd.

Under the Deed of Trust for the Bonds (Series A), Gama undertook to meet the following financial covenants:

The Company's tangible common equity will not fall below NIS 100 million.
The ratio of shareholders' equity to total assets shall not fall below 2%

As of the financial statements date, the Company meets the financial covenants.

Loans from other entities

On August 20 2020, Gama entered into an agreement with an institutional entity to receive a loan of NIS 250 million, which will be repaid in 9 equal installments starting in February 2023. On June 25 2020, Gama and a subsidiary thereof entered into an agreement with another institutional entity, to receive a loan of NIS 100 million, of which NIS 25 million will be repaid in eleven equal quarterly installments and the outstanding balance of NIS 75 million will be repaid in one lump sum on July 8 2023. The interest rate on these loans ranges from Prime and Prime + 1%.

Valuation techniques

The fair value of investments traded actively in regulated financial markets is determined based on market prices as of the reporting date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using transactions that were recently made at market terms, reference to the current market value of another instrument which is substantially the same, discounting of cash flows, or other valuation methods.

Illiquid debt assets

The fair value of illiquid debt assets, which are measured at fair value through profit and loss, and the fair value of illiquid financial debt assets, for which fair value information is provided solely for disclosure purposes, is determined by discounting the estimated future cash flows from those assets. The discount rates are based primarily on yields on government bonds and spreads of corporate bonds as measured on the TASE. The quoted prices and interest rates used for discounting purposes are determined by a company which won the tender, published by the Ministry of Finance, for the setting up and operating a database of quoted prices and interest rates for institutional entities.

Illiquid shares

The fair value of the investment in illiquid shares was estimated using the discounted cash flow model (DCF). The estimate requires management to make certain assumptions regarding the model's data, including expected cash flows, discount rates, credit risk and volatility. The probabilities in respect of the estimates in the range can be measured reliably, and management uses them to determine and evaluate the fair value of these investments in illiquid shares.

Derivatives

The Company enters into transactions involving derivative financial instruments with multiple parties, especially financial institutions. The derivatives were valued using valuation models with observable market inputs are mainly interest rate swap contracts and foreign currency forwards. The most frequently used valuation techniques include prices of forwards and swap models using present value calculations. The models combine a number of inputs, including the credit rating of the parties to the financial transaction, spot/forward exchange rates, prices of forward contracts and interest rate curves. All derivative contracts are fully back against cash; therefore, there is no counterparty credit risk and non-performance risk of the Company itself in respect thereof.

NOTE 6 - SHAREHOLDERS' EQUITY AND CAPITAL REQUIREMENTS

It is management's policy to maintain a strong capital base in order to retain Company's ability to continue its activities such that it will be able to generate returns to its shareholders and support future business activities. The Phoenix Insurance, the Excellence Group, pension and provident funds management companies and other institutional entities consolidated in the financial statements are subject to capital requirements set by the Commissioner of the Capital Market, Insurance and Savings (hereinafter - the "Commissioner").

In October 2020, The Phoenix Insurance's Board of Directors set a minimum economic solvency ratio target and target range based on Solvency II. The minimum economic solvency ratio target, taking into account the transitional provisions, is set at 135% while the minimum solvency ratio target without taking into account the provisions during the Transitional Period is set at 105%, set to reach 135% at the end of the Transitional Period according to The Phoenix Insurance's capital plan.

Furthermore, The Phoenix Insurance's Board of Directors approved an economic solvency ratio target range of 150%-170%, within which The Phoenix Insurance aspires to be during and at the end of the Transitional Period, taking into account the Deduction During the Transitional Period and its gradual reduction.

Principles of the Solvency II-based Economic Solvency Regime

The Phoenix Insurance is subject to the Solvency II-based Economic Solvency Regime in accordance with implementation provisions as published in June 2017 and revised in October 2020 (hereinafter - the "Economic Solvency Regime").

Economic solvency ratio

The economic solvency ratio is calculated as the ratio between the insurance company's recognized economic equity and the capital required for solvency purposes.

The recognized economic equity is determined as the sum of the core tier 1 capital derived from the economic balance sheet and debt instruments that include loss absorption mechanisms (Additional Tier 1 capital, Tier 2 capital instruments, Subordinated Tier 2 capital, Tier 2 capital and Tier 3 capital).

Economic balance sheet items are calculated based on economic value, with insurance liabilities calculated on the basis of a best estimate of all expected future cash flows from existing businesses, without conservatism margins, and plus a risk margin.

The solvency capital requirement (SCR) is designed to estimate the economic equity's exposure to a series of scenarios set out in the Economic Solvency Regime provisions, and which reflect insurance, market and credit risks as well as operational risks.

The Economic Solvency Regime includes, among other things, transitional provisions in connection with compliance with capital requirements, and which allow increasing the economic equity by deducting from the insurance reserves an amount calculated in accordance with the Economic Solvency Regime provisions (hereinafter - the "Deduction"). The Deduction will decrease gradually until 2032 (hereinafter - the "Transitional Period"). In addition to a reduced capital requirement, that will increase gradually until 2023, in respect of certain investment types.

NOTE 6 - SHAREHOLDERS' EQUITY AND CAPITAL REQUIREMENTS (CONTD.)

In accordance with the Consolidated Circular, the economic solvency ratio report in respect of the December 31 and June 30 data of each year shall be included in the first periodic report published after the calculation date. Despite the above, on March 19 2020, the Commissioner published a letter, Ref. No. SH 2020-2031, stipulating that an insurance company is exempt from publishing an Economic Solvency Ratio Report as of June 30 2020 and from filing solvency reporting files in for that date.

On March 14 2021, a letter from the Commissioner was published, Ref. No. 2021-423, stating that the deadline for publication of the Economic Solvency Ratio Report as of December 31 2020, as well as the accompanying files reported to the Commissioner, shall be filed no later than June 30 2021. In addition, the letter states that an insurance company may refrain from publishing an Economic Solvency Ratio Report as of June 30 2021.

In accordance with the Solvency Ratio Report as of December 31 2020, The Phoenix Insurance has surplus capital, both when calculation is made having no regard to the transitional provisions and when it is made taking into account the transition provisions. The calculation made by The Phoenix Insurance as described above, was reviewed by The Phoenix Insurance's independent auditors, in accordance with International Standard on Assurance Engagements (ISAE 3400) the Examination of Prospective Financial Information. This standard is relevant to audits of economic solvency calculations and does not constitute part of the auditing standards applicable to financial statements.

It should be emphasized that the projections and assumptions on the basis of which the Economic Solvency Ratio Report was prepared are based mainly on past experience as arising from actuarial studies conducted from time to time. In view of the reforms in the capital market, insurance and savings, and the changes in the economic environment, past data do not necessarily reflect future results. The calculation is sometimes based on assumptions regarding future events, steps taken by management, and the pattern of the future development of the risk margin, that will not necessarily materialize or will materialize in a manner different than the assumptions used in the calculation. Furthermore, actual results may materially vary from the calculation, since the combined scenarios of events may materialize in a manner that is materially different than the assumptions made in the calculation.

In their special report, the independent auditors noted that they did not review the appropriateness of the Deduction During the Transitional Period as of December 31 2020, except for verifying that the Deduction amount does not exceed the expected discounted amount of the risk margin and the capital required for solvency in respect of life and health insurance risks arising from existing businesses during the Transitional Period in accordance with the pattern of future development of the required capital, which affects both the calculation of the expected capital release and the release of the expected risk margin as described in the provisions on calculation of risk margin. Furthermore, attention is drawn to what is stated in the Economic Solvency Ratio Report regarding the uncertainty derived from regulatory changes and exposure to contingent liabilities, the effect of which on the solvency ratio cannot be estimated.

For further details, please see Section 2.1 to the Report of the Board of Directors, and the Economic Solvency Ratio Report as of December 31 2020 published on The Phoenix Insurance's website.

NOTE 6 - SHAREHOLDERS' EQUITY AND CAPITAL REQUIREMENTS (CONTD.)

Dividend

According to the letter published by the Commissioner, in October 2017, (hereinafter - the "Letter") an insurance company shall be entitled to distribute a dividend only if, following the distribution, the company has a solvency ratio - according to the provisions of the Economic Solvency Regime - of at least 100%, calculated without taking into account the transitional provisions and subject to the economic solvency ratio target set by the Company's Board of Directors. The aforesaid ratio shall be calculated without the relief granted in respect of the original difference attributed to the acquisition of the provident funds and management companies. In addition, the letter set out provisions for reporting to the Commissioner.

On October 27 2020, The Phoenix Insurance's Board of Directors approval of the dividend distribution whereby, as from 2021, The Phoenix Insurance shall distribute an annual dividend at a rate of 30% to 50% of its distributable comprehensive income as per its audited annual consolidated financial statements for the relevant year, so long as The Phoenix Insurance meets the minimum economic solvency ratio targets in accordance with Solvency II. The minimum economic solvency ratio target, taking into account the transitional provisions, is set at 135% while the minimum solvency ratio without taking into account the provisions during the Transitional Period is set at 105%, set to reach 135% at the end of the Transitional Period according to The Phoenix Insurance's capital plan.

It is hereby clarified that this policy should not be viewed as an undertaking by The Phoenix Insurance to distribute dividends, and that any actual distribution shall be individually subject to the Board of Directors' approval, at its sole discretion; the Board of Directors of The Phoenix Insurance may decide on actual distribution at different (higher or lower) rates, or not to distribute any dividend. Furthermore, the execution of any actual distribution shall be subject to compliance with the provisions of the law applicable to any dividend distribution, including, among other things, the provisions of the Companies Law, 1999, and to compliance with the financial covenants The Phoenix Insurance has undertaken or/or will undertake to comply with, to The Phoenix Insurance's having sufficient distributable profits on the relevant dates, to the condition that the distribution shall not adversely affect the terms of The Phoenix Insurance's bonds and/or its cash flows, and to the extent to which The Phoenix Insurance needs cash to finance its activities, including future investments, as shall be from time to time, and/or its expected and/or planned future activities.

The Board of Directors of The Phoenix Insurance may review the dividend distribution policy from time to time and decide, at any given time, taking into account business considerations and the legal and regulatory provisions applicable to The Phoenix Insurance, to change the dividend distribution policy, including the rate of dividend to be distributed.

On March 24 2021, the Board of Directors of The Phoenix Insurance approved the distribution of a dividend in the amount of NIS 200 million, in accordance with the audited results as of December 31 2019, and in accordance with the results of an estimate to calculate the Solvency II-based economic solvency ratio as of December 31 2020. The dividend was paid in April 2021.

As stated, in accordance with the audited results of the economic solvency ratio as of December 31 2020, the Company meets the requirements of the letter published by the Commissioner in October 2017 regarding the restrictions on dividend distribution, as stated above.

In June 2021, The Phoenix Insurance distributed a cash dividend in the amount of NIS 200 million. Furthermore, The Phoenix Insurance completed the distribution of the dividend in kind from the Phoenix Excellence Pension and Provident Funds in the amount of NIS 656 million.

NOTE 6 - SHAREHOLDERS' EQUITY AND CAPITAL REQUIREMENTS (CONTD.)

C. Dividend (contd.)

The solvency ratio as of December 31 2020 does not include the effect of the business activity of The Phoenix Insurance subsequent to December 31 2020 until the report publication date, changes in the mix and amounts of insurance investments and insurance liabilities, exogenous effects - including changes in the risk-free interest rate curve, and regulatory changes affecting the business environment; it does not include the distributions outlined above, which took place during June 2021.

The Company has undertaken to supplement, at any given time, The Phoenix Excellence Pension and Provident Funds' equity to the amount set in the Income Tax (Rules for the Authorization and Management of Provident Funds) Regulations, 1964. This undertaking shall be in effect so long as The Phoenix Insurance controls The Phoenix Excellence Pension and Provident Funds, whether directly or indirectly. The Phoenix Insurance will be required to fulfill this commitment only when The Phoenix Excellence Pension and Provident Funds Ltd.'s equity will be negative, provided that the supplement amount does not exceed the liabilities limit as aforesaid; the commitment will be in effect so long as The Phoenix Insurance is the controlling shareholder of this entity.
Phoenix Excellence Pension and Provident Funds and Halman Aldubi Provident are required to maintain minimum equity in accordance with the Supervision of Financial Services Regulations (Provident Funds) (Minimum Equity Required from a Provident Fund or a Pension Fund's Management Company) 2012, and the Commissioner's Directives, the directives of the Israel Securities Authority and/or the TASE Rules and Regulations. As of June 30 2021, the companies meet these requirements.
In August, The Phoenix Insurance issued through The Phoenix Capital Raising, an Additional Tier 1 capital instrument (hereinafter - the "Capital Instrument") totaling approximately NIS 200 million - recognized as regulatory capital under the Economic Solvency Regime, in order to strengthen its capital and improve its solvency ratio. The Capital Instrument is currently traded on the TACT-Institutionals trading platform. The Capital Instrument issued is linked to the CPI and carries an annual interest rate of 2.29%. The other terms and conditions of the instrument, including the redemption period, are in accordance with the provisions of Part B ("Provisions in respect of Equity Capital of Insurance Companies") to Insurance Circular 2020- 1-15, "Provisions for Applying Economic Solvency Regime Based on Solvency II for Insurance Companies." As part of the issuance, in addition to the aforesaid amount that was issued and after obtaining the approval of the relevant organs in The Phoenix Group and the approval of the Capital Market, Insurance and Savings Authority, The Phoenix Capital Raising issued to the Company NIS 1.02 billion of the Capital Instrument in exchange for Tier 1 capital notes previously issued to the Company by The Phoenix Insurance. For further details, please see the Company's reports dated May 27 2021 and August 8 2021 (Ref. Nos.: 2021-01-031384 and 2021-01-062515, respectively). The Tier 1 capital instrument was rated A+ by Ma'alot S&P.
For further details regarding the acquisition of the company's shares, please see Note 8L below.
For further details regarding the Company's dividend distribution, please see Note 8J below.

NOTE 7 - CONTINGENT LIABILITIES

Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions

In recent years, there has been a significant increase in the number of petitions to approve class actions filed against the Group and in the number of lawsuits recognized as class actions. This is part of an overall increase in petitions to approve lawsuits as class actions in general, including against companies engaged in the Group's areas of activity, which stems mainly from the enactment of the Class Actions Law 2006. This trend substantially increases the Group's potential exposure to losses in the event of a ruling against the Group companies in class actions.

Petitions to approve lawsuits as class actions are filed through the hearing procedure mechanism set forth in the Class Action Law 2006 (hereinafter - the "Class Actions Law"). The hearings procedure for petitions to approve lawsuits as class actions is divided into two main stages: The first stage is the approval petition (hereinafter - the "approval petition" or the "approval stage", respectively.) If the approval petition is rejected by the court, the hearing stage at the class action level ends. A ruling at the approval stage may be subject to a request for appeal to the appellate courts. In the second stage, if the approval petition is accepted, the class action will be heard (hereinafter - the "class action stage"). A judgment at the class action stage can be appealed to the appellate courts. Within the mechanism of the Class Actions Law, there are, inter alia, specific settlement agreements, both in the approval stage and in the class action stage, as well as arrangements with regard to the plaintiff's withdrawal of the approval petition or class action lawsuit.

In the State of Israel, filing class action lawsuits does not entail payment of a fee derived from the claim amount; therefore the amounts of such claims may be significantly higher than the actual exposure for that claim.

Petitions to approve lawsuits as class actions (including lawsuits approved as class actions and the approval of which is under appeal) are set out in Sections 1-13, 17-30, 32, 34-41, 43, 44, 47, 49, 51, 53-56, 58, 59 to the following table; for such lawsuits, which, in management's opinion that is based, inter alia, on legal opinions whereby the Group's defense claims are more likely than not to be accepted and the petitions to approve the lawsuit as class actions will be rejected - no provision was included in the financial statements, except for petitions to approve class actions in which the Group is willing to reach a settlement. For petitions to approve lawsuits as class actions (including lawsuits approved as class actions and the approval of which is under appeal), in which the Group's defense claims - in whole or in part - are more likely than not to be rejected, and in which the Group is willing to reach a compromise, provisions were included in the financial statements to cover the exposure as assessed by the Group or a provision in the amount for which the Group is willing to settle, as the case may be.

Management's assessment, which is based, inter alia, on legal opinions received, is included in the financial statements under adequate provisions, where such provisions were required, to cover the exposure as assessed by the Group or the amount for which the Group is willing to settle, as the case may be.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

Many of the petitions to approve lawsuits as class actions have been filed against the Group on various matters related to insurance contracts and the Group's ordinary course of business, for which the Group has allocated insurance reserves.

