MILLIRE_2019_Annual Report

208 Milli Re Annual Report 2019 Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2019 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. The right of use which is calculated on leasing agreements is accounted under “Property, Plant and Equipment” account. The interest expense on the lease obligation is accounted under “Investment Management Expense - Including Interest’’, and the depreciation expense of the usage right asset is accounted under “Depreciation and Amortization Expenses ” Information on the duration of the operating leases and discount rates applied are as follows: Assets subject to operational leasing Contract Period (Year) Discount Rate - TL (%) Buildings 2-10 years 1,94-24,42 2.23 Dividend distribution It is decided in Ordinary General Assembly Meeting of the Company, held on March 25, 2019, to make a dividend payment of TL 60.000.000 to shareholders and to allocate remaining balance as voluntary reserves from the net period income amounting to TL 278.213.412, from 2018 activities of the Company, after the legal reserves are allocated and TL 59.981.259 has been paid in cash and TL 18.741 has been recognized in due to shareholders account under short term liabilities. 2.24 Unearned premiums reserve In accordance with the “Communiqué on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves” (“Communiqué on Technical Reserves”) which was issued in 26606 numbered and August 7, 2007 dated Official Gazette and put into effect starting from January 1, 2008, the reserve for unearned premiums represents the proportions of the gross written premiums without deductions of commission or any other allowance, in a period that relate to the period of risk subsequent to the reporting date for all short-term insurance policies. Nonetheless; Unearned premium reserves are calculated on the basis of 1/8 for reinsurance and retrocession transactions that are not subject to basis of day or 1/24 due to application limitations, For commodity transportation policies with indefinite expiration dates, 50% of the remaining portion of the premiums accrued in the last three months, less any commissions is also provided as unearned premium reserves. In line with the Communiqué on Technical Reserves, the calculation of unearned premium reserve is performed as follows by the Group: for proportional reinsurance contracts, on the basis of 1/8 over the ceded premiums for treaty and facultative contracts, for commodity transportation policies with indefinite expiration dates, 50% of the remaining portion of the premiums accrued in the last three months, less any commissions is also provided as unearned premium reserves and for non-proportional reinsurance contracts, on the basis on day by considering beginning and ending of the contracts. The Company calculates reserve for unearned premiums for ceded premium as retrocedant on the same basis. Unearned premiums reserve is calculated for all insurance contracts except for the contracts for which the mathematical reserve is provided. Unearned premiums reserve is also calculated for the annual premiums of the annually renewed long term insurance contracts.