MILLI RE 2020 ANNUAL REPORT

Millî Reasürans Türk Anonim Şirketi (Currency: Turkish Lira (TL)) NOTES TO THE CONSOLIDATED 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) Subrogation, salvage and quasi income According to the Circular 2010/13 dated September 20, 2010; the Company may account for income accrual for subrogation receivables without any voucher after the completion of the claim payments made to the insurer. If the amount cannot be collected from the counterparty insurance company, the Company provides provision for uncollected amounts due for six months. If the counter party is not an insurance Company, the provision is provided after four months. As at the reporting date, in accordance with the related circular the Company provided TL 62.093.125 (December 31, 2019: TL 55.051.547) subrogation receivables and recorded TL 88.399.103 (December 31, 2019: TL 61.848.008) (Note 12) net subrogation and salvage receivables under receivables from main operations. The Company provided allowance for uncollected subrogation receivables amounting to TL 24.744.443 (December 31, 2019: TL 28.174.144) (Note 12) in accordance with circular. For the years ended December 31, 2020 and 2019, salvage and subrogation collected are as follows: December 31, 2020 December 31, 2019 Land Vehicles 610.070.256 488.773.672 Land Vehicles Liability 10.175.098 9.773.051 Fire and Natural Disasters 4.823.627 3.697.414 Marine 2.204.341 1.046.428 General Damages 657.535 592.116 General Liability 617.188 22.492 Sea Vehicles 171.732 59.570 Casualty 12.459 1.725 Legal Protection 32 - Total 628.732.268 503.966.468 As of December 31, 2020, and 2019, accrued subrogation and salvage income per branches is as follows: December 31, 2020 December 31, 2019 Land Vehicles 65.010.849 36.130.567 Land Vehicles Liability 15.088.472 16.014.366 Fire and Natural Disasters 5.708.556 7.752.757 General Damages 995.426 824.538 Marine 767.440 705.698 Casualty 527.346 232.701 Sea Vehicles 250.401 131.857 General Liability 50.613 55.524 Total 88.399.103 61.848.008 Commission income and expenses As further disclosed in Note 2.24 - Reserve for unearned premiums , commissions paid to the insurance and reinsurance companies as a reinsurance company and the commissions received from the reinsurance companies are recognized over the life of the contract by deferring commission income and expenses within the calculation of reserve for unearned premiums for the policies produced before January 1, 2008 and recognizing deferred commission income and deferred commission expense in the financial statements for the policies produced after January 1, 2008. Interest income and expenses Interest income and expense are recognized using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. The effective interest rate is established on initial recognition of the financial asset and liability and is not revised subsequently. The calculation of the effective interest rate includes all fees and points paid or received transaction costs, and discounts or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability except for the financial assets at fair value through profit or loss. 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 193