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) 17 Insurance contract liabilities and reinsurance assets Estimation of the ultimate payment for the outstanding claims is one of the most important accounting assumptions of the Company. Estimation of the insurance contract liabilities contains several ambiguities by nature. The Company makes calculation of the related insurance technical provisions accordance with the Insurance Legislation and reflects them into financial statements as mentioned in Note 2 - Summary of significant accounting policies . As of December 31, 2018 and 2017, technical reserves of the Company are as follows: December 31, 2018 December 31, 2017 Unearned premiums reserve, gross 597.910.179 460.020.207 Unearned premiums reserve, ceded (Note 10) (18.693.888) (6.817.997) Unearned premiums reserve, net 579.216.291 453.202.210 Outstanding claims reserve, gross 1.208.024.137 978.797.675 Outstanding claims reserve, ceded (Note 10) (48.942.099) (47.871.980) Outstanding claims reserve, net 1.159.082.038 930.925.695 Unexpired risks reserve, gross 3.559.131 6.279.176 Unexpired risks reserve, ceded (Note 10) (256.126) (445.123) Unexpired risks reserve, net 3.303.005 5.834.053 Equalization reserve, net 100.987.550 70.933.229 Mathematical reserves 73.795 116.109 Total technical reserves, net 1.842.662.679 1.461.011.296 Short-term 1.741.675.129 1.390.078.067 Medium and long-term 100.987.550 70.933.229 Total technical reserves, net 1.842.662.679 1.461.011.296 As of December 31, 2018 and 2017, movements of the insurance liabilities and related reinsurance assets are presented below: Unearned premiums reserve December 31, 2018 Gross Ceded Net Unearned premiums reserve at the beginning of the period 460.020.207 (6.817.997) 453.202.210 Written premiums during the period 1.320.177.533 (165.195.789) 1.154.981.744 Earned premiums during the period (1.182.287.561) 153.319.898 (1.028.967.663) Unearned premiums reserve at the end of the period 597.910.179 (18.693.888) 579.216.291 Unearned premiums reserve December 31, 2017 Gross Ceded Net Unearned premiums reserve at the beginning of the period 377.386.976 (6.276.405) 371.110.571 Written premiums during the period 1.085.712.889 (129.912.142) 955.800.747 Earned premiums during the period (1.003.079.658) 129.370.550 (873.709.108) Unearned premiums reserve at the end of the period 460.020.207 (6.817.997) 453.202.210 Millî Reasürans Annual Report 2018 Unconsolidated Financial Statements and Independent Auditors’ Report / 143