Milli Re 2025 Annual Report

According to December 5, 2014 dated “Circular regarding Outstanding Claims Reserve (2014/16)”, the Company constitutes data by taking base of acceptance year rather than Casualty period for the reason of characteristic of reinsurance operations in course of ACLM calculation and calculates ACLM once in a year as of year-end. The methods indicated in the table are calculated according to paid claims. Milli Reasürans received approval from the General Directorate of Insurance of the Treasury Undersecretariat of the Republic of Turkey through a letter numbered 05403 dated January 31, 2011, allowing it to perform IBNR calculations based on paid losses instead of incurred loss data when necessary, depending on the data quality for each line of business. To confirm the currency of this request, a written application was made to the SEDDK on January 6, 2025. In a letter dated January 15, 2025, numbered E-97354901-010.06.02-3701446, the SEDDK referred to the General Communiqué on the Provision for Incurred But Not Reported Claims numbered 2014/6, confirmed the currency of the request, and deemed it appropriate for the IBNR calculation to be made based on paid losses. During the calculation of ACLM, the recourse and salvage amounts to be deducted according to the method determined by the Ministry must be calculated over the collected amounts (including the interest income collected together with the recourse incomes and the litigation costs incurred for the collection of this receivable and attorney fees). When calculating the aforementioned amounts, only the recourse and salvage collections for which compensation was paid within the period subject to the calculation should be taken into account and associated with the period in which they were collected in the table. Salvage and subrogation income which will be deducted in the calculation of ACLM stated by the Under secretariat should be based on collected amount (collected amount includes interest income over salvage and subrogation income, expertise, consultant and lawsuit expenses). Collections are taken into account according to their collection period. The Republic of Turkey’s Prime Ministry Treasury Undersecretariat (as of July 10, 2018: Ministry of Treasury and Finance of the Republic of Turkey) According to the letter dated January 12, 2012 and numbered B.02.1.HZN.0.10.03.01/854 sent by Republic of Turkey Ministry of Treasury and Finance to the Company, determination of final claims for the last business year used in IBNR calculation has been changed as at December 31, 2011. Accordingly, the final premium amount earned for the last business year is determined by considering premium development factors since premiums may be accrued in the following years under the terms of the agreements. Based on the calculated final premium amount of the last business year, unearned premium reserves and earned premiums are determined. Aforementioned earned premium amount is multiplied by the average of claim/premium ratio of the previous years to determine final claims amount of the last business year. IBNR is calculated by subtracting the paid and reported claims of the last business year from the final claims amount determined by the aforementioned method. In addition, IBNR amounts reported by sedan companies are taken into consideration and in order to prevent duplicate provision; paid claims, outstanding claims reserve and premiums of reported claims are excluded from the data set used in the calculation of IBNR. The Company determined final IBNR amount by adding reported IBNR amounts to IBNR amounts calculated from the data prepared in accordance with the principals mentioned above In accordance with December 5, 2014 dated and 2014/16 numbered “Circular for Outstanding Claims Reserve” of Republic of Turkey Ministry of Treasury and Finance, ACLM calculation should be on main branch. However, as at December 31, 2012, Milli Reasürans has calculated ACLM reserve for General Losses main branch as two separate subbranches namely agriculture and non-agriculture branches. Due to the differing characteristics of the Agriculture sub-branch and the Engineering sub-branches within the General Liability main branch in terms of the process of claims transforming into paid losses, it was argued that the IBNR calculated in this main branch could lead to unhealthy and non-representative results. Consequently, a request for permission was submitted to the Treasury Undersecretariat of the Republic of Turkey on January 17, 2013, via a letter numbered 300, to allow the calculation of the IBNR in the General Liability main branch to be conducted as two separate sub-branches: Agriculture and Non-Agriculture. The Treasury Undersecretariat responded with a letter numbered 24179134 on January 28, 2013, granting permission for the IBNR calculations in the General Liability main branch to be conducted on a sub-branch basis, distinguishing between Agriculture and Non-Agriculture. The amounts calculated as of December 31, 2025, have been reflected in the records. 248 MİLLÎ REASÜRANS 2025 Annual Report Notes to the Consolidated 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)