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Harel Insurance Investments & Financial Services Ltd.

June 2012

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Harel Insurance Investments & Financial Services Ltd.

This document has been prepared by Harel Insurance Investments and Financial Services Ltd. (hereinafter: the Company) solely for the purpose of presenting the Company's business. The information contained in this document has not been independently verified. No representation or warranty has been expressed or implied and no reliance should be based on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither the Company nor any of its employees or representatives shall bear any liability whatsoever (whether due to negligence or otherwise) for any loss howsoever resulting from using this document or its content or otherwise arising in connection with this document. This document is being provided solely for your information and may not be reproduced, redistributed or forwarded, directly or indirectly, in any form to any other person nor published, entirely or partially, for any purpose. Distributing this document may be restricted by law and persons receiving this document should be aware of such restrictions and observe them accordingly. By accepting this report you agree to be bound by the foregoing instructions. Statements for the Company’s future business, financial condition and results of operations are subject to risks and uncertainties, which may cause actual results to differ materially from those projected. Such future focused statements include, but are not limited to, product demand, pricing, market acceptance, changing economic conditions, product and technology development risks, the effect of the Company's accounting policies as well as certain other risk factors which are specified from time to time in the Company's reports to the Securities Authorities.

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Agenda

Group profile

Insurance

Vision

Financial services

4

Group profile

Insurance

Vision

Financial services

Agenda

5

Group Profile Lines of Business

F I R E Insurance Real Estate Financial

Services

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Group Profile

Revenue of premiums earned and benefit fees at 1-6.2012- Approximately NIS 6.5 billion

Annual Revenues from premiums earned at 2011- Approximately NIS 8.6 billion Shareholders equity – NIS 3.8 billion as of June 30, 2012 Market Cap - NIS 2.1 billion as of 12.8.2012 #1 in Health Insurance #1 in Non-Life insurance (excluding activity abroad) #3 in Provident Funds in compare to other insurance companies #2 in Mutual Funds #4 in Life Insurance #4 in Pension Total AUM – Approximately NIS 108.2 billion as of 30.6.2012

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Group Profile Historical Development

2006 1999 1989 1984 1975

1993 2007 2004 1985 1935 1982

2008

2010

Acquisition of 50% of the

life insurance portfolio of Yardenya Insurance Company

Hamishmar partnership founded by Herbert Bry

Establishment of Harel

Insurance Investments Ltd.: IPO on

TASE with 25% free – float raised $7.5

million

Acquisition of 100% of shares

of Dikla Insurance Company

through a 65% owned

subsidiary

Acquisition of pension funds and provident

funds

Acquisition of Gilad

New Pension

Fund

Acquisition of EMI-Ezer mortgage

insurance company

Acquisition of Dikla

Acquisition of Sahar Israel Insurance Company

Founding of Harel

Insurance Company

Acquisition of Shiloah Insurance Company

Acquisition of 87% of Zion

Holdings (the other 13%

were acquired in 1983)

Acquisition of mutual funds and provident

funds from Bank Leumi Establishment of an

insurance company in Greece (Interasco Societe Anonyme General Insurance

Company) Acquisition of 33.3%

of ICIC (Credit Insurance company)

Acquisition of Tzava Hakeva (Regular

Army) Saving Fund

Acquisition of 87% of an insurance

company in Turkey (Turk Nippon

Sigorta)

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Group Profile Ownership Distribution

The Public 49.8% The Hamburger

Family 50.2%

* As of 30.6.2012

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קבוצת הראל ביטוח ופיננסים

Harel Finance Holding Ltd.

Harel Insurance Company Ltd.

Insurance Company aboard

Turk Nippon Interasco

The Israel Credit Insurance Company

Ltd. (ICIC)

Dikla Insurance Company Ltd.

E.M.I. – Ezer Insurance Company

Ltd. Mortgage

Pension Funds Provident Funds

and Education Funds

Insurance Agencies

33.3%

100% 100% 100%

100% 100% 100%

100%

Harel Insurance Investments & Financial Services Ltd.

