MILLI RE 2020 ANNUAL REPORT

Millî Reasürans Türk Anonim Şirketi (Currency: Turkish Lira (TL)) NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) Except for the life branch, outstanding claims reserve consists of claims are recorded in the year in which they occur, based on reported claims and the difference between the result of the actuarial chain ladder method whose content and application criteria stated by Republic of Turkey Ministry of Treasury and Finance and reported but not settled claims are considered as incurred but not reported (“IBNR”) claims. Actuarial chain ladder method may be differentiated by Republic of Turkey Ministry of Treasury and Finance for reinsurance companies due to their special conditions. December 5, 2014 dated “Circular regarding Outstanding Claims Reserve (2014/16)” and 2010/12 numbered “Circular regarding actuarial chain ladder method”of Republic of Turkey Ministry of Treasury is abolished except Article 9 and 10. According to circular that explains ACML measurement method, insurance and reinsurance companies calculate ACML with six different methods as “Standard Chain, Damage/Premium, Cape Cod, Frequency/Intense, Munich Chain and Bornhuetter-Ferguson”. The methods selected for each branch is provided in the following section. The Company has not performed big claim elimination by Box Plox method. Branches December 31, 2020 December 31, 2019 Fire and Natural Disasters Standard Chain Standard Chain General Losses (*) Standard Chain Standard Chain General Liabilities (**) Standard Chain Standard Chain Land Vehicles Liabilities Standard Chain Standard Chain Marine Standard Chain Standard Chain Sea Vehicles Standard Chain Standard Chain Land Vehicles Standard Chain Standard Chain Casualty Standard Chain Standard Chain Health Standard Chain Standard Chain Air Vehicles Standard Chain Standard Chain Legal Protection Standard Chain Standard Chain Sea Vehicles Liability Sector Average (Insurance Association of Turkey 09/2020) Sector Average (Insurance Association of Turkey 09/2019) Air Vehicles Liability Sector Average (Insurance Association of Turkey 09/2020) Sector Average (Insurance Association of Turkey 09/2019) Fidelity Guarantees Sector Average (Insurance Association of Turkey 09/2020) Sector Average (Insurance Association of Turkey 09/2019) Financial Losses Sector Average (Insurance Association of Turkey 09/2020) Sector Average (Insurance Association of Turkey 09/2019) Credit Sector Average (Insurance Association of Turkey 09/2020) Sector Average (Insurance Association of Turkey 09/2019) Life Sector Average (Insurance Association of Turkey 09/2020) Sector Average (Insurance Association of Turkey 09/2019) (*) Two separate calculation have been made as agriculture and non-agriculture subbranches. (**) In accordance with the “Circular numbered 2020/11 on Making Amendments on Communique regarding Provision for Outstanding Claim Files numbered 2014/16” which has been published by Republic of Turkey Ministry of Treasury and Finance on December 7, 2020 and entered into force as of its publication date, an additional calculation is made in terms of Compulsory Financial Liability Insurance regarding Medical Malpractice sub-branch and calculation is made in terms of other sub-branches under General Liability through excluding Compulsory Financial Liability Insurance regarding Medical Malpractice. The Company, as a reinsurance company, selects data, adjustments, applicable methods and development factors by itself over the data obtained from insurance companies on a branch basis via actuarial methods. According to the article 11 clause 5 of “Circular on Actuarial Report for Non-Life Insurance Branch” dated November 6, 2008, selections and results should be assess in detail in actuarial report by the actuary. The Company does not have sufficient data for ships, Air Vehicles Liability, Fidelity Guarantees, financial losses, credits and life branches. Furthermore, claim development tables have irregular distribution for the aforementioned branches. Therefore, the Company prefers to use sector average in the actuarial chain ladder method. According to December 5, 2014 dated “Circular regarding Outstanding Claims Reserve (2014/16)” of Republic of Turkey Ministry of Treasury and Finance, the Company constitutes data by taking base of acceptance year rather than Casualty period for the reason of characteristic of reinsurance operations in course of ACML calculation and calculates ACML once in a year as of yearend. The methods indicated in the table are calculated according to paid claim. Financial Status Risks and Assessment of the Governing Body Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon Consolidated Financial Statements Together with Independent Auditors’ Report Thereon Milli Re Annual Report 2020 117