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) Exposure to foreign currency risk A 20 percent depreciation of the TL against the following currencies as of December 31, 2018 would have increased or decreased equity and profit or loss (excluding tax effects) by the amounts shown below (December 31, 2017: 10 percent depreciation of the TL). This analysis assumes that all other variables, in particular interest rates, remain constant. In case of a 20 percent appreciation of the TL against the following currencies, the effect will be in opposite direction. December 31, 2018 December 31, 2017 Profit or loss Equity (*) Profit or loss Equity (*) US Dollar 43.550.536 101.941.642 15.468.152 28.835.424 Euro (13.185.507) (4.359.308) (3.520.954) (1.777.023) Others 6.457.039 6.457.039 (5.199.756) (5.199.756) Total, net 36.822.068 104.039.372 6.747.442 21.858.645 (*) Equity effect also includes profit or loss effect of 20% depreciation of TL against related currencies (December 31, 2017: 10% depreciation of TL). Exposure to interest rate risk The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows or fair values of financial instrument because of a change in market interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for repricing bands. As at reporting date; the interest rate profile of the Group’s interest earning financial assets and interest bearing financial liabilities are detailed as below: December 31, 2018 December 31, 2017 Financial assets Financial assets with fixed interest rates: 5.991.429.695 4.700.100.331 Cash at banks (Note 14) (*) 5.342.227.631 4.302.893.552 Available for sale financial assets - Government bonds - TL (Note 11) 231.514.841 243.261.087 Cash deposited to insurance and reinsurance companies (Note 12) 188.736.338 92.604.295 Available for sale financial assets - Private sector bonds (Note 11) 221.150.459 38.099.583 Other- financial assets (Note 11) 7.800.426 23.241.814 Financial assets with variable interest rate: 135.011.390 143.370.843 Available for sale financial assets - Private sector bonds - TL (Note 11) 110.843.331 119.759.173 Available for sale financial assets - Government bonds- TL (Note 11) 24.168.059 23.611.670 Financial liabilities: Financial liabilities with fixed interest rate: 53.578.314 110.802.339 Funds from repo transactions (Note 20) 50.700.491 102.934.273 Expense Accruals From Derivative Contracts (Not 20) 2.877.823 7.868.066 (*) Demand deposits amounting to TL 21.978.266 are not included (December 31, 2017: TL 25.567.666). Fair value information The estimated fair values of financial instruments have been determined using available market information, and where it exists, appropriate valuation methodologies. The Group has classified its financial assets as held for trading or available for sale, As at the reporting date, available for sale financial assets and financial assets held for trading are measured at their fair values based on their quoted prices or fair value information obtained from brokers in the accompanying consolidated financial statements. Group management estimates that the fair value of other financial assets and liabilities are not materially different than their carrying values. Millî Reasürans Annual Report 2018 212 / Consolidated Financial Statements and Independent Auditors’ Report