In petitions to approve lawsuits as class actions as set out in Sections 14-16, 31, 33, 42, 45, 46, 48, 50, 52, 57, 60-67 in the table below, at this preliminary stage, the chances of the petitions to approve lawsuits as class actions cannot be assessed and therefore no provision is included in respect thereof in the Financial Statements.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

Following is more information about the petitions to approve lawsuits as class actions:

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
1.	January 2008 Tel Aviv District Court The Phoenix Insurance and other	Unlawful collection of payments known as "sub annuals" for life insurance policies, in an amount that exceeds the permitted one.	In May 2018, the Supreme Court granted the defendants' motion for leave to appeal and dismissed the plaintiffs' appeal, such that the District Court's judgment was quashed and the motion for approval of the claim as a class action was denied.
	insurance companies Approximately NIS 1.67 billion of all defendants, with about NIS 277 million		In July 2019, the Supreme Court upheld the plaintiffs' request for a further hearing on the question set forth in the Judgment regarding the regulator's position filed with the court regarding its instructions, and on the question of de minimis defense in a monetary class action.
	attributed to The Phoenix Insurance.4		On July 4 2021, the Supreme Court handed down its judgement in respect of the further hearing by the Supreme Court (which was concluded at a 4 to 3 majority), whereby the Supreme Court's judgement will be cancelled and the District Court's judgement will be reinstated, the approval petition will be allowed and the class action will be heard by the District Court, excluding the specific claims that were raised against The Phoenix Insurance (and another insurance company) regarding the collection of "sub-annuals" in an amount that exceeds the amount permitted by law - claims which were rejected by the court and therefore will not be discussed again by the District Court, and the legal proceedings in respect thereof has ended.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

⁴ The amounts were assessed by the plaintiffs in the class action statement of claim. It should be noted that the amounts in the motion to approve the claim as a class action were different and higher; those amounts also referred to the claim of collecting handling fees on policies and interest on annual premium, which is paid in installments, at a rate higher than the rate permitted by law, which, as stated, has been rejected.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
2.	February 2010 Central District Court The Phoenix Insurance (and other insurance companies in a parallel case, in light of filing a consolidated class action statement of claim)	The cause of the lawsuit, as approved by the District Court (in the corresponding case) was breach of insurance policies due to unlawful collection of handling fees in a manner that reduced the saving amount accrued in favor of the policyholder for a period starting seven years before the claim was filed.	In November 2016, the District Court - in a parallel case filed against several other insurance companies - partially approved motions to approve the claims as class actions. The class action - both in the corresponding case and in the case heard against The Phoenix Insurance - continues to be heard jointly by the District Court. At the same time, the parties conduct a mediation process.
	Approximately NIS 1.47 billion of all defendants (including the defendants in the corresponding case), of which approximately NIS 238 million is attributed to The Phoenix Insurance.4

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

⁴ The amounts are the amounts assessed by the plaintiffs in the consolidated class action statement of claim filed in March 2019 against the insurance companies sued in the corresponding case and against The Phoenix. It should be noted that the amounts in the motion for approval of the claim as a class action were different and higher.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
3.	April 2010 Central District Court The Phoenix Insurance and other insurance companies NIS 225.2 million from all the defendants.	Non-refund of premium for the relative portion of the month in which the insurance ended (due to cancellation by the policyholder) and/or refund of premium (where the premium is refunded) at nominal values (without linkage differences and interest).	In June 2015, the district court partially affirmed the petition to approve the claim as a class action lawsuit. In September 2016, the parties filed with the District Court an application for approval of a settlement agreement, at amounts that are immaterial to The Phoenix Insurance, which includes: the appointment of an examining party who will review the collection amounts in respect of which the claim was approved as a class action; consent to a contribution of 80% of the amount of the refund to be determined by the examining party; provisions regarding future conduct in cases of cancellation of policies that are the subject matter of the lawsuit and a recommendation regarding the payment of compensation to the plaintiffs, legal fees, etc. The settlement agreement is subject to the Court's approval. In June 2017, the Court appointed a reviewer to review the settlement agreement; the reviewer filed the review on The Phoenix Insurance in December 2020. On August 12 2021, the Attorney General submitted his position regarding the examiner's report filed with the court, according to which there is no need to approve the settlement in the format in which it was submitted in connection with the compensation payment mechanism and with excluding certain groups from the settlement. The Court has yet to rule on the settlement agreement.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
4.	May 2013 Tel Aviv District Court The Phoenix Insurance Approximately NIS 220 million or alternatively NIS 90 million.4	Non-payment of interest in respect of insurance benefits from the date of the insurance event, or alternatively from the end of 30 days from the date on which the claim was filed and until actual payment date.	On February 28 2021, the District Court handed down a partial judgment, according to which it has approved the class action, in respect of any entitled party (policyholder, beneficiary or third party), who - during the period starting three years prior to the filing of the lawsuit and ending on judgment date - received insurance benefits from The Phoenix Insurance (not in accordance with a judgment rendered in his case) without being duly paid interest thereon. It was also established that, for the purpose of implementing the judgment, calculation and manner of restitution, an expert will be appointed and that the class plaintiffs will be awarded legal expenses and legal fees. In May 2021, The Phoenix Insurance filed a motion to appeal with the Supreme Court against the judgment handed down by the District Court as well as a motion to stay the execution of the judgment. In June 2021 the Supreme Court issued a motion to stay the execution of the judgement and ruled that the motion to appeal requires a reply.
5.	July 2014 Central District Court The Phoenix Pension and Gemel Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.) and management companies of additional pension funds. NIS 48 million from all defendants.	Acting in bad faith when using the right - under the pension fund's rules and regulations - to increase management fees paid by pensioners from the accrual to the maximum amount allowed, as from the date they become pensioners.	The parties are awaiting the court's decision on the application for approval of the claim as a class action.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
6.	June 2015 Beer Sheva District Court The Phoenix Insurance Approximately NIS 125 million.	The cause of action, as approved by the District Court, is a violation of the provisions of the policy regarding special compensation (reimbursement) for performing surgery in a private hospital funded by "additional insurance services" (SHABAN) and the questions common to the group members are: what is the value of the commitment form on behalf of a health maintenance organization in respect of a privately owned hospital (Form 17), according to which the amount to be reimbursed to the policyholder is calculated; how The Phoenix Insurance in effect calculated the amount reimbursed to policyholders who underwent surgeries as part of SHABAN; and whether The Phoenix Insurance violated the provisions of the policy, and did not reimburse the full amount to the policyholders.	In December 2019, the District Court approved the petition to approve the claim as a class action lawsuit. The group on whose behalf the class action will be conducted will include all policyholders who were insured under a health insurance policy with The Phoenix Insurance, which included a reimbursement arrangement for performing surgery at a private hospital funded by SHABAN, based on a commitment form/Form 17, and in respect of whom an insurance event occurred from June 25 2012 through June 25 2015. The parties are in a mediation procedure.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
7.	September 2015 Tel Aviv District Court The Phoenix Pension and management companies of additional pension funds Approximately NIS 300 million per year since 2008 of all the defendants.	The claim is that the defendants pay agents fees and commissions calculated as a percentage of the management fees charged by them, thus allegedly violating their fiduciary duties, and that, as a result, the management fees that planholders are charged are higher than the appropriate rate.	The petition for approval of the claim as a class action lawsuit continues to be heard in court.
8.	December 2015 Tel Aviv District Court The Phoenix Insurance and another insurance company Approximately NIS 100 million from all defendants, of which NIS 50 million is attributed to The Phoenix Insurance.	Alleged unlawful collection of "sub-annuals" in life insurance at a rate that is higher than the permitted one.	On May 27 2020, the court issued a ruling rejecting the motion for approval of the claim as a class action, on the grounds that the plaintiffs do not have a cause of action. In September 2020, the plaintiff filed an appeal with the Supreme Court. A hearing on the appeal is scheduled for July 11 2022.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
9.	February 2016 Central District Court The Phoenix Insurance NIS 100 million.	The plaintiffs argue that The Phoenix Insurance does not link the payments it must pay policyholders under life insurance policies (which it issued until July 19 1984) due to an insurance event or due to the redemption of the policy, to the correct basic CPI in accordance with the linkage terms and conditions set out in the policies; i.e., the latest CPI published before the first day of the month in which the insurance term begins; the plaintiffs argue that this has a significant effect on the benefits to which the policyholders will be entitled.	The parties are in a mediation procedure.
10.	February 2016 Tel Aviv Regional Labor Court (the hearing was transferred from the Central District Court due to substantive jurisdiction) The Phoenix Pension and Gemel Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.) and management companies of additional pension funds. Approximately NIS 1 billion of all the defendants.	The plaintiffs argue that the defendants are acting inappropriately by charging management fees in respect of disability and survivors benefits, and do not disclose that fact, and that the rate of management fees collected from such benefit recipients is the maximum permitted rate, taking advantage of the fact that benefit recipients cannot transfer their funds and/or entitlement to such benefits elsewhere.	The petition for approval of the claim as a class action lawsuit continues to be heard in court. A hearing is scheduled for November 18 2021.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
11.	September 2016 Tel Aviv District Court The Phoenix Insurance and other insurance companies NIS 4.45 billion from all defendants, of which NIS 943 million is attributed to The Phoenix Insurance.	Collection of premiums on health insurance policies, for unnecessary coverages that the policyholders do not need, and alleged sale of health insurance policies despite being aware that they include coverages that the policyholders have no need for, since they have supplementary health insurance from the health maintenance organization they are a member of. In addition, according to the defendants, they also tied services since customers were unable to purchase a reduced-coverage policy that will include only coverages that are not included in the supplementary health insurance of their health maintenance organizations, thus creating "overlapping insurance".	In October 2020, the District Court ruled that the motion for approval of the claim as a class action was denied. In November 2020, the plaintiffs filed an appeal to the Supreme Court. An appeal hearing is scheduled for March 28 2022.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
			The motions to approve the lawsuits as class actions that appear in Sections 12-16 below were submitted on the grounds of unlawful collection of investment management expenses
	which are not sanctioned by the policies or bylaws.
12.	September 2016 Central District Court The Phoenix Insurance NIS 14.7 million.	Collecting investment management expenses in the individual saving policy Excellence Invest in addition to collecting management fees, without a provision in the policy expressly permitting to do so.	In May 2019, the District Court approved the petition to approve the claim as a class action lawsuit filed against The Phoenix Insurance and three other insurance companies (hereinafter - the "Defendants"), for breaching the provisions of the insurance policy due to unlawful collection of investment management expenses. The class on whose behalf the class action lawsuit against The Phoenix Insurance will be conducted includes all policyholders of the individual savings policy Excellence Invest issued by The Phoenix Insurance at present and in the seven years prior to the date of submission of the motion for approval as class action. The remedies claimed are the reimbursement of the investment management expenses that were overcharged in addition to interest
			differentials; and an order directing the defendants to stop collecting such fees. In September 2019, The Phoenix Insurance (along with the other defendants) filed a motion for leave to appeal to the Supreme Court against the decision approving the class action lawsuit.
			At the request of the Supreme Court, on August 13 2020, the Attorney General submitted his position on the proceedings and announced his attendance. According to the position, the Attorney General is of the opinion that the court should accept the motion for leave to appeal and the appeal itself and order the rejection of the motions for approval as class actions, for the reasons set out in the position.
			A hearing on the request for leave to appeal took place on February 11 2021, and the parties are awaiting the decision of the Supreme Court.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
The motions to approve the lawsuits as class actions that appear in Sections 12-16 below were submitted on the grounds of unlawful collection of investment management expenses
which are not sanctioned by the policies or bylaws. (contd.)

12.	Contd.	In July 2021, the Attorney General submitted to the Supreme Court the (draft) Interim Report of the Advisory Committee to the Commissioner of the Capital Market, Insurance and Savings on the examination of direct expenses, which was published for public comment in June 2021, noting that he believes that the issue has no bearing on the decision in the proceeding and does not alter his legal position that has already been filed in the proceeding, and has requested to file a position with respect to the report. The Supreme Court allowed the Attorney General and the other parties to submit their positions regarding the Interim Report. As of the publication date of the financial statements, the positions have yet to be submitted. At this point, the hearing on the class action in the District Court was postponed.
		It should be noted that requests for approval of class actions regarding investment management expenses are also pending against Excellence Gemel (please see Section 13 in the table below), The Phoenix Insurance (see Section 14 in the table below) and Halman Aldubi Provident and Pension Funds Ltd. (see Sections 15 and 16 in the table below).

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
13.	November 2016 Jerusalem Regional Labor Court Excellence Nessuah Gemel Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.) Approximately NIS 215 million.	The plaintiffs argue that under the rules and regulations of the Excellence Gemel provident fund, which were in effect until January 1 2016, and according to the rules and regulations of the Excellence Advanced Education fund, Excellence Gemel may not collect investment management expenses from planholders, since collection of such expenses had to stipulated clearly and expressly in the rules and regulations of the funds.	The parties filed a motion for a hearing arrangement with the court, according to which the hearings to approve the claim as a class action will be postponed until a decision has been made in connection with the motion for leave to appeal against the May 2019 District Court decision to approve as petitions to approve lawsuits as class actions filed for similar causes of action against The Phoenix Insurance, among others (see Section 12 above, in the table).
14.	June 2019 Tel Aviv Regional Labor Court The Phoenix Insurance Approximately NIS 351 million.	According to the plaintiff, The Phoenix Insurance charges policyholders of insurance policies which combine a life insurance component and a pension saving component (executive insurance) for investment management expenses without such charges being included in the terms and conditions of the policy.	The Phoenix Insurance has not yet submitted its response to the motion to approve the claim as a class action, and on October 2019, it submitted a motion for stay of proceedings until a decision is made in connection with the motion for leave to appeal against the May 2019 District Court decision to approve as class actions claims filed for similar causes of action (see Section 12 above, in the table). A final decision has yet to be made in connection with the stay of proceedings motion.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
15.	June 2019 Jerusalem Regional Labor Court Halman Aldubi Provident and Pension Funds Ltd. NIS 17.5 million.	The statement of claim alleges that IBI Provident and Study Fund Management Company Ltd. (which was merged with Halman Aldubi on July 1 2018) charged the plaintiff and the other planholders of the advance education fund under its management, investment management expenses, in addition to the fund management fees, contrary to the fund's bylaws.	Halman Aldubi has not yet submitted its response to the petition for approval of the claim as a class action lawsuit; in September 2019, it submitted a motion for a stay of proceedings until a final decision has been made on ten petitions for approval of claims as class action lawsuits which are being heard in Labor Court (including against Excellence Nessuah (see Section 13 above in the table) regarding the collection of management expenses in provident funds and advanced education funds.
			A final decision has yet to be made in connection with the stay of proceedings motion.
16.	July 2019 Jerusalem Regional Labor Court Halman Aldubi Provident and Pension Funds Ltd. No estimate was provided, but it	According to the statement of claim, Halman Aldubi charged the plaintiff and the other planholders of the Halman Aldubi comprehensive pension fund (the "Fund") investment management expenses, in addition to the management fees charged by the Fund, contrary to the Fund's bylaws; the practice continued until May	Halman Aldubi has not yet submitted its response to the petition for approval of the claim as a class action lawsuit; in September 2019, it submitted a motion for a stay of proceedings until a final decision has been made on ten petitions for approval of claims as class action lawsuits which are being heard in Labor Court (including against Excellence Nessuah (see Section 13 above in the table) regarding the collection of management expenses in provident funds and advanced
	was noted that the damage to all class members exceeds NIS 3 million.	2017, at which time the Fund's bylaws were changed so as to include the specific provision for charging direct investment management expenses.	education funds. A final decision has yet to be made in connection with the stay of proceedings motion.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
17.	January 2017 Central District Court The Phoenix Insurance and other insurance companies At least approximately NIS 12.25 million in respect of each of the defendants.	According to the plaintiffs, insurance companies overcharge insurance premiums since they do not disclose to policyholders a "practice" in the motor insurance subsegment that allows updating the age of the young driver insured under the policy and/or the years of driving experience when moving into another age bracket and/or years of driving experience bracket which can potentially result in a reduction of the insurance premium. It should be noted that the plaintiffs refer in their claim to a decision approving a motion for approval of a claim as a class action dealing with the same issue and filed against another insurance company, in which the said practice had allegedly been proven.	The petition for approval of the claim as a class action lawsuit continues to be heard in court.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
18.	April 2017 Tel Aviv Regional Labor Court (the hearing was transferred from the Tel Aviv Central District due to substantive jurisdiction) Shekel Insurance Agency (2008) Ltd. (hereinafter - "Shekel"), Agam Liderim (Israel) Insurance Agency (2003) Ltd. (hereinafter - " Agam Liderim"), second-tier companies of The Phoenix Holdings, and other insurance agencies. Approximately NIS 357 million of all defendants, of which NIS 47.81 million is attributed to Agam Liderim and NIS 89.64 million to Shekel.	According to the plaintiffs, until the regulator intervened and legislative changes were made in connection with this issue, managers of pension arrangements in general and the defendants in particular, provided employers with operating services involving preparing and managing pension insurance for employees without the employers paying any consideration in respect thereof to the pension arrangement managers, and that all costs pertaining to the operating services are paid by the employees through management fees they pay for the products marketed to them by the managers of the pension arrangement.	In August 2020, the court issued a ruling rejecting the motion for approval of the claim as a class action. On October 5 2020, the plaintiffs filed an appeal with the National Labor Court. On July 5 2021 the Court heard the appeal and thereafter the parties were allowed to supplement their arguments. Once the parties will supplement their arguments, the Court is expected to hand down a judgement.
19.	June 2017 Central District Court The Phoenix Insurance The amount of the claim was not estimated.	The lawsuit is concerned with a claim that service level agreements are marketed and sold, either directly or through agents on behalf of The Phoenix Insurance, in violation of the provisions of the law regarding the marketing and sale procedure of such agreements.	On August 18 2021, the District Court issued a ruling approving the petition to approve the claim as a class action. The group on behalf of which the class action will be conducted is anyone who had purchased from The Phoenix Insurance, whether directly or through its agents, service level agreements as part of the comprehensive car insurance policy, with The Phoenix Insurance violating the law regarding the marketing and sale of service level agreements, in the period ranging from June 30 2016 until the date of the ruling.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
20.	June 2017 Central District Court (sitting as an Administrative Court). The National Insurance Institute (hereinafter - the "National Insurance Institute") The Phoenix Insurance and additional insurance companies (hereinafter, jointly: the "Official Respondents") The amount of the claim was not estimated.	According to the plaintiffs, the National Insurance Institute collects national insurance contributions and health insurance contributions illegally from the tax exempt income of class members as defined below, in addition to collecting the minimum rate of health insurance contributions from class members' disability annuity. According to the plaintiffs, the National Insurance Institute overcharges class members for these contributions through the pension fund, the employer or any other third party. The plaintiffs point out that the Official Respondents are entities through which the insurance premiums were collected from the plaintiffs, and clarify that any employer and any entity paying an early pension and any entity paying a PHI benefit in Israel may be in a similar position to that of the Official Respondents. According to the plaintiffs, it is impossible to add all the parties as respondents and the court is asked to consider the Official Respondents that were added and which are related to the plaintiffs' case as class action defendants. The plaintiffs also stated that no operative remedy is requested in the case of the Official Respondents in the framework of the above claim.	The petition for approval of the claim as a class action lawsuit continues to be heard in court.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
21.	August 2017 Tel Aviv Regional Labor Court (the hearing was transferred from the Central District Court due to substantive jurisdiction) Excellence Gemel & Hishtalmut Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.) The claim amount was not estimated but it was stated as approximately NIS 1 million or more than NIS 2.5 million.	Increasing management fees without sending prior notice as required by law.	The parties are in a mediation procedure.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
22.	September 2017 Jerusalem District Court The Phoenix Insurance and other insurance companies The claim amount was not estimated, but it was stated that it was in the tens of millions of shekels or more.	According to the plaintiffs, the defendants breach the provisions of Section 5(b) of the Adjudication of Interest and Linkage Differentials Law, 1961 (hereinafter - the "Interest and Linkage Differentials Law"), by implementing a policy whereby they do not add any linkage differences and/or interest and/or linked interest to amounts ruled against them by a judicial authority, in cases where the defendants pay such amounts to class members at a later date than the date set for such payment.	On March 4 2021, the parties submitted to the court a motion for approval of a settlement agreement for an amount that is immaterial to The Phoenix Insurance, under which The Phoenix Insurance will amend the settlement deeds as outlined in the settlement agreement; the parties also recommended the payment of compensation to the class action plaintiff and legal fees for his/her attorneys. The settlement agreement has not yet been approved by the court. A hearing is scheduled for October 4 2021.
23.	January 2018 Central District Court The Phoenix Insurance and other insurance companies Approximately NIS 82.2 million per year from all the defendants, of which approximately NIS 22.3 million per year is attributed to The Phoenix Insurance.	According to the plaintiff, The Phoenix Insurance unlawfully refrains from paying its policyholders and third parties the VAT component applicable to the cost of damages when the damages have not been effectively repaired.	The petition for approval of the claim as a class action lawsuit continues to be heard in court.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
24.	February 2018 Tel Aviv District Court The Phoenix Insurance The Group's aggregate damage was not estimated, but it was stated that it can be assumed to exceed NIS 2.5 million.	According to the plaintiffs, The Phoenix Insurance misleads those who purchased health insurance and/or those for whom health insurance was purchased, where such insurance is in effect only, or also, during the policyholder's time in mandatory military service, career military service or reserve military service and/or when the policyholder is a policeman and/or a member of the security forces of the State of Israel; the plaintiffs claim that The Phoenix Insurance sells to the class members in general and IDF soldiers in particular an insurance product that is almost impossible to use due to various reasons as specified in the lawsuit.	The parties are awaiting the court's decision on the application for approval of the claim as a class action. It should be noted that in November 2020, the position of the Capital Market, Insurance and Savings Authority was submitted, which supports the position of The Phoenix Insurance.
25.	February 2018 Tel Aviv District Court Excellence Nessuah Gemel Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.) and additional companies NIS 21 million from all defendants, of which NIS 6 million is attributed to Excellence Gemel.	According to the plaintiffs, the claim deals with the unlawful collection of handling fees /collection fees/operating fees/fees and commissions/early repayment fees or any other payment (whatever its name may be) collected by the defendants from planholders thereof to whom they extended loans.	Excellence Gemel has not yet submitted its response to the petition for approval of the claim as a class action lawsuit. The parties are negotiating. It should be noted that similar motions for approval of claims as class actions filed against The Phoenix Pension and The Phoenix Insurance were concluded with a settlement agreement.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

