The Right Steps, Secure Future

THE RIGHT STEPS, SECURE FUTURE

2020 Annual Report CONTENTS

GENERAL INFORMATION 1 FINANCIAL STATUS 37 CORPORATE PROFILE 2 SUMMARY REPORT BY THE BOARD OF DIRECTORS 37 OUR CORPORATE VALUES 3 FINANCIAL INFORMATION AND INDICATORS 40 OUR VISION, OUR MISSION 3 ECONOMIC OVERVIEW 44 MILESTONES FROM THE HISTORY OF ANADOLU SİGORTA 6 OVERVIEW OF THE WORLD AND TURKISH INSURANCE INDUSTRIES CHAIRPERSON’S MESSAGE 10 AND FUTURE OUTLOOK 48 CEO’S MESSAGE 14 DEVELOPMENTS AND CHANGES IN LEGISLATION 51 THE ORGANIZATION, CAPITAL AND SHAREHOLDER STRUCTURE AN ASSESSMENT OF ANADOLU SİGORTA IN 2020 60 OF THE COMPANY 18 ASSESSMENT OF THE COMPANY CAPITAL AND COMMENTS 79 ORGANIZATION CHART 18 PROFIT DISTRIBUTION POLICY 80 CAPITAL AND SHAREHOLDER STRUCTURE 19 RISKS AND AN ASSESSMENT BY THE GOVERNING BODY 81 DISCLOSURES ON PREFERRED SHARES 19 RISK MANAGEMENT POLICIES ADHERED TO BY TYPES OF RISKS 81 GOVERNING BODY, EXECUTIVES AND THE NUMBER OF ACTIVITIES OF THE COMMITTEE OF EARLY DETERMINATION EMPLOYEES 20 OF RISK 84 BOARD OF DIRECTORS 20 INDEPENDENT AUDITOR’S REPORT ON THE EARY IDENTIFICATION DECLARATIONS OF INDEPENDENCE BY INDEPENDENT MEMBERS OF THE RISK COMMITTEE AND SYSTEM 86 OF THE BOARD OF DIRECTORS 23 OTHER MATTERS AND FINANCIAL STATEMENTS 87 EXECUTIVE COMMITTEE 24 INDEPENDENT AUDITOR’S REPORT ON THE ANNUAL REPORT HEADS OF UNITS UNDER THE INTERNAL SYSTEMS 26 OF THE BOARD OF DIRECTORS 87 AVERAGE NUMBER OF EMPLOYEES BY CATEGORIES DURING THE AN ASSESSMENT OF THE BOARD DIRECTORS BY THE CORPORATE REPORTING PERIOD 26 GOVERNANCE COMMITTEE 89 FINANCIAL AFFAIRS AND ACTUARIAL UNIT MANAGERS 27 DISCLOSURE POLICY 91 FINANCIAL RIGHTS PROVIDED TO THE MEMBERS OF THE STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE GOVERNING BODY AND EXECUTIVES 27 PRINCIPLES 93 RESEARCH AND DEVELOPMENT ACTIVITIES OF THE COMPANY 30 CORPORATE GOVERNANCE COMPLIANCE REPORT 94 RESEARCH AND DEVELOPMENT PERTAINING TO NEW SERVICES CORPORATE GOVERNANCE INFORMATION FORM 101 AND BUSINESS ACTIVITIES 30 ADDITIONAL INFORMATION ON CORPORATE GOVERNANCE 108 COMPANY ACTIVITIES AND MAJOR DEVELOPMENTS IN COMPLIANCE WITH SUSTAINABILITY PRINCIPLES 111 ACTIVITIES 31 COMMITTEES OPERATING WITHIN ANADOLU SİGORTA AND AN 2020-2021 PRIMARY GOALS AND POLICIES 31 ASSESSMENT BY THE BOARD OF DIRECTORS 113 INFORMATION ON THE COMPANY’S INVESTMENTS 31 AN ASSESSMENT OF THE OPERATION OF THE INDEPENDENT INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT ACTIVITIES 32 AUDIT FIRM IN 2020 ACTIVITY PERIOD VIA THE AUDIT COMMITTEE 118 AN ASSESSMENT OF 2020 BY THE BOARD OF INSPECTORS 32 HUMAN RESOURCES PRACTICES AT ANADOLU SİGORTA 119 INTERNAL CONTROL SYSTEM AND AN ASSESSMENT BY THE GOVERNING BODY 33 AGENDA OF THE ANNUAL GENERAL ASSEMBLY MEETING 120 INFORMATION ON ASSOCIATES 34 2020 PROFIT DISTRIBUTION PROPOSAL 121 REPURCHASED OWN SHARES BY THE COMPANY 34 2020 PROFIT DISTRIBUTION TABLE 122 DISCLOSURES CONCERNING SPECIAL AUDIT AND PUBLIC AUDIT 34 2020 ANNUAL REPORT COMPLIANCE STATEMENT 123 LAWSUITS FILED AGAINST THE COMPANY AND POTENTIAL DETAILED INCOME STATEMENT 124 RESULTS 34 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS DISCLOSURE OF ADMINISTRATIVE OR JUDICIAL SANCTIONS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON 126 AGAINST THE COMPANY AND/OR BOARD OF DIRECTORS INFORMATION ON CONSOLIDATED SUBSIDIARIES 209 MEMBERS 34 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS ASSESSMENT OF PRIOR PERIOD TARGETS AND GENERAL TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON 210 ASSEMBLY DECISIONS 34 AN ASSESSMENT OF FINANCIAL STANDING, PROFITABILITY AND EXPENSES INCURRED IN RELATION TO DONATIONS AND SOLVENCY 292 GRANTS AND SOCIAL RESPONSIBILITY PROJECTS 34 INFORMATION ON FINANCIAL STRUCTURE 294 COMMITMENT TO SOCIAL RESPONSIBILITY 35 SUMMARY FINANCIAL INFORMATION FOR THE LAST 5 YEARS THE COMPANY’S TRANSACTIONS WITH THE RISK GROUP 36 INCLUDING THE REPORTING PERIOD 295 INFORMATION FOR INVESTORS 296 GENERAL INFORMATION

Anadolu Anonim Türk Sigorta Şirketi Middle Black Sea Regional Branch 2020 Annual Report Kılıçdede Mah. Ülkem Sok. No: 8-A/7 55060 İlkadım / Samsun Corporate Title Tel: +90 850 724 0850 Anadolu Anonim Türk Sigorta Şirketi Fax: +90 850 744 0 750 E-mail: [email protected] Website www.anadolusigorta.com.tr Southern Anatolia Regional Branch Reşatbey Mah. 62029. Sok. No: 16/A Anadolu Sigorta Trade Registration No: 01120 Seyhan / Adana 4593/557 Tel: +90 850 724 0850 Fax: +90 850 744 0 746 Directory E-mail: [email protected]

Head Office Central Anatolia Regional Branch Rüzgarlıbahçe Mah. Çam Pınarı Sok. No: 6 Söğütözü Mah. 2176. Sok. Platin Tower İş Merkezi No: 7/1 34805 Beykoz / İstanbul 06530 Çankaya / Ankara Tel: +90 850 724 0850 Tel: +90 850 724 0850 Fax: +90 850 744 0 745 Fax: +90 850 744 0 749 E-mail: [email protected] E-mail: [email protected]

İstanbul Regional Branch Black Sea Regional Branch Levent Mah. Meltem Sok. No: 10 Karşıyaka Mah. Yavuz Selim Bulvarı No: 479/A İş Kuleleri Kule: 2 Kat: 8 61040 Ortahisar / Trabzon 34330 Beşiktaş / İstanbul Tel: +90 850 724 0850 Tel: +90 850 724 0850 Fax: +90 850 744 0 751 Fax: +90 850 744 0 753 E-mail: [email protected] E-mail: [email protected] Marmara Regional Branch Kadıköy Regional Branch Odunluk Mah. Akademi Cad. Küçükbakkalköy Mah. Vedat Günyol Cad. 20/11 Zeno İş Merkezi A Blok No: 10/5 34750 Ataşehir / İstanbul 16110 Nilüfer / Bursa Tel: +90 850 724 0850 Tel: +90 850 724 0850 Fax: +90 850 744 0 754 Fax: +90 850 744 0 748 E-mail: [email protected] E-mail: [email protected]

Mediterranean Regional Branch TRNC Branch Konyaaltı Cad. No: 78 Köşklüçiftlik Mah. Memduh Asaf Sok. No: 8 07050 Muratpaşa / Antalya Lefkoşa / KKTC Tel: +90 850 724 0850 Tel: 0392 227 95 95 Fax: +90 850 744 0 752 Faks: 0392 227 95 96 E-mail: [email protected] E-mail: [email protected]

Western Anatolia Regional Branch Gaziantep Sales Office Atatürk Cad. No: 92 İncilipınar Mah. Gazi Muhtar Paşa Bulvarı Anadolu Sigorta Binası 2 36017 Sok. Kepkepzade Park İş Merkezi 35210 Pasaport Konak / İzmir C Blok No: 6/10

Tel: +90 850 724 0850 Şehitkamil Gaziantep Anadolu Sigorta 2020 Annual Report Fax: +90 850 744 0 747 Fax: +90 850 744 0 755 E-mail: [email protected] E-mail: [email protected]

Previous years’ annual reports of Anadolu Sigorta 1 GENERAL INFORMATION CORPORATE PROFILE, OUR VISION, OUR MISSION, OUR CORPORATE VALUES

CORPORATE PROFILE, OUR VISION, OUR MISSION, OUR CORPORATE VALUES

ANADOLU SİGORTA WILL CONTINUE TO BACK THE ADVANCEMENT OF INSURANCE BUSINESS IN TURKEY, AND FURTHER CEMENT ITS STRONG POSITION IN THE SECTOR WITH ITS BREAKTHROUGH IN DIGITAL INSURANCE.

CORPORATE PROFILE

In 2020 Anadolu Sigorta expanded its total million in 2020. Trailing these two premium production by 21% year-on-year branches, in order, were fire and natural to TL 8 billion and controlled an 11.8% disasters with TL 1,423 million, health with share of the overall market among non-life TL 948 million, general losses with TL 580 companies. million and general liability with TL 356 million. Anadolu Sigorta pursues its operations via ten regional branches across the nation Turkey’s first national insurance company

Anadolu Sigorta 2020 Annual Report and one branch in the Turkish Republic of and the pioneer in the sector, Anadolu Northern Cyprus. The number of employees Sigorta will keep contributing to the on the company’s payroll averaged 1,361 in advancement of the insurance business in 2020. Turkey in the light of its mission and vision, and further build on its solid position in the Anadolu Sigorta registered its highest industry on the back of its powerful digital premium production in the motor vehicle insurance initiative. liability with TL 2,305 million, followed by the motor vehicles branch with TL 1,506

2 OUR VISION OUR MISSION

• To make Anadolu Sigorta In keeping with the deeply-rooted, pioneering, honest, and the insurance brand solid corporate values of Anadolu Sigorta to: preferred by everyone • Lead the sector, who needs insurance. • Help create a broad public awareness of insurance in • To achieve a strength Turkey, that makes it a reference • Implement a customer-focused approach to service, point in the worldwide insurance industry as well. • Increase our financial strength to international standards, • Enhance the value of our company.

