Phoenix Financial Ltd.

Hello, this is David Alexander, Deputy CEO of Phoenix Financial. Thank you for joining us to discuss the results for the first half of 2026. The call will be led by Phoenix CEO Eyal Ben-Simon and CFO and Deputy CEO Eri Schwartz. The presentation for the call can be found on our website or the Tel Aviv Stock Exchange website. It provides key points on the financial statements released this morning and should be read together with the full financials. At the end of the call, we'll answer questions that were discussed today on the Hebrew call. You can send any additional questions to us individually or to the email address ir.fnx.co.il. We're available to meet with investors to discuss performance, strategy, or any questions. Please note that the call will include forward-looking statements so that actual future results may be different. First day out, we'll talk about the company's results and the strategic growth. Eli will then review the group's financial results in more detail by segment.

Phoenix is the leading Israeli financial platform and asset manager, with $220 billion in assets under management. We have two sets of activities. First, a broad asset management business with growth engines, generating fee-related and recalling earnings. The second is a multi-line insurance business, including a marketing P&C business, as well as significant life and health businesses. Together, these activities create a broad, integrated financial platform for our clients. They generate synergies, data, high profitable, growth and strong cash flows. Phoenix provides access to Israel's dynamic economy. The market benefits from strong long-term demographic trends, productivity growth and wealth accumulation. And the Israeli economy continues to show strong resilience coming out of the war with Iran. GDP returned to high growth in the second quarter with attractive forecasts for 2026 and 2027. We see continued growth in savings with investments substituting for deposits. Turning to financial results, Phoenix delivered another strong half with 1.6 billion shekels of comprehensive income, 6.3 shekels earning per share. Return on equity was 26%. Total AUMs reached 660 billion shekels. There are several main takeaways for the first half of the year. First, Phoenix continues to deliver strong performance. Core earnings grew by 10% above expectations. This was driven by 36% growth in asset management in the first half and 48% in the second quarter. These are primarily recurring fee-related earnings shifting the mix toward the more capitalized businesses. Insurance continues to create strong cash flow in line with expectations. In light of the strong performance and growth, we plan to reassess and update our guidance. Phoenix continues to disrupt Israel's financial sector. The integrated Phoenix platform is distinctive in the breadth and depth of our offering. We now have 1 million app users with growing cross-sells. And we're moving fast on turning AI into competitive advantages across our businesses. At the same time, We are building new capabilities and executing M&A's. We launched an international P&C reinsurance capacity. We are capturing synergies in recent acquisitions including the binary digital platform and in wealth management. We see continued inorganic growth to create synergies, build capabilities and improve our client value propositions. Phoenix is generating growing capital returns. We're distributing 62% or nearly 1 billion shekels from H1 income, including buybacks and the 400 million shekel dividend announced this morning. This is aligned with our guidance of at least 55% payouts in 2026. In addition, we extended our 2026 buyback plan from 300 to 400 million shekels. Here we see a breakdown of the growth in income. On the right, we see H1, comprehensive income of 1.6 billion shekels and core income of 1.5 billion shekels. In orange, asset management grew by 36%. in H1 and 48% in Q2, shifting the mix in earnings. In blue, insurance was stable with nearly 900 million shekels in H1. Q2 impacted by the cycle in more property segment as expected and in line with medium-term guidance. Investments added about 120 million shekels in positive non-operating effects in the first half. Return on equity for the first half was 26% and core return on equity was 24%. Our investment team continues to manage capital allocation for both our client and corporate capital pools. Corporate account H1 annualized returns were 8%. H1 and the 5-year average are both higher than our normalization rate of 2.5% above risk-free, pointing to upside to guidance. Phoenix is growing quarterly payouts with an average of roughly 5% dividend yields in the last few years. So far in 2026, we've distributed nearly 1 billion shekels, which is 62% of comprehensive income. This includes dividends and buybacks. Today, we announced a dividend of 1.6 shekels per share or 400 million shekels overall for the second quarter of 2026. Adding 170 million shekels of buybacks, we distribute 65% of quarter income. Looking forward, we increased our annual buyback span from 300 to 400 million. IronX quality is translated into strong cash flows. The group enjoys cash remittance from subsidiaries every quarter. Here we see quarterly dividends from key subsidiaries with a total of more than 1 billion shekels from H1. We'll now discuss strategy and guidance across our businesses. The opportunity we are seeing is rapid asset accumulation and value creation in Israel. The Israeli economy enjoys strong structural tailwinds with steady growth in population, GDP per capita, and wealth accumulation. These tailwinds contribute directly to the increase in financial assets held by the public, which have