NOTE 7 - CONTINGENT LIABILITIES (contd.)

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
26.	March 2018 Tel Aviv Regional Labor Court The Phoenix Pension Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.) and additional companies The amount of the claim was not estimated.	According to the plaintiffs, the claim deals with collection of insurance premiums in respect of survivors' insurance (life insurance coverage) from policyholders who have no survivors; which results with the policyholders paying insurance premiums without receiving anything in return.	The parties are awaiting the court's decision on the petition for approval of the claim as a class action lawsuit.
27.	May 2018 Haifa Regional Labor Court The Phoenix Pension and Gemel Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.)4 NIS 200 million.	According to the plaintiffs, contrary to that which is stated in its rules and regulations, The Phoenix Pension has refrained from paying or from paying in full the partial contributions towards benefits to anyone who does not receive a full disability pension. In any case, The Phoenix Pension refrained from reporting to policyholders - either in pay slips or in annual statements - about the payments it made, to the extent that it did, indeed, make such payments.	On August 15 2021, the Regional Labor Court issued a resolution approving the motion for approval of the claim as a class lawsuit. As part of the above resolution, the Court approved causes of action in connection with the failure to pay contributions towards benefits in respect of planholders receiving a partial disability pension during the period from May 1 2012 through May 1 2019; the Court ordered a remedy whereby the rules and regulations should be abided by and the planholders' accumulated balance should be credited with current monthly contributions towards benefits based on a value date as of the original entitlement date, plus the yield accrued on the fund as from the said date. The Court also ruled that no separate pecuniary damages has been proven in addition to what is stated above, and that no monetary damages should be paid. A hearing for the class action was set for October 20 2021.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

⁴ The petition for approval of the claim as a class action lawsuit was originally filed against The Phoenix Insurance. The plaintiffs filed an amended petition for approval of the claim as a class action lawsuit, in which they changed the identity of the defendant and also added to their previous allegations and to the definition of the class they seek to represent.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
28.	June 2018 Jerusalem District Court The Phoenix Insurance and another insurance company The amount of the claim was not estimated.	According to the plaintiff, the claim deals with the defendants' unjustified refusal to recognize a surgical procedure that had medical justification as an insurance event according to the health policies issued, by claiming that it is a "preventive surgical procedure".	In February 2021, the position of the Capital Market, Insurance and Savings Authority was submitted. The Phoenix Insurance replied to this position. The petition for approval of the claim as a class action lawsuit continues to be heard in court.
29.	September 2018 Tel Aviv Regional Labor Court The Phoenix Insurance The amount of the claim was not estimated.	According to the plaintiff, The Phoenix Insurance breached its good faith and fiduciary duties towards its policyholders by automatically depositing the additional contributions it received following the expansion order that required an increase in contributions towards benefits for all Israeli workers, for policyholders in managers insurance policies taken out before June 1 2001 (with guaranteed annuity conversion factors) in new policies referred to by the plaintiff as "contribution policies", without carrying out a pension marketing procedure that includes a justification document, and also by determining the management fees in the policy unilaterally at the maximum rate permitted by law.	On April 18 2021, the parties filed with the court an agreed motion to approve the plaintiff's withdrawal of the petition to approve the claim as a class action. The withdrawal motion has not yet been approved by the court.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
30.	December 2018 Tel Aviv District Court The Phoenix Insurance, other insurance companies and banks NIS 280 million from all defendants.	According to he plaintiffs, the claim deals with unlawful overcharging of insurance premiums for unnecessary building insurance policies issued to building owners (who took out a mortgage loan and were required to insure the building with a building policy in favor of the lending bank), despite the fact that at the time of issuance of such policies, there was already and insurance policy covering that building, regardless of whether that policy was taken out with the same insurance company or with another insurance company.	The petition for approval of the claim as a class action lawsuit continues to be heard in court.
31.	March 2019 Central District Court The Phoenix Insurance Approximately NIS 2.6 million.	According to the plaintiff, the claim deals with The Phoenix Insurance's practice to delay the repayment of the relative portion of insurance premiums upon cancellation of compulsory motor and property insurance policies rather than paying it within the period set by law; the plaintiff also claims that The Phoenix Insurance repays the said amount without adding linked interest. The plaintiff also claims that The Phoenix Insurance refrains from repaying full linkage when refunding the relative portion of the insurance premiums.	The parties are in a mediation procedure.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
32.	May 2019 Tel Aviv District Court The Phoenix Insurance Approximately NIS 766.8 million.	According to the plaintiff, the claim deals with The Phoenix Insurance's not paying policyholders in participating life insurance policies which include an Rm formula their full share of the profits and full payments to which they are entitled under the insurance contracts; the plaintiff also claims that The Phoenix Insurance does not fulfill its reporting and disclosure obligations towards policyholders regarding their policies and rights.	The petition for approval of the claim as a class action lawsuit continues to be heard in court. It should be noted that the plaintiff stated that a similar motion for approval of a claim as class action, which was filed against another insurance company, had recently been approved.
33.	July 2019 Tel Aviv District Court The Phoenix Insurance and other insurance companies Approximately NIS 264.5 million from all the defendants, of which approximately NIS 67.5 million is attributed to The Phoenix Insurance.	The plaintiffs claim that the defendants do not pay their policyholders interest as required by law in respect of insurance benefits for the period starting 30 days after the date of delivery of the claim until the date of actual payment.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. It should be noted that according to the plaintiffs, this claim is based on the same cause of action as the class action described in Section 4 above in the table; however, it was nevertheless decided to file this claim for the sake of caution only, given the doubt as to whether the class of plaintiffs seeking the approval of this motion is included in the previous class action. In light of this, at the request of The Phoenix Insurance, in July 2020 the proceedings in this claim were delayed until a judgment will have been rendered in the previous claim.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
34.	May 2019 Nazareth Magistrate Court The Phoenix Insurance The amount of the claim was not estimated.	According to the plaintiff, this claim deals with The Phoenix Insurance's failure to pay in full insurance benefits under the insurance policy in respect of damage caused to a vehicle, on the grounds that the ownership class of the vehicle is "leasing - sale of a new vehicle with 0 km or formerly" even though the ownership of the vehicle is not and/or never was of such ownership class, and the permanent owner of the vehicle's license as "Owner 00" was the first purchaser, who is not the leasing company.	The petition for approval of the claim as a class action lawsuit continues to be heard in court.
35.	August 2019 Central District Court The Phoenix Insurance and other insurance companies The claim amount was not estimated, but it was stated that it was NIS 1 million or more.	The claim is that in insurance polices covering mechanical engineering equipment the defendants determine the value of the equipment for the purpose of determining the premium according to the value of new equipment, disregarding the age of the equipment; however, in the event of total loss of equipment the defendants pay the policyholders insurance benefits in accordance with the equipment's actual value upon the occurrence of the insurance event, taking into consideration the age of the equipment.	The petition for approval of the claim as a class action lawsuit continues to be heard in court. A pre-trial hearing is scheduled for December 15 2021.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

NOTE 7 - CONTINGENT LIABILITIES (contd.)

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
36.	August 2019 Central District Court The Phoenix Insurance and other insurance companies The claim amount was not estimated, but it was stated	The plaintiffs claim that in case of vehicle theft or total loss as a result of an accident, the defendants refuse to reimburse policyholders for the proportionate share of the insurance premiums (the premium) paid for service contracts (road recovery services, windscreen repair, towing, etc.) in respect of the period subsequent to the theft or total loss, despite the fact that the service contract is cancelled and the risk it	The petition for approval of the claim as a class action lawsuit continues to be heard in court. A pre-trial hearing is scheduled for October 24 2021. In February 2020, the position of the Capital Market, Insurance and Savings Authority was submitted, which is not in line with the plaintiffs' position.
	that it was in the tens of millions of shekels or more.	covers no longer exists.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
37.	December 2019 Central District Court PassportCard Israel General Insurance Agency (2014) (hereinafter - "PassportCard") and The Phoenix Insurance The amount of the claim was not estimated.	According to the plaintiff, the defendants sell travel insurance without informing their customers - at the time of issuing the insurance policy - about the fact that the "search and rescue" component can be excluded if it is not required by the customers; the plaintiff also claims that the defendants do not inform customers about price changes they make in insurance policies' components; furthermore, the defendants do not inform customers in a clear manner about the right to reimbursement of a proportionate share of the insurance premiums in the event that the actual trip is shorter than planned, and in the event that the insurance period is shortened for any reason whatsoever (including due to cancellation of the insurance policy). The plaintiff also claims that even when the defendants reimburse insurance premiums to policyholders who shortened their travel period and at the same time also shortened the insurance period for any reason whatsoever, they do not reimburse the full insurance premium for the shortened insurance period, contrary to law and the insurance policy.	The parties are in a mediation procedure.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
38.	January 2020 Central District Court The Phoenix Insurance, other insurance companies and a road recovery and towing services company. The claim amount was not estimated but it was stated that it significantly exceeds NIS 2.5	The plaintiff claims that, in cases where vehicles' windscreens broke, the defendants had provided and still provide alternative windscreens, which do not meet Israeli standards and are not manufactured by the same maker as the car; by doing so, the defendants allegedly breach their obligations under the insurance policies and coverage contracts.	The petition for approval of the claim as a class action lawsuit continues to be heard in court. A hearing is scheduled for October 4 2021.
39.	million. February 2020 Central District Court The Phoenix Insurance The claim amount was not estimated, but it was stated that it is in the millions of shekels or more.	The plaintiff claims that starting in early 2016 or thereabouts, The Phoenix Insurance ceased to fulfill its obligation in health insurance policies marketed prior to February 1 2016, in which it undertook to provide insurance coverage, at no additional cost, to all children born to the principal policyholder (starting with the fourth child), until they reach the age of 21.	The parties are in a mediation procedure.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
40.	February 2020 Tel Aviv Regional Labor Court The Phoenix Insurance No less than NIS 25 million.	The claim is that The Phoenix Insurance refuses to pay its life insurance policyholders the benefit they are entitled to in respect of the first month after the end of the insurance period (the first month of their retirement).	The petition for approval of the claim as a class action lawsuit continues to be heard in court.
41.	February 2020 Central District Court PassportCard Israel General Insurance Agency (2014) (hereinafter - "PassportCard") and The Phoenix Insurance NIS 6.125 million.	The claim is that the defendants violate the provisions of the travel insurance policy, since when an insurance event occurs to a policyholder and insurance benefits are claimed in respect of expenses of a person who travelled with the policyholder or accompanied him/her on their trip, the defendants deduct from the insurance benefits double the deductible - one for the policyholder and the other for another person covered by the insurance, i.e. the policyholder or person who travelled with the policyholder or the person who accompanied him/her. The plaintiff also claims that the defendants violate various provisions of insurance circulars regarding the claim filing form, the data included therein, receiving a copy thereof; the plaintiff further claims that the defendants refrain from informing policyholders who file claims of their right to obtain a copy of the decision made regarding their claim and/or appeal against the decision to various parties, nor do they inform policyholders of the period of time they have to do so.	The petition for approval of the claim as a class action lawsuit continues to be heard in court. A hearing is scheduled for December 9 2021.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
42.	February 2020 Tel Aviv Regional Labor Court (the hearing was transferred from the Tel Aviv District Court) Halman Aldubi Provident and Pension Funds Ltd. NIS 335 million (or alternatively, NIS 58 million or NIS 36 million).	The claim is that Halman Aldubi allegedly violated its duty to the plaintiff and to all beneficiaries in the provident funds of Halman Aldubi, of deceased planholders, and any planholder of the Halman Aldubi provident funds with whom contact was lost, to locate and inform the said beneficiaries, as well as the planholders with whom contact was lost, that they are entitled to funds in the Halman Aldubi funds, on the dates set forth to that effect in the Supervision of Financial Services Regulations (Provident Funds) (Locating Planholders and Beneficiaries), 2012, in the period beginning on January 1 2013 until the date of the ruling in the lawsuit.	Halman Aldubi has not yet filed its response to the amended approval petition filed by the plaintiff. A hearing on the petition to approve the lawsuit as a class action is scheduled for February 3 2022.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details

The petitions to approve claims as class actions listed in Sections 43 and 44 below were filed following the coronavirus pandemic which broke out in March 2020. The petitions were submitted in the motor and home insurance subsectors; the plaintiffs argue in these motions that insurance companies in general and The Phoenix Insurance in particular should reimburse policyholders for premiums paid during the period in which restrictions were in place due to the coronavirus pandemic in view of the reduced insurance risk in these fields during that period.