OUR CORPORATE VALUES

A COMPANY PIONEERSHIP INTEGRITY POWERFUL ENTRENCHED STRUCTURE IN HISTORY

It was founded in Pioneer in creating It has ethical merits; It has a stable financial accordance with the product; power; instructions given by It fulfills its promises Mustafa Kemal Atatürk. Pioneer in service; definitely; It has an extended and efficient service network; Pioneer in technology; It inheres in transparency It is Turkey’s first national Anadolu Sigorta 2020 Annual Report insurance company. as principle; It has a sophisticated With its self-renewing and high qualified human It has a powerful ability preserves its It never abandons human source; corporate structure built pioneering position; values. on its knowledge of It gains power from It plays a pioneering role the synergy created by insurance accumulated in social responsibility. through the years. İşbank.

WE STAND BY OUR POLICYHOLDERS UNDER ANY CIRCUMSTANCE. GENERAL INFORMATION MILESTONES FROM THE HISTORY OF ANADOLU SİGORTA

MILESTONES FROM THE HISTORY OF ANADOLU SİGORTA

1925 1986 1996 ANADOLU SİGORTA WAS REPRESENTING A NEW POLICIES IN LEGAL FOUNDED ON APRIL 1ST AT BRANCH IN THE TURKISH PROTECTION INSURANCE THE INITIATIVE OF ATATÜRK INSURANCE BUSINESS, BRANCH, ANOTHER FIRST AND UNDER THE LEADERSHIP “ELECTRONIC EQUIPMENT IN OUR COUNTRY, WERE OF İŞBANK, TURKEY’S FIRST INSURANCE” WAS FIRST WRITTEN. NATIONAL BANK. STARTED BY ANADOLU SİGORTA.

FOUNDED IN 1925 AS THE FIRST NATIONAL INSURANCE COMPANY IN OUR COUNTRY, ANADOLU SİGORTA HAS BEEN PURSUING ITS OPERATIONS AWARE OF ITS PIONEERING ROLE IN THE TURKISH INSURANCE INDUSTRY.

1925 1984 1993 Anadolu Sigorta was founded on April 1st Highly acclaimed by the public and the Extending administrative and technical at the initiative of Atatürk and under the sector, “Insurance of the Future”, the most assistance to Günay Anadolu Sigorta, leadership of İşbank, Turkey’s first national comprehensive life policy ever offered in founded and started to operate in bank. Turkey until then, was introduced. Azerbaijan, Anadolu Sigorta became the first Turkish insurance company to set up 1961 1986 an international operation. The first data processing system was set Representing a new branch in the Turkish up. insurance business, “Electronic Equipment 1996 Insurance” was first started by Anadolu Policies in legal protection insurance 1975 Sigorta. branch, another first in our country, were

Anadolu Sigorta 2020 Annual Report Being the leader of national insurance 1987 written. since the onset of the Turkish Republic, Activities commenced in the agricultural Anadolu Sigorta celebrated its 50th 1997 insurance branch. anniversary. Aiming to make the most of the 1991 possibilities offered by IT, a “Recon 1983 Project” was launched. Services were The life branch was transferred to Anadolu “Blue Insurance” policies marking the made more efficient and productive with Hayat Sigorta, a newly-formed life insurer introduction of comprehensive insurance the inclusion of all services and agencies as required by law. system in Turkey and offering 17 types of in the data processing network with online cover were put on sale for the first time. and real‑time systems.

6 2001 2007 2020 AFTER PROVIDING SERVICE THE SECTOR’S UNRELENTING TELEWORKING SCHEME FOR OVER FIVE DECADES, THE CHAMPION IN PREMIUM WAS INTRODUCED FOR THE COMPANY WAS RELOCATED PRODUCTION FOR THE EMPLOYEES DURING THE FROM ITS BUILDING IN LAST SIX YEARS, ANADOLU PANDEMIC AND INSURANCE KARAKÖY TO İŞ TOWERS, SİGORTA BECAME THE FIRST ACTIVITIES WERE CARRIED ON WHERE IT WOULD BE INSURANCE COMPANY IN UNINTERRUPTEDLY. TOGETHER WITH İŞBANK TURKEY TO EXCEED THE USD 1 SUBSIDIARIES. BILLION THRESHOLD IN TOTAL PREMIUM PRODUCTION.

1999 2006 2012 In order to provide the fastest and most The company maintained its sectoral The company received four international comprehensive service to its policyholders leadership in premium production for awards with its social responsibility in the aftermath of the disastrous the fifth consecutive year and realized project, and its 2011 Annual Report. earthquake of 17 August, the company a premium production in excess of TL 1 worked round the clock to provide billion, undersigning yet another historic 2013 uninterrupted service. result in the history of the Turkish Anadolu Sigorta relocated to is new head insurance industry. 2001 office in Kavacık-İstanbul. After providing service for over five 2007 2015 decades, the company was relocated The sector’s unrelenting champion in While celebrating its 90th anniversary, the from its building in Karaköy to İş Towers, premium production for the last six company launched its revamped website. where it would be together with İşbank years, Anadolu Sigorta became the first subsidiaries. insurance company in Turkey to exceed 2019 the USD 1 billion threshold in total 2002 premium production. The Company reached TL 6.6 billion in total premium production in 2019. A brand-new era began with the “Maximum Service in Insurance” concept. 2008 While the net profit for the period The company introduced the service Anadolu Sigorta launched the C2C (Closer augmented by 31% to TL 403 million, RoE philosophy under one title that it has to Customer) change program whereby was 18.7%. possessed since its foundation, and once all business processes are reviewed and Having completed its 10th year by the again became the author of a first in the revised. While the company increased its end of 2019, the social responsibility sector. profitability through sustainable growth initiative “Bir Usta Bin Usta” (One Master, strategy, it also received Active Academy Thousand Masters) reached its goal of 2004 Private Customer Satisfaction Award in opening 5 different vocational courses in Voted as “the most satisfactory insurance Insurance for the fifth consecutive time. 5 different cities each year, and came to company with its products and services”, a close after training 1,000 prospective Anadolu Sigorta 2020 Annual Report Anadolu Sigorta received the Active 2010 masters for 50 different vocations risking Academy Private Customer Satisfaction The company celebrated its 85th vanishing. Award in Insurance. The company anniversary. expanded its service range by taking 2020 Planned within the frame of the C2C over the health branch from Anadolu change program, the first set of changes Teleworking scheme was introduced Hayat Emeklilik, which the company was put into life. for the employees during the pandemic was required by law to give up. Anadolu and insurance activities were carried on Sigorta was awarded its ISO 9001: 2000 The company launched its new social uninterruptedly. Quality Management System certification, responsibility project, “Bir Usta Bin Usta” an endorsement proving that the (From One Master to One Thousand), company’s quality management system thus contributing to revitalize vanishing complies with international standards. professions in Anatolia. 7 WE ARE ONE STEP AHEAD IN DIGITAL INSURANCE.

GENERAL INFORMATION CHAIRPERSON’S MESSAGE

CHAIRPERSON’S MESSAGE

WHILE OUR LONGSTANDING DIGITAL TRANSFORMATION EFFORTS HANDED OUR COMPANY COMPETITIVE EDGE IN THE FORM OF RAPID ADAPTATION TO EMERGING CONDITIONS AND SERVICE COMPETENCE DURING THE PANDEMIC, THEY HAVE ALSO SERVED AS THE STRONGEST FACTOR THAT HELPED US UPGRADE THE CUSTOMER EXPERIENCE.

2020 has been a year overshadowed by before the pandemic. In the wake of the the decelerated spread of the virus, and the pandemic. agreement reached between the EU and economic activity displayed a recovering UK one year after the Brexit process trend owing to the government’s Global economy, which was already fragile became official, new arrangements supportive measures that included credit at the start of 2020, was confronted governing commercial, legal and security guarantees, tax payment deferments with even tougher circumstances as matters went into force at the onset of and direct transfers. Domestic demand uncertainties were further exacerbated by 2021, thus eliminating the uncertainties adopted an upturn as the rate cuts the Covid-19 pandemic, and began to lose nurtured by a possible no-deal withdrawal. implemented by the Central Bank of the momentum. Republic of Turkey (CBRT) between July While the January 2021 report by the Embodying the potential to lead to 2019 and May 2020 reflected on credit IMF estimates 3.5% contraction for the farther-reaching and deeper impacts as appetite, in addition to the measures global economy because of the pandemic, compared to the 2008 global financial mentioned before, and the Turkish the shrinkage is measured at 4.9% for crisis, the pandemic imposed contraction economy registered 6.7% growth in the developed economies and at 2.4% for on supply and demand alike, while forcing third quarter on an annual basis. developing economies. Looking at the a significant decline in production and regional implications of the pandemic, the Increased domestic demand, volatility in trade volumes. Economic activity slowed Eurozone will suffer the biggest plunge in financial markets and relatively stronger down due to lockdown measures, as 2020 with 7.2%. currency pass-through as compared to unemployment rates surged. previous periods gave an upward push to Turkey is showing resilience against the Anadolu Sigorta 2020 Annual Report In an effort to mitigate the impacts of the inflation. While the annual rise in CPI crisis. the pandemic, central banks in various was 14.6%, that in D-PPI reached 25.15%. countries implemented rate cuts and Following the rebalancing period in 2019, Having halted the rate cut process in June expansionary monetary policies, and the Turkish economy, after achieving 2020, the CBRT initiated tight monetary launched unprecedented massive relief 4.5% growth in the first quarter of policy by increasing the weighted programs encompassing asset purchases, 2020, shrank by 9.9% in the second average funding cost from August. In its liquidity provisions and credits. quarter in connection with the restrictive November meeting, on the other hand, measures imposed in connection with the A clear cut solution has yet to be achieved the CBRT hiked the policy rate to 15% pandemic. In the third quarter of the year, regarding the trade wars between the US and announced that all funding would be restrictive measures were flexed with and China that dogged the global agenda provided at the one-week repo rate, the

10 6.7%

Turkish economy registered 6.7% growth in the third quarter on an annual basis.

main policy tool of the CBRT, in order to The pandemic forced itself on the Having turned out to be a bad year in simplify the monetary policy. In the final agenda of global insurance business. terms of natural disasters as well, 2020 meeting of the year, the CBRT increased has also been the scene to contracted The Covid-19 pandemic created a sudden the policy rate by an additional 200 basis reinsurance capacity, which also reflected and unexpected shock in the global points. on prices. insurance industry. Insurance companies Export and tourism revenues, the two were affected in varying forms depending In 2020, while remarkable material losses main generators of foreign currency for on factors such as their portfolios at risk, resulted from natural phenomena such Turkey, remained low in 2020 because free assets available to reinsurers, and as seasonal tropical cyclones, extreme of the pandemic, and the preference to their financials, and they are suffering monsoon rainfall, hurricanes, record-high prop economic activity mainly by credit declines in their profitability and growth temperatures above the Arctic Circle, expansion supported importation demand. rates. In addition, the pandemic negatively and even major grasshopper invasions Thus, the outlook of the current account affected also the premium volume of the associated with global warming, which balance deteriorated. worldwide insurance industry. Having are increasing in intensity and frequency, expanded 3.5% in 2019, the non-life claims payments by insurance companies The New Economic Program projected premium volume is estimated to have pushed the averages of the last 20 years. 0.3% growth for the Turkish economy. grown by a mere 1.3% in 2020. Economic uncertainties resulting from As extreme weather events stemming the rise in the number of cases in the last Provision of coverage against the from global climate change increase quarter of the year and the emergence pandemic, which is a major risk with markedly every year, parametric Anadolu Sigorta 2020 Annual Report of the mutated variant of the virus respect to health insurance, boosted commercial insurance products despite the positive news about the claims payments. Business interruptions incorporating coverage against these vaccine against Covid-19, combined resulting from event cancellations made risks will be sought after at an increasing with the geopolitical developments and up the other large portion of claims. extent. the negative circumstances in financial The worldwide insurance industry is Paralleling the speed gained by markets continue to put pressure on anticipated to pay USD 40 billion to 60 digitalization with the driving force of growth. billion in damages due to the pandemic. the pandemic, cyber crimes surged by 300% in 2020. Turkey ranks fifth among