more than doubled in the last 10 years. This demand drives growth in financial services. On the top right, we see that the market cap of Israeli financial services has grown more than five times in the last decade to 500 billion shekels. Below, we also see that this value is shifting towards asset management and insurance. Clients are moving away from deposits and towards funds, trading The younger clients are driving the change and as the population grows, we expect this trend to accelerate. Phoenix is leading this disruption, growing from 2% to 7% of the total market cap, but we aim to take a much larger share of this growing value. Phoenix is capturing this opportunity. The Phoenix platform offers a broad value proposition across investments, savings, insurance and credit. We have diversified fees, competitive advantages across the value chain and strong performance. Going forward, we continue to grow based on our full growth and value drivers. Compounding organic growth, innovation and technology driving Here you can see how the strategy translates to numbers. We expect baseline core income organic growth of 10% through 2028. This is driven by asset management with 20% growth guidance and 36% H1 actual growth, shifting the mix toward recurring fee earnings. Insurance generating strong cash flows for the group with cyclical motor segment impact this year, still in line with 2028 guidance. Beyond these baseline organic figures, we are seeing significant upside potential. This includes, for example, the early impact of the platform opportunity, acquisitions that have been completed or that will be executed, the stochastic model that is expected to add 100 million shekel pre-tax earnings, and investment performance above our conservative normalization. Given the strong growth in asset management and the upside potential that is materializing, we will reassess and update this guidance. With 1 million app users, Phoenix is building strong digital capabilities across our businesses. The platform provides broad integrated financial services with a fully digital interface. Phoenix clients can invest, buy insurance, manage equity, take a loan and trade on the stock exchange in one place. The experience is simple, convenient and transparent with increasingly personalized journeys and offerings. For Phoenix, it is a significant opportunity for cross-sells and growth. Phoenix is compounding AUMs at high double digits with a focus on high-margin activities. We see continued growth during H1 to 658 billion shekels, up 8% year-to-date. We are already close to our 2028 guidance range and plan to revisit this guidance as well. Our asset management businesses are compounding EBITDA at nearly 30%. This strong growth is driven wealth and investments on the one hand and brokers and advisors on the other hand. During H1, EBITDA grew by 29% and during Q2 by 40%. We expect EBITDA to grow both organically and with M&As. were aiming for roughly 2.4 to 2.6 billion shekels by 2028. These asset management businesses are very attractive with high multiples both internationally and in Israel. We can now deep dive into the various asset management businesses. Phoenix continues to grow the wealth, investments, and retirement activities. Phoenix is market leader and we intend to continue to deepen competitive advantages to capture market share. Our digital trading platform is growing quickly driven by very strong market demand. We have a leading employee stock option administration platform with a new app as well as a broad set of relevant wealth investment products such as alternatives, and portfolio management, and we're introducing new capabilities in wealth management to expand our service and offerings, both organically and through acquisitions. We believe that going forward, our broad client base will generate significant growth and cross-sales opportunities within our integrated platform. The brokers and advisors segment focuses on retirement planning and personal advisory, investments, benefit administration and insurance distribution. The business model relies on long-term relationships with clients and employers and generates strong recurring revenues and fee-based earnings. The platform activity continues to grow both organically and through roll-up acquisitions. While Phoenix is the market leader with only 8% share, so we see significant room for growth. Phoenix continues to grow our payments and financing activity while focusing on profitability and risk management. The business is based on a strong platform with a broad base of clients that provides credit card clearing, SME and consumer credit solutions. More than 50% of the business is credit card and payment solutions, generating low-risk fee-based earnings. This quarter, the Baini digital platform was added to this segment, following the completion of the acquisition. Baini is one of the most popular e-commerce apps in Israel, with a unique pool of over 1.2 million users, 15,000 employers, and over 1,000 We see significant synergies across our digital platforms and an even stronger client experience. The insurance activity provides a strong balance sheet and stable cash flows for the group. Here we focus our growth on capital light segments and products such as P&C and critical illness. In P&C we focus on accelerating growth while maintaining margins. This business is naturally affected by market cyclicality in motor property, sometimes lagging international markets by 6 to 12 months. During the past year, we saw significant growth in number of direct motor property policies. We aim to continue to grow based on competitive advantages across the value chain, including underwriting distribution, Thank you very much.

