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) Valuation of financial assets As of December 31, 2018 and 2017, changes in fair values that stem from securities classified as available for sale financial assets that present share in capital and associates are detailed as below: December 31, 2018 December 31, 2017 Fair value reserves at the beginning of the period 52.911.805 31.358.139 Change in the fair value during the period (Note 4.2) (34.148.167) 34.301.149 Deferred tax effect (Note 4.2) 4.183.047 (3.992.089) Net gains transferred to the statement of income (Note 4.2) (78.640.548) (10.944.242) Deferred tax effect (Note 4.2) 17.300.921 2.188.848 Fair value reserves at the end of the period (38.392.942) 52.911.805 16 Other reserves and equity component of discretionary participation As of December 31, 2018 and 2017, other reserves are explained in detail in Note 15 - Equity above. As of December 31, 2018 and 2017, the Group does not hold any insurance or investment contracts which contain a DPF. 17 Insurance contract liabilities and reinsurance assets Estimation of the ultimate payment for the outstanding claims is one of the most important accounting assumptions of the Company. Estimation of the insurance contract liabilities contains several ambiguities by nature. The Company makes calculation of the related insurance technical provisions accordance with the Insurance Legislation and reflects them into consolidated financial statements as mentioned in Note 2 - Summary of significant accounting policies . As of December 31, 2018 and 2017, technical reserves of the Group’ are as follows: December 31, 2018 December 31, 2017 Unearned premiums reserves, gross 3.280.229.790 2.761.900.572 Unearned premiums reserves, ceded (Note 10) (732.987.716) (551.618.894) Unearned premiums reserves, SSI share (63.611.725) (58.817.233) Unearned premiums reserves, net 2.483.630.349 2.151.464.445 Outstanding claims reserve, gross 5.416.277.390 4.142.682.408 Outstanding claims reserve, ceded (Note 10) (1.195.809.112) (595.038.575) Outstanding claims reserve, net 4.220.468.278 3.547.643.833 Unexpired risk reserves 109.401.449 53.356.959 Unexpired risk reserves, ceded (40.180.868) (23.911.227) Unexpired risk reserves, net 69.220.581 29.445.732 Equalization reserves, net (*) 276.734.089 211.872.440 Other technical reserves, net 276.734.089 211.872.440 Life mathematical reserves 73.795 116.109 Total technical reserves, net 7.050.127.092 5.940.542.559 Short-term 6.772.584.798 5.728.670.119 Medium and long-term 277.542.294 211.872.440 Total technical reserves, net 7.050.127.092 5.940.542.559 Millî Reasürans Annual Report 2018 230 / Consolidated Financial Statements and Independent Auditors’ Report