11 GENERAL INFORMATION CHAIRPERSON’S MESSAGE

CHAIRPERSON’S MESSAGE

OUR COUNTRY IS UNDERGOING AN EXTRAORDINARY PERIOD, AS DOES THE REST OF THE WORLD. LIKE IT DID IN PREVIOUS EXTRAORDINARY TIMES, OUR COMPANY, BEING TURKEY’S INSURANCE, WILL UNINTERRUPTEDLY CARRY ON WITH ITS SERVICES AND STAND BY ITS STAKEHOLDERS IN KEEPING WITH ITS MOTTO “NEVER LOSE” ALSO THROUGHOUT THIS PROCESS.

the most attacked countries in the world. of insurance has been a positive the insurance industry with its 95 years Since digital technology has become an development instilling hope for the future of experience, and carries on with its indispensable part of corporate and social of the industry. increasing contribution to the industry life, cyber risks will continue to expand uninterruptedly. We are celebrating the 95th anniversary inevitably. Therefore, cyber risk insurance of Anadolu Sigorta, the first national In the light of its nearly a century of will clearly be a rising trend in the period insurance company of the Republic of experience in effective management of ahead, which allows mitigation of financial Turkey. risk, Anadolu Sigorta exhibited a highly risks stemming from cyber attacks. proactive approach during the pandemic. Founded at the initiative of our great In 2020, our industry has proven that it Prioritizing health for all of its stakeholders leader Mustafa Kemal Atatürk and under is erected on solid foundations. from its employees to customers, the leadership of İşbank in 1925 shortly agencies to surveyors, our Company Looking at Turkey, the insurance sector after the proclamation of our Republic ensured business and service continuity has proven that it is erected on solid in response to the need for an insurance flawlessly with the support of its advanced foundations as manifested by the company operating with domestic technological infrastructure, while inclusion of Covid-19 within the scope capital and workforce that would serve implementing all the necessary measures. of coverage and the support extended to to strengthen particularly the financial the policyholders, the accelerated digital sector, our Company has derived its name Digitalization is the main driving force transformation and upgraded service from Anatolia, where it was born and has behind improved customer experience. quality delivered through digital channels drawn its strength from. Digitalization is among our top priorities during the pandemic, as well as the rapid Merely TL 500 thousand at its both within our own business models and claims payments for earthquake damages incorporation, our Company’s registered product and service delivery to customers in 2020. capital reached TL 500 million today. We alike. In fact, many of our strategic goals Anadolu Sigorta 2020 Annual Report Despite the tough macroeconomic employ the industry’s most experienced intersect at this point either directly or conditions, and the burden of health human capital in our headquarters, nine indirectly. We carry on with our initiatives insurance payments originating from the regional offices, and our branch in the and efforts with the goal of being the pandemic and support made available to Turkish Republic of Northern Cyprus. brand preferred by our new generation the policyholders, our industry has proven With great pride, I would like to state employees and customers across a broad its strength and sustained its growth. that our Company serves as a school that array ranging from lean processes to In this period, increased awareness sources the qualified human resource of hybrid working models, cooperation with

12 startups to mobile applications. While our Governance System Project. With this longstanding digital transformation efforts project, we aim to build a system pursuing handed our Company competitive edge in environmental and social sustainability, 1925 the form of rapid adaptation to emerging as well as economic sustainability in conditions and service competence during underwriting and fund management the pandemic, they have also served processes. We will keep transparently as the strongest factor that helped us sharing this project and all other initiatives upgrade the customer experience. we are carrying out within the scope of sustainability with our stakeholders Founded at the initiative of While digitalization acted as the driving through our Sustainability Reports. In force to find ourselves new areas for our great leader Mustafa this way, we also hope to heighten development with the goal of knowing the Kemal Atatürk and under awareness of these issues and to act as an customers and offering the products and encouragement factor. the leadership of İşbank services that best fit them, it also ensures that we constantly enhance the efficiency Our country is undergoing an in 1925 shortly after and quality of the communication we extraordinary period, as does the rest the proclamation of our establish with the customers and the of the world. Like it did in previous service we deliver. extraordinary times, our Company, being Republic, our Company Turkey’s insurance, will uninterruptedly The period we are going through has derived its name from carry on with its services and stand by its demonstrated the vitality of Anatolia, where it was born stakeholders in keeping with its motto sustainability initiatives once more. “Never Lose” also throughout this process. and has drawn its strength The pandemic has been a period that We would like to thank our valuable from. compelled not only the insurance industry colleagues who have signed their names but all of us to question and make sense underneath our achievements, our of the world and life once more. The business partners who have never stopped vitality of sustainability initiatives, which extending support, and our distribution we, at Anadolu Sigorta, have been giving channels, policyholders and all our momentum to in an effort to leave a shareholders. livable world to the future generations, were revealed once again - unfortunately Sincerely, through such a dismal experience. I would like to take this opportunity to reemphasize that we have embraced the sustainability point-of-view with all of its social, environmental and economic aspects in all our operations, products and services, and that we are supporting social Füsun Tümsavaş sustainable development. We recognize Chairperson of the Board of Directors that sustainability is an unending journey. In 2020, we have arrived at an important point in our Environmental and Social Anadolu Sigorta 2020 Annual Report

13 GENERAL INFORMATION CEO’S MESSAGE

CEO’S MESSAGE

SINCE THE INCEPTION OF THE PANDEMIC, ANADOLU SİGORTA TOOK ALL ITS ACTIONS AIMED AT ITS STAKEHOLDERS IN AN AGILE MANNER, AND CARRIED ON UNINTERRUPTEDLY WITH ITS SERVICES, DISPLAYING ITS ADMINISTRATIVE AND TECHNOLOGICAL CAPABILITIES.

Our industry is undergoing a major test. In 2020, premium production by non- over-year. At year-end 2020, the number life branches increased by nearly 18% to of policyholders in the complementary As we witness an extraordinary period in TL 68 billion and accounted for 82.5% health insurance segment grew 18.7% and connection with the COVID-19 pandemic of the total production in the overall reached 1.6 million. that seized our lives in 2020, we, as the insurance industry. insurance industry, are working hard to The interest the public authorities have protect our policyholders, employees and Annual premium production in life been showing in insurance, particularly in all our stakeholders from the negative insurance, on the other hand, was up by the past two years, brings along significant impacts of the process, and to effectively 27% to exceed TL 14 billion, constituting opportunities in terms of the development manage the pandemic-related risks. 17.5% of total premium production. of the insurance industry that has verified Since the onset of the pandemic, our its financial strength amid challenging In non-life branch, while technical profit government and the entire industry, conditions and sustains its growth in reached TL 7.2 billion as at September being the Insurance Association of real terms. Changes to the regulatory 2020, technical profitability was 15%. The Turkey and insurance companies, gave a framework that are already enforced improved loss/premium ratio particularly good account of themselves. As part of and the forthcoming ones will carry our in auto branches during the pandemic the apposite and rapid measures taken, industry forward as powerful and positive produced a rise in technical profit. premium payments on policies were steps taken towards establishing a more deferred and discounts were granted, Despite the negative effect stemming organized and more competitive structure. and all companies announced significant from the inclusion of the pandemic Anadolu Sigorta continues to stand supportive packages for policyholders. in health insurance coverage upon strong by its stakeholders. Although constituting an exclusion for financial results, loss frequency the insurance industry, COVID-19 was declined in connection with the drop in Since the inception of the pandemic, included within the coverage scope, Anadolu Sigorta 2020 Annual Report hospitalization, and in turn, in utilization Anadolu Sigorta took all its actions aimed and insured individuals and institutions of insurance policies, for other illnesses. at its stakeholders in an agile manner, holding Complementary Health Insurance from effective communication to health- There has been a high increase in and Private Health Insurance policies related precautions, and from teleworking premium production primarily in aircraft, had access to this coverage. In order to to far-reaching service through digital as well as in watercraft and general losses preclude any aggrievement in overseas channels. The Company carried on branches. The growing extent of the trips, COVID-19 coverage was added also uninterruptedly with its services within policyholders’ pursuit for assurance in the to overseas travel insurance policies. the frame of its Business Continuity Plan, health branch reflected on production and displaying its administrative and Through this rough patch calling for unity results, especially in the Complementary technological capabilities. and solidarity, our industry displayed Health segment. In the health branch, powerful alliance and further reinforced its consolidated premium production of the reputation. industry expanded by nearly 21% year-

14 +21%

Anadolu Sigorta achieved acceleration in its premium production with the support of the revived economic activity after the first half of the year, which amounted to TL 8 billion at the end of the year, up by 21%.

While our Company extended support Digitalization will remain our priority 360-degree communication approach to its customers in a number of ways also in the wake of the new normal. under which our policyholders can easily including discounts, increased number of reach Anadolu Sigorta and instantly The pandemic compelled new and installments, deferment on payments, and convey their feedbacks through various expedited digitalization targets extended coverage periods, it also adapted platforms including the mobile app, for companies as a result of the its sales and distribution strategies very website and even the WhatsApp account, transformation it has caused in consumer rapidly to the new world in line with we make sure that our products and behavior and in the ways of doing changed customer behaviors, and added services fulfill the needs and expectations. business. further momentum to digitalization On another note, we think that the efforts. In addition to ensuring continued artificial intelligence, or the so-called engagement of existing customers Anadolu Sigorta achieved acceleration in “metal collar”, will be “employed” to a through new experiences, reaching the its premium production with the support gradually increasing extent particularly target audience that needs insurance of the revived economic activity after the in operational processes, and we are much more quickly, and creating first half of the year, which amounted to making developments along this line awareness and recognition of insurance TL 8 billion at the end of the year, up by to reallocate our human resource to with those who are not yet aware of 21%. processes requiring higher competencies. their need for insurance are possible only We foresee that Generation Z, dubbed the Controlling 11.8% market share as at through digital presence. Internet Generation or iGen, will be able year-end 2020, our Company ranked third The greatest advantage Anadolu Sigorta to work more effectively and will be more in production as a result of the merger of enjoys is the solid digital infrastructure motivated in business models compatible public companies. and competence it has achieved thanks with their technological habits, and we are giving priority to efforts in this vein While 41.2% of the technical income to the major steps it has taken so far Anadolu Sigorta 2020 Annual Report booked by the Company in the reporting by determining technology, digital as well. period stemmed from the motor vehicles transformation and innovation as its main While we provided our policyholders branch, it was followed, in order, by areas of investment and work. with the possibility to perform numerous health with 24.4% share, and motor We are constantly improving ourselves insurance transactions via our digital vehicles liability with 20.8% share. Total with the aim of offering user-oriented, service outlets and customer contact technical income grew by 14% YoY. Total secure and rapid service to our center through various developments in investment income transferred from non- policyholders on our digital channels, and digital applications during the pandemic, technical section amounted to TL 1.05 to this end, we continuously introduce we have also restated our pledge to offer billion. Our net profit showed 14.3% user-friendly innovations at every step more efficient service and communication increase and went up to TL 460.6 million, of the insurance experience from policy to all the stakeholders within our while total assets reached TL 12 billion. sales to claims processes. Based on our ecosystem.

