MILLI REASURANS ANNUAL REPORT 2018

Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) 21 Deferred taxes As of December 31, 2018 and 2017, deferred tax assets and liabilities are attributable to the following: December 31, 2018 December 31, 2017 Deferred tax assets/ (liabilities)) Deferred tax assets/ (liabilities)) Unexpired risk reserves 15.228.528 6.478.061 Provision for the pension fund deficits 8.947.362 7.867.023 Equalization reserves 41.127.247 30.152.964 Provisions for employee termination benefits 7.543.894 6.260.002 Other provisions 14.837.226 11.218.221 Subrogation provision 3.558.004 1.834.144 Discount of receivables and payables 522.078 658.758 TAS adjustment differences in depreciation (3.159.259) (2.352.237) Profit commission accruals (2.028.998) (2.004.770) Subrogation receivables from third parties (5.651.737) (3.977.190) Valuation differences in financial assets (15.377.031) (7.743.987) Time deposits 192.055 85.806 Other 1.598.347 560.707 Valuation of real estate (60.193.714) (54.385.521) Deferred tax assets/(liabilities), net 7.144.002 (5.078.019) As of December 31, 2018, the Group does not have deductible tax losses. (December 31, 2017: None.) Movement of deferred tax assets as of December 31, 2018 and 2017 are given below: December 31, 2018 December 31, 2017 Opening balance at January 1 (5.078.019) (10.848.500) Recognized in profit or loss (4.635.421) 18.150.973 Recognized in equity 16.857.442 (12.380.492) Closing balance at December 31 7.144.002 (5.078.019) 22 Retirement benefit obligations Employees of the Company are the members of “Milli Reasürans Türk Anonim Şirketi Emekli ve Sağlık Sandığı Vakfı (“Milli Reasürans Pension Fund”) and the employees of Anadolu Sigorta are the members of Anadolu Anonim Türk Sigorta Şirketi Memurları Emekli Sandığı (“Pension Fund of Anadolu Anonim Türk Sigorta Şirketi”) which has been founded in accordance with the Article 20 of the Social Securities Act No: 506. As per the provisional article No: 23 of the Banking Law No: 5411, pension funds of the banks which were established within the framework of Social Security Institution Law, should be transferred to the Social Security Institution within three years after the publication of the prevailing Banking Law enacted on November 1, 2005. However, the said article of the Banking Law has been vetoed by the President on November 2, 2005 and the execution of the article was ceased based on the Supreme Court’s decision numbered E.2005/39, K.2007/33 and dated March 22, 2007 effective from March 31, 2007. Supreme Court asserted possible losses on acquired rights of employees of pension fund as reason for cancellation decision. Millî Reasürans Annual Report 2018 236 / Consolidated Financial Statements and Independent Auditors’ Report