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) Evaluation of the impact of the Covid 19 pandemic on Company activities Covid-19 pandemic in Turkey as well as all over the world and has affected all areas of life significantly. In addition to the health threat it posed, the epidemic caused financial fluctuations whose impact was felt on a global scale. Countries have announced economic measures one after another in order to reduce the negative effects of the virus epidemic on economies. With the onset of the virus as of March 2020 in our country, many measures have been taken in social life and in the field of economy. In addition to the measures that regulate social life according to the epidemic, support packages were announced to the sectors that are likely to be adversely affected by the epidemic by reducing interest rates in the field of economy. As of December 31, 2020, it is observed that the pandemic process has not adversely affected the financial performance of our Company. In addition to these data, when our financial indicators are considered as a whole, it is considered that our activities have a sustainable structure. On the other hand, in order to ensure that our operational activities are not interrupted, necessary measures are taken for our personnel to work remotely and our practices are shaped in parallel with the developments in the pandemic process. In this process, there were no disruptions in operations and information technologies due to remote working. Evaluation of the effect of Covid 19 pandemic on the subsidiary of the Company Anadolu Sigorta Covid 19 pandemic brought economical problems with it in global scale. Within this scope to reduce the negative effects in question economical precautions are started to be implemented by many countries. In our country, with the first coronavirus case seen in March and the increasing number of cases, many measures have been taken in the field of social life and economy. In addition to the measures that regulate social life according to the epidemic, support packages to reduce the negative effects of the epidemic have been announced in the field of economy. When the pandemic is evaluated in terms of our sector due to the decrease in traffic density and postponement of health claims, claim payments in the motor vehicles, motor vehicle third party liability and health branches, and marketable securities profits are monitored. As of December 31, 2020, the pandemic has not negatively affected the financial performance of the Company. When the premium production compared to 2019 in non-life insurance sector, there was an increase of 17.7% in 2020. During the pandemic period, there was no significant increase in the net damage amount and policy cancellations. In the health branch, it is observed that the frequency of claims for 2020, due to insurers have avoided going to the hospital and postponed their treatment to future dates. As a result of the examination of inpatient and outpatient treatment data, the Company has added TL 40.098.588 provision for treatments postponed by the insured to future dates due to COVID-19. When we analyse our investment income, the balanced distribution of our securities portfolio is considered as another important factor that prevents our assets from being exposed to high stress during the pandemic process. In line with these data, when our financial indicators are considered as a whole, it is considered that our activities and profitability level have a sustainable structure. On the other hand, necessary precautions have been taken for our personnel to work remotely and our practises have been shaped in this direction not to disrupt our operational activities. In this period, there was no disruption caused by remote working in the fields of customer relations, operations and information technologies. In addition, our customer service is maintained without interruption from all contact points including our call center and digital channels. 4 Management of insurance and financial risk 4.1 Management of insurance risk Objective of managing risks arising from insurance (reinsurance) contracts and policies used to minimize such risks Reinsurance risk is defined as a possibility of financial loss due to inappropriate and insufficient application of reinsurance techniques in the activities of taking insurance contract responsibility partially or completely. Potential risks that may be exposed in transactions are described, classified and managed based on the requirements set out in the Company’s “Regulative Framework on the Risk Management Activities, Risk Management Policies and Implementation Procedures and Principles of the Risk Management” issued by the approval of the Board of Directors. The main objective of the “Regulative Framework on the Risk Management Activities, Risk Management Policies and Implementation Procedures and Principles of the Risk Management” is to determine the risk measurement, assessment, and control procedures and maintain consistency between the Company’s asset quality and limitations allowed by the insurance standards together with the Company’s risk tolerance of the accepted risk level assumed in return for a specific consideration. In this respect, instruments that are related to risk transfer, such as; insurance risk selection, risk quality follow-up by providing accurate and complete information, effective monitoring of level of claims by using risk portfolio claim frequency, treaties, facultative reinsurance contracts and coinsurance agreements, and risk management instruments, such as; risk limitations, are used in achieving the related objective. 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 205