MILLIRE 2021 ANNUAL REPORT

11 MİLLİ RE ANNUAL REPORT 2021 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 While coverage and exclusions for contagious diseases and cyber risks made the headlines in 2021 renewals, more fundamental topics such as capacity, risk appetite, liabilities and pricing gained the foreground in 2022 renewals. According to year-end 2021 data of the Insurance Association of Turkey, the Turkish insurance industry’s premium production was up by 27.5% on a year-on-year basis to TL 105.3 billion. Having grown nominally, the industry contracted by 6.3% in real terms. Premiums written in non- life branches amounted to TL 87.6 billion, whereas premium production in Life insurance was worth TL 17.7 billion. Milli Re preserves its solid performance. In 2021 during which it pursued operations adjusting itself according to varying extraordinary circumstances, our Company displayed a successful performance enabled by its deep-rooted market experience, robust financial structure and risk management competence, and continued to offer reinsurance capacity in domestic and international markets in line with the needs of ceding companies. In 2021, Milli Re’s premium production increased by 36% compared to the previous year and reached TL 2,483 million. As of 2021 year-end, our Company’s total assets were registered as TL 7,183 million, shareholders’ equity as TL 3,000 million and net profit for the period as TL 549 million. Offering service at international standards for more than 90 years, Milli Re will continue to stand by its business partners with effective reinsurance solutions in domestic and international markets, keeping with its vision of being a reinsurance company of choice. On behalf of myself and our Board of Directors, I would like to thank our shareholders, business partners and employees who made the greatest contribution to our Company’s goal of being a preferred business partner within Turkey and abroad. Ebru ÖZŞUCA Chairperson improved outlook. However, the escalation in global commodity prices will most likely intensify the upward risks on current deficit in the period ahead. During 2021 which was characterized by an inflation outlook deteriorated by high exchange rates and high commodity and energy prices, the CPI went up -to 36.08% with the dominant effect of transportation and food expenditure groups, while the rise in PPI reached 79.89%, marking the highest increases of the past 19 years. The course of the pandemic and inflationary pressures, coupled with the geopolitical risks heightened particularly in our geography, reinforce the signals that 2022 will also be a tough year. Inflationary pressures and the consequences of climate change affect our industry. In 2021, the key factors that set the tendency in insurance and reinsurance markets have been the versatile effects of the pandemic, inflationary pressures persisting at a global scale, low investment levels, and the impact the natural disasters occurring worldwide, on the financial results of reinsurers. As the final impact of the Covid-19 pandemic that occupies the top spots of the agenda for the insurance and reinsurance markets remains uncertain, the amount of total insured losses was reported as USD 48 billion as at year-end 2021. On another hand, insured losses caused by worldwide extreme weather events triggered by climate change add up to significant amounts. The amount of total economic losses from natural catastrophes went up by 33% in 2021 to USD 280 billion. Surpassing last year’s figure of USD 82 billion, global insured losses went up to USD 120 billion in the reporting period, making 2021 the second costliest year on record for the industry. While a great portion of the natural disaster losses was recorded in US, only 43% of the global losses were insured, pointing out to the fact that insurance density remains relatively low for secondary perils even in developed countries. Insured catastrophe losses surpassed the 2020 figure of USD 82 billion, making 2021 the second costliest year on record for the industry. As the majority of natural disasters occurred in the US, the fact that only 43% of global losses were insured reveals that the insurance penetration ratio for disasters is relatively low even in developed countries, apart from major risks. OFFERING SERVICE AT INTERNATIONAL STANDARDS, MİLLİ RE WILL CONTINUE TO STAND BY ITS BUSINESS PARTNERS WITH EFFECTIVE REINSURANCE SOLUTIONS IN DOMESTIC AND INTERNATIONAL MARKETS KEEPING WITH ITS VISION OF BEING A REINSURANCE COMPANY OF CHOICE.