This quarter we are updating the allocation of investment returns with the insurance segment. Capital and investment performance are being allocated from other equity returns segment to the business segment, life, health and P&C. This change is aligned with regulatory guidance, FRS and the best practice. The results of each segment now better align with the capital it uses. Other results about Two-thirds of the investment income from other equity returns are now allocated to the business segment. In the table you can see the performer relocations of the previous quotas. The update doesn't change the total income, only the allocation between the segments. Phoenix reports strong 1.57 billion shekels of comprehensive income in H1-2026. Asset management shows a strong growth with 36% year-on-year. Insurance was in line with expectations with slightly lower compared with the record first half of last year. In the second quarter, we reported a strong 872 million shekels of comprehensive income. The earnings contribution is similar to the first half. Core earnings from asset management rose by about 50%. Insurance was slightly lower compared with the record quarter last year, and in line with our expectations. Looking at the income by segment, we see a significant contribution from all lines of business. We see a strong contribution from P&C, Health and Investment, Brokers and Advisors segment. All are strategic growth engines of the group. Compared to previous year, we see a decline in life insurance due to risk laying in the second quarter. Looking at the second photo, we see a similar picture with significant contributions from all lines of business. P&C was impacted by market cyclicality in motor property in addition to the life. Here we see a full breakdown of the CSM evolution by segment. We focus on optimizations of our CSM while increasing growth of new business. In addition, we are growing also in investment policies. The CSM balance will positively impact by implementation of stochastic models. We expect it to grow between 1.2 to 1.5 billion shekels. The strong balance sheet provides financial flexibility for the group. We maintain low LTV in the Phoenix Financial as well as subsidiaries. During the second quarter, we obtained international rating for the Phoenix Financial by Moody's. This rating adds to the S&P rating for the Phoenix Financial and to the existing rating of Phoenix Insurance and the local rating of our subsidiaries. Solvency remain high at 177 with transition measured as of December. This strong solvency position is above long-term target of 150 to 170. We expected the stochastic model to increase also our solvency ratio by 12%. Our capital position and surplus provide flexibility for growth and cash flow from going forward. We will now review each segment in more details. PNC is performing as expected and in line with guidance. 90 million shekels income before tax in the segment, similar to the record period of last year. Motor property was affected by the cycle, mainly in the second quarter. This is in line with our expectation market trends. We use our capabilities mainly in underwriting to capture market opportunities and grow in number of clients. The number of policies in the direct channel grows significantly over the past year. We continue to grow and manage the business closely based on market trends and risks. In the health segment we see the improvement in core income. Comprehensive income before tax was 637 million shekels in the first half. In this segment we are focused in capital efficient activities with low long term risk like critical illness insurance for example. The life segment generated 227 million shekels before tax in the first half, underwriting profit decline mainly in the second quarter. This was due to specific increase in actual claims. Going forward, we expect the stochastic model to add about 100 million shekels to the segment for income before tax. Other equity returns reflect the change in the investment return allocation method. The wealth and investment segments contribute 338 million shekels before tax in the first half. These segments include activities of the Fenix Investment House, Fenix Capital Partners and investment policies. We see a strong growth in alternative and wealth. Our found and brought to us business continue to grow and demonstrate the change in the market trends and client demand. The retirement business contribute was 76 million shekels pre-tax in the first half. We are focusing on efficiency and improving profitability. The broker and advisor segment delivered 238 million shekels of income before tax in the first month. We see a strong growth of 30% year on year. This includes organic growth as well as energy from wall-up M&As. We continue to capture value in the fragment market. The payment and financing segments generate 123 million shekels before tax. More than half of the income comes from a fee-based payment activities. We consolidated buy-me performance for the first time in the quarter and are starting to capture synergies. The company also increased its stake in the LAL Frequent Fire Club from 20% to 25% further contribution to our fee-related earnings. In financing, the company continues to grow business credit, consumer credit, and construction financing. At the same time, we are maintaining responsible credit portfolio with strong risk management.

