MILLI RE 2023 ANNUAL REPORT

BOARD OF DIRECTORS REPORT We respectfully submit for the consideration and approval of the Milli Re General Assembly of Shareholders our company’s 95 th fiscal-year balance sheet, income statement, distributable- profits statement, changes in equity statement, and cashflow statement for 2023, all of which have been prepared in accordance with principles and rules mandated by the Ministry of Treasury and Finance. While the tightening monetary policies formulated by anti-inflationary efforts and aggravated geopolitical risks made the main headings that set the 2023 agenda of global economy, liquidity shrinkage that particularly affected emerging countries, issues in accessing financing and the pressure high interest rates exert on growth reflected negatively on economic indicators. The addition of the humanitarian plight in Gaza to the Russia-Ukraine war that has been going on for more than two years now that unveil the exacerbating effects of geopolitical risks, and the earthquake disaster in our country have imprinted 2023 as tragic developments with deep economic and social scars. As of year-end, it has been observed that steps taken to pull down global inflation started producing results sooner than expected and the worrisome sharp decline scenarios in relation to growth did not materialize. In its January 2024 update of the World Economic Outlook, the IMF revised its previous forecasts upwards and reported estimated growth rates for 2023 as 3.1% for global economy, 1.6% for developed economies and 4.1% for developing ones. The report also underlined that global recession risk weakens parallel to consistent growth and disinflation, and projects global economic growth rate for 2024 at 3.1%. In 2023 during which it has preserved its growth trend, the Turkish economy experienced the repressive effect of hyper inflation, which also restrained household income levels. Having climbed up throughout the year, the year-end CPI was 64.77%. The driving force of our economy that registered 4.7% expansion in the first three quarters of the year has been consumption expenditures that were brought forward due to the rising inflation. Following the general elections, a change of policy was introduced in the second half of the year that resorted to various measures to tame inflation. The CBRT moved to simplification and started increasing the policy rate, gradually hiking the interest rate from 8.5% in June to 42.5% at the end of the year. On another front, the policies implemented in the first half of the year for repressing the demand for foreign currency were loosened, allowing exchange rates to rise according to the market dynamics, and improvements were observed in the CBRT reserves. While global deceleration and notably the stagnation in Europe that represents our main export market harnessed the growth in exports, the upward effect of consumption-driven economic growth on non-energy imports reflected negatively on external balance and current deficit. Despite the ongoing positive impact of tourism revenues on current accounts balance, decreased transportation and travel revenues reflected negatively. The IMF estimates that the Turkish economy grew by 4% in 2023 and projects 3.1% expansion in 2024. In 2024, tight monetary policies and high interest rates will be probably maintained for some more time within the scope of the fight against inflation, and global economy will possibly exhibit a slowing growth trend. Moreover, the highlights of potential elements that might create volatilities for global economy in 2024 include geopolitical risks led by the regional armed conflicts with sustained risk of dissemination in the Middle East, global polarization and trade wars, elections to be held in more than 40 countries and notably the US, and the impacts of the climate crisis that increase in frequency and severity. Turning now to the global reinsurance market, total economic losses attributable to natural disasters amounted to USD 380 billion or 7% more than in 2022. Insured catastrophic losses topped the USD 100 billion mark once again and hit USD 118 billion. In our country, on the other hand, the Kahramanmaraş Earthquake of February 6 th that heavily struck 11 provinces went down in the records as the costliest natural disaster in 2023. While it is noted that global insured losses mostly stemmed from medium- scale weather events, global insurance ownership is still very low considering that insured losses made merely 31% of global catastrophic losses. Despite high catastrophic losses registered in 2023, the technical results of reinsurers improved with the contribution of the significant tightening tendency in the prices and terms dominating 2023 renewals, and total reinsurance capital including alternative capital rose from USD 590 billion at year-end 2022 to USD 635 billion as of September 2023 thanks also to the recovery in investment income. According to figures published by the Insurance Association of Türkiye, the Turkish insurance industry’s premium production amounted to TL 485.9 billion in 2023. On a nominal basis, this corresponds to a year-on increase of 107%. This growth corresponds to a real increase of 25% when the inflation factor is taken into account. Non-Life branches wrote premiums in the amount of TL 429.2 billion, corresponding to a nominal growth by 110.3% on an annual basis and accounting for 88.3% of total premiums available to the industry in 2023. The growth in these branches was driven by increased premiums of life policies resulting from medical inflation, as well as higher premiums in Land Vehicles Liability and Land Vehicles policies due to the escalating inflation and exchange 76 MİLLİ RE