43.	April 2020 Tel Aviv District Court The Phoenix Insurance, other insurance companies and the managing corporation of the Compulsory Motor Insurance Pool (the "Pool") Ltd. Approximately NIS 1.2 billion of all the defendants, of which NIS 145 million is attributed to The Phoenix Insurance or, alternatively, NIS 719 million of all the defendants, of which NIS 113 million is attributed to The Phoenix Insurance.	The subject matter of the lawsuit is that the defendants unjustly profited,4 allegedly, by failing to reduce car insurance premiums (for compulsory and/or comprehensive and/or third party policies) during the mobility restrictions imposed due to the coronavirus pandemic. This was done, argued the plaintiffs, despite a decrease in mileage travelled and the level of risk to which the defendants are exposed.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. A pre-trial hearing is scheduled for February 28 2022. It should be noted that a petition to approve a similar claim as a class action, which was filed against The Phoenix Insurance and other insurance companies was rejected in August 2021 (see section 5 in the concluded claims table below).

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

⁴ The petition to approve the claim as a class action includes two petitions to approve claims as class actions filed against The Phoenix Insurance and other defendants, which were merged into a single claim in February 2021 by the Tel Aviv District Court (see Note 42(a) (1) in Sections 42 and 44 of the class actions table in the Company's financial statements as of December 31 2020, published on March 25 2021 (Ref. No. 2021-01-044709).

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
44.	April 2020	The argument is that the defendants must reimburse	The Phoenix Insurance has yet to submit its response to the petition to approve
	Tel Aviv District Court	premiums they overcharged policyholders in motor and	the class action lawsuit.
	The Phoenix Insurance and other insurance companies	home insurance, due to a decrease in the risk they are exposed to as a result of the restrictions imposed following the coronavirus pandemic, which led to a decline in trips and a decline in bodily harm and damage to property.	On February 2021, the court ruled that the petition to approve the claim as a class action in relation to motor insurance was dismissed and will continue to be heard in relation to home insurance.
	Approximately NIS 886 million of all the defendants, approximately NIS 107 million is attributed to The Phoenix		On April 25 2021, the plaintiff filed an appeal with the Supreme Court against the decision regarding the dismissal of the petition to approve the claim as a class action regarding car insurance.
	Insurance.		An appeal hearing is scheduled for May 25 2022.
			As for home insurance, The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. A pre-trial hearing is scheduled for February 28 2022.
			It should be noted that a petition to approve a similar claim as a class action, which was filed against The Phoenix Insurance and other insurance companies was rejected in August 2021 (see section 5 in the concluded claims table below).

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
45.	May 2020 Tel Aviv District Court Phoenix Excellence Pension and Provident Funds Ltd. and other management companies The claim amount was not	According to the plaintiffs, the claim deals with the defendants' classifying some of the contributions transferred to an advanced education fund on behalf of their customers as taxable provisions, even though they are not taxable.	Phoenix Excellence filed its response to the petition for approval of the claim as a class action lawsuit as well as a motion for leave to file a third-party notice against the State - the Israel Tax Authority. The Israel Tax Authority filed its response to the said petition. A decision is yet to be issued on the request. A pre-trial hearing is scheduled for November 23 2021.
	estimated, but it was stated that it is estimated, at a minimum, in the hundreds of millions of shekels.
46.	May 2020 Tel Aviv District Court Halman Aldubi Provident and Pension Funds Ltd. and other management companies and additional management	According to the plaintiffs, the claim deals with the defendants' classifying some of the contributions transferred to an advanced education fund on behalf of their customers as taxable provisions, even though they are not taxable.	Halman Aldubi filed its response to the petition for approval of the claim as a class action lawsuit as well as a motion for leave to file a third-party notice against the State - the Israel Tax Authority. The Israel Tax Authority filed its response to the said petition. A decision is yet to be issued on the request. A pre-trial hearing is scheduled for November 23 2021. It should be noted that a similar petition to approve a claim as class action was
	companies The claim amount was not estimated, but it was stated that it is estimated, at a minimum, in the hundreds of millions of shekels.		filed against Phoenix Excellence (see Section 45 above in the table).

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
47.	June 2020 Tel Aviv District Court PassportCard Israel General Insurance Agency (2014) (hereinafter - "PassportCard") and The Phoenix Insurance At least NIS 10 million.	According to the plaintiff, the claim deals with non payment of insurance benefits in respect of cancellation of a trip due to a pandemic (the coronavirus pandemic) under travel insurance that the plaintiff purchased through PassportCard.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit.
48.	June 2020 Tel Aviv Regional Labor Court The Phoenix Insurance The amount of the claim was not estimated.	According to the claim, after a policyholder passes away, The Phoenix Insurance links the funds accrued in the policy to the consumer price index, instead of linking them to the investment track selected by the policyholder, as it previously did.	The parties referred the proceeding to a mediation procedure.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
49.	June 2020 Central District Court The Phoenix Insurance and another insurance company Approximately NIS 10.5 million for each defendant.	According to the claim, the defendants overcharge customers in loan agreements they enter into with their customers; overcharging takes place due to a one-way linkage mechanism, which is in place under those agreements, whereby if the CPI increases above the base CPI, the defendants collect the linkage differences due to the increase; however, if the CPI decreases below the base index, they do not credit their customers for the said decrease.	The petition for approval of the claim as a class action lawsuit continues to be heard.
50.	July 2020 Haifa Magistrate Court PassportCard Israel General Insurance Agency (2014) (hereinafter - "PassportCard") and The Phoenix Insurance NIS 1.84 million.	According to the claim, when travel insurance benefits are paid late, the defendants do not pay interest in respect of the delay; the plaintiff also claims that the defendants usually pay the insurance benefits according to the exchange rate on the day of the insurance event rather than the exchange rate on repayment date. In addition, it was argued that the disclosure duty regarding the deductible and the limitation of the insurer's liability with regard to the "winter sports" component is violated as part of a representation made prior to entering into the insurance contract.	The Phoenix Insurance has not yet submitted its response to the motion to approve the claim as a class action, and on January 10 2021, it submitted a motion for stay of proceedings until a final decision has been made in connection with the class action outlined in Section 4 above in the table. A decision has not yet been issued in connection with the stay of proceedings motion and a hearing was scheduled for October 11 2021.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
51.	July 2020 Central District Court The Phoenix Insurance and other insurance companies About 1.9 billion of all defendants, with the share of each of the defendants being in accordance with its market segment; according to the plaintiffs, The Phoenix's share is approximately 19%.	According to the claim, the defendants must charge reduced insurance premiums in cases of insurance policies with exclusions due to an existing medical condition compared to policies in which no such exclusion is present, since exclusions mitigate the defendants' insurance risk.	The petition for approval of the claim as a class action lawsuit continues to be heard in court. A pre-trial hearing is scheduled for October 21 2021.
52.	September 2020 Tel Aviv District Court (the hearing was transferred from the Tel Aviv Regional Labor Court) Phoenix Excellence Pension and Provident Funds Ltd. No estimate was provided for the claim amount.	The subject matter of the lawsuit, according to the plaintiff, is the following: provision of incorrect statements and/or incorrect calculations of the linkage differences credited to planholders; incorrect calculations and presentation of real profits; incorrect recording of deposits, causing the profits in respect thereof to be taxed unlawfully; causing pecuniary damage to planholders due to failure to monitor employers inadequate contributions and failure to require them to complete such contributions, whether by sending appropriate notices to employers and planholders or by making up the difference by the fund itself; and recording deposit dates that are different than the actual ones.	Excellence Gemel has not yet submitted its response to the petition for approval of the claim as a class action lawsuit. At the request of Excellence Gemel, in March 2021 the Court forwarded the hearing of the petition for approval of the claim as a class action lawsuit to the Tel Aviv District Court and to the panel which heard a similar motion for approval as a class action lawsuit filed against it (see Section 45 above in the table); a hearing regarding the next stage of the proceeding was set to November 23 2021.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
53.	September 2020	According to the claim, The Phoenix Insurance does not	The petition for approval of the claim as a class action lawsuit continues to be
	Tel Aviv District Court	pay policyholders insured under a long-term care policies the full amount due to them under their	heard in court.
	The Phoenix Insurance	policies, since it offsets these amounts against proceeds
	NIS 92.7 million.	received from the National Insurance Institute; it is also claimed that The Phoenix Insurance does not indemnify policyholders for certain medical treatments.
54.	September 2020	According to the claim, the defendants acted in	The Phoenix Insurance has yet to submit its response to the petition to approve
	Central District Court The Phoenix Insurance and another insurance company	violation of the provisions of critical illness insurance policies when they continued to charge policyholders the full amount of the monthly premium even after the first insurance event had occurred.	the class action lawsuit. A pre-trial hearing is scheduled for October 28 2021.
	NIS 84 million from all the defendants, of which NIS 67.2 million is attributed to The Phoenix Insurance (a total of NIS 16.8 million in respect of critical illness insurance and a total of NIS 50.4 million in respect of permanent health insurance).	It was also alleged against The Phoenix Insurance that contrary to its obligations, it charges its policyholders a monthly PHI insurance premium, even after the period of insurance coverage has ended.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
55.	October 2020 Tel Aviv District Court The Phoenix Insurance It is noted that the amount of the claim cannot be estimated accurately for all groups as defined in the claim; however, it is noted that the amount of the claim in relation to the cosmetic surgery cause of action is NIS 7.53 million.	According to the plaintiff, The Phoenix Insurance does not link the liability limits in its health insurance policies to the Consumer Price Index, thereby preventing policyholders from obtaining full recovery of their damages; the plaintiff also claims that The Phoenix Insurance does not provide insurance coverage to policyholders, claiming that the procedure in question is a cosmetic surgery, thereby breaching the provisions of the insurance contract; the plaintiff further claims that The Phoenix Insurance does not provide fair disclosure of the definition of cosmetic surgery and of the fact that it is excluded from the policy.	The Phoenix Insurance filed its response to the motion to approve the claim as a class action. A pre-trial hearing is scheduled for October 20 2021.
56.	November 2020 Tel Aviv District Court The Phoenix Insurance The amount of the claim was not estimated.	According to the plaintiff, in the event of a flight cancellation, The Phoenix Insurance conditions the payment of insurance benefits upon a onerous condition whereby the policyholder is required to present an official confirmation on the flight cancellation from the airline; the plaintiff claims that insurance benefits are not paid due to a concealed, unlawful reason, whereby the policy only covers the cancellation of scheduled flights. By doing so, The Phoenix Insurance allegedly sold a product that has no value and does not cover the flight cancellation risk.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. The parties are in talks to end the procedure by way of withdrawal from the proceeding.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
57.	December 2020	According to the plaintiff, who is insured in a health	The Phoenix Insurance has yet to submit its response to the petition to approve
	Haifa Magistrate Court	insurance policy comprising of a list of surgical procedures, The Phoenix Insurance does not pay	the class action lawsuit. A pre-trial hearing is scheduled for September 14 2021.
	The Phoenix Insurance	insurance benefits in respect of invasive surgical
	NIS 1.75 million	procedure involving a further medical procedure to policyholders who took out the insurance before 2014.
58.	December 2020	According to the plaintiff, The Phoenix Insurance	The Phoenix Insurance filed its response to the motion to approve the claim as a
	Central District Court	allegedly does not indemnify its policyholders in motor insurance policies relating to vehicles other than private	class action. A pre-trial hearing is scheduled for October 14 2021.
	The Phoenix Insurance	and commercial cars weighing up to 3.5 tons (such as
	The aggregate claim amount was not estimated but it was stated that it exceeds NIS 2.5 million.	trucks, taxis, etc.), in respect of the damage caused to their vehicle due to the insurance event - which, the plaintiff claims, is in breach of the policy and the law. It is further claimed that The Phoenix Insurance does not provide its policyholders with an appraiser's report, which includes an estimate of the impairment to the vehicle's value due to the insurance event nor its manner of calculation.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
59.	February 2021	According to the plaintiff, the claim deals with the	The Phoenix Insurance filed its response to the motion to approve the claim as a
	Central District Court	increasing of insurance premiums by more than 75% than the agreed premiums in life, long-term care, and	class action. A pre-trial hearing is scheduled for October 14 2021.
	The Phoenix Insurance No estimate was provided for the claim amount, but it was stated that the damage exceeds NIS 2.5 million.	PHI insurance policies taken out as part of a special deal for members of the Israel Bar Association (and potentially in other insurance policies) in 2016, without informing policyholders, obtaining their consent and providing them with any explanations.
60.	March 2021 Tel Aviv District Court The Phoenix Insurance and other insurance companies Approximately NIS 79 million from all defendants	The subject matter of the claim, according to the plaintiffs, is that the defendants refuse to pay for the policyholders' expenses for the purchase of medical cannabis, contrary to the provisions of the policy to cover drugs excluded from the Healthcare Services Basket, and since medical cannabis is recognized for medical use in Western countries.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit; a hearing date has not yet been scheduled.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
61.	March 2021 Central District Court The Phoenix Insurance No estimate was provided for the claim amount, but it was stated that the damage exceeds NIS 2.5 million.	The subject matter of the claim, according to the plaintiff, is that The Phoenix Insurance allegedly unlawfully rejects claims by its policyholders in "personal accident" policies to pay for hospitalization at a "non-general hospital", claiming that a "hospital", as defined in the policy, is a medical institution whose underlying meaning is a "general hospital only".	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. A pre-trial hearing is scheduled for December 21 2021.
62.	April 2021 Central District Court The Phoenix Insurance Approximately NIS 36.25 million.	The subject matter of the claim, according to the plaintiff, is failure to reduce management fees for a savings policy, contrary to the agreement between the policyholders and The Phoenix Insurance.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. A pre-trial hearing is scheduled for January 26 2022.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
63.	April 2021 Central District Court The Phoenix Insurance, banks, investment houses, credit card companies and other insurance companies The claim amount was not estimated but it was stated that it amounts to millions of shekels.	According to the plaintiffs, when using the defendants' digital services (while browsing their personal accounts), customers' private, personal and confidential information is transferred to third parties without the customers' consent, violating their privacy.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. A hearing date has not yet been scheduled.
64.	June 2021 Tel Aviv District Court The Phoenix Holdings, The Phoenix Insurance, the Chairman of the Board of Directors of The Phoenix Holdings and The Phoenix Insurance, serving board members of The Phoenix Holdings and the Phoenix Insurance and a long serving manager in The Phoenix Insurance (hereinafter - the "Defendants"). NIS 137 million.	This lawsuit relies on the facts as presented in a petition to approve a derivative lawsuit that was filed against the Defendants and which deals with events that took place at the beginning of the 1990s (see Section 4 below in the chapter Legal Proceedings). According to the plaintiffs, the subject matter of the claim is an alleged misleading report and non-disclosure by the Company of material facts that caused damaged to buyers of the share. According to the plaintiffs, at the beginning of the 1990s the Company took steps, in which it managers were involved, to recruit customers and help them to benefit from guaranteed return insurance policies; such steps were allegedly carried out in breach of guidance.	The defendants have not yet filed their response to the petition to approve the claim as a class action. A hearing date has not yet been scheduled.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

A. Class actions - petitions to approve lawsuits as class actions and lawsuits approved as class actions (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
65.	July 2021 Tel Aviv District Court The Phoenix Insurance Approximately NIS 4.8 million.	According to the plaintiff, the subject matter of the claim is The Phoenix Insurance's refusal to fund the cost of a surgical procedure; the plaintiff claims that The Phoenix refrained from making fair disclosure of the insurance coverage and any exclusions thereto in some of the health insurance polices marketed subsequent to October 1 2001.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. A hearing date has not yet been scheduled.
66.	July 2021 Tel Aviv District Court The Phoenix Insurance The claim amount was not estimated, but it was stated that it exceeds NIS 2.5 million.	According to the plaintiffs, the subject matter of the claim is that the defendants deduct interest at the rate of 2.5% (or any other rate) from the monthly yield accrued for policyholders to whom a monthly benefit is paid under participating life insurance policies issued in 1991-2004; according to the plaintiffs, such a deduction is not established in the contractual terms of the relevant insurance policies.	The Phoenix Insurance has yet to submit its response to the petition to approve the class action lawsuit. A hearing date has not yet been scheduled.
67.	August 2021 Tel Aviv District Court Halman Aldubi I2P1, Limited Partnership (hereinafter - the "Partnership"). NIS 7.5 million	The subject matter of the lawsuit is the claim that the Partnership's filings posted on the Israel Securities Authority and the TASE's websites (the MAGNA and the MAYA, respectively) are not accessible to people with disabilities; accordingly the plaintiff claims that the Partnership prevents or reduces disabled people's capability to obtain information from those reports.	The Partnership has yet to submit its response to the petition to approve the class action lawsuit. A hearing date has not yet been scheduled. The plaintiff noted that he filed a number of petitions to approve claims as class actions, whose subject matter is similar to that of this claim; such petitions were filed against a number of companies, including another insurance company.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

^* For additional claims concluded between January 1 2021 and March 25 2021, please see Note 42(a)(2), Sections 10 and 11 of the table of concluded claims in the Company's financial statements as of December 31 2020, published on March 25 2021 (Ref. No. 2021-01-044709).

