MILLI_RE_ANNUAL REPORT 2022

We respectfully submit for the consideration and approval of the Milli Re General Assembly of Shareholders our company’s 94 th fiscal-year balance sheet, income statement, distributable-profits statement, changes in equity statement, and cashflow statement for 2022, all of which have been prepared in accordance with principles and rules mandated by the Ministry of Treasury and Finance. High inflation and tighter financial conditions in many countries, Russia’s war on Ukraine, and a resurgence of Covid-19 infections in China, as well as other challenges continued to cloud the global economic outlook all year long in 2022. With inflation taking off and reaching levels not witnessed in decades, most countries’ monetary authorities tightened monetary policy while households, already hit by the stream of pandemic-related financial support drying up, saw their buying power further reduced. The upshot is that the global economy lost a great deal more momentum than had been expected. While the Russia-Ukraine war disrupted regional supply chains, higher energy prices also pushed up producers’ input costs. Even though the economic fallout from the pandemic had begun to recede in most countries, renewed outbreaks in China continued to hamper its national economy. Drawing attention particularly to both issues in its January 2023 World Economic Outlook update, the IMF revised its projections downward saying that global economic growth, which it estimated to be 3.4% overall in 2022, would most likely drop to 2.9% in 2023 and then recover slightly to 3.1% in 2024. Many international actors predict that the current uncertain environment will continue to affect the entire world in the years ahead. Furthermore, they also express concern that the multidimensional nature of the challenges may reduce the chances of global cooperation on issues such as sustainability, the environment, climate change, and supply security. Despite the global economic outlook however, which had looked likely to recover after the pandemic but then deteriorated due to geopolitical risks and high inflation, growth in the Turkish economy remained on course. Disruptions in regional supply chains that began in late February 2022 with Russia’s invasion of Ukraine had worldwide implications insofar as both countries are major global suppliers of raw materials and agricultural products. Although rising global raw material and energy prices posed risks for producers in Turkey, their impact on the Turkish economy’s growth performance turned out to be limited: despite them, the country’s GDP still managed to grow by 5.6% in 2022. Credit Guarantee Fund financing resources provided to exporters and to the tourism industry as part of the new “Türkiye Economy Model” (TEM) which the government introduced mainly to shore up macroeconomic and financial stability were decisive in achieving this growth performance. While TEM’s anti-inflationary measures did help moderate their steady rise somewhat, as of end-2022 consumer prices were still 64.27% higher than what they were at the beginning of the year. Rampant high inflation, increasing political tensions, worsening energy bottlenecks, and proliferating economic problems as well as the worldwide social impact of all of these issues fueled ever greater concerns as to the uncertainty of future expectations. Turning now to the global reinsurance market, total economic losses attributable to natural disasters amounted to USD 270 billion or 16% less than in 2021. Although insured catastrophic losses once again topped the USD 100 million mark, at USD 120 billion they were still pretty close to their previous-year level. Consistent with what has been an ongoing trend for several years now, these losses were largely associated with the secondary effects of natural disasters; however there was a significant worldwide uptick in severe weather events such as hail, floods, drought, and extreme weather attributable to prevailing La Niña conditions. That insured losses resulting from natural disasters corresponded to only 45% of all the associated global economic loss indicates that very much of our world is still either underinsured or not insured at all. Despite some truly spectacular catastrophic losses caused by extreme weather events such as Hurricane Ian last year, reinsurers registered technically profitable results thanks in part to better pricing and to tighter terms and conditions. However, owing to such factors as largely reduced financial earnings and unrealized investment losses, the reinsurance industry’s total capital (including its alternative capital) contracted from USD 675 billion to USD 560 billion in the nine months to end-September 2022. According to figures published by the Insurance Association of Turkey, the Turkish insurance industry’s premium production amounted to TL 235 billion in 2022. On a nominal basis, this corresponds to a year-on increase of 123.2%. This growth corresponds to a real increase of 36% when the inflation factor is taken into account. Board of Directors 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 80 MİLLİ RE 2022 ANNUAL REPORT