MILLI RE 2023 ANNUAL REPORT

rates. Nominal expansion in Life branch, on the other hand, was 84% due to the reflection of the uptrend in interest rates in individual loan volume; consequently; the share of this branch in total life and non-life premiums declined from 13% to 11.7%. While very strong nominal rises in premium production were registered in nearly every non-life branch in 2023, the greatest increases took place in the two branches that together also account for the biggest share of premium insurers’ receipts: motor vehicle liability (up 105%) and motor vehicle (up 89.2%). Next in the rankings with the highest shares, Illness/Health and Fire and Natural Disasters branches recorded respective increase rates of 135.4% and 139.5%. Premiums written in the up-and-coming Participation insurance constituted 5% of the sector’s total premium income as of year-end 2023, as they did in 2022. The barely-apart earthquakes centered in Pazarcık and Elbistan districts of Kahramanmaraş that took place by the beginning of February 2023 with respective magnitudes of 7.7 and 7.6 hit a broad geography including Hatay, Osmaniye, Adıyaman, Diyarbakır, Şanlıurfa, Gaziantep, Kilis, Adana, Malatya and Elazığ provinces, besides Kahramanmaraş, affecting a large population of nearly 14 million people. The earthquakes not only caused a multi-faceted destruction for the people in the region, but also hurt the national economy due to its immense span. Total exports from the region that holds nearly 9% share within the country’s exports declined by 13% year-on-year, with the steepest falls occurring in Osmaniye, Adıyaman, Kahramanmaraş and Hatay provinces. The total burden the earthquakes imposed on the Turkish economy was put at USD 104 billion. According to the Kahramanmaraş and Hatay Earthquakes Report released in March 2023 by the Presidency of Strategy and Budget, damages to houses constitute the largest portion of the loss with USD 57 billion. This is followed by damages to the public infrastructure and service buildings with USD 13 billion and damages to private sector except houses with USD 12 billion. While insurers covered approximately 5% of the losses that had an impact on the insurance sector calculated at around USD 5 billion, 95% were paid by reinsurers. As of year-end 2023, Milli Re paid EUR 322 million in earthquake damages; including outstanding claims, total final damages to be paid is forecasted to reach the order of EUR 550 million. Following what has been a year of the importance of insurance, risk transfer and earthquake coverage bared once again for our country, a higher amount of reinsurance coverage was needed as compared to 2023 due to elevated insurance prices that resulted from inflation and increased costs. One other reason that warranted the need for higher earthquake coverage has been diverse assumptions and scenario analyses used in reviewing the modeling. The key post-earthquake action taken by the Turkish insurance industry has been the increasing of the amount of TL 400 million set for the free tariff implementation to TL 2 billion as of 01 August 2023, and raising tariff prices on the basis of risk groups by 25% as of 01 January 2024. The damages caused by the earthquake and growing capacity needs further escalated the reinsurance costs that have been already climbing up for the past two years; some difficulties were experienced in the placement of reinsurance treaties, and some companies were able to complete their placements by creating a hybrid model using alternative reinsurance treaties. As opposed to previous years, 2023 has been a year in which both proportional and non-proportional reinsurance treaties were placed at later dates than envisaged. Most Turkish insurance companies continued protecting their 2024 risk portfolios by means of surplus proportional bouquet treaties. Following 2024 renewals, Milli Re provides capacity to 18 companies utilizing proportional reinsurance treaties and is the leader in the reinsurance treaties of 14 companies. Having restructured its portfolio due to retrocession capacity restraint and costs and having reduced its shares in proportional treaties by 40%-50% as compared to the previous year based on its profit-oriented strategy, Milli Re’s market share in proportional treaties in 2024 was 18%, which was 30% in 2023. Milli Re participated in the programs of eight companies that make use of excess of loss agreements to cover their risk portfolios. Milli Re maintains its dominant position, experience and technical know-how in the Turkish market and continues to consolidate its presence in global markets backed also by its robust capitalization. Having booked TL 3,629 million in net profit for the period as of year-end 2023, the company’s paid-in capital amounts to TL 660 million, and its shareholders’ equity to TL 10,128 million, while its total assets and premium volume are registered as TL 22,668 million and TL 9,925 million respectively. While the company generated 85.3% of its total premiums on local business, 14.7% thereof was written on international business. In closing, we are deeply grateful to all our stakeholders for their growing contributions towards our company’s continued and consistently successful performance in 2023 enabled by its corporate reputation and credibility. Sincerely yours, BOARD OF DIRECTORS 77 GENERAL INFORMATION FINANCIAL RIGHTS PROVIDEDTOTHE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES RESEARCH & DEVELOPMENT ACTIVITIES FINANCIAL STATUS FINANCIAL INFORMATION 2023 Annual Report RISKS AND ASSESSMENT OF THE GOVERNING BODY