MILLI RE 2020 ANNUAL REPORT

Activities and Major Developments Related to Activities General Information Financial Rights Provided to the Members of the Governing Body and Senior Executives Research & Development Activities 50 Milli Re Annual Report 2020 Industry’s ex‑gratia payments for the diagnosis and treatment expenses related to the pandemic which essentially were not included within coverage, strengthened the positive perception of Health insurance and significantly increased the demand for private and complementary Health insurances. Health grew by 21% elevating its volume in Non‑Life premium from 14% to 15% in 2020 and further growth is anticipated for this line. The share of Fire and Natural Catastrophe Perils in Non‑Life rose to 15.5%, in line with the 25% increase in premium income. This rate corresponds to a real growth of approximately 9.4%. While economic conditions and drop in purchasing power put pressure on premium from residential risks, the increase in house sales as a result of low‑interest loans introduced in early June contributed to the annual growth. There was 18% year‑on premium increase in this segment. Despite the pandemic circumstances, price‑focused competition and relative stagnation in investments, premium related to commercial and industrial risks increased by 28% and 26% respectively, showing a growth over the sector, which is a translation of the high renewal rate for these policies and the fact that insured values and premiums of a significant part of these policies are either in hard currency or indexed to inflation. Premium for Natural Catastrophe Perils, which has a share of approximately 34% in the premium income of the Fire and Natural Catastrophe Perils, grew by around 26% reflecting the increased public awareness following the earthquakes in 2020 and the effect of the new earthquake tariff. General Damages comprises of Engineering, Agriculture, Theft and Plate Glass Insurances and approximately 95% of the premium income in this line originates from Engineering and State Subsidized Agricultural Insurances. Engineering premium, which had declined in real terms in the previous year, grew by 52% in 2020 due to several large investments and energy projects fronted by the sector, while if these construction projects are not taken into account, growth would have been around the sector average. On the other hand, increase in the awareness and prevalence of agricultural insurances due to losses caused by climate change and the incentives for policyholders led to 29% growth in the premium production. The share of Marine, consisting of Hull (Sea Vehicles and Sea Vehicles Liability) and Cargo in Non‑Life increased from 2% to 3% as the result of 34% growth over 2020. Cargo premiums increased by 27%mainly due to the affect of currency movements on trade and Sea Vehicle Liability grew by 30%. As most of the policies and respective premiums in Hull insurance are in hard currency, there was around 50% growth in this segment which elevated the volume of Hull premium in Marine from 25% to 33%. Despite the pandemic conditions, General Liability maintained its 3% share in Non‑Life premium with 28% yearly growth. General Liability comprises of 14 sub‑branches and 83% of the total premium emanate from General Third Party Liability, Employers’ Liability and Professional Indemnity. Whilst the increase in Third Party Liability and Employers’ Liability premiums remained limited due to competitive pressures, Professional Liability insurance grew by 58%. The annual real term increase of 67% in Product Liability, which has a share of 7% in General Liability premiums, indicates that there is a great growth potential in this area as well. Liability insurance is expected to continue to evolve in the upcoming period in conjunction with the growing tendency to resort to litigation by individuals and institutions and the increase in claims. Despite the fact that Personal Accident, which constitutes 90% of total premium income, has gained some momentum due to low‑interest housing loans introduced at the beginning of June, the share of Accident in Non‑Life premium income has decreased from 4% to 3% due to implications of the pandemic. Although the market share is currently very small, it is expected that the positive trend in financial insurances such as Surety and Credit, which grew over 30% in 2020, will continue to develop in line with the economic conjuncture and state support. Efforts to prevent and/or mitigate losses arising from cyber threats and data breaches increase the demand for individual or corporate cyber insurance products. In addition to advances in technology and increased use of digital platforms, with the Turkish Insurance Market