Concluded claims

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
1.	May 2020 Tel Aviv District Court Excellence Gemel & Hishtalmut Ltd. (currently: Phoenix Excellence Pension and Provident Funds Ltd.) and additional insurance companies and management companies The amount of the claim was not estimated.	The claim is that the Law Enforcement and Collection Authority overcharges those who submit foreclosure applications in respect of financial instruments managed by the defendants; overcharging is allegedly carried out through an automated system and amounts overcharged are transferred to the defendants.	On April 7 2021, the Court handed down a decision to strike the petition to approve the claim as a class action.
2.	May 2020 Tel Aviv District Court Halman Aldubi Provident and Pension Funds Ltd. and additional insurance companies and management companies The amount of the claim was not estimated.	The claim is that the Law Enforcement and Collection Authority overcharges those who submit foreclosure applications in respect of financial instruments managed by the defendants; overcharging is allegedly carried out through an automated system and amounts overcharged are transferred to the defendants.	On April 7 2021, the Court handed down a decision to strike the petition to approve the claim as a class action. It should be noted that a similar petition to approve a claim as class action was filed and withdrawn against Phoenix Excellence (see Section 1 above in the table).

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

B. Concluded claims (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
3.	February 2018 Jerusalem District Court The Phoenix Insurance The amount of the claim was not estimated.	According to the plaintiffs, The Phoenix Insurance continues to charge life insurance premiums from its deceased policyholders.	In January 2021, the parties submitted a motion for approval of a settlement agreement for an amount that is immaterial to The Phoenix Insurance, under which The Phoenix Insurance committed to reimburse insurance premiums to the class members, as outlined in the settlement agreement; the parties also recommended the payment of compensation to the class action plaintiff and legal fees for his/her attorneys. On June 30 2021 the Court handed down a judgement approving the settlement agreement.
4.	July 2017 Jerusalem District Court PassportCard Israel General Insurance Agency (2014) (hereinafter - "PassportCard") and The Phoenix Insurance The claim amount was not estimated, but it was stated that it exceeds NIS 2.5 million of all the defendants.	The plaintiff claims that as part of travel insurance it provides PassportCard effectively records confidential medical conversations held between its policyholders and physicians, listens to these conversations and transfers them to The Phoenix Insurance, while breaching policyholders' privacy without their consent and while conducting wiretapping. In addition, the plaintiff claims that the defendants retain the recorded conversations, maintain an illegal database and even use the recordings.	In October 2019, the District Court issued a judgment rejecting the motion for approval of the claim as a class action lawsuit. In January 2020, the plaintiff filed an appeal against the judgment with the Supreme Court. On July 12 2021 the Supreme Court handed down a judgement rejecting the plaintiff's appeal.

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

B. Concluded claims (contd.)

No.	Date,1 court,2 defendants and claim amount3	Main arguments	Details
5.	April 2020 Haifa District Court The Phoenix Insurance and other insurance companies Approximately NIS 81 million of all the defendants, of which approximately NIS 13 million is attributed to The Phoenix Insurance.	The plaintiff claims that the defendants overcharged insurance premiums in their employer liability insurance and third-party insurance (as part of business insurance policies), despite the drop in the number of employees, suppliers, customers, etc. who attend businesses due to the coronavirus pandemic and the restrictions imposed as a result thereof, which constitutes is a material decrease in the risk to which the defendants are exposed.	On August 4 2021, the District Court ruled that the motion for approval of the claim as a class action was denied, among other things, due to the fact that the plaintiffs do not have cause, have not proven risk mitigation, and that the claim is not worthy of being heard as a class action lawsuit. It should be noted that petitions to approve similar claims against The Phoenix Insurance (and other insurance companies) as class actions are outstanding (see Sections 43 and 44 above in the table).

¹ The date on which the petition for approval of the claim as a class action lawsuit was originally filed.

² The court with which the petition for approval of the claim as a class action lawsuit was originally filed.

³ The claim amount as assessed (if assessed) by the plaintiff(s) in the petition for approval of the claim as a class action lawsuit.

Legal Proceedings

Set forth below is a description of legal and other proceedings against the Group. For proceedings where, in the opinion of management - which is based, among other things, on the legal opinion it has received - it is more likely than not that the Group's defense claims will be allowed and the proceeding will be dismissed, no provision was included in the financial statements. For proceedings where it is more likely than not that the Group's defense claims will be dismissed, in whole or in part, the financial statements include provisions to cover the exposure estimated by the Group. In management's opinion, which is based, among other things, on legal opinions it received, the financial statements include adequate provisions, where provisions were required, to cover the exposure estimated by the Group.

1. On November 11 2020, an insurance agency filed a lawsuit in the amount of approximately NIS 17.6 million against The Phoenix Insurance and nine other defendants, including an agency which consolidated in The Phoenix Group's financial statements, alleging misuse of the plaintiff's trade secrets and list of customers. It should be noted that the plaintiff had previously filed a motion for a temporary injunction in respect of the subject matter of the claim - and the motion was dismissed. The lawsuit continues to be heard in court.
1. On December 30 2020, a lawsuit was filed against Excellence Nessuah Services Ltd. (hereinafter in this section - "Excellence") and Ms. Hanna Hollander by OSR R&D Israel (hereinafter - the "Plaintiff" or "OSR") for a restraining order and monetary remedy in the amount of NIS 5,167,962, with the Tel Aviv District Court, claiming that Excellence breached the lease agreement with it (hereinafter - the "OSR Lawsuit"). Excellence, on the other hand, demanded that the plaintiff evict the leased premises since it violated the terms of the lease, including failure to pay rent on time. The plaintiff rejected the claim, and Excellence filed an eviction notice against OSR with the Magistrates Court (hereinafter - the "Excellence Lawsuit"). On June 21 2021, a joint hearing was held on the two lawsuits, in which OSR Lawsuit was dismissed without a costs order; regarding Excellence's claim, the court decided that OSR will provide Excellence with a bank guarantee in accordance with the lease agreement (which was indeed provided, making the evacuation remedy redundant); regarding the past debt of OSR to Excellence, it was determined that OSR will deposit with the court a total of NIS 125,403. The parties agreed that the amount would be transferred from the court to Excellence.
1. On January 29 2017, Pilat Group Ltd. (hereinafter "Pilat Group") and Pilat Holdings (1986) Ltd. (jointly, - "Pilat Group" and/or the "Plaintiffs") filed a lawsuit with the District Court, against Halman Aldubi Provident and Pension Funds Ltd. (by virtue of its merger with Hadas Arazim Provident Funds Ltd. on April 30 2013), and against 17 other defendants, including Oracle Solutions Ltd. (hereinafter - "Oracle"). The main arguments of the claim was that some of the defendants joined Oracle in purchasing shares of the Pilat Group, constituting approximately 17.9% of the voting rights in Pilat Group (hereinafter - the "Oracle Group"), and that Hadas Provident joined forces with the Oracle Group to acquire control of Pilat Group, such that Oracle would hold 20% of the voting rights, and Hadas Provident approximately 17%, while obtaining the approval of the Israel Securities Authority (ISA) that the Oracle Group and Hadas Provident not be considered "joint holders" under the Securities Law, 1968. At the same time, the plaintiffs claim, data and documents regarding collaboration between the parties were concealed from the ISA. In addition, allegations were made regarding a series of appointments and interested party transactions made in Pilat Group in violation of the law, which contributed significantly to the collapse of Pilat Group.

C. Legal Proceedings (contd.)

(contd.)

In the statement of claim, the Court is requested to order the defendants, jointly and severally, to compensate the plaintiffs for the damage caused to them, according to the claim, due to the impairment of Pilat Group's value, in the total amount of NIS 35.9 million. The lawsuit continues to be heard in court.

On June 14 2021, a derivative lawsuit and a motion to approve the filing of a derivative lawsuit to the Economic Department at the Tel Aviv-Jaffa District Court (hereinafter - the "Lawsuit") was filed against The Phoenix Holdings, The Phoenix Insurance, the Chairman of the Board of Directors of The Phoenix Holdings and The Phoenix Insurance, serving board members of The Phoenix Holdings and the Phoenix Insurance and a long-serving manager in The Phoenix Insurance (hereinafter jointly - the "Defendants").

According to the plaintiff, the subject matter of the claim is the alleged breach of duty towards the Company by the board members and officers, who allegedly allowed the Company to recruit customers and help them over more than three decades to benefit from guaranteed return insurance policies; such steps were allegedly carried out in breach of guidance prohibiting the marketing of such policies as from December 31 1990.

The claim amount, as claimed and estimated by the plaintiff, is NIS 124 million, which according to the plaintiff - is the total direct damage caused to the Company as a result of El Al employees added to the guaranteed-return policies enjoying better conversion coefficients.¹

The Defendants have not yet filed their reply to the motion to approve the lawsuit as a derivative lawsuit. A pre-trial hearing is scheduled for January 10 2022.

The Group is a party to legal and other proceedings, which are not insurance claims, including, among other things, claims made by customers, former customers, agents and various third parties in immaterial amounts and for a total amount of approximately NIS 32.3 million. The causes of action against the Group in these proceedings are different.

Other proceedings

On October 13 2020, the Israel Securities Authority (hereinafter - the "ISA") notified Excellence Investments Management and Securities Ltd. (formerly Excellence Nessuah Brokerage Services Ltd.) (hereinafter in this section - "Excellence Nessuah") that a request to impose a monetary sanction on Excellence Nessuah had been submitted to the Monetary Sanctions Committee following an audit conducted by the ISA from November 2018 to May 2019 in connection with issues related to the prohibition of money laundering. In January 2021, Excellence Nessuah submitted its written position to the ISA. On June 29 2021, the Israel Securities Authority announced its decision, in accordance with an early settlement it reached with Excellence Nessuah, according to which Excellence Nessuah will pay a monetary sanction in the amount of NIS 350 thousand. This sanction has been paid in full.

¹ Since this is a derivative claim accompanied by a petition to approve the claim as a derivative claim, which, if approved, the Company will be entitled to funds thereunder, the total claimed amount does not appear in the following summary table.

Complaints

Complaints are filed against the Group from time to time, including complaints to the Commissioner of the Capital Market, Insurance and Savings (hereinafter - the "Commissioner") in relation to policyholders' rights under insurance policies and/or the law. These complaints are handled on an ongoing basis by the Group's Public Complaints Department. The Commissioner's decisions with regard to these complaints, to the extent that a decision has been made in respect thereof, are sometimes issued as sweeping decisions relating to a group of policyholders. Before issuing a final version of his decisions, the Commissioner usually issues a draft decision.

Furthermore, as part of the Commissioner's inquiries with the group, following complaints and/or audits on his behalf, demands are made from time to time to receive various data regarding the Group's handling of insurance policies in the past and/or a demand to reimburse funds to groups of policyholders and/or other guidelines. In addition, the Commissioner has the power, among other things, to impose monetary sanctions on the Group in accordance with the data that was and/or will be transferred thereto following inquiries as described above. In addition to the motions for approval of claims as class actions filed against the Group and the legal and other proceedings, there is a general exposure, which cannot be assessed and/or quantified, due to, among other things, the complexity of the services provided by the Group to its policyholders. The complexity of these services inevitably leads to interpretive claims and other claims due to information gaps between the Group and third parties to the insurance contracts in connection with a long list of commercial and regulatory terms. This exposure is reflected, among other things, in the areas of pension savings and long-term insurance, including health and long-term care insurance, in which the Group operates. Insurance policies in these areas of activity are assessed over many years in which policies, regulation and legislation change and new court rulings are issued. These changes are implemented by automated systems that undergo frequent changes and adjustments. The complexity of these changes and the application of the changes over many years lead to an increased operational exposure. In addition, allowing new interpretations for the provisions of insurance policies and long-term pension products sometimes affects the Group's future profits in respect of its existing portfolio, in addition to the exposure embodied in claims for compensation for customers in respect of past activity.

It is impossible to anticipate the types of claims that will be raised in this area or the exposure arising from these and other claims in connection with insurance contracts - claims which are raised through, among other things, the procedural mechanism set forth in the Class Actions Law. In addition, some of the Group's products have long terms and are particularly complex in light of the various legislative arrangements both in the field of product management and in the field of taxation, attribution of contributions, investment management, the policyholder's employment status, his contributions and more.

The Wage Protection Law, 1958 imposes a liability on the Group's institutional entities, in accordance with the circumstances specified in the law, in respect of employers' debts to the institutional bodies, where such debts have not been repaid on time. The Group is in the process of improving the data on employers' debts and policyholders' rights, during the course of which lawsuits were filed against employers and the debts of other employers were rescheduled. Once this process is completed, the Group will complete the handling of employers' debts in accordance with the provisions of the law.

NOTE 7 - CONTINGENT LIABILITIES (contd.)

Summary table

The following table summarizes the amounts claimed in pending petitions to approve lawsuits as class actions, claims approved as class actions and other material claims against the Group, as noted by the plaintiffs in the statements of claim filed on their behalf. It is hereby clarified that the amounts claimed do not necessarily reflect the amounts of exposure assessed by the Group, since these are assessments on behalf of the plaintiffs which will be resolved as part of the legal proceedings. It is further clarified that the table below does not include proceedings that have been concluded, including proceedings that concluded after a compromise agreement was approved in respect thereof.

Type	No. of claims	Amount claimed in NIS thousand (Unaudited)

Claims approved as a class actions:
A specific amount was attributed to the Company	6	1,074,743
The claim pertains to several companies and no specific amount was attributed to the Company.	1	225,200
The amount of the claim was not specified	1	-
Pending petitions to approve lawsuits as class actions:
A specific amount was attributed to the Company	27	4,163,052
The claim pertains to several companies and no specific amount was attributed to the Company.	8	3,825,000
The amount of the claim was not specified	24	-
Other material claims:
A specific amount was attributed to the Company	-	-
The claim pertains to several companies and no specific amount was attributed to the Company.	1	35,900
The amount of the claim was not specified	-	-
Claims and other requirements	34	32,359

The total provision amount in respect of class actions, legal proceedings and others, filed against the Group as specified above as of June 30 2021 and December 31 2020, amounted to approximately NIS 191,885 thousand (of which a total of approximately NIS 5,528 thousand is in respect of concluded class actions) and approximately NIS 185,444 thousand, respectively.

Changes in estimates and principal assumptions used to calculate the insurance reserves:

Effect of interest on pension reserves -

A decrease (increase) in long-term interest rates may increase (decrease) the paid pension reserve and the supplementary retirement pension reserve is deferred due to the use of a lower (higher) discount rate, to the extent that a change in the discount rate is required due to changes in market interest rates.

In addition, the supplementary retirement pension reserve for deferred pensions is affected by future income expectations (using K factor), so that the decrease (increase) in interest rates may decrease (increase) the expected future income, and if according to the new projection it will be impossible to continue funding the provisions to the reserve, the Company will increase the reserve in order to reduce future provision amounts (or vice versa).

K factor values used by the Company

	As of June 30 2021 2020 Unaudited		As of December 31 2020 Audited
	%

In respect of guaranteed return insurance policies	-	-	-
In respect of yield-dependent insurance policies	0.85	0.66	0.85

For further details regarding changes in the K factor for the reporting period, please see Section 4 below.

Reserve in respect of liability adequacy test (LAT)

The Company tests the adequacy of the reserves for life insurance and LTC and where necessary, increases the reserves. Testing is performed according to the regulatory guidelines and on the basis of actuarial assumptions and a risk-free yield curve plus an illiquidity premium. To the extent that there are changes in these assumptions, the supplement required according to the test will change.

A decrease (increase) in the risk-free interest rate curve and/or in the rate of illiquidity premium will increase (decrease) the supplement for the reserves required according to the LAT test (to the extent that a supplement is required).

Regarding the retrospective application of Insurance Circular 2020-1-5, Amendment of the Provisions of the Consolidated Circular regarding Measurement of Liabilities - Liability Adequacy Test (LAT) (hereinafter – the "LAT Circular "- please see Note 2.DD to the Annual Financial Statements.

A. Changes in estimates and principal assumptions used to calculate the insurance reserves: (contd.)

Set forth below is the effect of the changes in the interest rate curve and the main changes described above on the insurance liabilities:

	For the 6 months ended June 30		For the 3 months ended June 30		For the year ended December 31
	2021	2020	2021	2020	2020
	Unaudited NIS million				Audited
Life insurance segment:
Effect of updating other assumptions on the supplementary pension reserve and paid pensions	-	-	-	-	(12)
Effect of updating of assumptions on the cancellation rates	-	-	-	-	-
Effect of updating assumptions on the expense rates Effect of updating assumptions on the mortality rates Change in the discount rate used in the calculation of the	(16) -	5 -	(16) -	- -	(54) -
supplementary retirement pension reserve and paid pensions.	16	7	11	(37)	25
Change in K value	-	(8)	-	(102)	(261)
Total increase (decrease) in liabilities on retention in the life insurance segment	-	4	(5)	(139)	(302)
Health insurance segment: Effect of updating of assumptions on the cancellation rates:
LAT Other	- -	- -	- -	- -	(24) (43)
Effect of updating assumptions on the expense rates:
LAT	(198)	(46)	(198)	-	(54)
Other Effect of updating assumptions on the mortality and morbidity rates:	19	(17)	19	-	(12)
LAT	293	-	293	-	-
Other	(121)	-	(121)	-	-
Change in reserve (LAT) following a change in the discount rate	54	190(*)	30	93(*)	173(*)
Change in the LAT reserve following application of the illiquidity premium circular	-	(110)	-	(110)	(110)
Total increase (decrease) in liabilities on retention in health insurance segment	47	17	23	(17)	(70)
P&C insurance segment:
Change in discount rate	-	10	-	21	1
Effect of the discount rate applied to National Insurance allowances	-	-	-	-	(74)
Total increase (decrease) in liabilities on retention in P&C insurance segment	-	10	-	21	(73)
Total increase (decrease) in liabilities on retention before tax	47	31	18	(135)	(445)
Total increase (decrease) in liabilities after tax	31	20	12	(89)	(293)

(*) This effect includes the effect of classifying the excess value of assets from the life insurance segment to the health insurance segment in the amount of approximately NIS 121 million, with the addition of approximately NIS 47 million from excess value of other illiquid assets as a result of the amendment of the LAT Circular and the amendment of the Circular on Allocation of Illiquid Assets. For more information, please see Note 25DD(2) to the 2020 Annual Financial Statements.

