Important developments in the health branch in 2007 were as follows:

• Scheduled to be enforced with effect from 01 January 2007, the Law Governing General Health Insurance (GHI) was first postponed to 01 July 2007 then to 01 January 2008, and lastly to the second half of 2008. The uncertainty affecting GHI inevitably led to uncertainties in the planning of Private Health Insurance (PHI) by insurance companies.

• The “Communiqué on Insurance Branches” published under the Insurance Law no. 5684 changed the name of the “Health Branch” into “Sickness/Health Branch”.

• Insurance companies are given the chance to provide critical illness coverage as an independent coverage, provided that they hold the necessary license in sickness branch.

Although the industry's premium production in health branch as at 31 December 2007 is not yet available, it is estimated to achieve a 27% growth and reach TRY 1,250 million.

Milli Re's premium production in the health branch went down by 9% on an annual basis and amounted to TRY 110,120,683 in 2007. Paid losses increased by 21% and materialized as TRY 127,813,073. Gross loss ratio was 111%.

The telling factor for the increase in the negative trend was the run-offs of treaties that were not renewed in 2007 within the scope of various measures started to be taken to mitigate the effects of the industry's poor performance in health on Milli Re. It is expected that the positive impact of new measures started to be adopted will be seen in 2008.

Milli Re's premium income for Health branch stood at TRY 110,120,683 in 2007.