Thank you, Eddie. For additional information and resources, you can visit our website at www.phoenixfinancial.co.il. We'll now review the questions that were discussed in the conference call today in Hebrew. First question. You're showing strong growth in asset management. What's driving this growth and do you expect growth to continue at this pace?

First, numbers talk. We've seen growth of 48% quarter to quarter in 2026 and 36% growth in the first half. So it means that there is a lot of demand for financial products and financial services. And Phoenix is a market leader in that space. It means that we have built ourselves to capture this demand and we see that demand not only from what Phoenix is providing but also from the market itself. The amount of financial assets in Israel have grown significantly in the last 10 years, more than doubled itself to 7.7 trillion. and it means that Israelis now are interested in much more developed or advanced financial products like we've seen in other markets like in the US and other advanced markets and Israel is a bit behind but the catch up would be much faster and in Phoenix we've built the whole capabilities the very comprehensive solutions from digital platforms different products, distribution channels through our agencies and so on and so forth and it means that eventually this demand will keep growing and the pace will also go up and we've seen that in the last few years quarter after quarter we've managed to grow our asset management business so generally the Answer is yes, definitely.

Second question. In your guidance, you committed to payouts of at least 55% of the company's earnings. In the first half, you distributed more than 60%. Is this a level we should expect going forward?

Above 55% for sure. This is our guidance. This is our policy. This is our commitment. 45% at least in cash payments. and above that by buyback but it's just minimum numbers meaning Phoenix as we did in the first half and definitely in the second quarter we paid out more than the 55% in the second quarter we are already on 65% payout in cash dividend and in buyback and the guidance we are committed to this guidance of at least 65%. So in each and every quarter, of course, every year we'll pay more than that.

Next question. You mentioned your intention to revisit and update guidance. What does that mean specifically and when do you expect to do it?

It means that less than a year ago we published our guidance of the current guidance and we see now that we are above the plan. It means that we have managed to perform there in almost all line of businesses and it means that in the coming quarters we need to come up with updated plan because the number as we see for now are not representing the 2028 guidance. It means that if we continue with what we have managed to do in the last few quarters, it means that we will be above the plan. So, in the coming future, meaning in the next few quarters, we will come up with an updated plan.

Next question. You highlight that Phoenix is driving disruption in Israeli financial services sector. Can you provide examples?

First, I can say that the growth ratios shows that we are disrupting the market. In any disruption, such growth means that people are shifting from one product to another product, which is a better product for them. Otherwise, they wouldn't do so. So it means by all our, or according to all our platforms that are growing in double digits, it means that we are disrupting the market. And I can be more specific, for example, in investment accounts, in consumer credit, in our employees' benefit, in the way that we distribute, the way that we distribute insurance by The way that we are pricing our P&C insurance, it means that Phoenix DNA or Phoenix culture is more of a very innovative culture, very innovative DNA, and it means that we disrupt the market. Of course, this disruption brings a lot of value and a lot of growth to Phoenix. But not only through our products or services like we did with our application or integrating AI solutions to our businesses, it means that also through our M&As we've managed to create value and eventually all our clients are benefit, actually they manage to benefit from the solutions and services that we provide.

Next question. You've reached one million app users. What do you intend to do with these clients?

So, we've published two years ago that our growth is based on the platform that we've managed to create and the culture and the DNA that we've created. But we also said that there is another level of value that wasn't penetrated by Phoenix and we started to explore that. And this is eventually the three different million clients that we have in our portfolio, individuals and business clients. And what we see currently through our technological investments, through our data capabilities, that now we've started to explore the value of those clients, of those application users. And as we mentioned, we have currently 1 million users currently using our applications and we've started to see upsell, cross-sale, lots of value coming from those applications and we've just started. More than that, we see a very strong demand by clients to use our services. It means that Phoenix is doing something good to the clients. We provide them with very attractive financial products, insurance products, advanced products, investment products. So we see a very strong growth in usage of our platforms and it means eventually that the potential in integrating different and diversified products to the financial products and insurance products to the client is a huge potential for the group.

Thank you. These were the questions. Investors are welcome to contact us directly or anytime or via email. We'd be happy to answer questions or arrange for a call. We'll also be in the United States and in the UK in the coming months. So if you want to schedule a meeting, please reach out to us. Our email address is ir.fnx.co.il. Finally, we should mention that you'll find the publication and the other materials on our website and a recording of this call should be uploaded tomorrow. Thank you again for joining the call.