MILLI RE 2020 ANNUAL REPORT

Millî Reasürans Türk Anonim Şirketi (Currency: Turkish Lira (TL)) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) Legal Reserves The legal reserves consist of first and second legal reserves in accordance with the Turkish Commercial Code. The first legal reserve is appropriated out of the statutory profits at the rate of 5%, until the total reserve reaches a maximum of 20% of the entity’s share capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the entity’s share capital. The first and second legal reserves are not available for distribution unless they exceed 50% of the share capital but may be used to absorb losses in the event that the general reserve is exhausted. The movements of legal reserves are as follows: December 31, 2020 December 31, 2019 Legal reserves at the beginning of the period 155.933.995 123.041.486 Transfer from profit 39.011.027 32.892.509 Legal reserves at the end of the period 194.945.022 155.933.995 As of December 31, 2020, and 2019, “Other Reserves and Retained Earnings” includes extraordinary reserves, sales profits to be capitalized and buildings for own use revaluation differences. As at December 31, 2020 and 2019, “Other Reserves and Retained Earnings” are detailed as below: December 31, 2020 December 31, 2019 Other profit reserves 23.673.789 24.424.400 Extraordinary reserves 692.870.924 588.605.356 Other capital reserves 167.674.813 165.814.989 Sales profits to be capitalized 24.431.260 24.245.511 Other earnings and losses (4.294.111) (2.758.065) Private funds 16.900.903 - Subsidiary capital correction (71.060.154) (71.060.049) Total 850.197.424 729.272.142 Other capital reserves According to TAS 16 - “Property Plant and Equipment”, property, plant and equipment are initially recorded at cost and can be subsequently measured at their fair values. The Company has started to show based on the revaluation model by measuring over fair value as of the third quarter of 2015 by making changes in the use of the property which is measuring the cost model in the financial statements before. In accordance with tax legislation, 75% of profits from sales of participation shares and 50% of profits from sales real estates included in the assets of companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years. Anadolu Sigorta, as of December 31, 2020, the tax exempt which obtained thanks to sale of participation shares and real estate in 2010, 2011, 2013, 2014, 2015, 2016 and 2017 years respectively, amounting to TL 8.081.516, TL 80.025, TL 647.763, TL 920.272, TL 2.541.500, TL 15.094 and TL 838.049 and real estate revaluation funds of 2018, 2019 and 2020 the profit not subject to distribution for 2018, 2019 and 2020 are classified as other capital reserves. Milli Reasürans, according to expertise reports, fair value of property for use is calculated as TL 179.340.000 and revaluation differences amounting to TL 162.300.435 is recognized in ‘Other Capital Reserves’ account under equity as TL 146.070.394 with net tax effect in financial statements as of December 31, 2020 (December 31, 2019: TL 146.070.394). As of 31 December 2020, Non-Distributable Profit amount recognized according to the equity method is TL 21.604.419. (December 31, 2019: TL 19.744.595). 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 Milli Re Annual Report 2020 229