Group Profile

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comprehensive Profit

Group Profile Profit & ROE NIS Millions

Return of Equity

34.6 54.7 67.2 70.5 56.2 159.9 152.2

235.1 132.7

401.1 405.9 482.5

424.5 389.3

-335.9

738.0

562.0

44.8 92.1

230.4

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1-6.2011

1-6.2012

12.3% 17.5% 18.6% 16.6%

11.2%

19.6% 22.5% 29.5%

13.5%

37.8%

25.5% 24.0% 18.6% 16.2%

-14.0%

25.0%

16.0%

2.0% 5.0% 12.0%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1-6.2011

1-6.2012

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11.5 13.9 14.5 16.5 18.4 21.1 22.9 25.8 25.8 34.4

39 41.2 43.5 2.2 2.8 3.7 5.7

8.9

11.7 13.8

15.5

18 18.8 17.3

21.5

23.4 22.2

22.5

14 13.9 10.8

15

20.8 17 18.7

1.2

3.1 3.6

4.1

1.3 2

2 2

2.1

1.8

2.3 3.6

3.8

0

20

40

60

80

100

120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 30.6.2012

Portfolio management

ETN

Mutual funds

Provident funds

Pension funds

Insurance

Total Assets Under Management NIS Billions

12.2 14.7 15.4 17.5 20.4

26.5

59.7 64.2 61.7

82.8

100.3 108.2

101.4

Group Profile

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Shareholders equity attributable to company shareholders *NIS Millions

Group Profile Changes in shareholders equity attributable to company shareholders NIS Millions

* As of 31 December 2011

313 361 425 504 550 630 817

1'000 1'081 1'420

1'754 2'135

2'433

2'933

2'397

3'106

3'578 3'525 3'767

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 30.6.2012

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Group Profile Dividend History NIS Millions

*The company did not distribute dividends in 2009 in compliance with the directive of the "Control of Insurance“. **During March 2011 the Company’s Directorate approved a dividend distribution of about Approximately NIS 64 million to share holders of Harel Insurance Investments & Financial Services Ltd. ***During may 2011 the Company’s Directorate approved a dividend distribution of about Approximately NIS 42 million to share holders of Harel Insurance Investments & Financial Services Ltd.

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Group Profile Share Price Performance

Trading Data - As of 12 August 2012

99.2 Share price

95.6/ 177.7 12M high/low

2,103 Market cap. (mil)

---- Tel Aviv 25 ---- HAREL ---- IBI Insurance Index

0123456789

1998 1999 2000 2000 2001 2002 2002 2003 2004 2004 2005 2006 2006 2007 2008 2008 2009 2010 2010 2011 2011 2012

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Group profile

Insurance

Vision

Financial services

Agenda

2'234 2'205 2'393 2'894 2'736 2'966 3'184

1'524 1'596

2'434 2'671 2'465

2'621 2'643 2'852 2'810

1'388 1'419

1'178 1'336 1'498

1'670 1'822

2'061 2'477

1'159 1'362

364 468 597

1'115 1'481

1'936

2'478

1'116 1'367

143 157

702

832 1'139

1'248

1'325

603

639

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53

96

154

69 88

2005 2006 2007 2008 2009 2010 2011 1-6.2011 1-6.2012

Non-life insurance abroad

Provident contributions

Pesion contributions

Health insurance

Non-life insurance

Life insurance

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Insurance Insurance Premiums earned NIS Millions

6,353 6,837

7,655

9,165 9,874

11,159

12,428

5,859 6,471

Insurance

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2011 Market Share by Insurance premiums*

* As of 31.12.2011

Total Health Life

Life-Non (not incl. abroad)

Life-Non (incl. abroad)