15 GENERAL INFORMATION CEO’S MESSAGE

CEO’S MESSAGE

BASED ON OUR 95 YEARS OF INSURANCE TRADITION AND EXPERIENCE, WE WILL KEEP TAKING CUSTOMER CONFIDENCE AND OUR BRAND REPUTATION FURTHER AND FORWARD, AND TO CONTRIBUTE MORE STRONGLY TO OUR ECONOMY AND OUR INDUSTRY.

We are giving policyholders the means to machine learning and image processing, processes on an end-to-end digital reach claims services without leaving their AS’lı has been capable of communicating platform. homes through auto claims notification in Turkish verbally and in writing for We continue to improve our applications and process follow-up through “Sigortam more than 3 years. Our customers can in order to provide more benefits to Cepte” (Insurance on My Mobile) mobile communicate with AS’lı through our our agencies, which we involve in our app; collection of the vehicle from home corporate website, as well as mobile digitalization processes. Agency selection, to be returned to home in case of motor applications including WhatsApp and policy issuing, renewal and many other own-damage claims; ascertainment with Telegram. different tasks can be handled on our Remote Video Survey in residential and In a bid to enhance customer experience platforms such as the “Dijital Acente business place damages; procurement of and better manage our costs in relation Platformu” (Digital Agency Platform), documents via email in all bodily injury to the services we render, we use AI and “Bireysel Sube” (Personal Branch), “Ticari claims, and field team support, as well as advanced analytical data models in every Şube” (Commercial Branch), “Sigortam services such as purchasing of compulsory area. Our Social Network Analysis Project Cepte” (Insurance on My Mobile), and policies such as TCIP and motor TPL conducted in 2020 earned us several first “Poliçem Hazır” (My Policy is Ready). through our digital channels, payment prizes in its respective category from of policy debts via “Sigortam Cepte” We also engage all Anadolu Sigorta numerous international consultant firms. mobile app, and provision of healthcare employees in our digital processes. In During the reporting period, we succeeded consultancy service by contacting 2020, our citizen data scientist education in converting our data into information by physicians 24/7 via Sağlığım Cepte (My program produced its first outputs. The using advanced analytical data models in Health on Mobile) app. journey to convert data into information various fields including customer analytics, will continue at our Company. We have devoted significant efforts for health claims payment management, more than 3 years for employing artificial auto products, dynamic pricing and Conventional insurance companies need intelligence and advanced analytical data active target management, and we have to digitalize quickly. I think that it will no Anadolu Sigorta 2020 Annual Report models in our work processes. Our AI offered better service to our customers longer suffice to become an insurance platform, AS’lı as we call her, carries out by blending it with our 95 years of company using technology expertly in loss ascertainment by processing images, experience. the medium-term. We must transform thus decreasing our claims file processing ourselves into technology companies We are now offering a brand new times in 2020, while it has achieved the handling insurance expertly. experience with “juno”, our new capability to handle 40 processes on her generation digital insurance service own through Robotic Process Automation. Demand for health, trade credit and targeted at bringing the insurance Hence, in 2020, AS’lı performed more cyber risk policies is growing. products to consumers with a clear, than 80 million screen queries, and thus easy-to-understand and cordial language. During the pandemic, demand for health single-handedly performed the tasks that Addressing the digitally-savvy new insurance picked up in parallel with would require 400 people. Trained also generation, “juno” handles all work the individuals’ heightened awareness in Natural Language Processing (NPL), and recognition of these policies, while 16 financial risk insurance policies such and third prize in the “Information that, as a prerequisite of our mission, we as Trade Credit Insurance, Bond, and Visionary” category with its “Organized need to extend support to the best of our Credit Insurance took to the fore with Fraud Detection through Social Network ability to win these customers back for commercial enterprises in view of the Analysis Project”, the system. Health insurance, financial economic conjuncture. In connection with risk insurance, and cyber risk insurance, as Gold Stevie in the “Insurance Solution” the change in purchasing behaviors and well as fire and natural disasters branch category with its “Value Segment accelerated transition to digital business in connection with the possible Marmara (MAT) Project” and Silver Stevie in the models, cyber risk insurance acquired earthquake will remain as our priority “Financial Services” category at the Stevie great importance for individuals and focus areas. On the other hand, we will International Business Awards, companies alike. keep developing new products with the Third prize in the “IT Cost Efficiency” target of taking the insurance business With the Government Funded Trade category with “Image-Based Loss beyond being a payment point of claims Credit Insurance, the SMEs take their Estimation with AS’lı Artificial when they do occur and repositioning it forward receivables under assurance Intelligence” Project, and second as one that cares for the health, security against the risk of non-collection at prize in the “Future of Work – Talent and future of its customers, standing by maturity and render their commercial Management” category with “Data them at all times. activities sustainable. The negative Analyst Education Program” at the IDC experience that the pandemic handed to While digital insurance experience has Türkiye CIO Summit, and enterprises will further fuel the demand been a rising trend during the pandemic, for this policy in the near future. “Best Insurance Product of the Year” our Company will continue to use the award with its “Anadolu Sigorta My capabilities technology has to offer at In this period, our Company developed Flight is Assured” product as voted by an increasing extent both in its business the “Commercial Parametric Epidemics the consumers within the scope of the models and customer experience. We are Insurance” product, a first in Turkey, in “Selected Product of the Year” program. of the opinion that the digital agility we order to keep the SMEs that went through have captured in this period will provide a rough patch during the COVID-19 The phrase “Anadolu Sigorta is Turkey’s major benefits also in the future for our pandemic safe from potential losses that insurance” sums up our mission. business partners and policyholders alike. might arise in connection with a new pandemic. The coming period will be one that will Based on our 95 years of insurance compel us to spend efforts for capturing tradition and experience, we will keep The Cyber Security Insurance, developed increased awareness of insurance taking customer confidence and our brand two years ago by our Company under ownership in premium production and reputation further and forward, and to its pioneering identity and providing penetration. contribute more strongly to our economy coverage against cyber attack risks, goes and our industry. I believe that in this so- beyond saying merely “we are by your We all want our jobs to benefit the people called new normal period, we will sustain side when an accident occurs” with a and to contribute to their lives. Ever since our growth with a higher momentum as conventional insurance approach, and its incorporation to date, Anadolu Sigorta compared to the pre-pandemic period. warns the policyholder at the same also worked to add value to the soil where time by way of security screening and it has taken root and to carry that which I would like to extend my thanks to all controls in order to avert the risk before it is valuable to the future. It has assumed our stakeholders with whom we move materializes. responsibility for protecting national forward together, who have always stood wealth. by us with their support and contributions. Our achievements are crowned with awards. It has drawn its strength to move forward Sincerely, along this route from its experience and Anadolu Sigorta endorses its capabilities know-how of 95 years, its self-confidence to reflect its superiority in digital and high level service approach. Anadolu Anadolu Sigorta 2020 Annual Report technology in its products and services Sigorta is Turkey’s insurance, and will to develop innovative products with continue to create value for this land. Mehmet Şencan the awards earned. Our Company was CEO honored with the following awards in Henceforward, we will work altogether 2020: with great vigor and enthusiasm to be beneficial to our country and to Anadolu First prize in “Talent Development” Sigorta. We will approach one another category at the IDC Türkiye Digital with love, respect, tolerance and trust. We Transformation Awards 2020 with its will share our knowledge and experience. “Citizen Data Scientist Education Project”, We will encourage each other. We believe

17 GENERAL INFORMATION THE ORGANIZATION, CAPITAL AND SHAREHOLDER STRUCTURE OF THE COMPANY

ORGANIZATION CHART

Board of Directors

Coordination Department to the Corporate Governance Committee Board of Directors

Audit Committee

Board of Auditors Early Determination of Risk Committee

Digital Insurance Committee

Chief Executive Officer Mehmet Şencan

Risk Management and Internal Control Department

1st Deputy Chief Deputy Chief Deputy Chief Deputy Chief Deputy Chief Deputy Chief Executive Executive Executive Executive Executive Executive Filiz Tiryakioğlu M. Levent Sönmez Erdinç Gökalp Fatih Gören Mehmet Abacı Ali Kaplan

Agency Relations Digital Insurance Information Claims and Sales and Customer Actuarial Legal Consultant Technologies Management Management Communications Department Samim Ünan Department Department Department Department

Fund Management Information & Corporate Bank Insurance Inward Reinsurance and Investor Communication Non-Motor Claims Insurance Technologies Software Department Department Relations Department Department Development Department Department

Human Resources Engineering & Legal Affairs Project and Change Motor Insurance Motor Claims and Training Fire Special Risks and Subrogation Management Department Department Department Department Department Department

Corporate Accounting Marine Insurance Reinsurance Communication and Finance Health Claims Department Department Department Department Department

Marketing Corporate Strategy Collection and Customer Health Insurance and Performance Management

Anadolu Sigorta 2020 Annual Report Management Department Management Department Department

Procurement and Regional Offices Risk Engineering Construction Department Department Southern Anatolia Western Anatolia Marmara Liability, Aviation Data Analysis Central Anatolia and Special and Management Middle Black Sea Risks Insurance Reporting Black Sea Department Department Mediterranean İstanbul Fire & Agricultural Kadıköy Insurance 18 Department TRNC Branch GENERAL INFORMATION THE ORGANIZATION, CAPITAL AND SHAREHOLDER STRUCTURE OF THE COMPANY

CAPITAL AND SHAREHOLDER STRUCTURE, DISCLOSURES ON PREFERRED SHARES

CAPITAL AND SHAREHOLDER STRUCTURE

48% OF THE SHARES OF ANADOLU SİGORTA, A SUBSIDIARY OF İŞBANK, ARE QUOTED ON BORSA İSTANBUL (BIST) STAR MARKET.

CAPITAL STRUCTURE (%) Capital Increases and Their Sources There were no capital increases in 2020.

Disclosures on Preferred Shares No more preferred shares remained following the amendment to the Articles of Incorporation registered by the 42.7 57.3 company on 11 April 2013. Others Millî Reasürans T.A.Ş. Changes in the Articles of Association during 2020 None.

RATINGS Anadolu Sigorta 2020 Annual Report

Credit Ratings Fitch Ratings Note Outlook IFS BB Negative National IFS AA+ (tur) Stable Corporate Governance Rating SAHA Kurumsal Derecelendirme Hizmetleri A.Ş. Note Corporate Governance Rating Note 9.55

19 GENERAL INFORMATION GOVERNING BODY, EXECUTIVES AND THE NUMBER OF EMPLOYEES

BOARD OF DIRECTORS

Füsun Tümsavaş Fikret Utku Özdemir Mehmet Şencan Chairperson Vice Chairman CEO and Director

Füsun Tümsavaş was graduated Fikret Utku Özdemir holds an Mehmet Şencan graduated from from Ankara University, Faculty of associate degree in Nuclear the Management Engineering Political Science, Department of Engineering from Hacettepe Department of İstanbul Technical Economics-Finance. She started University and graduated with University. He began his her professional career at the a bachelor’s degree in Business professional career at İşbank Ankara Branch of the Central Administration from the Faculty as an Officer at Galata Branch Bank of the Republic of Turkey in of Economics and Administrative in 1988 and joined the Board 1979. In 1981, she started to work Sciences at the Middle East of Inspectors as an Assistant at İşbank’s I. Loans Department Technical University. He holds a Inspector the same year. After as an Officer and subsequently Master’s Degree in Finance from working as Branch Manager in became Assistant Section Head EDHEC Business School (France). various cities between 1997 and and Assistant Credit Specialist He joined İşbank as a member of 2007, he then functioned as the in the same department. Ms. the Board of Inspectors in 1996 manager of Bursa Corporate, Tümsavaş was appointed as and served in various positions Başkent Corporate and Kozyatağı Assistant Manager in 1994 and in a number of the Bank’s Corporate branches. Mr. Şencan Unit Manager in 1999 in the departments from 2005 until was appointed Deputy Chief aforementioned department. She 2017. Having started to serve as Executive of İşbank in April 2017. became the Head of Commercial Assistant General Manager at Milli He began serving as the CEO of Loans Department in 2004. Re in 2017, Fikret Utku Özdemir Anadolu Sigorta as of September has been appointed as a member 2019. In addition to her duties at the of the Board of Directors and Bank, Ms. Tümsavaş also serves as General Manager of Milli Re on the Vice Chairperson of the Board 27 August 2019. of İşbank Supplementary Pension Fund.

