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) Gain and losses from financial assets Gains and losses recognized in the statement of income, net: December 31, 2018 December 31, 2017 Interest income from bank deposits 461.155.750 318.873.647 Foreign exchange gains 901.481.239 472.065.152 Interest income from debt securities classified as available-for-sale financial assets 3.789.449 31.959.880 Gains transferred from the statement of equity to the statement of income on disposal of available for sale financial assets ( Note 15) 78.640.548 10.944.242 Income from derivative transactions 297.457.026 90.116.129 Income from participates 53.479.268 47.584.280 Interest income from debt securities classified as held to maturity financial investments - 13.641 Income from debt securities classified as held for trading financial assets 19.054.279 18.303.260 Interest income from debt securities classified as held for trading financial assets - 39.566 Income from equity shares 19.950.973 22.503.231 Interest income from repos 613.305 34.218.331 Income from subsidiaries 255.858 153.904 Income from investment funds 55.909.817 22.067.629 Other 2.913.533 3.087.195 Income from investment funds reclassified as available for sale financial assets 43.440.441 7.118.861 Investment income 1.938.141.486 1.079.048.948 Loss from derivative transactions (66.177.031) (179.274.294) Foreign exchange losses (488.165.142) (134.071.983) Loss from valuation of financial assets (8.864.845) (1.118.002) Loss from disposal of financial assets (47.588.465) (17.134.520) Investment management expenses (including interest) (2.012.996) (1.231.961) Investment expenses (612.808.479) (332.830.760) Investment income, net 1.325.333.007 746.218.188 Financial gains and losses recognized in equity, net:: 31 December 2018 31 December 2017 Fair value changes in available for sale financial assets (Note 15) (12.664.199) 32.497.908 Gains transferred from the statement of equity to the statement of income on disposal of available for sale financial assets ( Note 15) (78.640.548) (10.944.242) Total (91.304.747) 21.553.666 Capital management The Company’s capital management policies include the following: -- To comply with the insurance capital requirements required by the Republic of Turkey Ministry of Treasury and Finance -- To safeguard the Company’s ability to continue as a going concern In accordance with the “Communiqué on Measurement and Assessment of Capital Adequacy for Insurance, Reinsurance and Individual Pension Companies” issued by Republic of Turkey Ministry of Treasury and Finance on August 23, 2015 dated and 29454 numbered; the Company measured its minimum capital requirement as TL 467.082.690 (December 31, 2017: TL 384.768.809) as of December 31, 2018. As of December 31, 2018 and 2017, the capital amount of the Company presented in the unconsolidated financial statements are TL 1.736.300.262 and TL 1.587.067.868 respectively and capital surplus of the Company is amounting to TL 1.079.355.016 (December 31, 2017: TL 982.382.182) according to the communiqué. As of December 31, 2018, required equity amount determined in calculations over consolidated financial statements of Company’s subsidiary Anadolu Sigorta, is amounted TL 1.439.439.281. As of December 31, 2018, according to communiqué, equity amount in consolidated financial statements of Anadolu Sigorta is over required equity amount. Millî Reasürans Annual Report 2018 Consolidated Financial Statements and Independent Auditors’ Report / 215