Migdal32.6%

Clal22.1%

Harel15.2%

Phoenix17.5%

Menora8.0%

Other4.6%

Migdal10.1%

Clal22.3%

Harel40.6%

Phoenix18.8%

Other2.8%

Migdal8.4%

Clal25.5%

Harel17.5%

Phoenix11.6%

Menora13.6%

Other23.2%

Migdal9.4%

Clal18.2%

Harel18.5%

Phoenix12.9%

Menora15.2%

Other25.8%

Migdal20.5%

Clal22.5%

Harel19.8%

Phoenix15.6%

Menora9.9%

Other11.7%

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Insurance

#1 in Non-Life Insurance excluding activity abroad Global partner of: Axa, Ace, Chubb, Allianz, Royal & Sun Alliance, Zurich (General

Agent for Zurich since 1940), Hdi-Gerling and XL capital, QBE Registered Lloyd's broker since 1935 Specializing in large industrial risks Long term relationships with leading reinsurers around the world At the end of 2008, the Group entered a unique cooperation agreement with the

National Indemnity Company, a leading company in the insurance sector and part of the Berkshire Hathaway company. The agreement guaranties Berkshire Hathaway 20% retention in each Harel Group’s non-life insurance branches, including liability branches

Non-Life Insurance As of 30 June 2012

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Insurance Non-life Insurance NIS Millions

Premiums

comprehensive Profit

208184

142

17

248

130

17 14

117

2005 2006 2007 2008 2009 2010 2011 1-6.2011 1-6.2012

1,976 2,216 2,483 2,683 2,837 2,852 2,810

1,388 1,419

2005 2006 2007 2008 2009 2010 2011 1-6.2011 1-6.2012

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Insurance Non-life Insurance NIS Millions

Premiums 1-12.2010 1-12.2011 1-6.2011 1-6.2012

Increase (Decrease)

Compulsory Motor 672 548 327 311 )(5% Motor Property 894 868 533 514 )(4% Other Property 641 708 395 446 13% Other Liability 695 679 302 324 7% Mortgage Insurance 60 45 29 20 )31%(

2,962 2,847 1,586 1,615 2%

Comprehensive Income

1-12.2010 1-12.2011 1-6.2011 1-6.2012 Increase

(Decrease) Compulsory Motor 44 28 15 75 400% Motor Property 24 )35( )13( 4 - Other Property 42 41 25 20 - Other Liability 7 )15( )7( 5 - Mortgage Insurance 13 )2( )6( 13 -

130 17 14 117 -

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Insurance

As part of the Group’s strategic growth, activities in Greece and Turkey were

established during the last few years

Turning to these markets was based on the significant potential compared to Israel

and western countries

These activities are still in their establishment stages and we foresee the demand

for much investment in the coming years

Non-Life Insurance abroad

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Insurance

#1 in Health insurance

Well known as market leader

Over 75 years of experience and accumulated knowledge in the field

Line of business with more than 10% growth per annum

Long term, consistently high profitability

Extensive contacts with medical institutions in Israel and abroad

More than 3 million insured parties

Advanced and professional service structure

Unique products in the industry, some exclusive Cooperation with wanted medical

institutions

Market share - Approximately 40%

Health Insurance As of 30 June 2012

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Insurance Health Insurance NIS Millions

Premiums

comprehensive Profit

823 870 1'014 1'178 1'336 1'505 1'678 1'822 2'061 2'477

1'159 1'362

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1-6.2011 1-6.2012

90 142 157 180

221 189

139

261 227

162

85 96

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1-6.2011 1-6.2012

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Insurance

One of the highest proportions of personal insurance in the industry

High share of profitable term life and other risk covers

Experts in structuring early retirement plans

positive sales results single premium savings

Total premiums earned 1-6.2012 - Approximately NIS 1,596 million

Market share - Approximately 7.6%

Life Insurance As of 30 June 2012

1'901 1'888 1'957 2'234 2'204 2'393

2'894 2'736 2'966 3'184

1'524 1'596

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1-6.2011 1-6.2012

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Premiums distribution H1-2012

