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 75 Milli Re Annual Report 2020 According to 2020 year‑end figures released by the Insurance Association of Turkey, insurance industry in Turkey produced TL 82.6 billion premium with an increase of 19% compared to 2019. This amount reflects the double counting effect emanating from the “High Risk Insurance Pool” for Land Vehicles Liability Insurance as well as the business ceded by the companies through fronting arrangements without retaining any liability. 82.5% of the total premium was generated by Non‑Life and 17.5% from Life insurance. Previous year, due to the continued growth in loan volume as well as the increase recorded in housing sales as a result of the significant decline seen in housing loan interest rates, there has been 27% nominal growth in life insurance and its share in total premium production increased from 16% in 2019 to 17%. While a growth of 18% on nominal basis was recorded in Non‑Life businesses, in real terms growth was around 3%. As a result of the pandemic conditions, ongoing price cap implementation and the sluggish vehicle sales compared to previous years, the premium income of Land Vehicles Liability and Land Vehicles business lines, which have predominant weight in total industry premium, showed a limited growth of 11% on nominal basis and constrained the overall Non-Life premium production as well. Even though it is not within the scope of cover, the industry’s decision to compensate for pandemic related diagnosis and treatment costs without charging any additional premium strengthen the positive perception towards Health Insurance and increased the demand for Private Health and Complementary Health Insurance. The premium income for the business line achieved 21% growth in 2020. Having 16% share in total industry premium production, the premium income of Fire and Natural Catastrophe Perils showed 25% upward movement in nominal terms, which corresponds to 9% growth in real terms. Factors such as increase in housing sales with the impact of the decline recorded in housing loan interest rates at the beginning of June, the sum insured amounts and premiums of a significant portion of the renewed policies for commercial and industrial risks being indexed to foreign exchange or inflation as well as the increased public awareness in the aftermath of earthquake disasters occurred in 2020 and the new earthquake tariff, contributed to the premium growth of the business line. With its know‑how in the local market, experience as well as the reputation earned in the eyes of the international reinsurance companies and its strong financial structure, Milli Re participates in a significant number of the reinsurance programs of companies operating in the Turkish insurance market, most of which have international shareholders. Providing capacity to 21 companies that utilized reinsurance cover on proportional basis in 2021, Milli Re leads 16 bouquets and has 27%market share. Continuing its operations successfully since 1929 with its well‑established corporate culture and experience; starting in 2006, Milli Re focused on underwriting business from the international markets as part of its strategy to expand to international markets. Our Singapore Branch, which started its operations in 2008 in line with this strategy, marked its 14 th year of operation. Providing reinsurance capacity to 123 ceding companies operating in over 50 countries, Milli Re remains to be a preferred business partner in the international markets. Being one of the most powerful players in the region, Milli Re continues with its digital transformation at full speed in order to increase its productivity in line with its aim to sustain its leader position in the local market and be a preferred business partner in the international markets. The pandemic which had a worldwide impact since March 2020 affected all aspects of life, especially health and economy, and caused substantial changes in working conditions. As part of the precautions taken in order to minimize the risks for our employees, their family members and the general public health while ensuring business continuity, our Company adapted to remote working conditions starting in March. In the new working practice according to which maximum 75% of our employees worked from home as of June, our company carried out its activities successfully owing to the advantages provided by the information technologies infrastructure as well as the sanitary measures taken. The total premium production of our Company by the end of 2020 reached TL 1,820 million indicating a year‑on‑year growth of 9.7%. 73% of total premium amounting to TL 1,335 million was obtained from local business while 27% equaling to TL 485 million originated from international markets. In 2020, taking into account the investment income and expense transferred from non‑technical operations, our Company obtained a profit of TL 62.5 million in respect of our technical operations and TL 286.1 million from financial operations and closed the 2020 operating year with a profit of TL 348.6 million. The assets of our company reached TL 5,506 million and shareholders’ equity was TL 2,639 million as at the end of 2020. We would like to thank our esteemed stakeholders for being the greatest supporters of our Company, while it continues to carry forward its reputation and reliability that has been gained over the 92 years of operation, and its efforts to be a preferred business partner with its strong financial structure. Sincerely yours, BOARD OF DIRECTORS