MILLI REASURANS ANNUAL REPORT 2018

Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) 29 Insurance rights and claims December 31, 2018 December 31, 2017 Claims paid, net off reinsurers’ share (3.390.740.033) (2.755.766.835) Changes in outstanding claims reserves, net off reinsurers’ share (672.824.445) (639.560.994) Changes in unearned premium reserves, net off reinsurers’ share (332.165.904) (16.115.304) Change in equalization reserves (66.543.242) (57.234.707) Change in life mathematical reserves, net off reinsurers’ share 42.314 49.048 Changes in unexpired risks reserves, net off reinsurers’ share (39.774.849) (24.394.142) Total (4.502.006.159) (3.493.022.934) 30 Investment contract benefits None. 31 Other expenses The allocation of the expenses with respect to their nature or function is presented in Note 32 - Expenses by nature below. 32 Operating expenses For the years ended December 31, 2018 and 2017, the operating expenses are disclosed as follows: December 31, 2018 December 31, 2017 Commission expenses (Note 17) 837.704.032 790.658.325 Commissions to the intermediaries accrued during the period (Note 17) 914.371.048 805.870.258 Changes in deferred commission expenses (Note 17) (76.667.016) (15.211.933) Employee benefit expenses (Note 33) 239.728.958 201.226.446 Foreign exchange losses 70.480.481 26.255.159 Administration expenses 155.172.151 120.087.667 Commission income from reinsurers (Note 10) (224.731.883) (179.056.843) Commission income from reinsurers accrued during the period (Note 10) (248.982.078) (209.781.952) Change in deferred commission income (Note 10) 24.250.195 30.725.109 Advertising and marketing expenses 18.968.329 21.577.701 Outsourced benefits and services 21.559.689 20.149.187 Other 152.102.033 84.468.527 Total 1.270.983.790 1.085.366.169 Millî Reasürans Annual Report 2018 240 / Consolidated Financial Statements and Independent Auditors’ Report

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