Insurance Life Premiums NIS Millions

Managers Isurance 834

52%

Personal Insurance

20713%

Trm21614%

Other33921%

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Insurance

Life Insurance NIS Millions

15'121 16'668

18'765 18'426

23'868 27'281 28'531

29'945

520 557 513 511 525 604 669 382

3.44% 3.34%

2.90% 2.77% 2.60% 2.48% 2.57% 2.78%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

0

5'000

10'000

15'000

20'000

25'000

30'000

35'000

2005 2006 2007 2008 2009 2010 2011 1-6.2012

Reserves Redemptions Ratio

Life Insurance NIS Millions

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Insurance

High growth

Over 2 billions Benefit fees collection in a year, for the period 1-6.2012

Approximately NIS 1,367 million

Total assets management - NIS 15.5 billions

Market share - Approximately 12.9%

Pension Funds As of 31 March 2012

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Insurance Pension Figures NIS Millions

Increase 31.12.2011 30.6.2012 Harel

6.6% 590,220 629,017 Total number of members

12.5% 13,810 15,540 Total assets

Increase 1-6.2011 1-6.2012 Harel

22.5% 1,116 1,367 Benefit fees collected by the pension funds

Market share (As of 31 December 2011)

HAREL12.9%

Other87.1%

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Insurance

16 funds with 36 investments options

Approximately 581,000 clients

Over 650,000 accounts

Total assets Management - NIS 22.5 billions

1-6.2012 Management fees – Approximately NIS 110.2 millions

1-6.2012 Profit before tax - Approximately NIS 28 millions

Market share – Approximately 7.6%

Provident Funds As of 30 June 2012

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Group profile

Insurance

Vision

Financial services

Agenda

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Harel Finance

The scope of managed assets in the capital markets and financial services sector of the group approximately NIS 27 billion

The income of the group from the capital market and financial services activity - approximately NIS 99.6 million

The profit before tax from the activity in the capital market and financial services sector - approximately NIS 9.5 million

The comprehensive profit before tax from activity in the capital market and financial services sector approximately NIS 9.5 million

Mutual Funds – Assets Under Management (AUM) totaling approximately NIS 18.7 billion. Market share of approximately 12% (as of 30 June 2012)

Member of TASE Tel Aviv Stock exchange - approximately 4,000 clients. Assets in Custody approximately NIS 24.8 billion*

Portfolio management – over 1,200 managed accounts with total AUM of approximately NIS 3.8 billion

Financial Products – 45 ETN (Exchanged Traded Notes), 4 CN (certificate of Deposit), Total AUM Approximately NIS 4.1 billions

Asset Management compared to Investment Banking

Activities, products & market segment As of 30 June 2012

* (incl. interested and related parties)

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Finance Development in Mutual Funds NIS Millions

Market share

Total assets 30.6. 2012

Total assets 31.12.2011

Total assets 31.12.2010 Mutual Funds (Owner)

18.0% 27,723 24,740 28,234 Psagot (York)

12.4% 18,773 16,985 20,754 Harel-Pia (Harel)

11.0% 16,672 17,987 19,543 Excellence (Including Prisma)

10.8% 16,372 15,350 14,215 Migdal Capital Markets (Migdal Insurance)

10.3% 15,586 16,691 9,965 Meytav

37.5% 56,544 49,783 63,194 Others

100% 151,175 141,536 155,905 Total

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Group profile

Insurance

Vision

Financial services

Agenda

34

Social Responsibility

Harel Group, one of Israel's leading companies, places paramount

importance on all matters related to corporate responsibility and

strong community involvement. The Group's contribution to the good of

the community amounted to about NIS 3.7 million in 2011, compared with

NIS 2.8 million in 2010, and NIS 2.5 million in 2009.

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Vision

To Persist be the best Insurance & Finance group in Israel

Continue to achieve high revenues and profitability in all areas of activity

concentration of effort in profitable growth

Continue to lead the launch of the latest products to continue to meet the changing

needs of the market

Exploitation of business opportunities to expand the types and scope of activity

Continue to maintain a unique service to customers and agents with a long-term

observation on the good of the client

Continue consistent activity in social involvement and help the community with

business development