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) 32 Operating expenses As of December 31, 2018 and 2017, the operating expenses are disclosed as follows: December 31, 2018 December 31, 2017 Life Non-Life Life Non-Life Commission expenses (Note 17) 6.404.104 277.545.222 3.699.959 236.950.224 Commissions to the intermediaries accrued during the period (Note 17) 7.101.817 309.672.092 4 .001.994 258.280.358 Changes in deferred commission expenses (Note 17) (697.713) (32.126.870) (302.035) (21.330.134) Employee benefit expenses (Note 33) 786.531 51.527.690 762.104 44.133.697 Foreign exchange losses 117.919 70.362.562 51.597 26.203.562 Administration expenses 226.149 15.706.760 210.082 13.041.930 Commission income from reinsurers (Note 10) - (2.084.256) (1.611) (1.636.623) Commission income from reinsurers accrued during the period (Note 10) - (2.228.392) - (1.803.088) Change in deferred commission income (Note 10) - 144.136 (1.611) 166.465 Outsourced benefits and services 20.622 1.144.486 22.012 1.118.514 Other 24.982 11.222.083 28.814 6.847.942 Total 7.580.307 425.424.547 4.772.957 326.659.246 33 Employee benefit expenses As of December 31, 2018 and 2017, employee benefit expenses are disclosed as follows: December 31, 2018 December 31, 2017 Life Non-Life Life Non-Life Wages and salaries 572.422 38.880.258 558.452 33.271.119 Employer’s share in social security premiums 128.864 7.687.682 128.566 6.915.865 Pension fund benefits 85.245 4.959.750 75.086 3.946.713 Total (Note 32) 786.531 51.527.690 762.104 44.133.697 34 Financial costs Finance costs of the period are presented in “Note 4.2 - Financial Risk Management ” above. There are no finance costs classified in production costs or capitalized on tangible assets. All financial costs are directly recognised as expense in the unconsolidated statement of income. 35 Income tax Income tax expense in the accompanying financial statements is as follows: December 31, 2018 December 31, 2017 Corporate tax expense: Corporate tax provision (27.682.983) (44.131.400) Deferred taxes: Origination and reversal of temporary differences 1.814.922 9.420.780 Total income tax expense / (income) (25.868.061) (34.710.620) Millî Reasürans Annual Report 2018 150 / Unconsolidated Financial Statements and Independent Auditors’ Report