Milli Re 2025 Annual Report

As explained in the Circular (2017/07) on Discounting Net Cash Flows Arising from the Provision of Outstanding Compensation published on September 15, 2017, insurance companies will be able to discount the net cash flows generated by the provision of outstanding compensation that they allocate in accordance with the insurance legislation according to the principles set out in the circular. In accordance with the circular no 1 in the article, it has been made mandatory to apply discounts in the “General Liability” and “Motor Third Party Liability branches of the provision for outstanding compensation. The company has chosen to apply discounts only for mandatory branches and no discounts are made for other branches. With the Circular No. 2025/32 “Circular on Amendments to Circular No. 2016/22 on Discounting Net Cash Flows Arising from the Provision for Outstanding Compensation” published on December 18, 2024, the Circular’s 7th article was changed as “Net cash flows are discounted to cash value by taking into account 29% as of the financial reporting date”. In accordance with the relevant general circular, the discount rate applied to the net cash flows arising from the outstanding claims reserve has been 35% as of December 31, 2024 (December 31, 2024: 35%). Accordingly, the Company has calculated the net discounted amount of the outstanding claims reserve as TL 2.380.906.267 as of December 31, 2025 (December 31, 2024: TL 1,960,424,461). The change in the discount rate has resulted in an increase of TL 160.558.152 on the net outstanding claims reserve recognized in the financial statements as of December 31, 2025. The Company’s net outstanding claims provisions by branch as of December 31, 2025 and 2024 are given below, before and after discount: December 31, 2025 Branches Net outstanding claims before discount Discount Amount Discounted net outstanding claims provision Motor Third Party Liability 895.431.226 (499.139.333) 396.291.893 General Liabilities 2.792.113.060 (1.881.766.934) 910.346.126 Total 3.687.544.286 (2.380.906.267) 1.306.638.019 December 31, 2024 Branches Net outstanding claims before discount Discount Amount Discounted net outstanding claims provision Motor Third Party Liability 635.982.639 (371.816.439) 264.166.200 General Liabilities 2.167.620.695 (1.588.608.022) 579.012.673 Total 2.803.603.334 (1.960.424.461) 843.178.873 2.26 Mathematical reserves There is no mathematical provision in the Company’s financial statements as of December 31, 2025. (December 31, 2024: None) 2.27 Unexpired risk reserves (URR) 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 compensation 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). 146 MİLLÎ REASÜRANS 2025 Annual Report Notes to the Unconsolidated Financial Statements As of December 31, 2025 Millî Reasürans Türk Anonim Şirketi (Currency: Turkish Lira (TRY)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish)