MILLIRE ENG2024

2.26 Mathematical reserves As of December 31, 2024, there are no mathematical provisions. (31 December 2023: None). 2.27 Unexpired risk reserves (URR) Milli Reasürans In accordance with the Communiqué on Technical Reserves, while providing unearned premiums reserve, in each accounting period, the companies should perform adequacy test covering the preceding 12 months due to the probability that future claims and compensations of the outstanding policies may be in excess of the unearned premiums reserve already provided. In performing this test, it is required to multiply the unearned premiums reserve, net with the expected claim/premium ratio, net. Expected claim/premium, net ratio is calculated by dividing incurred losses (outstanding claims reserve, net at the end of the period + claims paid, net -outstanding claims reserve, net at the beginning of the period) to earned premiums (written premiums, net + unearned premiums reserve, net at the beginning of the period -unearned premiums reserve, net at the end of the period). According to the “Communiqué on Amendments to Communiqué on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves” published in Official Gazette no 28356 dated July 17, 2012; besides the net unexpired risk reserve detailed in the above, gross unexpired risk reserve is also calculated. The test is performed on main branch basis and in case where the net and gross expected claim/premium ratio is higher than 95%, reserve calculated by multiplying the exceeding portion of the expected claim/premium ratio with the unearned premiums reserve of that main branch is added to the reserves of that branch. Difference between the gross and net amount is represents reinsurer’s share. Premiums paid for non-proportional reinsurance agreements are considered as premiums ceded to the reinsurance firms. The portion of the amounts paid for non-proportional reinsurance agreements corresponding to the relevant period is considered as the ceded premium in the net premium calculation. Within the scope of the circular dated December 10, 2012 and numbered 2012/15 of the Turkey Ministry of Treasury and Finance, the calculation of the provision for unexpired risks is carried out on the basis of the main branches. According to the circular regarding the provision for unexpired risk reserve (2019/5), Reinsurance companies can make the calculation on the basis of the underwriting (business) year. In this case, the calculation is made by proportioning the total gross final loss incurred for at least the last three writing (business) years to the total gross earned premiums (written premiums minus unearned premiums reserve). Although it is essential to repeat the calculation in each quarter, if it can be clearly seen that the repetition of the calculation in quarterly periods will not produce meaningful results due to the structure of the agreements made or the agreement processes of the parties, it is possible to use the calculation made for the end of the year in the current year interim period estimates. With the issuance of the Circular numbered 2022/27 titled “Provision for Unexpired Risks” by the Insurance and Private Pension Regulation and Supervision Agency on October 24, 2022, the previous circular numbered 2019/5 has been revoked. It is possible to perform calculations on an annual basis. The Company applies the year-based calculation defined in the Circular only within the Motor Vehicles Liability branch. However, due to significant fluctuations experienced in the current year related to economic indicators such as inflation and exchange rates as of September 30, 2022, and in order to eliminate the misleading effect caused by these fluctuations, particularly in the Fire, Natural Disasters, and General Liability branches which are heavily influenced by such fluctuations, calculations in these branches have been performed using the relevant methodology. 218 Millî Reasürans Türk Anonim Şirketi (Currency: Turkish Lira (TL)) Notes to the Consolidated Financial Statements As of December 31, 2024 (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) MİLLİ RE