MILLI RE 2020 ANNUAL REPORT

Financial Status Risks and Assessment of the Governing Body Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon Consolidated Financial Statements Together with Independent Auditors’ Report Thereon 49 Milli Re Annual Report 2020 Turkish Insurance Market Although the direct impact of the pandemic on the insurance industry was not significant, due to economic slowdown and the implications of the lockdowns, some contraction was experienced especially in Accident, Health, General Liability, Land Vehicles and Land Vehicles Liability which have a high share in the premium production of the sector. With the normalization process, policy production gained speed again. TL 82.6 billion premium According to 2020 year‑end figures published by the Insurance Association of Turkey, insurance industry in Turkey produced TL 82.6 billion premium with an increase of 19% over the previous year. Already facing challenges due to the effects of the slowdown in the global economy, geopolitical tensions, trade wars and low interest rate environment in the last few years, Turkey’s economy and insurance industry was adversely affected by the social and economic consequences of the pandemic since the first months of 2020. According to 2020 year‑end figures published by the Insurance Association of Turkey, insurance industry in Turkey produced TL 82.6 billion premium with an increase of 19% over the previous year. This amount reflects the double counting effect emanating from the “Risky Insureds’ Pool” for Land Vehicles Compulsory Liability Insurance on sectoral data and premiums relating to risks which are fronted by insurers and completely transferred to other carriers. 82.5% of the total premium was generated by Non‑Life and 17.5% from Life insurance. The share of Life in total market premium increased from 16% in 2019 to 17.5%, owing to the continued growth in loan volume in 2020 and the increase in house sales due to low‑interest housing loans introduced at the beginning of June. On the other hand, nominal growth in Non‑Life was 18% corresponding to a real term movement of circa 3%. Although the direct impact of the pandemic on the insurance industry was not significant, due to economic slowdown and the implications of the lockdowns, some contraction was experienced especially in Accident, Health, General Liability, Land Vehicles and Land Vehicles Liability which have a high share in the premium production of the sector. With the normalization process, policy production gained speed again. Specifically, in Land Vehicles, policies which were not renewed in April and May were significantly renewed in June, also reflecting the impact of incentives to the policyholders regarding eased conditions in premium payments and coverage extensions. Contribution of Land Vehicles Liability and Land Vehicles, which together remain as the largest segment in Non‑Life, has dropped to 46% from 49% in 2019, reflecting the effect of the pandemic as well as the continuation of the price cap in Land Vehicles Liability and the sluggish vehicle sales compared to previous years. Muted growth in these lines has constrained overall industry premium.