MILLI RE 2023 ANNUAL REPORT

TURKISH INSURANCE MARKET at year-end 2023, what was a repeat of the previous year’s result. The earthquakes that measured 7.7 and 7.6 respectively on the Richter scale and centered in Pazarcık and Elbistan districts of Kahramanmaraş on 06 February 2023 were felt across a broad geography covering the Southeast Anatolia, East Anatolia, Central Anatolia and Mediterranean Regions. Having struck Hatay, Osmaniye, Adıyaman, Diyarbakır, Şanlıurfa, Gaziantep, Kilis, Adana, Malatya and Elâzığ as well as Kahramanmaraş, the earthquakes affected a local population of approximately 14 million people. The social lives of the people in the region were extremely negatively affected by the earthquakes, while the national economy took a serious blow. The reported total burden of the earthquakes on the Turkish economy is USD 104 billion. According to the Kahramanmaraş and Hatay Earthquakes Report released in March 2023 by the Presidency of Strategy and Budget, damages to houses make up the largest portion of the earthquake- inflicted losses with USD 57 billion. This is followed by damages to public infrastructure and service buildings with USD 13 billion and damages to the private sector excluding houses with USD 12 billion. Within the economic loss resulting from the earthquakes, insured losses amount to USD 5 billion; of this amount, it is envisaged that 5% will be borne by insurers and 95% by reinsurers. As of year-end 2023, Milli Re made claims payments associated with the earthquakes in the amount of EUR 322 million. With a cautious approach, our company’s total ultimate losses will possibly reach the order of EUR 550 million. Modification of the Optional Earthquake Tariff has been an important post-earthquake development with respect to the Turkish insurance industry. TL 400 million target set for the free tariff implementation was increased to TL 2 billion as of 01 August 2023, and tariff prices on the basis of risk groups were raised by 25% as of 01 January 2024. Another important regulatory change in 2023 has been the reset minimum capital amounts required for incorporating an insurance company. By a circular released on 27 November 2023, Insurance and Private Pension Regulation and Supervision Agency increased the iminium capital required for incorporating an insurance company that wishes to operate in all branches from TL 500,000,000 to TL 1,600,000,000. The decision of the Insurance and Private Pension Regulation and Supervision Agency on 28 November 2023 to administer precaution against Gri Sigorta and Melce Sigorta insurance companies and to hand over the handling of their insurance portfolio to the Assurance Account was another significant development in the sector in 2023. In the period ahead, the economy policy to be implemented in the aftermath of the local elections will be influential upon the course of the insurance industry. Moreover, in addition to consideration of exchange and inflation rate impact in pricing, disciplined continuance of the positive course that emanated from correct pricing and capturing the necessary technical requirements in policies following the Kahramanmaraş earthquakes will play a major role on the industry’s technical profitability. It will be crucial for the insurance industry that heavily felt the effects of the earthquake disaster of 2023 to come up with and offer the properly- priced innovative products and forms of coverage that address policyholders’ genuine needs in order to sustain its growth and profitability, WITHIN THE ECONOMIC LOSS RESULTING FROM THE EARTHQUAKES, INSURED LOSSES AMOUNT TO USD 5 BILLION; OF THIS AMOUNT, IT IS ENVISAGED THAT 5% WILL BE BORNE BY INSURERS AND 95% BY REINSURERS. 50 MİLLİ RE