Ms. Tümsavaş was elected to İşbank’s Board of Directors on 28 March 2008, 31 March 2011, 28 March 2014, 31 March 2017 and 31 March 2020. Being the

Anadolu Sigorta 2020 Annual Report Chairperson of İşbank Board of Directors, Ms. Tümsavaş also serves as the Chairperson of the Risk Committee, Audit Committee, T.R.N.C. Internal Systems Committee, Remuneration Committee and Corporate Governance Committee; and as a member of the Credit Committee. She was appointed as Chairperson of Anadolu Sigorta on 29 April 2020.

20 Dr. Fatih Anıl Dilek Demirbaş Vedat Karahanoğlu Hafız Ekrem Kürkçü Director (Independent) Director (Independent) Director Director

Dr. Fatih Anıl received a graduate Prof. Dilek Demirbaş graduated Born in 1976 in Erzurum, Vedat 1966, İstanbul. Ekrem Kürkçü degree in management from from İstanbul University, Faculty Karahanoğlu graduated from graduated from Uludağ İstanbul Technical University, a of Economics, Public Finance the Public Administration University/Education Faculty. He Department in 1985, and graduate degree in economics completed master’s programs in Department (French) of the started his career as officer at from the University of the Department of Economics Faculty of Economics and Business İşbank Harbiye Branch. He was Amsterdam, and a doctorate at İstanbul University, Faculty Administration at Marmara promoted to Section Head and degree in production management of Social Sciences, followed by a University. Having started to work Sub Manager between 1995-2005 and marketing from Marmara doctorate program in economics as a Credit Specialist Trainee at at Beyoğlu Branch, Assistant at the University of Leicester in University. He then started the U.K. She carried out master’s Altunizade Branch of İşbank in Manager between 2005-2008 at his career as an economist/ studies at the University of Rice 1999, he later functioned as Credit Central Operations Division. He EU specialist at the Economic in the U.S. The same year, she Specialist at Kozyatağı Corporate was promoted to Unit Manager Development Foundation. He started her academic career at Branch (2007), Assistant Manager the same year. Since 2008 he worked as Finance and Trade the Newcastle Business School at Gebze Corporate Branch serves as Division Manager at where she later became an Manager at Beymen and as Assistant Professor, Associate (2008-2011) and Branch Manager Foreign Trade and Commercial General Manager at Elements Professor and Full Professor, in at Ümraniye Commercial Branch Loans Operations Division. Textile. Between 2008-2011 he tandem with which she served (2011-2016). Having become served as the General Manager in various administrative roles Şişli Commercial Branch Manager of Orka Holding. He published including the Head of Strategic in 2016, Vedat Karahanoğlu has Management and International three books: Yeni Nesil İş Modeli- Business Department, FT MBA been serving as the Head of SME Pazarlama 5.0) New Generation program leadership. In 2011, she and Enterprise Banking Sales Business Model – Marketing 5.0), joined Yıldırım Beyazıt University Department since 2019. Pazarlamadan Perakendeye (From as a Professor in the Business Marketing to Retailing) and Sanayi School; she was a co-founder of the Department of International Firmalarında Orta Ölçek Tuzağı Trade and Business, which she (Middle Scale Trap in Industrial headed. In 2016, she joined Firms) that was published by the İstanbul University as a Professor İstanbul Chamber of Industry. He in the Faculty of Economics, also gives courses on subjects such Department of Economic Theory. Ms. Dilek Demirbaş has academic as “Management” “Marketing” publications in Turkish and English in the graduate programs of languages, conducts national Bilgi and Boğaziçi (BUYEM) and international projects, acts universties. He is also a lecturer in as an advisor to graduate and Anadolu Sigorta 2020 Annual Report the undergraduate and graduate postgraduate students, and offers consultancy to various programs of the Nişantaşı institutions including development University. agencies and The Scientific and Technological Research Council of Turkey (TÜBİTAK). In addition, she currently serves in a number of positions including member of the Board of Trustees of the International University of Sarajevo, a member of the Economic Research Foundation, and a member of the editorial board of the Journal of Economy, Culture and Society. 21 GENERAL INFORMATION GOVERNING BODY, EXECUTIVES AND THE NUMBER OF EMPLOYEES

BOARD OF DIRECTORS

Kemal Emre Sayar Ayşegül Toker Director Director (Independent)

A graduate of Industrial Engineering Department of the Middle Ayşegül Toker graduated from Industrial Engineering at the Middle East Technical University, Kemal Emre Sayar completed East Technical University and became a faculty member in the the graduate programs on Information Technologies in Business Administration Department at Boğaziçi University in 1997 Management (MS) at Sabancı University, and on Economics and where she has been researching in the fields of Internet and new Finance (MA) at Boğaziçi University. He started his career in technologies since then. Prof. Ayşegül Toker works on the adaptation 1999 as an assistant inspector for İşbank, where he held various of new technology by consumers and businesses. In connection with managerial positions. He currently works as Unit Manager the advancements in information and communications technologies, she has a number of articles published in various academic journals, of the Subsidiaries Department. Serving as a member on the proceedings in national and international conferences, books and Boards of Directors of various group companies, Mr. Kemal book chapters about social media, location-based marketing, mobile Emre Sayar has been a Board Director at Anadolu Sigorta since marketing, online marketing, virtual communities and customer 26 November 2015. relationship management. She is a co-author of the book Mobile Marketing: Fundamentals and Strategy printed by McGraw Hill. In recent years, she has been noted for her academic work and studies addressing the business world in relation to Digitization Strategies, Social Media, Digital Marketing and Corporate Entrepreneurship (Intrapreneurship). In addition to her academic work, Prof. Toker managed the University’s presence and strategy on all social networks as the Social Media Coordinator. Having assumed the position of Boğaziçi University Entrepreneurship Center Director in 2016, Prof. Toker runs projects for improving the entrepreneurship ecosystem and culture. Prof. Ayşegül Toker has served as the Dean of the Faculty of Economics and Administrative Sciences at Boğaziçi University between 2012-2020.

Information on Board Meetings Held in 2020 Fiscal Year During 2020, the Board of Directors of Anadolu Sigorta held 12 meetings; while two

Anadolu Sigorta 2020 Annual Report of them were physical meetings, some members participated electronically in the remaining 10 meetings because of the pandemic conditions.

Ten meetings were held with full participation, whereas two meetings were held with the absence of one member in each due to justified excuses of our members. The Board of Directors held its 1261st meeting at the end of 2020.

Distributed to the Board members five days in advance of the meeting date on average, general agenda items deal with the Reports by the Board of Directors Committees, monthly working reports of the Executive Committee, reports by the Board of Inspectors, proposals, and informative memos.

Ayşen Aygül Board of Directors Reporter

22 GENERAL INFORMATION GOVERNING BODY, EXECUTIVES AND THE NUMBER OF EMPLOYEES

DECLARATIONS OF INDEPENDENCE BY INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS

2 March 2020

To: Anadolu Anonim Türk Sigorta Şirketi Corporate Governance Committee

I hereby declare that I satisfy the criteria of independence pursuant to applicable legislation within the framework of the criteria covered in the Communiqué on the Determination and Implementation of Corporate Governance Principles, and submit my candidacy as an independent member of the Board of Directors of Anadolu Anonim Türk Sigorta Şirketi.

Yours sincerely,

Prof. Ayşegül Toker

2 March 2020

To: Anadolu Anonim Türk Sigorta Şirketi Corporate Governance Committee

Yours sincerely,

Prof. Dilek Demirbaş

2 March 2020

To: Anadolu Anonim Türk Sigorta Şirketi Corporate Governance Committee

Dr. Fatih Anıl

23 GENERAL INFORMATION GOVERNING BODY, EXECUTIVES AND THE NUMBER OF EMPLOYEES

EXECUTIVE COMMITTEE

Mehmet Şencan Filiz Tiryakioğlu Mehmet Levent Sönmez CEO 1st Deputy Chief Executive Deputy Chief Executive

Mehmet Şencan graduated from Agency Relations and Sales Digital Insurance and Customer the Management Engineering Management Department Communications Department Department of İstanbul Technical Bank Insurance Department Corporate Insurance Department University. He began his Human Resources and Training Marine Insurance Department professional career at İşbank Department Marketing and Customer as an Officer at Galata Branch Corporate Communication Management Department in 1988 and joined the Board Department Risk Engineering Department of Inspectors as an Assistant Corporate Strategy and Liability Aviation and Special Risks Inspector the same year. After Performance Management Insurance Department working as Branch Manager in various cities between 1997 and Filiz Tiryakioğlu graduated from After graduating from İstanbul 2007, he then functioned as the Anadolu University, Faculty Technical University, Faculty of Manager of Bursa Corporate, of Business Administration, Maritime Studies, Department of Başkent Corporate and Kozyatağı Department of Business Marine Engineering in 1985, M. Corporate branches. Mr. Şencan Administration. She started her Levent Sönmez got his master’s was appointed Deputy Chief career at Anadolu Sigorta as a degree in “Contemporary Executive of İşbank in April 2017. Clerk in the Fire Department Management Techniques” He began serving as the CEO of in 1985. After working in from Marmara University and Anadolu Sigorta as of September administrative positions in Maine University and completed 2019. the Fire Insurance and Claims the Swiss Re SITC Marine Departments, she became Insurance program. He started Training Manager in 2000 and his career at Anadolu Sigorta as was appointed as the Human a Risk Management Assistant Resources and Training Manager Specialist in the Marine Insurance in 2004. Appointed as Deputy Department in 1991 and rose to Chief Executive Officer in 2008, Manager position in 1999 after Ms. Tiryakioğlu has been serving working in various levels in the as 1st Deputy Chief Executive since Marine Insurance Department. 2013. M. Levent Sönmez was appointed as Bakırköy Regional Manager in 2002 and Kadıköy Regional Manager in 2004. Holding “Chartered Insurance Institute/

Anadolu Sigorta 2020 Annual Report London Dip. CII” degree, Mr. Levent Sönmez has been serving as a Deputy Chief Executive of Anadolu Sigorta since 2008. He is also a member of the Board of Directors of TARSİM Agricultural Insurance Pool.

