Phoenix : Solvency Report of The Phoenix Insurance Company Ltd. (Subsidiary) as of June 30, 2022

Economic Solvency Ratio Report of The

Phoenix Insurance Company Ltd.

As of June 30, 2022

Table of Contents

		Page
Overview and Disclosure Requirements ..................................	………………..3
Definitions ...........................................................................	………………..4
Calculation Methodology .......................................................	………………..6
Section 1	- Economic Solvency Ratio and Minimum Capital Requirement….13
Section 2	- Economic Balance Sheet.......................................	………………15
Section 2.A - Information about Economic Balance Sheet ........	………………17

Section 2.B - Composition of liabilities in respect to insurance contracts and

investment contracts ............................................................	………………23
Section 3 - Shareholders' Equity in respect of SCR ..................	………………24
Section 4 - Solvency Capital Requirement (SCR) .....................	………………26
Section 5	- Minimum Capital Requirement (MCR) ....................	………………27
Section 6	- Effect of the Application of the Directives for the Transitional
Period..................................................................................	………………28
Section 7	- Dividend Distribution Restrictions ..........................	………………30

Economic Solvency Ratio Report as of June 30, 2022

Overview and Disclosure Requirements

Solvency II-based Economic Solvency Regime

The information provided below was calculated in accordance with the provisions of Circular 2020-1-15 of the Commissioner of the Capital Market, Insurance and Savings (hereinafter - the "Commissioner")

• "Amendment to the Consolidated Circular concerning Implementation of a Solvency II-Based Economic Solvency Regime for Insurance Companies" (hereinafter - the "Economic Solvency Regime Directives"), was prepared and presented in accordance with Chapter 1, Part 4 Section 5 of the
  Consolidated Circular as revised in Circular 2022-1-8 (hereinafter - the "Disclosure Provisions").

The Economic Solvency Regime provisions set a standard model for calculating eligible capital and the regulatory solvency capital requirement (SCR), with the aim of bringing insurance companies to hold buffers to absorb losses arising from the materialization of unexpected risks to which they are exposed.

The solvency ratio is the ratio between the eligible equity and the regulatory solvency capital requirement.

The eligible equity is composed of Tier 1 Capital and Tier 2 Capital. Tier 1 Capital includes equity calculated through assessing the economic value of an insurance company's assets and liabilities in accordance with the circular's provisions, and Additional Tier 1 Capital. Additional Tier 1 Capital and Tier 2 Capital include equity instruments with loss absorption mechanisms, including Subordinated Tier 2 Capital, Hybrid Tier 2 Capital and Tier 3 Capital, which were issued prior to the circular's effective date. The circular places restrictions on the composition of eligible equity for SCR and MCR purposes (see below), such that the rate of Additional Tier 1 capital shall not exceed 20% of the Tier 1 capital???, and such that the rate of components included in Tier 2 Capital shall not exceed 40% of the SCR without taking into account the transitional provisions and the equity scenario adjustment, and shall not exceed 50% of the SCR under the transitional provisions and taking into account the equity scenario adjustment.

The eligible capital is compared to the required capital when there are two levels of capital requirements:

• The capital required to maintain an insurance company's solvency (hereinafter - "SCR"). The SCR is risk-sensitive, and is based on forward-looking calculation of the impact of the materialization of different scenarios, while taking into account the correlation of the different risk factors, based on the guidance in the Economic Solvency Regime Directives.
• Minimum capital requirement (hereinafter "MCR" or "Capital Threshold"). In accordance with the
  Economic Solvency Regime Directives, the Capital Threshold shall be equal to the highest of the amount of the minimum Tier 1 capital required under the "Requirements of the Previous Capital Regime" and an amount derived from insurance reserves and premiums (as defined in the Solvency Circular), with a floor of 25% and a cap of 45% of the SCR.

The eligible capital and the required capital are calculated using data and models which are based, among other things, on forecasts and assumptions that rely mainly on past experience. These calculations are highly complex.

The Economic Solvency Regime Directives include, among other things, transitional provisions and adjusting the stock scenario, as follows:

1. Selecting on of the following alternatives:

The Phoenix Insurance Company Ltd.

