MILLI_RE_ANNUAL REPORT 2022

Of these premiums, 86.9% (TL 204.2 billion) were earned in non-life branches, which were up by 133.1% on a nominal basis and amounted to TL 204.2 billion. Inflation and exchange rate movements contributed significantly to the growth in premiums, particularly in the motor vehicle liability and motor vehicle branches. While nominal growth in life-policy premiums was 74% year-on, their share of the industry’s total premium production shrank from 17% in 2021 to 13% in 2022, paralleling a contraction in the volume of banks’ retail lending. While very strong nominal rises in premium production were registered in nearly every non-life branch in 2022, the greatest increases took place in the two branches that together also account for the biggest share of premium insurers’ receipts: motor vehicle liability (up 147%) and motor vehicle (up 212%). Looking ahead… In recent years there has been a growing demand for new types of insurance products that address newly emerging needs as well as for more traditional ones. For example, the increased use of technology and recourse to remote work during the pandemic has led to an increasingly greater demand for cyber insurance products. The need of non-business as well as of business users to protect themselves against losses arising from online threats and data breaches can likewise be expected to result in increases both in the variety of such products and in the number of insurers offering cybersecurity coverage. Owing in part to new legal regulations and to the government’s increasing focus on alternative financial markets, there has also been a shift to takaful insurance products in recent years. Premiums earned on participation insurance policies corresponded to 5% of the Turkish insurance industry’s total premium production in 2022. In any event, developments in inflation, exchange rate movements, and changes in the growth dynamics of the country’s economy will play an important role in determining the direction of the insurance industry in the period ahead. New legal and regulatory framework changes–particularly those that help the sector keep pace with and adapt to innovations in digital technology–will accelerate the industry’s development and impart additional momentum to its growth. Coming up with and offering properly priced innovative products and forms of coverage that address policyholders’ needs through the right channels while also adhering to strategies that focus on sustainable growth and profitability will become increasingly more important for insurance companies. The worldwide contraction in capacity available for 2022 renewals that was attributable to a steadily increasing reluctance among insurers to provide coverage for catastrophic risks manifested itself much more in Turkish insurers’ 2023 renewals owing to increasing occurrence and frequency of secondary catastrophic losses and to increases in costs and catastrophe liabilities fueled by exchange rate movements and inflation. In the uncommonly belated January 2023 renewals, insurers who had filed claims were confronted by serious reinsurance renewal surcharges while minimum limits were increased across the board, even for those who had not. Collateral requirements were also made much more stringent. Most Turkish insurance companies continued protecting their 2023 risk portfolios by means of surplus proportional bouquet treaties. Providing capacity to 25 companies making use of proportional reinsurance after their 2023 renewals and as the leading provider in the reinsurance treaties of 21 companies, Milli Re secured a 30% market share of overall premium production. Milli Re also participated in the programs of nine of the twelve companies that make use of excess-of-loss contracts to cover their risk portfolios. Supported by its robust capital structure, its deep technical knowledge and experience of the Turkish market, and longstanding tradition of delivering international-standard service quality, Milli Re will continue to stand by its business partners as a supplier of effective reinsurance solutions. At end-2022, the company’s paid-in capital amounted to TL 660 million; its total assets and total equity were worth TL 12,400 million and TL 5,056 million respectively. During the previous twelve-month period, it had booked TL 4,808 million in premiums of which 76.7% were earned on home-market business and the remaining 23.3% on cross-border policies. In closing, we are deeply grateful to all our stakeholders for their contributions towards our company’s continued and consistently successful performance in 2022. The Board of Directors 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 81 MİLLİ RE 2022 ANNUAL REPORT