On January 11 2021, Midroog announced it is reiterating the rating of Series 3 and 4 bonds at Aa3.il, with a stable outlook. For further details, please see the Company's immediate report dated January 11 2021 (Ref. No.: 2021-15-004746).
On January 20 2021, Universal Motors Israel Ltd. (hereinafter "UMI"), a related party, purchased from a third party and as part of an off-floor transaction 12,478,168 ordinary Company shares in consideration for NIS 26 per share - for a total of approximately NIS 324.43 million. Subsequent to the acquisition, UMI will hold 4.9% of the Company's share capital. For additional details see the Company's immediate report dated January 20 2021 (Ref. No. 2021- 01-009007). For further details subsequent to the balance sheet date, please see Note 9A.
Regarding the acquisition of Halman Aldubi and sale of the default pension funds, please see Notes 1D and 4A, Business Combinations, above.
Regarding the possibility of selling Ad 120, please see Note 1E above.
As to the Company's gaining control in Gama, see Notes 1F and 4B above regarding business combinations.
On February 9 2021, Ma'alot S&P reiterated The Phoenix Insurance's rating at -ilAA and +ilAA, respectively. For further information, please see the Company's immediate report dated February 9 2021 (Ref. No. 2021-01-016203).
In February 2021, the Company extended, by NIS 127,384 thousand, registered Series 4 bonds of NIS 1 par value each and NIS 222,616 thousand of NIS 1 par value each registered (Series 5) bonds, which were issued pursuant to the Company's shelf offering report dated February 3 2021 (Ref. No. 2021-01-013684). The proceeds of the offering were used by the Company for its ongoing needs and those of its subsidiaries, including the acquisition of Halman Aldubi's entire share capital. On January 31 2021, Midroog announced it was reiterating the rating at Aa3.il, with a stable outlook, for the extension. Also, on February 9 2021, Maalot announced that it was reiterating the ilAA.il rating with a stable outlook.
In February 2021, the Company's Board of Directors approved the adoption of a voluntary reporting policy in English on the English-language MAYA website of the Tel Aviv Stock Exchange, beginning on the date of publication of the Company's annual Financial Statements for 2020. The adoption of the said policy is based, inter alia, on a notice published by the Israel Securities Authority on June 30 2020 - "Notice to Companies: Voluntary Publication of Translations of Reports into English." For further details, please see the Company's immediate report dated February 25 2021 (Ref. No. 2021-01-023287). The Company follows the said policy and on April 22 2021, published its 2020 Periodic Report in English for the first time.
On March 24 2021, the Company's Board of Directors approved a dividend distribution in the amount of NIS 380 million. The dividend per share of NIS 1 par value is NIS 1.49213. The record date for the distribution is April 5 2021. The dividend will be paid on April 18 2021.
On June 6 2021, The Phoenix Insurance's Board of Directors approved a dividend distribution in the amount of NIS 200 million out of The Phoenix Insurance's distributable profits for 2020.

Following the Company's share buyback plan of up to NIS 100 million as of October 1 2020, the Company purchased a total of 2,279 thousand shares in April and June for 2021, for a total of approximately NIS 66 million. Following these purchases, the Company holds approximately 3,776 thousand of the Company's shares and the plan's current performance rate is 93.24%.
On May 26 2021, the Company's Board of Directors approved, after receiving the approval of Compensation Committee, to allocate the employees of the Company and its subsidiaries some of whom are officers of the Company (including the Company's CEO) as well as some of the Company's service providers (hereinafter - the "Offerees") a total of up to 3,937,000 options, not listed for trading, offered at no cash monetary consideration (offered in consideration for work performed or service rendered to the Company by the Offerees) exercisable into up to 3,937,000 registered ordinary shares of NIS 1 par value each of the Company, out of the Company's reserved shares. Assuming that all options exercisable under this outline are to be exercised, immediately after exercise thereof and taking into account the issued and paid-up capital of the Company to date, the shares arising from the exercise of the options shall constitute approximately 2.6% of the issued and paid-up capital of the Company and approximately 2.5% of its voting rights (and approximately 1.6% and 1.5%, respectively, on a fully diluted basis). In practice, no allotment will be made to the offerees who will realize the full stock options arising from them, but only shares in an amount that reflects the amount of the monetary benefit inherent in the options. In accordance with the Board of Directors' decision, out of the amount of 3,937,000 options offered to offerees a total of 88,000 options will be allotted to the Company's CEO. The fair value at the Award Date is calculated based on a appraisal received from an external appraiser who used the binomial model. The average value of one option was estimated at approximately NIS 3.2, and the total value of the options allotted was estimated at that date at approximately NIS 13 million (taking into account the attrition rate). The award of options to the Company's CEO was approved in an extraordinary annual general meeting of the Company on July 5 2021. For more information, see the immediate reports dated May 27 2021, July 6 2021 and July 8 2021 (Ref. Nos. 2021-01- 031390, 2021-01-048694 and 2021-01-050455, respectively).
During May 2021, following a military escalation in Israel, rockets were fired into the country over a period of 11 days. During this period, the Company continued to provide full service to its customers. To the best of the Company's knowledge, as of the report publication date, the event does not have a material effect on the Company's performance. In addition, we note that the State of Israel covers property damage, if any.
In February 2016 and July 2017, The Phoenix Insurance (together with its wholly-owned subsidiaries) invested a cumulative amount of NIS 30 million in Riskified (hereinafter - "Riskified") (nostro and planholders). The Company re-evaluates the investment from time to time in accordance with an independent external valuation. As of December 31 2020, the balance of the investment amounted to approximately NIS 160 million.

Following the listing of Riskified on NASDAQ in July 2021, the Company performed a valuation by an independent external appraiser as of June 30 2021. According to the valuation, the Company recorded a profit before tax of approximately NIS 76 million in the second quarter of 2021. It should be clarified that Riskified shares are under lockup for a period of 180 days from the date of initial listing. The value of the Company's stake (Nostro and the planholders) in Riskified as of the IPO date amounted to approximately NIS 450 million (value per share of USD 21) (immediately prior to the signing of these financial statements, the value is approximately NIS 600 million (value per share of USD 27.85), before adjustment in respect of the lockup period. It should be noted that the share price may be highly volatile and there is no certainty of the profit to be generated for the Company in the future, inter alia, taking into account said lock-up period. For further details, see the Immediate Report dated August 1 2021 (Ref. No. 2021-01-059863).
The Phoenix Mortgages (Gold) Ltd. In February 2021, the Board of Directors of The Phoenix Insurance approved a new activity, which includes the establishment of a new company, The Phoenix Mortgages (Gold) Ltd. (hereinafter - "The Phoenix Mortgages"), which is owned by The Phoenix Insurance (51%) and a number of other partners holding different percentages of the remaining shares. The Phoenix Mortgages began operations at the end of Q2 2021 and its core operation is providing loans to the over 60s against a first degree lien on their apartment The operations of The Phoenix Mortgages are financed by The Phoenix Insurance through loans.
Following Note 1 to the annual financial statements on the coronavirus crisis, the Company estimates that the coronavirus vaccine campaign, implemented by the Israeli Government in early 2021 (hereinafter - the "Vaccination Campaign"), led to the recovery of the Israeli economy. The Vaccination Campaign led to a sharp drop in morbidity rates and has enabled the economy to reopen almost entirely without substantial restrictions on economic activity. However, as of mid-June 2021, the said recovery was halted due to an increase in the number of verified cases as a result of the spread of the Delta variant; therefore, the Israeli Government reinstated the requirement to wear masks indoors, along with additional restrictions imposed, according to the developing morbidity rates. As of the report publication date, to the best of the Company's knowledge, the Government of Israel is considering imposing additional restrictions due to the continuing spread of the Delta Variant, including the possibility of imposing a closure, which could slow down economic activity. It is clarified that, as of this date, the Company is unable to fully assess the future and long-term ramifications of the coronavirus crisis on its operations and business position, inter alia in light of the crisis' effects on the Israeli and global economy.

NOTE 9 - SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE

On July 26 2021, the Commissioner of the Capital Market, Insurance and Savings granted UMI's ultimate shareholders a permit to hold up to 15% of the means of control in the Company and the institutional entities under its control. As of the report date, UMI, the permit holders and Mr. Benjamin Gabbay - who is the chairman of the Company's Board of Directors and also serves as co-CEO and most senior financial officer at UMI and is related to one of the permit holders - jointly hold approximately 5.02% of the Company's shares.
In connection with class actions filed and developments in lawsuits after the balance sheet date, see Note 7 above.
In August, The Phoenix Insurance issued through The Phoenix Capital Raising an Additional Tier 1 capital instrument; for further details, see Note 6F.

DETAILS OF ASSETS FOR ASSETS AND OTHER FINANCIAL INVESTMENTS

Details of other financial investments

	As of June 30 2021
	Presented at fair value through profit and loss	Available for-sale	Loans and receivables	Total
	Unaudited
	NIS thousand
Liquid debt assets (A1)	157,315	7,010,047	-	7,167,362
Illiquid debt assets	-	-	12,248,364	12,248,364
Shares (A2)	-	2,570,777	-	2,570,777
Other (A3)	527,881	3,156,656	-	3,684,537
Total	685,196	12,737,480	12,248,364	25,671,040

	As of June 30 2020
	Presented at fair value through profit and loss	Available for-sale	Loans and receivables	Total
	Unaudited
	NIS thousand
Liquid debt assets (A1)	64,294	7,958,335	-	8,022,629
Illiquid debt assets	-	-	13,072,349	13,072,349
Shares (A2)	4,641	1,391,144	-	1,395,785
Other (A3)	392,966	2,171,863	-	2,564,829
Total	461,901	11,521,342	13,072,349	25,055,592

		As of December 31 2020
	Presented at fair value through profit and loss	Available for-sale	Loans and receivables	Total
		Audited
		NIS thousand
Liquid debt assets (A1)	108,809	7,942,457	-	8,051,266
Illiquid debt assets	-	-	13,231,897	13,231,897
Shares (A2)	5,860	1,854,613	-	1,860,473
Other (A3)	604,573	2,595,491	-	3,200,064
Total	719,242	12,392,561	13,231,897	26,343,700

DETAILS OF ASSETS FOR ASSETS AND OTHER FINANCIAL INVESTMENTS (CONTD.)

A1. Liquid debt assets

	As of June 30 2021
	Carrying amount	Amortized cost
	Unaudited
	NIS thousand
Government bonds	4,071,847	4,046,080
Other debt assets:
Other non-convertible debt assets	2,973,102	2,692,400
Other convertible debt assets	122,413	113,995
Total liquid debt assets	7,167,362	6,852,475
Impairments carried to profit and loss (cumulative)	86,162

	As of June 30 2020
	Carrying amount	Amortized cost
	Unaudited
	NIS thousand
Government bonds	4,814,449	4,579,232
Other debt assets:
Other non-convertible debt assets	3,188,905	3,137,994
Other convertible debt assets	19,275	20,933
Total liquid debt assets	8,022,629	7,738,159
Impairments carried to profit and loss (cumulative)	129,539

	As of December 31 2020
	Carrying amount	Amortized cost
	Audited
	NIS thousand
Government bonds	4,974,270	4,817,279
Other debt assets:
Other non-convertible debt assets	3,008,147	2,597,370
Other convertible debt assets	68,849	49,863
Total liquid debt assets	8,051,266	7,464,512
Impairments carried to profit and loss (cumulative)	98,984

DETAILS OF ASSETS FOR ASSETS AND OTHER FINANCIAL INVESTMENTS (CONTD.)

A2. Shares

	As of June 30, 2021
	Carrying amount	Amortized cost
	Audited
	NIS thousand

Liquid shares	2,104,837	1,603,626
Illiquid shares	465,940	229,965
Total shares	2,570,777	1,833,591
Impairments carried to profit and loss (cumulative)	175,809

	As of June 30, 2020
	Carrying amount	Amortized cost
	Audited
	NIS thousand

Liquid shares	1,128,736	986,343
Illiquid shares	267,049	146,987
Total shares	1,395,785	1,133,330
Impairments carried to profit and loss (cumulative)	295,283

	As of December 31, 2020
	Carrying amount	Amortized cost
	Audited
	NIS thousand

Liquid shares	1,545,485	1,177,687
Illiquid shares	314,988	185,520
Total shares	1,860,473	1,363,207
Impairments carried to profit and loss (cumulative)	213,115

DETAILS OF ASSETS FOR ASSETS AND OTHER FINANCIAL INVESTMENTS (CONTD.)

A3. Other financial investments

	As of June 30, 2021
	Carrying amount	Amortized cost
	Audited
	NIS thousand

Total liquid financial investments	714,486	632,229
Total illiquid financial investments	2,970,051	2,258,378
Total other financial investments	3,684,537	2,890,607
Impairments carried to profit and loss (cumulative)	121,812

	As of June 30, 2020
	Carrying amount	Amortized cost
	Audited
	NIS thousand

Total liquid financial investments	451,512	417,541
Total illiquid financial investments	2,113,317	1,781,318
Total other financial investments	2,564,829	2,198,859
Impairments carried to profit and loss (cumulative)	118,208

	As of December 31, 2020
	Carrying amount	Amortized cost
	Audited NIS thousand


Total liquid financial investments	660,178	503,235
Total illiquid financial investments	2,539,886	1,880,737
Total other financial investments	3,200,064	2,383,972
Impairments carried to profit and loss (cumulative)	116,453

Part 3

Data from the Consolidated Interim Financial Statements Attributed to the Company As of June 30 2021 (Unaudited)

Page

Independent Auditors' Review Report2
Condensed Interim Data on Financial Position 3
Condensed Interim Data about Profit and Loss 4
Condensed Interim Data about Comprehensive Income5
Condensed Interim data about Changes in Equity 6-10
Condensed Interim data about Changes in Cash Flows 11-12
Additional Information regarding the Condensed Interim Standalone Financial Information 13-14

Kost Forer Gabbay & Kasierer Menachem Begin Road 144A, Tel Aviv 6492102

Tel. +972-3-6232525 Fax +972-3-5622555 ey.com

To The Shareholders of The Phoenix Holdings Ltd.

Dear Sir/Madam,

Re: Special report to the review of the separate interim financial information in accordance with Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970

Introduction

We have reviewed the separate interim financial information disclosed in accordance with Regulation 38D to the Securities Regulations (Periodic and Immediate Reports), 1970 of The Phoenix Holdings Ltd. ("the Company") as of June 30, 2021 and for the six and three months period then ended. The Company's board of directors and management are responsible for the separate interim financial information. Our responsibility is to express a conclusion on the separate interim financial information based on our review.

We did not review the separate interim financial information taken from the interim financial information of investees, the total investment in which amounted to approximately NIS 2,037,034 thousand as of June 30, 2021 and the Company's share in of their earnings amounted to approximately NIS 60,169 thousand and NIS 30,394 thousand for the six and three months period then ended, respectively. The separate interim financial information of those companies was reviewed by other auditors, whose review reports have been furnished to us, and our conclusion, insofar as it relates to the financial information in respect of those companies, is based on the review reports of the other auditors.

Scope of Review

We conducted our review in accordance with Review Standard (Israel) 2410 of the Institute of Certified Public Accountants in Israel, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted pursuant to Israeli GAAP and, as a result, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review and the review reports of other auditors, nothing has come to our attention that causes us to believe that the accompanying separate interim financial information is not prepared, in all material respects, in accordance with Regulation 38D to the Securities Regulations (Periodic and Immediate Reports), 1970.

