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) There are not any treasury shares held by the Company itself or by its subsidiaries or associates. There are not any treasury shares issued which will be subject to sale in accordance with forward transactions and contracts. Legal reserves The legal reserves consist of first and second legal reserves in accordance with the Turkish Commercial Code. The first legal reserve is appropriated out of the statutory profits at the rate of 5%, until the total reserve reaches a maximum of 20% of the entity’s share capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the entity’s share capital. The first and second legal reserves are not available for distribution unless they exceed 50% of the share capital, but may be used to absorb losses in the event that the general reserve is exhausted. The movements of legal reserves are as follows: December 31, 2018 December 31, 2017 Legal reserves at the beginning of the period 104.684.305 90.368.821 Transfer from profit 7.291.447 8.595.616 Accounted according to the equity method 11.065.714 5.719.868 Legal reserves at the end of the period 123.041.466 104.684.305 As of December 31, 2018 and December 31, 2017, “Other Reserves and Retained Earnings” includes extraordinary reserves, gains to be added to equity and buildings for own use revaluation differences and other profit reserves. Extraordinary reserves The movement of extraordinary reserves is as follows: December 31, 2018 December 31, 2017 Extraordinary reserves at the beginning of the period 179.927.411 81.426.607 Transfer from profit 46.420.386 70.647.616 Accounted according to the equity method 58.281.764 27.853.188 Extraordinary reserves at the end of the period 284.629.561 179.927.411 Other profit reserves According to revision on TAS 19, actuarial profit and losses that recognized in income statement in termination indemnity calculation before, is recognized in “Other Profit Reserves” account under equity in current period financial statements. The amount of TL (2.073.808), (December 31, 2017 TL (1.367.215 TL)) regarding actuarial calculation is presented in other profit reserves account, in calculation of termination indemnity as of December 31, 2018. Movement of other profit reserves is presented below: December 31, 2018 December 31, 2017 Other profit reserves at the beginning of the period 24.383.602 25.812.080 Actuarial gains/losses (706.593) (342.955) Accounted according to the equity method (1.269.067) (1.085.523) Other profit reserves at the end of the period 22.407.942 24.383.602 Statutory reserves After the allocation of first legal reserves and first dividend to shareholders, reserve for natural disasters and catastrophe might be allocated, if deemed necessary, based on the suggestion of the Board of Directors and decision of the General Assembly. As of December 31, 2018, there are no funds allocated in this manner (December 31, 2017: None). As of December 31, 2018, the statutory reverses that are accounted according to the equity method amounting to TL 23.673.660 (December 31, 2017: 14.966.866 TL). Millî Reasürans Annual Report 2018 Unconsolidated Financial Statements and Independent Auditors’ Report / 141