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 72 MİLLİ RE ANNUAL REPORT 2021 REPORT BY THE BOARD OF DIRECTORS Distinguished Shareholders, We respectfully present the balance sheet, income statement, profit distribution statement, statement of changes in equity, and the cash flow statement showing the results achieved in 2021, marking the Company’s 93 rd year of operation, for the assessment and approval of the Esteemed Assembly. These documents are prepared in line with the provisions of applicable legislation and the principles and guidelines set out by the Republic of Turkey Ministry of Treasury and Finance. While Covid-19 persisted with its new variants in 2021 despite increasing rates of vaccination, relative normalization brought along a fast recovery in economic activity. The recovery was driven mainly by the expansionary monetary and fiscal policies implemented globally by the central banks of major developed countries against the pandemic, and the demand that kicked in in 2021, which was deferred due to lockdowns in the previous period. Supply shortage that emerged in view of the quickly rising demand led to issues in accessibility of raw materials, which aggravated cost-side inflationary pressures. In connection with this development, commodity prices took an upturn, on top of which came the supply issues in the chip industry, leading to a crisis that escalated to production halts in automotive and high- tech products. In addition, rapid increase in consumption and investment demand also carried inflation concerns to the top of the economy agenda in 2021. In its World Economic Outlook update released in January 2022, the International Monetary Fund (IMF) estimated a growth rate of 5.9% for the global economy in 2021, projecting the same as 4.4% for 2022. While the estimated growth rate for 2021 for developed economies is 5%, it is 6.5% for emerging countries. In the same report, the IMF estimates 5.2% growth for the Euro Zone, 5.6% for the US, and 8.1% for China. Having completed 2020 with 1.8% growth with a fast recovery which was enabled by the measures supporting economic activity, the Turkish economy maintained its growth momentum also in 2021 and expanded by 7.3%, 21.9%, 7.5% and 9.1% respectively for each quarter according to chain volume measures, whereas annual growth was 11%. Main factors supporting growth were private consumption, which played an important part with the contribution of the base effect, and exports which saw record levels. In the global reinsurance market, total economic losses resulting from natural catastrophes went up by 33% to reach USD 280 billion in 2021. Insured cat losses, on the other hand, exceeded the 2020 figure of USD 82 billion reaching USD 120 billion and making 2021 the second costliest year on record for the industry. Majority of losses were caused by secondary perils such as flood, wildfire, winter weather and severe weather conditions. Only 43% of the global natural catastrophe losses were insured, pointing out to the fact that insurance penetration remains relatively low for secondary perils even in developed countries. It is still difficult to predict the ultimate impact of the Covid-19 pandemic, which undoubtedly continued to be one of the hot topics for the insurance and reinsurance industry, with total reported insured losses reaching USD 48 billion by the end of 2021. Around 40% of this figure relates to incurred but not reported (IBNR) losses, primarily owing to loss of profit claims from property lines. As the global economy is in the recovery phase after the shock caused by the pandemic, the profitability of the insurance industry is expected to boost in 2022 and onwards. Despite the losses caused by major natural disasters as well as the increase in the frequency of medium-scale events and catastrophe losses driven by secondary perils and the uncertainty around the development of Covid-19 losses, with the help of improved terms and conditions in favor of the reinsurers, total of traditional and alternative reinsurance capital rose from 2020 year-end figure of USD 650 billion to USD 660 billion by the end of June 2021. 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. This nominal growth corresponds to a contraction of 6.3% in real terms in view of the inflation factor. Generating 83.2% of the sector’s premium, Non-Life premium reached TL 87.6 billion with an annual nominal growth by 28.5%. Nevertheless, the Non-Life insurance income shrank by 5.6% in real terms, particularly due to the relative contraction in the Land Vehicles Liability that has 27% share in total premium. In Life, nominal growth was 22.8% in connection with the change in the volume of individual loans, and the share of the branch in total premium went down from 17.5% to 16.8%.