MILLIRE 2021 ANNUAL REPORT

ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES GENERAL INFORMATION FINANCIAL RIGHTS PROVIDED TO THE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES RESEARCH & DEVELOPMENT ACTIVITIES 58 MİLLİ RE ANNUAL REPORT 2021 GLOBAL REINSURANCE MARKET AND MİLLİ RE PAKISTAN Pakistan’s economy grew by 5.37% during 2021, which represented a recovery following the Covid-19 pandemic induced contraction in the previous year. Growth in industries, such as construction and small-scale manufacturing, agriculture as well as services are expected to improve and support the GDP growth in 2022. Following the decision of the federal government to sell some stake in Pak Re, the national reinsurer of Pakistan, the Cabinet Committee on Privatization (CCOP) approved the sale of a 20% stake in the reinsurer. The Insurance Industry produced Pak Rs. 250 billion (approximately USD 1.5 billion) of premium income, showing a year-on-year growth by 20% by the end of September 2021. Strong demand for Health, Motor and Property are the main contributors for this strong growth. 2022 Renewals were completed smoothly in respect of scope and capacity across all classes except slight rate increases in Property and Engineering. In the absence of any cat losses, there was one major fire loss which affected the underwriting result of the companies involved. Most of the reinsurance markets remain committed with no signs of withdrawn capacities. RUSSIA Cooling domestic demand in Russia drove a slowdown in GDP growth in 2021. However, the economy regained it pace as a result of rebounding exports in the second half-year with increasing global demand in energy, despite the reintroduction of some Covid-19 pandemic measures triggered by record numbers of new cases and virus-related deaths. Meanwhile, geopolitical tensions, stemming from concerns that Russia is gearing up for a possible invasion of Ukraine continued to run high in 2021. The Central Bank of Russia (CBR) has implemented a new prudential framework starting from 1 July 2021 for Russian insurance companies. The new regulation brings along a notable tightening from the previous Solvency I-like regime. The initial stage of this reform makes the regulatory capital buffer significantly thinner and lower the solvency ratios for most insurers. However, the implementation of the new scheme is likely to strengthen insurers’ capital framework. Russian insurance market grew by 8% in 2021, and total GWP approached RUB 2 trillion (~EUR 23 billion). It is noted that development of the insurance market was in line with the Bank of Russia growth targets which put pressure on all segments of the insurance market. Accordingly, there has been no reduction in any segment but only some correction of dynamics after rapid recovery in 2021. 2021 has been a calm year in Russia in terms of losses. There have not been any large claims affecting the market. However, the effect of global hardening in reinsurance markets has been clearly felt by market players. Reinsurance spending of Russian insurers continued to increase owing to stricter terms and conditions prevailing in the market. Similar to the previous renewal, loss affected programs have seen rate increases of 20% to 30%, while rates for loss free programs either remained stable or increased slightly in January 2022 renewals. CENTRAL AND EASTERN EUROPE 2021 GDP growth in CEE has surpassed the forecasted as a result of stronger global economic outlook and the brisk reopening of economies of the Region as a result of the improved pandemic situation. The recovery has been mostly driven by industrial output, exports of goods and government consumption, while household consumption was depressed by restrictive measures and uncertainty. The economic recovery seems to be underway, but accompanied by higher inflation, naturally calling for a normalization of interest rates. 20% The Insurance Industry produced Pak Rs. 250 billion (approximately USD 1.5 billion) of premium income, showing a year-on-year growth by 20% by the end of September 2021.