24 Erdinç Gökalp Fatih Gören Mehmet Abacı Ali Kaplan Deputy Chief Executive Deputy Chief Executive Deputy Chief Executive Deputy Chief Executive

Inward Reinsurance Department Regional Offices and TRNC Branch Information Technologies Claims Management Department Actuarial Department Fund Management and Investor Department Non-Motor Claims Department Motor Insurance Department Relations Department Information and Communication Motor Claims Department Reinsurance Department Legal Affairs and Subrogation Technologies Software Health Claims Department Health Insurance Department Department Development Department Procurement and Construction Accounting and Finance Project and Change Management Ali Kaplan received his degree Department Department Department in Public Administration from Data Analysis and Management Collection Management İstanbul University, Faculty of Reporting Department Department Having graduated from the Political Sciences. He started Department of Metallurgical and his professional career as a After graduating from Kuleli Fatih Gören graduated from Materials Engineering, Faculty clerk in our Company’s Fire Military High School and from Ankara University, Faculty of of Engineering at the Middle Department in 1990, where he the Turkish Military Academy, Political Sciences, Department East Technical University in was promoted to Sub-Manager Department of Business of International Relations 1991, Mehmet Abacı started his level in 1999. He then worked Administration, Erdinç Gökalp got in 1990. He completed the professional career in İşbank’s in managerial positions at his master’s degree in insurance Chartered Insurance Institute IT Department as a Software Gaziantep Liaison Office, in the from Marmara University, (CII) certification program Specialist the same year. He Marketing Department, Kadıköy Institute of Banking and Insurance. under the School of Banking became a Unit Manager in 2004. Regional Branch, Bakırköy Having started his career as a Risk and Insurance at Ziraat Bank in Appointed as Deputy Chief Regional Branch, and Corporate Management Assistant Specialist 1991. He worked as a Specialist Executive Officer at SoftTech Insurance Department. After being in the Marketing Department in in Retail Banking and Agricultural A.Ş. in 2008, he was named the appointed to İstanbul Regional 1991, he worked in administrative Loans Departments at Ziraat Solution Development Manager Branch in Manager position in levels in Marketing, Accident Bank between 1991 and 1994. and Project & Change Manager 2013, he became the manager of Insurance and Reinsurance Having joined Anadolu Sigorta at İşbank in 2010 and in 2011 Kadıköy Regional Branch in 2016. Departments before rising to the as an Assistant Inspector on the respectively. Mr. Mehmet Abacı He has been serving as Deputy Reinsurance Manager role in 2001. Board of Inspectors in 1994, Mr. has been serving as a Deputy Chief Chief Executive since December During his employment, he earned Fatih Gören was appointed as Executive Officer of our Company 2018. the Atatürk scholarship granted Accounting Manager in 2004. since 2012. by the Association of Insurance Holding Corporate Governance and Reinsurance Companies of Rating License and Capital Turkey and received insurance Market Activities Level 3 License, education abroad for six months. Mr. Gören is a member of the He is a member of the Board of Corporate Governance Committee

Directors of the Turkish Moto at our Company and a Member Anadolu Sigorta 2020 Annual Report Insurers’ Bureau. A member of of the Board of Directors at the the Technical Committee of Insurance Arbitration Commission. FAIR Nat Cat Pool since 2013 Mr. Gören has been serving as and a member of the Technical Deputy Chief Executive Officer Committee of FAIR Oil and Energy since 2008. Syndicate since 2018, Mr. Gökalp has been serving as a Deputy Chief Executive Officer of our Company since 2008.

25 GENERAL INFORMATION GOVERNING BODY, EXECUTIVES AND THE NUMBER OF EMPLOYEES

HEADS OF UNITS UNDER THE INTERNAL SYSTEMS, AVERAGE NUMBER OF EMPLOYEES BY CATEGORIES DURING THE REPORTING PERIOD

HEADS OF UNITS UNDER THE INTERNAL SYSTEMS

Dr. İbrahim Erdem Esenkaya İnanç Duyar Chairman of the Board of Inspectors Head of Risk Management and Internal Control

İbrahim Erdem Esenkaya graduated from Holding a bachelor’s degree in mathematics İstanbul University, Faculty of Political Sciences, from Marmara University, İnanç Duyar Department of Public Administration. He completed an undergraduate degree in then completed a master’s degree without business administration at Anadolu University dissertation in the graduate program for the and a graduate degree in the Mathematical Management of Financial Institutions at İstanbul Engineering Department at Yıldız Technical University, Faculty of Business Administration, University. She started her career at Anadolu Institute of Business Administration. He earned Sigorta in the Risk Management and Internal his master’s degree in Business Management Control Department in 2006. She qualified for and Organization, and his doctorate degree actuarial certificate in 2011 upon completing in Accounting and Auditing from the Institute the actuary exams given by the Ministry of of Social Sciences at the same university. He Treasury and Finance. After being assigned to pursued an academic career as a guest lecturer the Actuarial Department in Actuary-2 position at İstanbul University and doctor faculty in 2015, she was promoted to the position of member at İstanbul Esenyurt University at Supervisor in the same department in 2018. various times. He started his career at Anadolu Appointed to the Risk Management and Internal Sigorta as an Assistant Inspector at the Board Control Department in November 2019, of Inspectors on 1 May 1995, became Senior İnanç Duyar has been serving as the Head of Assistant Inspector on 28 April 1998 and grade Risk Management and Internal Control since 3 Inspector on 1 May 1999. He was appointed 1 March 2020. to the Accounting and Finance Department on 1 June 2001 as an Assistant Manager and to Internal Audit Department on 1 January 2005 as a Manager. İbrahim Erdem Esenkaya has been appointed as the Chairman of the Board of Inspectors on 1 June 2007.

AVERAGE NUMBER OF EMPLOYEES BY CATEGORIES DURING THE REPORTING PERIOD Anadolu Sigorta 2020 Annual Report Average number of employees by categories during the reporting period is as follows: 2020

Senior level managers 7 Managers 42 Consultants 2 Middle level managers 206 Specialists/Officers/Other employees 1,104 Total 1,361

26 GENERAL INFORMATION FINANCIAL AFFAIRS AND ACTUARIAL UNIT MANAGERS

FINANCIAL RIGHTS PROVIDED TO THE MEMBERS OF THE GOVERNING BODY AND EXECUTIVES

FINANCIAL AFFAIRS AND ACTUARIAL UNIT MANAGERS

Murat Tetik Taylan Matkap Barış Hüseyin Şafak Accounting and Financial Affairs Appointed Actuary/Manager Fund Management and Investor Manager Relations Manager

Murat Tetik graduated from İstanbul University, Taylan Matkap received his bachelor’s degree Barış Hüseyin Şafak graduated from İstanbul Business Administration Department (English) from Ankara University, Department of University, Faculty of Science, Department of and started his career in our company on Statistics and completed his master’s degree Mathematics, and completed the Executive 1 May 1997 as an Assistant Inspector on the in the Department of Actuarial Science and Development program at Koç University. Board of Inspectors. He was promoted to Senior Finance at Boston University. Started his career He started his career at Anadolu Sigorta Assistant Inspector on 1 May 2000, to Class III at Anadolu Sigorta on 1 December 2008 in on 3 January 2005 as a Risk Management Inspector on 1 June 2001, to Class II Inspector appointed actuary position, Mr. Taylan Matkap Assistant Specialist in the Accounting and on 1 June 2003, and to Vice Chairman of the also serves as the President of the Actuarial Finance Department. He became a Senior Board of Inspectors on 1 August 2004. He Society of Turkey. Assistant Specialist in 2007 and Specialist was appointed as an Assistant Manager to the in 2009 before rising to the position of Accounting and Financial Affairs Department Supervisor in the same Department in 2013. on 1 January 2005, where he rose to the On 1 December 2018, he was appointed as position of Manager on 1 February 2008. He is a Manager of the Fund Management and Investor member in the Insurance Association of Turkey Relations Department, which was set up on the Financial Accounting Inspection and Research same date. Mr. Şafak holds Level 3, Derivative Committee. Instruments and Corporate Governance Rating licenses issued by the Capital Markets Board of Turkey.

FINANCIAL RIGHTS PROVIDED TO THE MEMBERS OF THE GOVERNING BODY AND EXECUTIVES Anadolu Sigorta 2020 Annual Report

Financial Rights Other Means

In the fiscal year ended on The expenses incurred for the members of 31 December 2020, TL 10,539,345 in the company’s governing body and senior total has been provided in remunerations executives under other means such as and similar benefits to the governing business related entertainment and travels body and senior executives such as the amounted to TL 111 thousand. Chief Executive Officer and Deputy Chief Executive Officers. Further details are presented in the relevant section of financial notes. 27 WE ARE FOCUSED ON EXCELLENT CUSTOMER EXPERIENCE.

RESEARCH AND DEVELOPMENT ACTIVITIES OF THE COMPANY RESEARCH AND DEVELOPMENT PERTAINING TO NEW SERVICES AND BUSINESS ACTIVITIES

RESEARCH AND DEVELOPMENT PERTAINING TO NEW SERVICES AND BUSINESS ACTIVITIES

Numerous initiatives with a focus on RiskCep Mobile Application was launched, The outputs from our multi-dimensional technology and innovation were carried which allows faster execution of risk segmentation developed within the scope out in a bid to improve the services analyses by our sales force during their of our data analytics projects were used delivered to customers and to increase field work and creation of risk reports; to build on the diversity and efficiency the efficiency in processes co-executed in addition, user experience offered by of our sales opportunities, and our with our business partners; in this sense, Ofisim Cepte Mobile Application was capability to address the target customer significant progress was achieved in upgraded and revamped, which will segment. Using the social network heightening the level of digital maturity. satisfy our agencies’ daily mobile needs analysis algorithms and enriching the Under the innovation initiatives, projects and let them perform their day-to-day currently used data resources, Organized related to artificial intelligence, mobility transactions. Misuse Analysis Platform was developed and internet of things (IoT) were for the motor own damage product. prioritized. Within the frame of the priority given This study based on data analytics will to mobile technologies, our new- serve to determine claims in the nature Anadolu Sigorta WhatsApp account was generation insurance application JUNO of organized misuse, which cannot be launched, and the so-called metal-collar was developed and introduced for use identified in individual claims files, but assistant, AI-based AS’lı began offering by our customers. Digital claims journey where the parties in different claims files service also on this channel, fulfilling a flows offered to customers on Sigortam are interconnected. number of functions including addition Cepte (Insurance on my Mobile) app was of missing claims documents, submitting redesigned in view of user experience. Our Commercial Internet Branch now has proposals based on the license image, etc. the capability allowing our customers to Emotional states of written conversations As part of our IoT initiatives, various log in and perform transactions for health, received through WhatsApp and Chatbot prototypes that can be used in our sales marine, and SME fleet products. channels began to be measured, which and after-sales services were developed allowed referral of contents described as such as water detector, fire detector, urgent or negative in these conversations telematics device, etc. to be checked by our business units as alerts.

