MILLI REASURANS ANNUAL REPORT 2018

Millî Reasürans Türk Anonim Şirketi NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) The effect of changes in fair values of the associates and the available-for-sale financial assets on equity that is resulted from the fluctuations on index (all of the other variables are assumed to be fixed) are as follows as of December 31, 2018 and 2017: Change in index December 31, 2018 December 31, 2017 Market price of equity 10% 4.938.518 7.154.259 Gain and losses from financial assets Gains and losses recognized in the statement of income, net: December 31, 2018 December 31, 2017 Gains transferred from the statement of equity to the statement of income on disposal of available for sale financial assets ( Note 15) 20.482.905 3.047.570 Interest income from bank deposits 209.673.361 128.135.803 Interest income from debt securities classified as available-for-sale financial assets 1.846.363 (348.208) Income from equity shares 9.546.226 8.592.946 Foreign exchange gains 139.716.863 41.419.317 Income from investment funds 29.276.621 22.067.629 Interest income from repos 613.305 454.895 Income from subsidiaries 157.046.405 89.674.722 Income from affiliates 31.731.033 28.233.340 Investment income 599.933.082 321.278.014 Foreign exchange losses (57.759.377) (21.942.845) Loss from disposal of financial assets (11.907.041) (996.561) Investment management expenses (including interest) (511.981) (846.635) Investment expenses (70.178.399) (23.786.041) Investment income, net 529.754.683 297.491.973 Gains and losses recognized in the statement of equity, net: December 31, 2018 December 31, 2017 Fair value changes in available for sale financial assets (Note 15) (70.821.824) 24.601.238 Gains transferred from the statement of equity to the statement of income on disposal of available for sale financial assets ( Note 15) (20.482.905) (3.047.570) Total (91.304.729) 21.553.668 Capital management The Company’s capital management policies include the following: -- To comply with the insurance capital requirements required by Republic of Turkey Ministry of Treasury and Finance -- To safeguard the Company’s ability to continue as a going concern In accordance with the “Communiqué on Measurement and Assessment of Capital Adequacy for Insurance, Reinsurance and Individual Pension Companies” issued by Republic of Turkey Ministry of Treasury and Finance on August 23, 2015 dated and 29454 numbered; the Company measured its minimum capital requirement as TL 467.082.690 (December 31, 2017: TL 384.768.809) as of December 31, 2018. As of December 31, 2018 and December 31, 2017, the capital amount of the Company presented in the unconsolidated financial statements are TL 1.736.300.262 and TL 1.587.067.868 respectively and capital surplus of the Company is amounting to TL 1.079.355.016 (December 31, 2017: TL 982.382.182) according to the communiqué. Millî Reasürans Annual Report 2018 132 / Unconsolidated Financial Statements and Independent Auditors’ Report