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) The movements of the allowances for impairment losses for receivables from main operations during the period are as follows: December 31, 2018 December 31, 2017 Provision for receivables from insurance operations at the beginning of the year 244.199.179 205.725.572 Collections during the period (Note 47) (596.362) (591.941) Impairment losses provided during the period (Note 47) 2.440.564 1.079.389 Impairment losses provided for subrogation - salvage receivables during the period (Note 47) 68.986.591 36.875.264 Valuation of doubtful receivables (Note 47) 7.097.592 1.110.895 Provision for receivables from insurance operations at the end of the year 322.127.564 244.199.179 (*) As of December 31, 2018 subrogation and salvage receivables is not included in the movement table of the provision for doubtful receivables amounting to TL 16.172.744. The movements of the allowances for impairment losses for other receivables are as follows: December 31, 2018 December 31, 2017 Provision for other receivables at the beginning of the year (53.177) (53.177) Collections during the period (Note 47) (356.186) - Provision for other receivables at the end of the year (409.363) (53.177) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset as a result of the imbalance between the Group’s cash inflows and outflows in terms of maturity and volume. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities. In respect of this risk which is measured by quantitative methods, any liquidity deficit is observed via the maturity analysis of assets and liabilities in the statement of balance sheet. Furthermore, liquidity structure of the Group is monitored by using the following basic indicators in respect of liquidity ratios: -- Liquid Assets/ Total Assets -- Liquidity Ratio -- Current Ratio -- Premium and Reinsurance Receivables/ Total Assets The results evaluated by the Risk Committee and reported regularly to the Board of Directors. Action plan is determined by the Board of Directors in the case of having exposure higher than acceptable level of risk and probability. Management of the liquidity risk The Group considers the maturity match between asset and liabilities for the purpose of avoiding liquidity risk and ensure that it will always have sufficient liquidity to meet its liabilities when due . Millî Reasürans Annual Report 2018 208 / Consolidated Financial Statements and Independent Auditors’ Report