AS’lı AI application started claims ascertainment based on images; in addition, a study was carried out to identify digital traces in claims, with the target of performing image-based checking of recurrent compensation. Models that would allow recognition of unconfigured visual contents were developed, with the aim of establishing warning systems for all photos accessed by way of video surveys. Anadolu Sigorta 2020 Annual Report

30 COMPANY ACTIVITIES AND MAJOR DEVELOPMENTS IN ACTIVITIES 2020-2021 PRIMARY GOALS AND POLICIES

INFORMATION ON THE COMPANY’S INVESTMENTS

2020-2021 PRIMARY GOALS AND POLICIES

As Turkey’s most established and most RiskCep mobile applications, according to On another note, at Anadolu Sigorta, we experienced insurance company, our vision changing circumstances, and to improve will keep supporting social sustainable is defined as being the brand preferred by user experience. In addition, transition to development with all the social, everyone who needs insurance, and our teleworking and digital working models environmental and economic aspects mission is spelled out as helping create was ensured very quickly and successfully involved, and we will continue to introduce a broad awareness of insurance in our during the pandemic. This harmonious new projects with a sustainability point- country, leading the sector, and enhancing work setting and circumstances created of-view in all our operations, products the value of our Company. with all our stakeholders and business and services in a bid to leave a livable partners will be carried on and further world to the future generations. Within Within the framework of this vision and improved during the new normal period. the scope of the Environmental and Social mission and mission, securing a successful Governance System we have set up by performance across the board that is also Customer analytics and data science end-2020 with the purpose of integrating reflected on the financial results is an have gained even greater importance and sustainability within business processes, inevitable necessity in order to maintain become one of our corporate priorities we will start implementing sustainability our solid financial strength. To achieve this with the target of understanding the principles directly within our insurance goal, sustainable performance is targeted insurance needs and expectations even and investment processes, in addition to to be attained in 2021 by establishing before they arise, and of delivering the operational activities. a delicate balance between growth and right product or service at the right time profitability. in keeping with our vision to be the brand The main element that will determine the preferred by everyone. course of the economy in 2021 will most Priorities and needs in social life changed, certainly be the vaccination campaigns and continue to do so, at a faster speed, Conscious of the fact that Turkey is an against the Coronavirus and the course of owing particularly to the pandemic. It earthquake-prone country, our business the pandemic. Our Company will continue is among our fundamental duties to continuity efforts will be persevered to keep a close eye on the changes develop and offer the products and attaching the same degree of importance taking place in social and economic life in services needed by closely monitoring with the aim of optimally responding to connection with the speed of the outbreak and even by predicting these changes. In the needs of our customers, employees and to stand by our stakeholders as parallel, our efforts will be ongoing at full and all other stakeholders and of being by always. speed to upgrade our existing services, their side in the wake of all catastrophes, mainly İşOrtağım (My Business Partner), and principally earthquakes. It will be a OfisimCepte (Office on my Mobile), key responsibility for us to heighten the SağlığımCepte (My Health on Mobile), and society’s awareness of such phenomena.

INFORMATION ON THE COMPANY’S INVESTMENTS Anadolu Sigorta 2020 Annual Report

The company’s outlays in 2020 amounted to TL 63.2 million for projects carried out for revising basic insurance implementations, enhancing operational efficiency within the scope of the company’s information and communication technology investments. These projects are detailed under the heading “Research and Development Activities of the Company”.

31 COMPANY ACTIVITIES AND MAJOR DEVELOPMENTS IN ACTIVITIES INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT ACTIVITIES

AN ASSESSMENT OF 2020 BY THE BOARD OF INSPECTORS

Pursuant to the Regulation on the Internal In 2020, 34 studies were completed: 10 Developments are carefully monitored Systems of Insurance and Reinsurance investigations, 9 examinations and 15 to ensure that the audits conducted and and Pension Companies, the internal audit other studies. the reports subsequently issued take activity at our company is carried out by account of the “International Standards for the Board of Inspectors reporting to our As a result of the efforts to further expand Internal Audit”, are risk-focused, provide company’s Board of Directors. The Board and strengthen the central auditing of assurance for risk management and of Directors reviewed and acquainted itself agencies in line with the experiences contribute added value to our company with the 2020 Activity Report of the Board derived from agency audits, no hitches and necessary revisions and changes are of Inspectors. were experienced regarding the activities made accordingly in the audit processes of the Board of Inspectors, despite the and in the audit reports prepared after In 2020, 31 headquarters units, 9 regional transition to the work-from-home model these processes. branches and 1 branch adding up to because of the Covid-19 pandemic that 41 units in total were audited and the dominated 2020. On the other hand, The Board of Inspectors will keep carrying resulting determinations and assessments efforts also continued to create early out the activities within the context of the were reported. warning systems that accurately identify internal audit program prepared, as well as and reveal the risk elements in advance. other duties assigned to it outside of this Initiated in order to monitor the extent scope, based on the fundamental approach at which the audited units fulfill the As of year-end 2020, the Board of for maximizing the benefits expected from requirements of the reports resulting Inspectors was staffed by 16 board internal auditing. from the audits conducted, follow-up members consisting of inspectors and audits continued to be carried out in assistant inspectors. Overseas training 2020. A total of 36 follow-up audits were programs were not attended due to the conducted during 2020, 19 of which Covid-19 pandemic. Notwithstanding, resulted from 2019 audits. with the aim of supporting the professional development of the Auditing of agencies persisted pursuant Board members and building on their to the Regulation on the Internal Systems professional knowledge, their online of Insurance and Reinsurance and Pension participation in various seminars, meetings Companies during 2020, and 803 agencies and training programs in Turkey and were audited, and the results were abroad have been facilitated after March. reported. In this frame, efforts were carried on also in 2020 so that the members of the On the other hand, based on Articles 16/1 Board of Inspectors obtain nationally and and 17/2 of the Regulation on the Internal internationally recognized professional Systems of Insurance and Reinsurance certificates. and Pension Companies, audits were conducted at all of the agencies that remain after eliminating those that were dissolved during the reporting period from the 2,311 agencies that were listed in the audit programs approved by the Board of Directors and planned to be audited in the 2018-2020 period. Anadolu Sigorta 2020 Annual Report

32 COMPANY ACTIVITIES AND MAJOR DEVELOPMENTS IN ACTIVITIES INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT ACTIVITIES

INTERNAL CONTROL SYSTEM AND AN ASSESSMENT BY THE GOVERNING BODY

Pursuant to the provisions of the risk-control matrixes detailing the control • Developing the IT Service Delivery and “Regulation on the Internal Systems points were prepared, thus completing the Operation Processes of Insurance, Reinsurance and Pension system documentation. Companies” enforced upon its publication • Creating the IT Support Processes in the Official Gazette issue 26913 dated A Contingency Action and Funding Plan • IT Audit Management. 21 June 2008, the Risk Management and has been designed, which specifies the actions to be taken in the event of a Internal Control Department was set up • Accordingly, the Information Systems liquidity crisis sustained by the company in a structure so as to be conducted and Management Committee was set due to negative market movements administered directly by the CEO, and up, which will report directly to the beyond its control, unexpected vested in the powers and responsibilities Executive Board and will be responsible macroeconomic events, catastrophic or that will allow the Department to assess for IT strategy and steering activities. big-ticket claims payments and other the risk exposure and internal control The Information Systems Management reasons. environment in an independent/impartial Committee was established with the and effective fashion. The Board Director With the aim to prevent the company’s purpose of managing information responsible for Internal Systems is also exposure to various perils of differing systems in alignment with the responsible toward the Board of Directors scales (machinery breakdown, human company’s strategic goals, establishing for the formation of the Department and errors, theft, fire, explosion, state of war, the policies, procedures and processes ensuring, monitoring and coordinating its sabotage, natural disasters, terrorist for ensuring information security, and operability, adequacy and effectiveness. acts, power outages, etc.) and the efficiently managing the risks arising from the use of information systems. The duties, powers and responsibilities of losses resulting therefrom, the Business Basically the Committee defines, the individuals charged with the operation Continuity Management System has been assesses and reports on the risks and activities of the Internal Control set up to recover as quickly as possible arising from the use of information system, and for conducting the activities from the interruption caused by such systems; creates the guidelines for the are defined in the relevant Operating perils and to enable resumption of key management of these risks, establishes Guidelines released. The internal control activities. and monitors relevant controls. system is set up as a separate mechanism Within the scope of the Business independent from the internal audit Continuity Management System, It has been considered that the internal system, based on applicable legislation Business Continuity Management System control policies and procedures and numerous references available in Guidelines, Business Continuity Plan, introduced and the internal control national and international literature. Incident Management Plan, Emergency activities carried out are aligned with the company’s nature, the complexity Centralized and on-site internal control Response Plan, IT Continuity Plan and of its operations and risk structure, and activities do not eliminate or modify, in other documents were drawn up and possesses the minimum elements of an part or in whole, the relevant operational published on the Electronic Document efficient internal control system. and supervisory responsibilities of Management System. The operability of the employees who are in charge of the said plans is tested at certain intervals. conducting and/or managing these It was targeted to secure alignment activities. The Board of Inspectors with COBIT (Control Objectives for separately oversees the effectiveness and Information and Related Technology) in adequacy of the internal control system. the execution of information systems Within the scope of establishing an processes and functions, and the relevant processes were updated in this respect. effective internal control system that is Anadolu Sigorta 2020 Annual Report aligned with the nature, complexity and The following headings were addressed risk structure of the company’s operations; under the COBIT Alignment Project for duly and efficiently managing, mitigating Information Technology Governance and and controlling the risks involved in the Information Technology Processes: company’s operations; and employing • Devising the Information Technology a risk-focused approach to the conduct (IT) Governance Model and management of review, control, monitoring, assessment and reporting • Creating the Governance Processes activities concerning the activities of the company’s units, all of the company’s • Formulating the IT Service key processes were schematized, and Development Processes

33 COMPANY ACTIVITIES AND MAJOR DEVELOPMENTS IN ACTIVITIES INFORMATION ON ASSOCIATES

REPURCHASED OWN SHARES BY THE COMPANY, DISCLOSURES CONCERNING SPECIAL AUDIT AND PUBLIC AUDIT, LAWSUITS FILED AGAINST THE COMPANY AND POTENTIAL RESULTS, DISCLOSURE OF ADMINISTRATIVE OR JUDICIAL SANCTIONS AGAINST THE COMPANY AND/OR BOARD OF DIRECTORS MEMBERS, ASSESSMENT OF PRIOR PERIOD TARGETS AND GENERAL ASSEMBLY DECISIONS, EXPENSES INCURRED IN RELATION TO DONATIONS AND GRANTS AND SOCIAL RESPONSIBILITY PROJECTS

INFORMATION ON ASSOCIATES

The de facto scope of Anadolu Hayat Emeklilik A.Ş. covers engaging in individual or group private pension activities; setting up pension funds in this framework; creating fund bylaws for the funds to be set up; executing pension contracts, annuity contracts, portfolio management contracts, custody agreements with the custodian for safekeeping of fund assets; and offering individual or group life or whole life insurance policies and accident policies in connection therewith, as well as all sorts of life policies, and carrying out reinsurance operations in relation thereto.

The company has 20% stakeholding in Anadolu Hayat Emeklilik A.Ş. 31 December 2020 Book Value Shareholding Anadolu Hayat Emeklilik A.Ş. 744,760,000 20.0% REPURCHASED OWN SHARES BY THE COMPANY None. DISCLOSURES CONCERNING SPECIAL AUDIT AND PUBLIC AUDIT The company undergoes independent audits conducted by the independent audit firm, Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi (Ernst&Young) on its semi-annual financial statements at six-month intervals and on its annual financial statements annually, as well as consolidation audits performed by İşbank at the end of first and third quarters of the year. Due to being an associate of the Bank, the company is also subject to the annual information systems audits banks conduct at their consolidated entities. LAWSUITS FILED AGAINST THE COMPANY AND POTENTIAL RESULTS Lawsuits brought against the company and their possible results are presented under the heading “42 - Risks” in the notes to the financial statements. DISCLOSURE OF ADMINISTRATIVE OR JUDICIAL SANCTIONS AGAINST THE COMPANY AND/OR BOARD OF DIRECTORS MEMBERS During 2020, there were no penalties and/or sanctions of material nature imposed against the company and/or Board of Directors members on account of acts in violation of the legislation. ASSESSMENT OF PRIOR PERIOD TARGETS AND GENERAL

Anadolu Sigorta 2020 Annual Report ASSEMBLY DECISIONS All decisions adopted in the Annual General Assembly meeting held on 24 March 2020 have been carried out.