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Economic Solvency Ratio Report as of June 30, 2022

1. Gradual transition to the required capital until 2024 (hereinafter - the "Transitional Period"), such that the required capital shall increase gradually by 5% per year, starting with 60% of the SCR up to the full SCR amount.
2. Increasing the eligible capital by deducting from the insurance reserves an amount that will be calculated in accordance with Section c below. The deduction amount will decrease gradually until
   2032 (hereinafter: the "Deduction During the Transitional Period").

The Company opted for the second alternative of using the Deduction During the Transitional Period, after receiving the Commissioner's approval.

1. In addition to Section A above, the Economic Solvency Regime includes a reduced capital requirement, that will increase gradually until 2023, in respect of certain investment types.

Forward-looking information

The data included in this Economic Solvency Ratio Report, including the eligible and the required capital for solvency purposes are based, among other things, on forecasts, assessments, and estimates of future events, the

materialization of which is uncertain and is not under the Company's control, and which should be considered as "forward-looking information" as the term

is defined in Section 32A to the Securities Law, 1968. Actual results may differ from the results reflected in this Economic Solvency Ratio Report, if such forecasts, assessments and estimates, either in whole or in part, fail to materialize or materialize in a manner different than anticipated, including, among other things, with respect to actuarial assumptions (including mortality rates, morbidity rates, recovery rates, cancellations, expenses, uptake of pension benefits, rate of release of the risk margin and underwriting earnings rate), assumptions regarding future management actions, risk-free interest rates, capital market returns, future revenue, and damage in catastrophe scenarios.

The Phoenix Insurance Company Ltd.

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Economic Solvency Ratio Report as of June 30, 2022

Definitions

The Company	-	The Phoenix Insurance Company Ltd.
The Economic	-	The provisions of Circular 2020-1-15 of the Commissioner of the Capital Market,
Solvency		Insurance and Savings (hereinafter - the "Commissioner") - "Amendment to the
Regime		Consolidated Circular concerning Implementation of a Solvency II-Based
Directives		Economic Solvency Regime for Insurance Companies" (hereinafter - the
		"Solvency Circular"), including its explanations.
Best estimate	-	Expected future cash flows from insurance contracts and investment contracts
		throughout their term, without conservatism margins and discounted by an
		adjusted risk-free interest.
Long-term	-	Health insurance that is conducted similarly to life insurance.
health
insurance (SLT)
Short-term	-	Health insurance that is deemed to be written on a similar technical basis as
health		property and casualty insurance.
insurance
(NSLT)
Basic solvency	-	The capital required from an insurance company to maintain its solvency,
capital		calculated in accordance with the Economic Solvency Regime Directives, without
requirement		taking into account the capital required due to operational risk, adjustment to
(BSCR)		loss absorption due to deferred tax and required capital due to management
		companies.
Solvency	-	Total capital required from an insurance company to maintain its solvency,
capital		calculated in accordance with the Economic Solvency Regime Directives.
requirement
(SCR)
Recognized	-	Total Tier 1 Capital and Tier 2 Capital of an insurance company, after deductions
shareholders		and amortization in accordance with the provisions of Part B of the Appendix to
equity		the Solvency Circular.
Basic Tier 1	-	Excess of assets over liabilities in the economic balance sheet, net of
capital		unrecognized assets and dividend declared subsequent to balance sheet date and
		until the report's initial publication date.
Additional Tier	-	Perpetual capital note, non-cumulative preferred shares, Restricted Tier 1 capital
1 capital		instrument, Additional Tier 1 capital instrument -	valued in accordance with the
		provisions of Part A of the Appendix to the Solvency Circular.
Tier 2 capital	-	Tier 2 Capital instruments, Subordinated Tier 2 Capital, Hybrid Tier 2, Additional
		Tier 1 Capital instrument that was not included in Tier 1 and Hybrid Tier 3 Capital
		- valued in accordance with the provisions of Part A of the Appendix to the
		Solvency Circular.
The	-	Commissioner of the Capital Market, Insurance and Savings Authority.
Commissioner
The Phoenix Insurance Company Ltd.	5