	As of
	June 30 2021 June 30 2020		Dec. 31 2020
	Unaudited		Audited
		NIS thousand
Assets
Investments in investees	8,757,186	6,623,035	7,861,266
Loans and capital notes to investees	1,357,394	1,191,984	1,192,107
Total non-current assets	10,114,580	7,815,019	9,053,373
Other financial investments	20,152	38,484	22,986
Receivables and debit balances	13,039	13,598	14,482
Current tax assets	26	1,163	1,159
Cash and cash equivalents	49,431	69,861	40,270
Total current assets	82,648	123,106	78,897
Total assets	10,197,228	7,938,125	9,132,270
Equity attributed to Company's shareholders
Share capital	310,059	309,951	309,951
Premium on shares and capital reserves	839,186	823,281	833,592
Treasury shares	(93,271)	-	(26,411)
Capital reserves	1,139,769	615,858	913,036
Retained earnings	6,489,114	5,052,000	5,939,754
Total equity	8,684,857	6,801,090	7,969,922
Liabilities
Non-current liabilities	-	-	-
Bonds	1,391,996	1,004,542	1,082,538
Loan from an investee			-
Current liabilities
Payables and credit balances	11,307	9,114	5,955
Liability in respect of deferred taxes	22,399	-	37,855
Bonds	86,669	123,379	36,000
Total current liabilities	120,375	132,493	79,810
Total liabilities	1,512,371	1,137,035	1,162,348
Total equity and liabilities	10,197,228	7,938,125	9,132,270

Benjamin Gabbay Eyal Ben Simon Eli Schwartz Chairman of the Board of Directors

Chief Executive Officer Executive Vice President, CFO

Date of approval of the financial statements - August 24 2021

	For the six months ended June 30		For the three months ended June 30		For the year ended December 31
	2021	2020	2021	2020	2020
	Unaudited		Unaudited		Audited
	NIS thousand
Company's share in the profits of investees, net of tax	919,745	275,949	611,574	443,533	1,210,661
Investment income, net and finance income	35,517	18,339	22,955	10,340	42,353
Income from management fees of investees	1,500	1,500	750	750	3,000
Total income	956,762	295,788	635,279	454,623	1,256,014
General and administrative expenses	9,352	2,845	7,355	541	8,164
Finance expenses	19,158	10,294	15,076	5,366	40,972
Total expenses	28,510	13,139	22,431	5,907	49,136
Income (loss) before taxes on income	928,252	282,649	612,848	448,716	1,206,878
Taxes on income	-	-	-	-	37,855
Profit for the period attributed to the Company's owners	928,252	282,649	612,848	448,716	1,169,023

		For the six months ended June 30	ended June 30	For the three months	For the year ended December 31
	2021	2020	2021	2020	2020
			Unaudited		Audited
		NIS thousand
Profit for the period	928,252	282,649	612,848	448,716	1,169,023
Other comprehensive income (loss):
Amounts that will be or that have
been reclassified to profit or loss
when specific conditions are met
Net change in fair value of financial
assets classified as available for sale, carried to capital reserves	3,541	(3,328)	1,878	730	(1,307)
Losses, net from disposal of financial
assets classified as available for sale,
carried to the income statement	(1,008)	580	(1,008)	7	585
Profit (loss) on impairment of financial
assets classified as available for sale,
carried to the income statement	-	937	-	937	937
The Group's share in other
comprehensive income (loss) of equity
accounted investees	222,057	(111,001)	183,218	297,348	169,838
Total components of income (loss)
items, subsequently reclassified to profit or loss	224,590	(112,812)	184,088	299,022	170,053
Amounts that shall not be
subsequently reclassified to profit
or loss
The Group's share in other
comprehensive income of equity
accounted investees	-	1,248	-	-	13,621
Other comprehensive income (loss)
for the period, net	224,590	(111,564)	184,088	299,022	183,674
Total comprehensive income for the	1,152,842	171,085	796,936	747,738	1,352,697
period

	Share capital	Premium and capital reserves in respect of shares	Treasury shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder	Capital reserve from share based payment	Revaluatio n reserve	Reserve from translation differences	Capital reserve in respect of available for-sale financial assets	Total equity
						NIS thousand
Balance as of January 1 2021 (audited)	309,951	833,592	(26,411)	5,939,754	(43,622)	11,000	44,943	114,614	(23,338)	809,439	7,969,922
Net income Other comprehensive income (loss)	- -	- -	- -	928,252 -	- -	- -	- -	- -	- (2,495)	- 227,085	928,252 224,590
Total comprehensive income (loss) Dividend	- -	- -	- -	928,252 (380,000)	- -	- -	- -	- -	(2,495) -	227,085 -	1,152,842 (380,000)
Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation amount	-	-	-	1,108	-	-	-	(1,108)	-	-	-
Share-based payment		4,638	-	-	-	-	4,315	-	-	-	8,953
Acquisition of treasury shares	-	-	(66,860)	-	-	-	-	-	-	-	(66,860)
Exercise of employee options	108	956	-	-	-	-	(1,064)	-	-	-	-
As of June 30 2021 (unaudited)	310,059	839,186	(93,271)	6,489,114	(43,622)	11,000	48,194	113,506	(25,833)	1,036,524	8,684,857

The Phoenix Holdings Ltd. 3-6

	Share capital	Premium and capital reserves in respect of shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder	Capital reserve from share based payment NIS thousand	Revaluation reserve	Reserve from translation differences	Capital reserve in respect of available for-sale financial assets	Total equity

Balance as of January 1 2020 (audited)	309,951	830,437	4,768,261	(43,622)	11,000	40,047	103,463	(19,926)	635,974	6,635,585
Net income	-	-	282,649	-	-	-	-	-	-	282,649
Other comprehensive income (loss)	-	-	-	-	-	-	1,248	1,534	(114,346)	(111,564)
Total comprehensive income (loss)	-	-	282,649	-	-	-	1,248	1,534	(114,346)	171,085
Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation amount	-	-	1,090	-	-	-	(1,090)	-	-	-

Share-based payment	-	(7,156)	-	-	-	1,576	-	-	-	(5,580)
As of June 30 2020 (unaudited)	309,951	823,281	5,052,000	(43,622)	11,000	41,623	103,621	(18,392)	521,628	6,801,090

	Share capital	Premium and capital reserves in respect of shares	Treasury shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder	Capital reserve from share based payment	Revaluatio n reserve	Reserve from translation differences	Capital reserve in respect of available for-sale financial assets	Total equity
						NIS thousand
Balance as of April 1 2021 (unaudited)	309,961	837,324	(26,411)	5,875,712	(43,622)	11,000	47,150	114,060	(22,281)	848,884	7,951,777
Net income Other comprehensive income (loss)	- -	- -	- -	612,848 -	- -	- -	- -	- -	- (3,552)	- 187,640	612,848 184,088
Total comprehensive income (loss)	-	-	-	612,848	-	-	-	-	(3,552)	187,640	796,936
Share-based payment	-	1,003	-	-	-	-	2,001	-	-	-	3,004
Acquisition of treasury shares Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation amount	- -	- -	(66,860) -	- 554	- -	- -	- -	- (554)	- -	- -	(66,860) -
Exercise of employee options	98	859	-	-	-	-	(957)	-	-	-	-
As of June 30 2021 (unaudited)	310,059	839,186	(93,271)	6,489,114	(43,622)	11,000	48,194	113,506	(25,833)	1,036,524	8,684,857

The Phoenix Holdings Ltd. 3-8

	Share capital	Premium and capital reserves in respect of shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder	Capital reserve from share based payment NIS thousand	Revaluation reserve	Reserve from translation differences	Capital reserve in respect of available for-sale financial assets	Total equity
Balance as of April 1 2020 (unaudited)	309,951	826,991	4,602,739	(43,622)	11,000	40,732	104,166	(14,741)	218,955	6,056,171
Net income	-	-	448,716	-	-	-	-	-	-	448,716
Other comprehensive income	-	-	-	-	-	-	-	(3,651)	302,673	299,022
Total comprehensive income	-	-	448,716	-	-	-	-	(3,651)	302,673	747,738
Transfer from revaluation reserve in respect of revaluation of property, plant and equipment, at the depreciation
amount	-	-	545	-	-	-	(545)	-	-	-
Share-based payment	-	(3,710)	-	-	-	891	-	-	-	(2,819)
As of June 30 2020 (unaudited)	309,951	823,281	5,052,000	(43,622)	11,000	41,623	103,621	(18,392)	521,628	6,801,090

	Share capital	Premium and capital reserves in respect of shares	Treasury shares	Retained earnings	Capital reserve from transactions with non controlling interests	Capital reserve from transaction with controlling shareholder	Capital reserve from share based payment	Revaluatio n reserve	Reserve from translation differences	Capital reserve in respect of available for-sale financial assets	Total equity
						NIS thousand
Balance as of January 1 2020 (audited) Net income	309,951 -	830,437 -	- -	4,768,261 1,169,023	(43,622) -	11,000 -	40,047 -	103,463 -	(19,926) -	635,974 -	6,635,585 1,169,023
Other comprehensive income (loss)	-	-	-	290	-	-	-	13,331	(3,412)	173,465	183,674
Total comprehensive income (loss) Transfer from revaluation reserve in respect of revaluation of property, plant	-	-	-	1,169,313	-	-	-	13,331	(3,412)	173,465	1,352,697
and equipment, at the depreciation amount	-	-	-	2,180	-	-	-	(2,180)	-	-	-
Share-based payment	-	3,155	-	-	-	-	4,896	-	-	-	8,051
Acquisition of treasury shares	-	-	(26,411)	-	-	-	-	-	-	-	(26,411)
Balance as of December 31 2020 (audited)	309,951	833,592	(26,411)	5,939,754	(43,622)	11,000	44,943	114,614	(23,338)	809,439	7,969,922

		For the six months ended June 30		For the three months ended June 30		For the year ended December 31
		2021	2020	2021	2020	2020
	Appendix	Unaudited		Unaudited		Audited
				NIS thousand
Cash flows from operating
activities
Profit		928,252	282,649	612,848	448,716	1,169,023
Adjustments required to present cash flows for operating activities	(a)	(934,374)	(278,756)	(639,034)	(451,157)	(1,163,853)
Net cash provided by (used in) operating activities of the Company		(6,122)	3,893	(26,186)	(2,441)	5,170
Cash flows from investing activities
Net cash used in investing activities in investees		-	12,000	-	-	12,000
Dividend from investees		538,000	-	538,000	-	-
Investment in capital note of The Phoenix Insurance		-	(220,000)	-	-	(220,000)
Acquisition of minority interest		-	-	-	1,114	-
Acquisition of a subsidiary (*)		(275,000)		-	-	-
Loans and capital notes provided to subsidiaries (*)		(156,633)	-	(63,000)	-	-
Sales (acquisitions) of financial investments by the Company, net		7,319	66,654	14,244	-	83,085
Net cash used in investing activities		113,686	(141,346)	489,244	1,114	(124,915)
Cash flows for financing activities
Dividend paid to shareholders		(380,000)	-	(380,000)	-	-
Share buyback by the Company		(66,860)	-	(66,860)	-	(26,411)
Repayment of bonds		-	(88,291)	-	-	(477,101)
Issuance of bonds (less issuance expenses)		348,457	217,511	-	-	585,433
Net cash provided by (used in) financing activities		(98,403)	129,220	(446,860)	-	81,921
Increase (decrease) in cash and cash equivalents		9,161	(8,233)	16,198	(1,327)	(37,824)
Balance of cash and cash equivalents at beginning of period		40,270	78,094	33,233	71,188	78,094
Balance of cash and cash equivalents at end of period		49,431	69,861	49,431	69,861	40,270

(*) For further information see Note 4A to the Consolidated Financial Statements

	For the six months ended June 30		For the three months ended June 30		For the year ended December 31
	2021	2020	2021	2020	2020
		Unaudited

Adjustments required to present cash flows (for) from operating activities:
Items not involving cash flows: Net (gains) losses on financial investments	(1,952)	253	(1,670)	(69)	1,346
Income and expense items not involving cash flows:
Accrued interest and appreciation (erosion) of bonds	11,670	(217)	11,015	356	11,289
Taxes on income	-	-	-	-	37,859
Company's share in the profits (losses) of investees, net	(919,745)	(275,949)	(611,574)	(443,533)	(1,210,661)
Changes in other balance sheet line items, net:
Change in receivables and debit balances Change in payables and credit	(6,721)	(2,997)	(11,592)	(11,866)	(562)
balances	5,352	(2,384)	(2,561)	3,188	(5,543)
Changes in loans to investees	(8,655)	2,538	(8,329)	767	2,419
Cash paid and received during the period for:
Taxes paid, net	(14,323)	-	(14,323)	-	-
Total cash flows for operating activities	(934,374)	(278,756)	(639,034)	(451,157)	(1,163,853)
Material non-cash activities: Appreciation of available-for-sale
assets against a capital reserve	227,085	(114,346)	187,640	302,673	173,465

NOTE 1 - GENERAL

The Interim Standalone Financial Information is presented in accordance with Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970 and does not include all the information required under Regulation 9C and the Tenth Addendum to the Securities Regulation (Periodic and Immediate Reports), 1970, "Standalone Financial Information of the Corporation".

This standalone financial information should be read in conjunction with the standalone financial information as of the date and year ended December 31 2020 and in conjunction with the consolidated condensed interim financial statements as of June 30 2021 (hereinafter - the "Consolidated Financial Statements").

Definitions

The Company - The Phoenix Holdings Ltd.

"Investee companies" - Consolidated companies and companies the Company's investment in which is included, whether directly or indirectly, in the financial statements based on the equity method.

NOTE 2 - SIGNIFICANT EVENTS DURING THE REPORTING PERIOD

A. On January 27 2021, the Company's Board of Directors approved a credit line agreement for subsidiary Phoenix Excellence Pension and Provident Funds Ltd. The credit line will be used by Phoenix Excellence Pension and Provident Funds Ltd. according to its needs, for a total of up to NIS 100 million for a period of two years. The credit terms and conditions shall be identical, back-to-back, in respect of Series 5 Bonds issued by the Company.
B. On March 21 2021, The Phoenix Agencies' Board of Directors approved a dividend distribution in the amount of NIS 138 million. The dividend will be paid on April 11 2021. Profit tax in the amount of NIS 15.5 million was paid with respect to this dividend.
C. On March 24, The Phoenix Insurance's Board of Directors approved a dividend distribution in the amount of NIS 200 million. The dividend will be paid on April 11 2021.
D. On June 6 2021, The Phoenix Insurance's Board of Directors approved an additional dividend distribution in the amount of NIS 200 million. The dividend was paid on June 7 2021.
E. On March 24 2021, the Company's Board of Directors approved a dividend distribution in the amount of NIS 380 million. The dividend per share of NIS 1 par value is NIS 1.49213. The record date for the distribution is April 5 2021. The dividend will be paid on April 18 2021.
F. On April 28 2021, a total of approximately NIS 67 million in capital notes issued by The Phoenix Investments to the Company was repaid.
G. On June 13 2021, the Company invested in the Phoenix Investments an amount of NIS 130 million against the issue of a capital note. The capital notes are not linked to the CPI and does not bear interest. Repayable in 5 years.
H. For other material events during the reporting period, please see Note 8 to the consolidated financial statements.

NOTE 3 - SUBSEQUENT EVENTS

A. In July 2021, the Board of Directors of The Phoenix Agencies distributed a dividend in the amount of NIS 35 million. The dividend was paid on July 22 2021. This dividend is subject to profit tax of approximately NIS 4 million.
B. On August 11 2021, the board of directors of the Company approved the distribution of a divided to the Company from Excellence Pension and Provident in the amount of NIS 190 million.
C. On August 11 2021, the board of directors of the Company approved an additional credit facility agreement to The Phoenix Excellence Pension and Provident. The credit line will be used by Phoenix Excellence Pension and Provident Funds Ltd. according to its needs, for a total of up to NIS 90 million. The credit will be at the same terms, back-to-back with Bonds Series 4 issued by the Company and, in any event the interest will not be less than the interest pursuant to the Income Tax Ordinance.
D. For further details regarding material subsequent events, please see Note 9 to the consolidated financial statements.

August 24, 2021

To The Board of Directors of The Phoenix Holdings Ltd. (hereinafter: the "Company") Dear Madam/Sir,

Re: Shelf Prospectus of The Phoenix Holdings Ltd. (hereinafter - the "Shelf Prospectus") published on August 1, 2019

We hereby inform you that we agree to the inclusion (including by way of reference) of our reports outlined below in a shelf offering based on the Shelf Prospectus:

1. The Review Report dated August 24, 2021 on the Condensed Consolidated Financial Information of The Phoenix Holdings Ltd. as of June 30, 2021 and for the six-month and threemonth periods then ended.
1. Special report dated August 24 on the Standalone Interim Financial Information in accordance with Regulation 9C to the Securities Regulations (Periodic and Immediate Reports), 1970 of The Phoenix Holdings Ltd. of The Phoenix Holdings Ltd. as of June 30 2021 and for the sixmonth and three-month periods then ended.

Kost Forer Gabbay & Kasierer Certified Public Accountants

Part 4

Report and Statements regarding the Internal Controls over Financial Reporting and Disclosure

Quarterly Report on the Effectiveness of the Internal Control over Financial Reporting and Disclosure in accordance with Regulation 38C(a):

Management, under the supervision of the Board of Directors of The Phoenix Holdings Ltd. (hereinafter: the "Corporation") is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure in the Corporation.

