Direct Insurance – Financial Investments: Second Quarter Results for 2008 28/8/2008    Continued Growth in all Areas of Company Activity *Premiums earned by the Polish subsidiary LINK4 came to NIS 89 million, an increase of 25% compared to the same period of last year. *Increase of 10% in premiums earned from general insurance businesses in Israel *Increase of 22% in premiums earned from life insurance businesses in Israel. *Increase of 8% in revenues compared to the same period of last year. *Insurance activities in the Czech Republic continue a high growth rate with over 29,000 policies at the date of the report. Direct Insurance – Financial Investments announces the results of their activity for the second quarter of 2008. For full details of the activity results, we recommend turning to pages 36-37 in the financial reports. Main points of the results of the second quarter of 2008 for the Polish subsidiary LINK4: *Premiums earned totaled approximately NIS 89 million, compared to approximately NIS 71.4 million for the same period the previous year, an increase of 25%. The company’s part of the premiums earned came to approximately NIS 44.5 million. The increase in the volume of premiums earned was partly offset by a mandatory levy of 12% on the third party vehicle insurance policies levied on the Polish insurance companies. *The company’s part in losses from general insurance transactions came to approximately NIS 2.2 million, compared to a profit in the second quarter last year and a loss of approximately NIS 8.8 million in the first quarter of this year. Main points of the results of the second quarter of 2008 for the Czech subsidiary DIRECT: *Premiums earned came to approximately NIS 4.8 million. The company’s part of the premiums earned totaled approximately NIS 2.4 million. *As of the date of the report, the Czech client portfolio includes over 29,000 policies. Main points of the subsidiary IDI Direct (the Israeli holding company) for the second quarter of 2008: *Total revenues came to approximately NIS 255.4 million, a growth of around 18% compared to the same period the previous year. *Premiums earned from general insurance businesses came to approximately NIS 171.6 million, compared to NIS 156.4 million for the same period last year, a growth of approximately 10% resulting from an increase in the number of client portfolios. *Premiums earned from life insurance businesses came to approximately NIS 40.5 million, compared to NIS 33.2 million for the same period the previous year, a growth of 22% due to an increase in the number of client portfolios. *Profit from general insurance businesses came to approximately NIS 4.1 million, compared to a first quarter loss in 2008 and a profit of approximately NIS 26.3 million for the same period the previous year. The drop in profit comes mainly from the weakness of the financial markets and the rise in the consumer price index that affects the revenues from investments and insurance obligations. *The company reported a loss of approximately NIS 5.5 million compared to a profit in the same quarter of last year. Main points of the results of activities for the second quarter of 2008: *Total revenues reached approximately NIS 295 million, an increase of approximately 8% compared to the same period last year (after RSA deduction). *Premiums earned from insurance businesses (company’s part) came to approximately NIS 259.5 million, compared to NIS 261.1 million for the same period last year (after RSA deduction). *Retirement funds – revenues came to approximately NIS 25 million with a net profit of approximately NIS 86,000. *Consumer credit – revenues came to approximately NIS 5.2 million, with a loss of approximately NIS 5.5 million. The company’s credit portfolio stands at over NIS 235 million. *The company reported a loss of approximately NIS 47 million, compared to a profit of approximately NIS 2 million for the same period of the previous year. The loss is a result of a combination of factors: *Expenses incurred by the establishment of insurance activities in the Czech Republic and Russia and consumer credit activities in Israel. *An increase in the volume of insurance claims made in Israel and in Poland. *A drop in the investment profits and a rise in the consumer price index. Doron Shneidman, the company CEO, said: “We are happy to present a quarter where our activities continue to grow and we are witnessing an increase in the volume of the company’s activities. Along with the impressive growth, we are witnessing a loss in the bottom line that results mainly from investing in activity in Russia at the beginning of the quarter, together with an impact on the investment profits and a rise in financing expenses, with the high index rate in the background.” Shneidman continues: “Regarding the group’s various activities, Poland has resumed its growth rate and we expect improvement in the profitability of the insurance business after a slight drop in the first quarter that resulted from a mandatory levy enacted by the government. In Israel, we see a significant improvement, despite the previous quarter, and are working to maintain that trend. The Czech Republic is maintaining its impressive growth rate and we continue to see this market as a significant growth engine. We launched our operations in Russia at the end of April, and that is also the reason for the rise in the volume of expenses in Russia compared to the previous quarter. The process of building this operation is continuing vigorously and we believe in the great potential inherent in this challenging country.”