MILLI REASURANS ANNUAL REPORT 2018

Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED 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) Anadolu Sigorta, according to Provisional Article 12 of the Regulation on the Amendment of the Regulation on Tariff Implementation Principles in the Compulsory Motor Insurance for Compulsory Liability for Land Vehicles, published in the Official Gazette dated July 11, 2017 and numbered 30121, the “Risk Insured Pool” has been established for those vehicle groups with high damage frequencies. In this context, the premiums and damages related to the traffic insurance policies issued within the scope of the pool starting on April 12, 2017 have started to be shared among insurance companies within the framework of the principles determined by the Undersecretariat of Turkish Motor Vehicle Office. After the change in legislation, by the Turkish Motor Vehicles office (TMTB) within the scope of monthly declarations, accounting records were created on premiums, damages and commission amounts transferred the pool and transferred to the pool according to its share, and also accounting was made for the amounts for the period not yet communicated by the Turkish Motor Vehicles office. Except for the life branch, outstanding claims reserves consists of claims are recorded in the year in which they occur, based on reported claims and the difference between the result of the actuarial chain ladder method whose content and application criteria stated by the Republic of Turkey Ministry of Treasury and Finance and reported but not settled claims are considered as incurred but not reported (“IBNR”) claims. Actuarial chain ladder method may be differentiated by the Republic of Turkey Ministry of Treasury and Finance for reinsurance companies due to their special conditions. Methods for the calculation of provision for incurred but not reported claims are determined by the Republic of Turkey Ministry of Treasury and Finance in the life-branch. The ACML methods selected for each branch is provided in the following section. The Group could not perform big claim elimination by Box Plox. December 31, 2018 December 31, 2017 Branches Milli Reasürans Anadolu Sigorta Milli Reasürans Anadolu Sigorta Fire and Natural Disasters Standard Chain Standard Chain Standard Chain Standard Chain General Damages (*) Standard Chain Standard Chain Standard Chain Standard Chain General Liability Standard Chain Cape Cod Standard Chain Cape Cod Land Vehicles Liability Standard Chain Cape Cod Standard Chain Cape Cod Marine Standard Chain Standard Chain Standard Chain Standard Chain Sea Vehicles Standard Chain Standard Chain Standard Chain Standard Chain Land Vehicles Standard Chain Standard Chain Standard Chain Standard Chain Casualty Standard Chain Standard Chain Standard Chain Standard Chain Health Standard Chain Standard Chain Standard Chain Standard Chain Air Vehicles Standard Chain Standard Chain Standard Chain Standard Chain Legal Protection Standard Chain Standard Chain Standard Chain Standard Chain Sea Vehicles Liabilities Sector Average (Insurance Association of Turkey 09/2018) Standard Chain Sector Average (Insurance Association of Turkey 09/2017) Standard Chain Air Vehicles Liability Sector Average (Insurance Association of Turkey 09/2018) Standard Chain Sector Average (Insurance Association of Turkey 09/2017) Standard Chain Fidelity Guarantees Sector Average (Insurance Association of Turkey 09/2018) - Sector Average (Insurance Association of Turkey 09/2017) -- Financial Losses Sector Average (Insurance Association of Turkey 09/2018) Standard Chain Sector Average (Insurance Association of Turkey 09/2017) Standard Chain Credit Sector Average (Insurance Association of Turkey 09/2018) Standard Chain Sector Average (Insurance Association of Turkey 09/2017) Standard Chain Life Sector Average (Insurance Association of Turkey 09/2018) - Sector Average (Insurance Association of Turkey 09/2017) -- Facultative Third Party Liability - Standard Chain -- Standard Chain (*) Two separate calculations have been made as agriculture and non agriculture sub branches. (Milli Reasürans T.A.Ş.). Millî Reasürans Annual Report 2018 194 / Consolidated Financial Statements and Independent Auditors’ Report