MILLI REASURANS ANNUAL REPORT 2018

Milli Re Annual Report 2018 Financial Status / 73 Jebi, which stroke Japan and some parts of Philippines in September, is considered to be the strongest storm in Japan’s history since Typhoon Yancy in 1993. However, the severest event of 2018 Pacific hurricane season was Category 5 Super Typhoon Mangkhut, which affected The Philippines, some parts of China and Hong Kong. Global reinsurance capital reached USD 595 billion by the end of the third quarter of 2018. In January 2019 renewals, available capacity remained abundant while the market players sought higher reinsurance protection as a result of increased frequency in catastrophic activity. While the reinsurers did not follow a common trend in their approach to buyers, they opted for assessing cedant companies with respect to their risk profiles and performance records. According to the year-end figures published by the Insurance Association of Turkey, total premium production in the Turkish insurance market reached TL 54.7 billion, corresponding to 17% growth on nominal basis and 2% reduction in real terms, compared to last year. This total amount reflects the double counting effect on the industry data arising from the High Risk Insurance Pool established for Land Vehicle Third Party Liability. 87% of the total premium was generated from Non-Life business, while 13% thereof was obtained from Life. As a result of the economic slowdown and the adverse effect of the rising interest rates on consumer and housing loans, Life Insurance could not achieve any substantial growth and its share within the market premium production decreased to 13% in 2018, from last year’s figure of 15%. Even though Non-Life premium increased by 20% on nominal terms, due to the factors such as declining car sales, diminishing property insurance, slowdown in economy and investments, continuous price competition as well as the on-going price cap on Land Vehicles Liability Insurance, a decline in real terms was recorded. On the other hand, the global catastrophe losses recorded in 2017 and 2018 did not cause any adverse effect on local insurance industry in Turkey with regards to the available capacity and terms offered. In general, no substantial changes were observed in cedants’ 2019 treaties compared to the previous term. With its know-how and experience in the local market, reputation in the international markets as well as its strong financial structure; Milli Re participates in a significant number of the reinsurance programmes of companies operating in the Turkish insurance market, most of which have international investors. Leading proportional treaties of 18 companies in 2019, Milli Re holds its market share of 27%. Providing reinsurance capacity to the Turkish insurance market since 1929, our Company started to underwrite business from the international markets in 2006 and Singapore Branch started its operations in 2008, as part of Milli Re’s strategy to expand to international markets. Marking its 90 th anniversary in 2018 and being one of the oldest reinsurers active in Europe, Milli Re provides reinsurance capacity to various insurance companies operating in over 50 countries. The total premium production of our Company by the end of 2018 reached TL 1,320 million. 69% of the total premium amounting to TL 911 million was obtained from local business while 31% equalling TL 409 million originated from international business acceptances. In 2018, taking into account the investment income and expense transferred from non-technical operations, our Company obtained a profit of TL 100.7 million in respect of our technical operations and TL 177.5 million from financial operations and closed the 2018 operating year with a profit for the year of TL 278 million. The paid in capital of our Company as at the end of 2018 was TL 660 million, its assets reached TL 3,738 million and shareholders’ equity was TL 1,736 million. We would like to extend our thanks to our esteemed stakeholders for providing the greatest contribution to our Company to maintain its prestige and reliability acquired during these 90 years of operation, and to continue its efforts to be a preferred business partner with its robust financial structure. BOARD OF DIRECTORS