For this matter, the members of management are as follows:

1. Eyal Ben Simon, CEO of the Company and The Phoenix Insurance.
1. Eli Schwartz, Executive Vice President, Chief Financial Officer of the Company and The Phoenix Insurance.
1. Daniel Cohen, Executive Vice President and Head of Long Term Savings and Life at The Phoenix Insurance
1. Haggai Schreiber, Executive Vice President, Chief Investment Manager, CEO The Phoenix Investments Ltd.
1. Dafna Shapira-Layla, Executive Vice President, Head of Health Insurance at The Phoenix Insurance.
1. Keren Granit, Executive Vice President, Head of Claims System & Head of Customers' Division at The Phoenix Insurance.
1. Moti Mor, Executive Vice President, Head of General Insurance at The Phoenix Insurance.
1. Meni Neeman, Executive Vice President, Chief Legal Counsel and Corporate Secretary of the Company and The Phoenix Insurance.
1. Michal Leshem, Executive Vice President, Chief Internal Auditor.
1. Amit Netanel, Senior Vice President, Chief Risk Officer of the Company and The Phoenix Insurance.
1. Ron Shvili, Executive Vice President of The Phoenix Insurance, Chief Technology, IT Systems and Innovation Officer of The Phoenix Insurance.
1. Raanan Saad, Executive Vice President at The Phoenix Insurance, Head of The Phoenix SMART.
1. Anat Cohen-Toledano, Executive Vice President at The Phoenix Insurance, Chief Actuary Property and Casualty, The Phoenix Insurance.
1. Roman Reidman, Executive Vice President at The Phoenix Insurance, Chief Actuary Life and Health.
1. Erez Orly, Executive Vice President, Head of Human Resources at The Phoenix Insurance.
1. Orr Harush, Vice President, Chief Of Staff at The Phoenix Insurance.

The internal control over financial reporting and disclosure consists of the Corporation's existing controls and procedures that have been planned by the chief executive officer and the most senior financial officer or under their supervision, or by the equivalent acting officers, under the supervision of the Corporation's Board of Directors, designed to provide reasonable assurance about the reliability of financial reporting and the preparation of the financial statements in compliance with applicable laws, and ensure that all information that the Company is required to disclose in the financial statements its publishes pursuant to law is collected, processed, summarized and reported in a timely manner and according to the format prescribed by law.

Among other things, internal controls include controls and procedures planned to ensure that all information that the Corporation is required to disclose as aforesaid is collected and transferred to the Corporation's management, including the chief executive officer and the most senior financial officer, or the equivalent acting officers, in order to allow decision making on a timely basis with respect to the disclosure requirements.

Due to its inherent limitations, internal control over financial reporting and disclosure is not designed to provide absolute assurance that misstatements or omissions of information in the financial statements shall be prevented or detected.

The Phoenix Insurance Ltd., a subsidiary of the Corporation, is an institutional entity which is subject to the directives of the Commissioner of the Capital Market, Insurance and Savings in the Ministry of Finance regarding the assessment of the effectiveness of internal controls over financial reporting.

With respect to the internal control of the said subsidiary, the Corporation implements the following provisions:

Institutional Entities Circular 2009-9-10, "Management's Responsibility for Internal Controls over Financial Reporting"; Institutional Entities Circular 2010-9-6, "Management's Responsibility for internal control over financial reporting - Amendment"; Circular 2010-9-7, "internal control over financial reporting - Statements, Reports and Disclosures"; Circular 2012-9-5, "internal control over financial reporting - Statements, Reports, Disclosures and Management's Responsibility for internal control over financial reporting - Amendments"; and Circular 2015-9-15, "internal control over financial reporting - Statements, Reports, Disclosures and Management's Responsibility for internal control over financial reporting - Amendments".

In the quarterly report on the effectiveness of internal control over financial reporting and the disclosure attached to the quarterly report for the period ended March 31 2021 (hereinafter - the "Last Quarterly Internal Control Report"), the internal control was found to be effective.

As of the report date, the Board of Directors and management have not been informed of any event or matter that may alter the assessment of the effectiveness of internal control, as presented in the Most Recent Annual Report Over Internal Control.

As of the report date, based on the Most Recent Quarterly Report over Internal Control and based on information brought to the attention of management and the Board of Directors as stated above, the internal control is effective.

Certification

Statement of the Chief Executive Officer

I, Eyal Ben Simon, hereby certify that:

(1) I have reviewed quarterly report of The Phoenix Holdings Ltd. (hereinafter the "Corporation") for the second quarter of 2021 (hereinafter – the "Reports");
(2) To my knowledge, the Reports do not contain any misrepresentation of a material fact, or omit a representation of a material fact that is necessary in order for the representations included therein - under the circumstances in which such representations were included - to be misleading as to the reporting period;
(3) To my knowledge, the financial statements and other financial information included in the Reports fairly represent, in all material aspects, the Company's financial position, financial performance and cash flows of the Corporation as of the dates and for the periods covered by the Reports;
(4) I have disclosed to the independent auditor of the Corporation, the Board of Directors, and the Board of Directors' audit committee, based on my most recent evaluation of the internal control over financial reporting and disclosure, the following:
- (a) All significant deficiencies and material weaknesses in the establishment or implementation of the internal controls over financial reporting and disclosure that may adversely affect, in a reasonable manner, the Corporation's ability to collect, process, summate or report financial information in a manner that may give rise to doubt as to the reliability of financial reporting and preparation of the financial statements in accordance with the provisions of the law; and -
- (b) Any fraud, whether material or not, involving the chief executive officer or anyone directly reporting thereto or involving other employees who have a significant role in the internal control over financial reporting and disclosure;
(5) I, severally or jointly with others in the Corporation:
- (a) I have established such controls and procedures, or ensured that such controls and procedures under my supervision be established and in place, designed to ensure that material information relating to the Corporation, including its consolidated companies as defined in the Securities Regulations (Preparation of Annual Financial Statements), 2010, is brought to my attention by others in the Corporation and the consolidated companies, particularly during the Reports' preparation period; and -
- (b) I have established controls and procedures, or ensured that such controls and provisions under my supervision be established and in place, designed to ensure, in a reasonable manner, the reliability of financial reporting and preparation of financial statements in accordance with the provisions of the law, including in accordance with generally accepted accounting principles;
- (c) I have not been informed of any event or matter that occurred in the period between the most recent report date (quarterly or periodic, as the case may be) and the date of this Report, which may change the conclusion of the Board of Directors and management regarding the effectiveness of internal controls over the corporation's financial reporting and disclosure.

Nothing in the foregoing shall detract from my responsibility or the responsibility of any other person, under any law.

August 24, 2021

Eyal Ben Simon, Chief Executive Officer

Certification

Statement of the Most Senior Financial Officer

I, Eli Schwartz, hereby certify that:

(1) I have reviewed interim financial statements and other financial information included in the interim report of The Phoenix Holdings Ltd. (hereinafter - the "Corporation") for the second quarter of 2021 (hereinafter – the "Reports" or "Interim Reports");
(2) To my knowledge, the interim financial statements and other financial information included in the Interim Reports do not contain any misrepresentation of a material fact, nor omit a representation of a material fact that is necessary in order for the representations included therein - under the circumstances in which such representations were included - to be misleading as to the reporting period;
(3) To my knowledge, the Interim Financial Statements and other financial information included in the Interim Reports present fairly, in all material aspects, the Company's financial position, financial performance and cash flows of the Corporation as of the dates and for the periods covered by the Reports;
(4) I have disclosed to the independent auditor of the Corporation, the Board of Directors, and the Board of Directors' audit committee, based on my most recent evaluation of the internal control over financial reporting and disclosure, the following:
- (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting and disclosure insofar as it relates to the Interim Financial Statements and other financial information included in the Interim Reports, that could reasonably adversely affect the Corporation's ability to collect, process, summarize or report financial information so as to cast doubt on the reliability of financial reporting and the preparation of the financial statements in accordance with law; and
- (b) Any fraud, whether material or not, involving the chief executive officer or anyone directly reporting thereto or involving other employees who have a significant role in the internal control over financial reporting and disclosure;
(5) I, severally or jointly with others in the Corporation:
- (a) I have established such controls and procedures, or ensured that such controls and procedures under my supervision be established and in place, designed to ensure that material information relating to the Corporation, including its consolidated companies as defined in the Securities Regulations (Preparation of Annual Financial Statements), 2010, is brought to my attention by others in the Corporation and the consolidated companies, particularly during the Reports' preparation period; and -
- (b) I have established controls and procedures, or ensured that such controls and provisions under my supervision be established and in place, designed to ensure, in a reasonable manner, the reliability of financial reporting and preparation of financial statements in accordance with the provisions of the law, including in accordance with generally accepted accounting principles;
- (c) I have not been informed of any event or matter that occurred in the period between the most recent report date (quarterly or periodic, as the case may be) and the date of this Report, which may change the conclusion of the Board of Directors and management regarding the effectiveness of internal controls over the corporation's financial reporting and disclosure.

Nothing in the foregoing shall detract from my responsibility or the responsibility of any other person, under any law.

August 24, 2021

Eli Schwartz, Executive Vice President, Chief Financial Officer

Part 5

Statements regarding Controls and Procedures over Financial Reporting and Disclosure of The Phoenix Insurance Company Ltd.

The Phoenix Insurance Company Ltd.

Certification

I, Eyal Ben Simon, hereby certify that:

1. I have reviewed the quarterly report of The Phoenix Insurance Company Ltd. (hereinafter the "Company") for the quarter ended June 30 2021 (hereinafter - the "Report").
1. To my knowledge, the Report does not contain any misrepresentation of a material fact, or omit a representation of a material fact, that is necessary in order for the representations included in it - under the circumstances in which such representations were included - to be misleading as to the reporting period.
1. To my knowledge, the quarterly financial statements and other financial information included in the Report present fairly, in all material aspects, the Company's financial position, financial performance and changes in equity and cash flows as at the dates and for the periods covered by the report.
1. I and others at the Company signing this certification are responsible for the establishment and implementation of controls and procedures regarding the Company's disclosure and internal control over financial reporting of the Company; and
2. (A) We have established such controls and procedures, or caused such controls and procedures to be established under our oversight, with the aim of ensuring that material information about the Company and its consolidated companies is brought to our attention by others in the Company and these companies, especially during the preparation of the Report;
3. (B) We have established such internal controls over the financial reporting or have overseen the establishment of such controls over financial reporting, with the aim of providing reasonable assurance as to the reliability of the financial reporting and that the financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and the directives of the Commissioner of the Capital Market, Insurance and Savings;
4. (C) We have evaluated the effectiveness of the Company's disclosure controls and procedures and presented in the Report our conclusions regarding the effectiveness of the disclosure controls and procedures as of the end of the reporting period according to our evaluation; and
5. (D) The Report discloses any change in the Company's internal control over financial reporting which occurred during the fourth quarter and has materially affected, or is reasonably expected to affect, the Company's internal control over financial reporting; and
1. I and others at the Company signing this certification have disclosed to the joint independent auditors, the Board of Directors, and the Board of Directors' audit committee, based on our most recent evaluation of the internal control over financial reporting, the following:
2. (A) All significant deficiencies and material weaknesses in the establishment or implementation of the internal control over financial reporting that may harm the Company's ability to record, process, summarize and report financial information; and
3. (B) Any fraud, whether or not material, involving management or other employees who have a significant role in the Company's internal control over financial reporting.

Nothing in the foregoing shall detract from my responsibility or the responsibility of any other person, under any law.

August 24, 2021

Eyal Ben Simon, Chief Executive Officer

The Phoenix Insurance Company Ltd. Certification

I, Eli Schwartz, hereby certify that:

1. I have reviewed the quarterly report of The Phoenix Insurance Company Ltd. (hereinafter the "Company") for the quarter ended June 30 2021 (hereinafter - the "Report").
1. To my knowledge, the Report does not contain any misrepresentation of a material fact, or omit a representation of a material fact, that is necessary in order for the representations included in it - under the circumstances in which such representations were included - to be misleading as to the reporting period.
1. To my knowledge, the quarterly financial statements and other financial information included in the Report present fairly, in all material aspects, the Company's financial position, financial performance and changes in equity and cash flows as at the dates and for the periods covered by the report.
1. I and others at the Company signing this certification are responsible for the establishment and implementation of controls and procedures regarding the Company's disclosure and internal control over financial reporting¹ of the Company; and
2. (A) We have established such controls and procedures, or caused such controls and procedures to be established under our oversight, with the aim of ensuring that material information about the Company and its consolidated companies is brought to our attention by others in the Company and these companies, especially during the preparation of the Report;
3. (B) We have established such internal controls over the financial reporting or have overseen the establishment of such controls over financial reporting, with the aim of providing reasonable assurance as to the reliability of the financial reporting and that the financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and the directives of the Commissioner of the Capital Market, Insurance and Savings;
4. (C) We have evaluated the effectiveness of the Company's disclosure controls and procedures and presented in the Report our conclusions regarding the effectiveness of the disclosure controls and procedures as of the end of the reporting period according to our evaluation; and
5. (D) The Report discloses any change in the Company's internal control over financial reporting which occurred during the fourth quarter and has materially affected, or is reasonably expected to affect, the Company's internal control over financial reporting; and
1. I and others at the Company signing this certification have disclosed to the joint independent auditors, the Board of Directors, and the Board of Directors' audit committee, based on our most recent evaluation of the internal control over financial reporting, the following:
2. (A) All significant deficiencies and material weaknesses in the establishment or implementation of the internal control over financial reporting that may harm the Company's ability to record, process, summarize and report financial information; and
3. (B) Any fraud, whether or not material, involving management or other employees who have a significant role in the Company's internal control over financial reporting.

Nothing in the foregoing shall detract from my responsibility or the responsibility of any other person, under any law.

August 24, 2021

Eli Schwartz, Executive VP, Chief Financial Officer

¹ As defined in the provisions of the institutional entities circular titled "Internal Control over Financial Reporting - Statements, Reports and Disclosures".

AI Terminal

The Phoenix Holdings Ltd.

6983_rns_2021-09-05_78e59aea-f07b-47ca-a4cd-6842cd177aec.pdf

Table of Contents

Members of the Board

Table of Contents

Report of the Board of Directors on the State of the Corporation's Affairs As of June 30 2021

1. The Group's Structure, its Areas of Activity, and Developments Therein

1.1. Group structure

The Company's shareholders

1.2. Areas of activity

1.3. Developments in the Group

1.3.1 Share buyback

1.3.2 Options to officers and employees

1.3.3 Binding offer in connection with the sale of Ad 120

1.3.4 Gama IPO

1.3.5 Transfer of the shares of management company Phoenix Excellence from The Phoenix Insurance to the Company

1.3.6 The Phoenix Mortgages (Gold) Ltd.

1.3.7 Acquisition of the Halman Aldubi Investment House

The Halman Aldubi transaction

Merger of Halman Provident into The Phoenix Excellence

Default pension sale - Meitav-Dash deal

1.3.8 ESG work plan

1.3.9 Financial services

1.3.10 Research

1.3.11 Interest

1.3.12 Issuance of Restricted Tier 1 capital (RT1) by The Phoenix Insurance

1.3.13 Ratings

1.3.14 The Company's preparation for the application of IFRS 17

1.3.15 Riskified Transaction

1.4. The coronavirus and its impact

1.5. The Draft Economic Arrangements Law

2. Description of the Business Environment

2.1. Implementation of the Economic Solvency Regime provisions applicable to The Phoenix Insurance Company Ltd.

2.1.1 Provisions regarding the implementation of the Economic Solvency Regime

2.1.2 Increasing economic capital according to the transitional provisions:

2.1.3 Publication of Economic Solvency Ratio Report

2.1.4 Economic solvency ratio and minimum capital requirement (MCR):

A. Economic solvency ratio:

Effect of material capital-related measures taken in the period between the calculation date and the publication date of the solvency ratio report:

Main changes in capital surplus and in the economic solvency ratio compared to last year

The deduction amount

B. Minimum capital requirement (MCR)

C. Limitations on dividend distribution and solvency ratio without the implementation of the transitional provisions

Dividend

D. Solvency ratio without applying the transitional provisions for the Transitional Period, and without adjusting the stock scenario:

E. Capital-related measures in 2021

The following table summarizes the positive (negative) risk-free linked interest ("spot") rates:4

2.2. Arrangements in force

2.3. Draft laws, regulations and bills

3. Developments in the Macroeconomic Environment

3.1. Financial markets in Israel

Subsequent to the balance sheet date

3.2. Capital markets abroad

Subsequent to the balance sheet date

4. The Board of Directors' Explanations for the State of the Corporation's Business

4.1. General

4.2. Summary of data from the Group's consolidated Financial Statements

Assets under management as of June 30 2021

Premiums, gross, contributions towards benefits and proceeds

Income for 1-6/2021

4.3. Description of the development of the Group's financial position

Assets:

Liabilities:

4.4. Description of the development of the Group's comprehensive income:

4.4.1. General

4.5. Set forth below are data regarding the Company's return on equity:

4.6. Developments in the life insurance and long-term savings (LTS) operating segment

4.6.2. Life insurance subsegment

4.6.4. Weighted returns on participating policies

4.6.5. Provident funds subsegment

4.6.6. Pension funds subsegment

Set forth below are developments in contributions towards benefits and total assets under management:

4.7. Health insurance

4.7.1. Set forth below is an analysis of the main effects and changes on the results of the health insurance subsegment for the reporting period compared to the

4.8. Property and casualty insurance

4.8.4. Set forth below is the gross loss ratio and combined ratio, and retention loss ratio in the motor property and other subsegments:

4.9. Financial services segment

The insurance agencies segment

4.10. The credit segment

The following table summarizes the positive (negative) risk-free linked interest ("spot") rates:⁴