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) Branche s December 31, 2017 Gross total claims liability (*) Reinsurance share of total claims liability Net total claims liability Land Vehicles Liability 760.470.215 (23.933.307) 736.536.908 Land Vehicles 716.831.060 (22.123.590) 694.707.470 Fire and Natural Disasters 609.435.692 (160.698.754) 448.736.938 Health 414.379.027 (25.540.811) 388.838.216 General Damages 333.826.800 (63.053.016) 270.773.784 General Liability 67.891.271 (7.929.900) 59.961.371 Sea Vehiles 83.104.425 (32.903.093) 50.201.332 Casualty 49.643.113 (7.228.749) 42.414.364 Marine 56.393.114 (13.004.328) 43.388.786 Life 15.010.302 (585.759) 14.424.543 Air Vehicles 159.260.684 (156.660.724) 2.599.960 Financial Losses 14.450.056 (12.348.494) 2.101.562 Air Vehicles Liability 25.717.182 (25.261.475) 455.707 Fidelity Guarantees 399.558 - 399.558 Credits 3.069.415 (2.912.603) 156.812 Legal Protection 81.864 - 81.864 Sea Vehiles Liability (12.340) - (12.340) Total 3.309.951.438 (554.184.603) 2.755.766.835 (*) Total claims liability includes outstanding claims reserve (paid). Effects of the changes in assumptions used in the measurement of insurance assets and liabilities showing the effect of each change separately that has significant effect on financial statements In the current year, there are no material changes in the assumptions of measurement of insurance assets and liabilities. 4.2 Management of financial risk Introduction and overview This note presents information about the Group’s exposure to each of the below risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. The Group has exposure to the following risks from its use of financial instruments: -- credit risk -- liquidity risk -- market risk The Group is subject to credit risk, market risk (foreign currency risk, interest rate risk and price risk in relation with financial investments) and liquidity risk due to assets and liabilities. The Group’s exposure to each of the above risks is assessed according to “Application Principles in Respect of Risk Limits”. The Group monitors its receivables by obtaining comprehensive information about the debtors and debtors’ activities. The risk over investment portfolio is managed by measuring and reporting the market risk daily, reassessing the results validity and applying different scenario analyses. The Group’s exposure to each of the above risks is measured by Internal Control and Risk Management Service independently, reported to Board of Directors and units of İş Bankası through the Risk Committee. Credit risk Credit risk is the risk of financial loss to the Group if counterparties (parties issued financial instrument, insurance companies, reinsurance companies and other debtors) having business relationship with the Group fails to meet its contractual obligations. The Group manages this credit risk by regularly assessing reliability of the counterparties. Millî Reasürans Annual Report 2018 206 / Consolidated Financial Statements and Independent Auditors’ Report