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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
6
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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8
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
10
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
11
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
12
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
27
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
31
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)
32
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