MILLI RE 2020 ANNUAL REPORT

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 53 Milli Re Annual Report 2020 reduced catastrophe purchase mirroring the reduction in exposures in Euro terms. A few programs were restructured and optimized to attain better cost/reward balance. Although there has been a nominal decrease in the total premium paid to reinsurers as a translation of lower coverage purchased, barring variations among specific programs and layers, Turkish market saw risk‑adjusted rate increases up to 10% on a general level. Milli Re’s involvement in catastrophe excess of loss programs in 2021 is 9%. As in proportional treaties, pandemic and cyber risks exclusions were implemented in excess of loss treaties and given the upward movement in pricing, placement of excess of loss programs was faster and smoother. The split of Milli Re’s domestic premium income differs significantly from that of market Non‑Life premiums. Largest contributors to revenue in the Turkish insurance market are Land Vehicles Compulsory Liability and Land Vehicles (Casco), as well as Agriculture and Health insurances. Whilst the share of these lines in the Non‑Life premium of the sector stands at 67%, they account only for 8% in Milli Re’s premium income, reflecting the conservative approach under the current conditions and the limited appetite of Milli Re. For this reason, the impact of the developments in Land Vehicles Compulsory Liability and Land Vehicles Insurances which generate 30% and 16% of the market Non‑Life premium respectively and substantial premium and loss increases in Agriculture remain limited for Milli Re. On the other hand, market developments in Fire and Natural Perils, Engineering, General Liability and Marine where most companies utilize proportional reinsurance for protecting their risk portfolios, are evidently translated to Milli Re’s local portfolio. Premium from local operations grew by 26% annually, mainly driven by Engineering and Marine. Despite the adverse effect of increased retrocession costs reflecting rate of exchange movements and premium adjustments for 2019 retrocession programs, as well as the increase in losses in Property, Engineering, General Liability and Land Vehicles Liability compared to the previous year, with the contribution of net transfers from non‑technical income, local portfolio generated a technical profit of TL 31.4 million. Premium from local operations grew by 26%annually, mainly driven by Engineering and Marine. Local Premium by Lines of Business Share (%) Fire 55 Engineering 19 Marine 8 General Liability 5 Agriculture 4 Land Vehicles Liability 2 Life 2 Other * 2 Personal Accident 2 Health 1 Total 100 * Credit, Legal Protection, Air Vehicles, Plate Glass, Air Vehicles Liability, Fidelity Guarantee Local Portfolio 2020 2019 2018 2017 2016 Premium (TL) 1,335,217,811 1,060,777,933 911,044,062 818,143,937 698,726,549 Share in Total Premium (%) 73.4 63.9 69.0 75.4 75.1