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) In the normal course of its operations, the Group is exposed to legal disputes, claims and challenges, which mainly stem from its insurance operations. The necessary income/expense accruals for the revocable cases against/on behalf of the Group are provided under outstanding claims reserves in the accompanying consolidated financial statements. As of December 31, 2018, total amount of the claims that the Group face is TL 1.776.535.000 in gross (December 31, 2017: TL 1.485.894.000). The Group provided outstanding claims reserves in the consolidated financial statements by considering collateral amounts. As of December 31, 2018, ongoing law suits prosecuted by the Company’s subsidiary Insurance Company against the third parties amounting TL 455.213.000 (December 31, 2017: TL 382.130.000). Anadolu Anonim Türk Sigorta Şirketi Mensupları Dayanışma Vakfı” was established by Anadolu Anonim Türk Sigorta Şirketi in accordance with the Turkish Commercial and Civil Laws which is examined by Tax Audit Committee inspectors due to the Company payments what are fulfilled obligations to the foundation owing to deed of the foundation and the related act. As a result of this investigation, an examination was reported for periods of 2007, 2008, 2009, 2010 and 2011. The final legal process which is related the period of 2007 and 2008 is expected to result in the Company’s favour and the amount of provision TL 12.768.684 which was published on the Official Gazette dated November 12, 2014. December 2013 and after the condition of the provision is evaluated later ongoing development of the legal process. There is a provision amount of TL 4.007.764 (December 31, 2017: TL 3.678.791) related with this process. An examination related to payments made for Company’s liabilities in frame of related regulations to “Milli Reasürans Türk Anonim Şirketi Mensupları Yardımlaşma Sandığı Vakfı” that established by Milli Reasürans Türk Anonim Şirketi in accordance with the Turkish Commercial and Civil Laws is realized by Tax Inspection Board inspectors. As a result of this investigation, a tax audit report is issued for the periods 2007, 2008, 2009, 2010 and 2011 with the claim that liability amounts shall be taxed at cost principle and be taxable for income tax withholding and stamp tax. Legal process has been started for the years 2007, 2008, 2009, 2010, 2011 and the later years and the payment regarding to the revenue authorities was paid. As of the report date, there is no recognized provision. 43 Commitments The future aggregate minimum lease payments under operating leases for properties rented for use are as follows: December 31, 2018 December 31, 2017 Less than one year 8.709.571 10.841.883 Between one to five years 17.509.704 18.012.507 More than 5 years 2.189.072 3.390.162 Total of minimum rent payments 28.408.347 32.244.552 44 Business combinations None. Millî Reasürans Annual Report 2018 Consolidated Financial Statements and Independent Auditors’ Report / 243