Direct Insurance: Results of the Second Quarter of 2007 30/8/2007    During the month of May 2007 the Company launched the insurance activities in the Czech Republic. · Premiums in the Polish subsidiary company LINK4 amounted to NIS 83.4 Million during the second quarter, growth of about 27.5% compared to the corresponding quarter last year. · The insurance portfolio in Poland increased to a level of over 220 thousand policies · The profit from general insurance transactions for the Polish LINK4 insurer totaled about NIS 3.5 Million in the second quarters, compared to a deficit of NIS 1.2 in the corresponding quarter last year. · Direct I.D.I. reported an increase of about 6% in general insurance premiums during the second quarter, which amounted to about NIS 155.8 Million. · During June the Company announced its signature on the Partnership Contract with the British Insurance Corporation R & SA, within the framework of R & SA’s investment of Dollar 170 Million in GDII, a Dutch subsidiary company wholly - owned by the Company, which concentrates its’ international activities. · The Company for the first time announced data regarding the volume of insurance policies in the field of general insurance. The results of activities for the second quarter of 2007: · The premiums from general insurance transactions amounted to about NIS 239.5 Million, compared with about NIS 212.4 Million during the corresponding quarter last year, an increase of about 13%. · The premiums from life insurance transactions amounted to about NIS 31.3 Million, compared with about NIS 26.4 Million during the corresponding quarter last year, an increase of about 19%. · The profit from insurance transactions totaled about NIS 28.6 Million, compared with about NIS 41.8 Million during the corresponding quarter last year, a decrease of about 32%. · The profit from general insurance transactions amounted to about NIS 25.2 Million, compared with about NIS 36.7 Million during the corresponding quarter last year, a decrease of about 31%. The decrease derives mainly from growth in the volume of claims compared with the corresponding quarter last year, as was reported by the Israeli Insurer, Direct I.D.I. · The profit from life insurance transactions amounted to about NIS 3.4 Million, compared with about NIS 5.1 Million during the corresponding quarter last year, a decrease of about 34%. The decrease derives mainly from growth in the volume of claims compared with the corresponding quarter last year, as was reported by the Israeli Insurer, Direct I.D.I. · The loss totaled about NIS 15.3 Million, compared with net profits of about NIS 0.6 Million during the corresponding quarter last year. The loss derives mainly from the investment of about NIS 22.8 Million to establish operations in the Czech Republic and in Russia, together with an investment of about NIS 5.8 Million to establish and launch direct financing activities, which deal with providing loans for the purpose of purchasing used vehicles. Results of the subsidiary company Direct I.D.I. (the Israeli insurer) for the second quarter of the year 2007: · The premiums from general insurance transactions amounted to about NIS 155.8 Million, compared with NIS 146.9 Million during the corresponding quarter last year, an increase of about 6%. · The premiums from life insurance transactions amounted to about NIS 31.3 Million, compared with NIS 26.4 Million during the corresponding quarter last year, an increase of about 19%. · The profit from insurance transactions totaled about NIS 31.8 Million, compared with about NIS 43.2 Million during the corresponding quarter last year, a decrease of about 26%. · The profit from general insurance transactions amounted to about NIS 28.4 Million, compared with about NIS 38.1 Million during the corresponding quarter last year, a decrease of about 25%. · The profit from life insurance transactions amounted to about NIS 3.4 Million, compared with about NIS 5.1 Million during the corresponding quarter last year, a decrease of about 34%. · The income from investments that were not included in the insurance transaction reports after deducting expenses in respect of deferred letters of obligation, amounted to about NIS 5.3 Million, compared to a loss of about NIS 6.7 Million during the corresponding quarter last year. · The net profit amounted to about NIS 13.8 Million, compared to about NIS 17.9 Million during the corresponding quarter last year, a decrease of about 23%. The results for the Polish LINK4 subsidiary for the second quarter of 2007: · The premiums amounted to about NIS 83.4 Million, compared with NIS 65.4 Million during the corresponding quarter last year, an increase of about 27.5%. · Insurance fees that were earned amounted to about NIS 70.5 Million, compared to about NIS 50.5 Million during the corresponding quarter last year, an increase of about 40%. · Surplus income on general insurance claims amounted to about NIS 32.2 Million, compared to about NIS 21.8 Million during the corresponding quarter last year, an increase of about 47%. · The profit from life insurance transactions amounted to about NIS 3.5 Million, compared with a loss of about NIS 1.2 Million during the corresponding quarter last year · The net profit amounted to about NIS 4.0 Million, compared with a loss of about NIS 1.3 Million during the corresponding quarter last year.The results for the Czech Direct subsidiary for the second quarter of 2007: · The Company launched its Czech activities during the month of May 2007. · During the short period through to the end of the quarter, they reported on initial premiums of a volume of NIS 291 thousand. Additional data concerning general insurance transactions follows: In policy terms: Opening balance New policies Policies that have become diminished Balance of file size In NIS 000 Gross premiums and fees Claims ratio Expenses ratio Profit (Loss) from general insurance transactions" Overseas, joint policies of third party and comprehensive are numbered once only since comprehensive vehicle insurance policies overseas are sold as an addition to third party policies (as a package of third party and comprehensive). In Israel, the quantity of policies includes counting compulsory vehicle insurance and property car insurance separately, despite the fact that a considerable portion of the customers purchase comprehensive and compulsory together.New policies – policies that were sold during the reported period, excluding the policies for new customers.Policies that were detracted – policies that expired without being renewed and policies that were cancelled during the period.Since we are referring to initial insurance activities the data is not representative and is therefore not presented.The ratio of claims – the ratio between claims per period and between insurance fees that were earned. Ratio of expenses – the ratio between expenses for sales, management and general, and between gross premiums and fees. The Managing Director of the Company, Doron Schneidman, advised: "This is an additional quarter in which we have shown growth in the insurance file in Poland, at the same time as continued improvement in our net profits. At the same time, the international strategic growth of the Company has made additional steps forward with the launch during May of insurance activities in the Czech Republic, after preparatory works that continued for a year, where in a very short period we can see buds of a process of building a file of insurees. We very much believe in this new and potential market and believe in our ability to implement, in this country, the model for direct insurance, similar to what we are doing very successfully in Poland. During the quarter we signed on a deal for association with the British Insurance Association R & SA, as a partner in the international activities, and we see in this a great expression of our ability to actualize the considerable latent potential contained in this activity." Schneidman added: "The loss reported in the bottom line is a result of the investment required in building the new platforms in the Czech Republic, which was launched during the second quarter, and Russia, which is in the establishment stage. These investments are essential in order to continue the expansion process of Direct Insurance, and are being implemented parallel to the activities of completing the launch deal with R&SA." About the Company Direct Insurance – Financial Investments is a pioneer in the field of direct insurance in Israel, and specializes in vehicle insurance without the use of agents. The Company operates in Israel, Poland and the Czech Republic. During the first half of 2008 the Company is expected to launch their activities in Russia. Additionally, the company in Israel deals with providing financial services by means of their financial division – Yashir Investment House.