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) Profit for the period that is extraneous from the distribution In accordance terms of tax legislation 50% portion of the gains from sales real estate and 75% portion of the gains from subsidiaries are exempt from corporate tax on condition that it has kept in a special fund account at least five years. Exempt gains cannot be transferred to another account except to add capital or in any way cannot be withdrawn from the business in five years. In the direction of sector announcement made by Treasury dated October 27, 2008 and numbered 2008/41, for the year ended December 31, 2016, the Company categorized the TL 23.723.323 profit on sale from the sale of the properties realized on April 10, 2015 under the company’s equity as “sales profits to be capitalized” and “other capital reserves” under the equity for the current period. As of 31 December 2020, sales profits to be capitalized amount recognized according to the equity method is TL 707.937 (December 31, 2019: TL 522.188). As of December 31, 2020, TL 162.083, which corresponds to 75% of the income obtained from the sale of the subsidiary realized by the Company as of December 14, 2020, has been classified in the Non-Distributable Period Profit. The Non-Distributable Period Profit amount accounted for using the equity method is TL 583.131 (December 31, 2019: 3.129.194). Statutory reserves After the allocation of first legal reserves and first dividend to shareholders, reserve for natural disasters and catastrophe might be allocated, if deemed necessary, based on the suggestion of the Board of Directors and decision of the General Assembly. As of December 31, 2020, total funds allocated is amounting TL 58.171.807 (December 31, 2019: TL 37.967.904), and there’s not any fund allocated from current period profit in current period. Foreign currency translation differences Foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. As at December 31, 2020, foreign currency translation reserve amounting to TL 21.166.656 loss (December 31, 2019: TL 34.192.451 loss) stems from Singapore Branch whose functional currency is US Dollars. Valuation of financial assets As of December 31, 2020, and 2019, 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, 2020 December 31, 2019 Fair value reserves at the beginning of the period 99.474.816 (38.392.942) Change in the fair value during the period (Note 4.2) 290.512.327 140.101.037 Deferred tax effect (Note 4.2) (25.861.280) (5.099.087) Net gains transferred to the statement of income (Note 4.2) (100.066.628) 3.674.113 Deferred tax effect (Note 4.2) 20.013.326 (808.305) Fair value reserves at the end of the period 284.072.561 99.474.816 16 Other reserves and equity component of discretionary participation As of December 31, 2020, and 2019, other reserves are explained in detail in Note 15 - Equity above. As of December 31, 2020, and 2019, the Group does not hold any insurance or investment contracts which contain a DPF. 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 231