MILLIRE_2019_Annual Report

195 Milli Re Annual Report 2019 Activities and Major Developments Related to Activities 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 General Information Financial Rights Provided to the Members of the Governing Body and Senior Executives Research & Development Activities Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2019 (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) (Currency: Turkish Lira (TL)) According to the letter dated January 12, 2012 and numbered B.02.1.HZN.0.10.03.01/854 sent by the Republic of Turkey Ministry of Treasury and Finance to the Company, determination of final claims for the last business year used in IBNR calculation has been changed as of December 31, 2011. Accordingly, the final premium amount earned for the last business year is determined by considering premium development factors since premiums may be accrued in the following years under the terms of the agreements. Based on the calculated final premium amount of the last business year, unearned premium reserves and earned premiums are determined. Aforementioned earned premium amount is multiplied by the average of claim/premium ratio of the previous years to determine final claims amount of the last business year. IBNR is calculated by subtracting the paid and reported claims of the last business year from the final claims amount determined by the aforementioned method. In addition, IBNR amounts reported by sedan companies are taken into consideration and in order to prevent duplicate provision; paid claims, outstanding claims reserve and premiums of reported claims are excluded from the data set used in the calculation of IBNR. The Company determined final IBNR amount by adding reported IBNR amounts to IBNR amounts calculated from the data prepared in accordance with the principals mentioned above. According to 16 th article of “Circular on Actuarial Chain Ladder Method (2010/12)” dated September 20, 2010 and announced by Republic of Turkey Ministry of Treasury and Finance, ACML calculation should be made through main branches. However, as of December 31, 2012, the Company has calculated ACML reserve for General Damages main branch as two seperate subbranches namely agriculture and non agriculture branches. Because, Agriculture and Engineering subbranches under General Damages main branch have different characteristics in conversion process of outstanding losses to paid losses, IBNR calculation of General Damages branch produces unreliable and improper results. The Company applied to Republic of Turkey Ministry of Treasury and Finance on January 17, 2013 with letter numbered 300, so as to receive permission to calculate IBNR reserve for General Damages branch as agriculture and non-agriculture sub branches seperately. Republic of Turkey Ministry of Treasury and Finance has given permission the Company in order to calculate IBNR reserve for General Damages within two sub branches with the letter dated January 28, 2013 and numbered 24179134. As at December 31, 2019, the Company recognised the amount that arose due to change in calculation method for IBNR on General Damages branch. Significant changes in accounting policies and significant accounting mistatements are applied retrospectively and prior period financial statements are restated. If the changes in accounting estimates are for only one period, they are applied prospectively both in the current period when the change is made and in the future period if the change is made. Critical accounting judgements used in applying the Company’s accounting policies are explained in 3 - Significant accounting estimates and requirements . Miltaş Turizm İnşaat Ticaret A.Ş., which is the subsidiary of the Company, is subject to the exceptions predicted in the Consolidation Communiqué; As the total assets of the subsidiary are less than one percent of the Company’s total assets, they are excluded from the scope of full consolidation and the retrospective effects of the amendments using the equity method defined in the relevant TFRS are shown below: Restatement of detailed the balance sheet as of January 1, 2018: Detailed Balance Sheet Previously Reported Restated Effect January 1, 2018 January 1, 2018 II- Non-Current Assets 927.983.192 930.087.227 2.104.035 D- Financial Assets 197.258.522 199.362.557 2.104.035 4- Subsidiaries 1.092.707 3.196.742 2.104.035 V- Equity 2.064.649.465 2.066.753.500 2.104.035 C- Profit Reserves 303.156.167 305.814.004 2.657.837 1- Legal Reserves 104.543.229 104.684.320 141.091 6- Other Profit Reserves 21.866.864 24.383.610 2.516.746 D- Previous Years’ Profits 295.707.526 295.004.364 (703.162) 1- Previous Years’ Profits 295.707.526 295.004.364 (703.162) F- Net Profit of the Period 189.520.109 189.669.469 149.360 1- Net Profit of the Period 189.520.109 189.669.469 149.360