Our company acts on the principle of providing quality service and it has preserved its leading position in terms of market share in line with its targets by furthering innovation and customer-orientation concepts. EXPENSES INCURRED IN RELATION TO DONATIONS AND GRANTS AND SOCIAL RESPONSIBILITY PROJECTS Our Company did not incur any expenses within the context of social responsibility in 2020, but spent TL 425 thousand in donations. 34 COMPANY ACTIVITIES AND MAJOR DEVELOPMENTS IN ACTIVITIES EXPENSES INCURRED IN RELATION TO DONATIONS AND GRANTS AND SOCIAL RESPONSIBILITY PROJECTS

COMMITMENT TO SOCIAL RESPONSIBILITY

Offering service to its policyholders (CSR) Summit. In 2020, Anadolu Sigorta With the purpose of supporting women in adhering to its vision summed up as began exploring a new corporate social business and social life within the scope “Never Lose”, Anadolu Sigorta garnered responsibility initiative that will create of its collaboration with Arya Women dozens of national and international sustainable social impact. Investment Platform, Anadolu Sigorta has awards with its social responsibility been organizing interactive online training initiative “Bir Usta, Bin Usta” (One Anadolu Sigorta collaborates with programs on insurance exclusively for Master, Thousand Masters) that it has TURMEPA (Turkish Marine Environment startups, investors and members in the conducted over the course of a 10-year Protection Association) to prevent Arya network; through these efforts, the period with the aim of reviving vanishing marine pollution and to contribute to the Company raises awareness of insurance crafts and training the future masters in combat against pollution. Based on the among women entrepreneurs and supports these vocations. Executed between 2010 protocol with TURMEPA, the Association them for taking the necessary measures. through 2019, the Project kept collecting that spends efforts to clean the marine awards in 2020, and was granted the environment in Turkey receives a share platinum prize in the “Quality Training” from the revenues generated by the category at the Sustainable Development insurance coverage sold to any type of Goals Awards organized within the scope vessel. The protocol for this cooperation of the 12th Corporate Social Responsibility was signed in 2010. Anadolu Sigorta 2020 Annual Report

35 COMPANY ACTIVITIES AND MAJOR DEVELOPMENTS IN ACTIVITIES THE COMPANY’S TRANSACTIONS WITH THE RISK GROUP

THE COMPANY’S TRANSACTIONS WITH THE RISK GROUP

During 2020 fiscal year, within the Commercial transactions the company The company’s transactions of a material framework of the applicable provisions of realized with its controlling shareholder nature with the related parties during the Turkish Commercial Code (TCC), our and other Group Companies during 2020, 2020 are presented in Note no. 45 under company is a subsidiary of İşbank Group. which are detailed in the report, fall within the notes to the financial statements in Pursuant to Article 199 of the TCC, the the company’s field of activity and were the present report. company’s Board of Directors presented carried out on an arm’s length basis. In all the declaration below in the conclusion of of the transactions the company realized the affiliation report issued in relation to in 2020 fiscal year with the controlling its relations with the controlling company company and its affiliates, any and all legal or an affiliate thereof: acts carried out in favor of the controlling company or its affiliate with guidance between our company and our principal from the controlling company, and any shareholder Türkiye İş Bankası A.Ş. and/or and all actions taken or avoided in favor of other ‘Group Companies’, there is no; the controlling company or its affiliates in 2020 have been reviewed according to the • transfer of receivables, payables or conditions and circumstances known to assets, us. We hereby declare that our company • legal transaction that may result in an did not sustain any such loss on account obligation, such as furnishing surety, of any transaction arising according to guarantee or endorsement, conditions and circumstances known in relation to 2020 fiscal year. • legal transaction that may result in transfer of profit. Anadolu Sigorta 2020 Annual Report

36 FINANCIAL STATUS SUMMARY REPORT BY THE BOARD OF DIRECTORS

SUMMARY REPORT BY THE BOARD OF DIRECTORS

Dear Shareholders, The IMF World Economic Outlook projects normalization steps taken and the credits that the world trade volume will shrink extended, 6.7% growth was registered in Before presenting the 2020 financial by 9.6% in 2020, but will grow by 8.1% the third quarter. statement figures for your approval and in 2021. The IMF anticipates that the comments, we deem it useful to recap the four major economies (US, Eurozone, In its January issue of the World changes and developments in economic China and Japan) will acquire V-shaped Economic Outlook, the IMF revised the life and the insurance sector. growth. However, the fitful increases in 5% contraction it has estimated for Coronavirus cases in connection with Turkey in October as 1.2% growth. The 2020 has been a year dominated by the the mutated variants of the virus and IMF projected 6% growth for 2021 and Coronavirus pandemic in every respect, loosened restrictions render the V-shaped 3.5% for 2022. The OECD, on the other and especially the economy. After its exit projections elusive. Many countries hand, decreased its estimated contraction emergence in Wuhan city in China by the reintroduced the Coronavirus restrictions by 2.9% in September to 1.3% for the end of 2019, it spread across the whole by the end of 2020 due to the second Turkish economy in its report published in world at an unexpected speed and with an wave of the pandemic. December, while projecting 3.2% growth unexpected influence. in the national economy for 2021. In the Interim Economic Outlook Given the fact that Q2 growth data published in December, the OECD revised Seasonally adjusted unemployment did not turn out to be as negative as its estimated global economic growth rate in September 2020 declined by 0.4 they were projected, the IMF and other projection for 2021 from 5% to 4.2%, and points YoY and was registered as 12.9%. international organizations concluded projected 3.7% growth for 2022. Industrial production index took a record by year-end 2020 that total economic fall of 31.4% in April due to the impacts contraction would not be as deep as Based on all these data and the of the restrictions implemented. The index projected previously owing to the developments that occurred, it is projected moved to the positive segment in June measures adopted against the Coronavirus that the decline in global production as the number of cases decreased and during 2020, and hence revised their resulting from the Coronavirus outbreak normalization steps kicked in, and rose to annual contraction projections positively. is lower than estimated, but a long 9% on an annual basis in October. The In the World Economic Outlook report process filled with uncertainties will be future developments in the Coronavirus issued in January 2021, the IMF revised experienced, which will slow down growth pandemic will directly influence the course its estimated contraction for 2020 in global economy. hereinafter. upwards to 3.5% from 4.4% announced in October. In the Temporary Economic Due to the impact of the Coronavirus Developments in demand, supply and Outlook – December report, the OECD pandemic, the Turkish economy exchange rates create inflationist effects. improved its estimated global economic experienced the most sudden contraction Annual CPI has been announced as 14.6%. downsizing to 4.2% from 4.5%. The World in the history of the country in 2020. 4.5% Uncertainties in relation to the course Trade Organization noted that the global growth registered in the first quarter of of the pandemic keep putting pressure commercial activity increased in the third 2020 was followed by 9.9% contraction on the budget outlook. Hence, new quarter, but that the recovery was slow. in the second quarter. With the measures were put into implementation Anadolu Sigorta 2020 Annual Report

37 FINANCIAL STATUS SUMMARY REPORT BY THE BOARD OF DIRECTORS

SUMMARY REPORT BY THE BOARD OF DIRECTORS

in November 2020 in an effort to take formed according to the speed of global Based on non-life segment data for the under control the spreading rate of the economic recovery in the period ahead. first nine months of 2020, motor vehicle virus fueled by the increased number of liability branch that represents the largest cases. Evidently, the Turkish economy will From the standpoint of catastrophe portion of the industry’s market share be shaped by the developments associated losses, after a rather milder period with posted TL 1 billion 556 million in technical with the Coronavirus pandemic in 2021, as respect to natural phenomena in the first profit. In the motor TPL segment that is the case for other countries. In addition half of the year, catastrophe losses took makes up a substantial portion of this to that, geopolitical conditions that Turkey an upturn in the second half of the year, branch, the technical profit figure was is exposed to will be influential to a large particularly due to the hurricanes in the TL 1 billion 394 million. The restrictions extent. US. The record-breaking heat wave in the imposed in connection with the pandemic US west coast gave rise to wildfires over have been influential on the lower number The insurance industry was able to show an area of 5 million decares, while also of losses in this branch. Motor vehicles resilience against the negative impacts of hitting thousands of settlement areas. (own damage) branch registered a the Coronavirus pandemic, even turning According to the Global Risks Report 2020, technical profit of TL 1 billion 992 million. them into the positive in some respects. all of the top 5 risks in terms of likelihood Following motor TPL and motor own With the rapid transition to digital channel are associated with the environment and damage, the highest profit generators for use by insurers and brokers in the first climate change, and climate change and companies engaged in non-life branches half of the year, the growth in individual the extreme weather events resulting were, in order, health with TL 1 billion 522 products achieved a more positive-than- therefrom all around the world is noted million in total, and accident with TL 1 expected growth in developed markets. as an area that must be monitored more billion 2 million in total. On the part of commercial products, on closely by the insurance industry in the the other hand, the capacity supplied coming period. Technical profit figure for all companies to the market narrowed down because engaged in non-life branches combined of tight market conditions. Hence, the Total premium production by the Turkish was TL 7 billion 214 million. Nonetheless, premiums increased in connection Insurance Industry went up by 19.3% the effect of the amount of TL 6 billion therewith, paving the way for the positive year-over-year to TL 82 billion 576 million 59 million needs to be taken into account, growth estimation; it is predicted that in 2020. According to December 2020 which was transferred from financial this momentum will persist throughout data, the industry’s real growth was 4.1% accounts. Non-life companies booked a the coming year owing to heightened on an annual basis. In this period, non-life profit of TL 5 billion 671 million net after awareness of risk and the higher number branches got 82.5% share out of the taxes and other liabilities in their financial of claims in relation to the pandemic. total production with TL 68 billion 144 statements for the first nine months of million, whereas life insurance had 17.5% 2020. Contrary to the projected stagnation, non- share with TL 14 billion 432 million. As life premiums are estimated to go up by at end-December, nominal growth in 3.6% in 2021 and 2022 on a global scale. non-life branches was 17.7%. The sector It is expected that the premium volume is anticipated to grow around 16% in non- will exceed the pre-pandemic levels by life branches in 2021. the end of the next year. However, the outlook of the insurance market will be Anadolu Sigorta 2020 Annual Report

38 A review of our Company’s financial In 2021, our Company targets to maintain position and operating results show that and further improve its production and 2020 has been a year during which we profitability performance, remaining successfully increased our profit and strictly adhered to leadership, innovation achieved targets, while growing at the and customer-focus concepts. same time. Dear Shareholders, According to unconsolidated results, our total assets grew by 24% year-over- We hereby present the Annual Report year to TL 12 billion, while our premium and our financial statements reflecting production went up by 21% in the same our 2020 activities for your review and period to TL 8 billion. Our Company comments. We would like to thank our increased its net profit by 14% on an customers for their trust in our Company, annual basis to TL 461 million, thereby our delivery channels and all other capturing 16.4% and 21.4% RoE, on stand- stakeholders, and our employees for their alone and consolidated bases, respectively. commitment and contributions. Additionally, our Company ranked third ANADOLU ANONİM TÜRK SİGORTA in terms of market share in the non- ŞİRKETİ life segment. On the basis of technical branches, motor vehicle liability branch BOARD OF DIRECTORS claimed the biggest share of our total premium production with 28.8%. This was followed, in order, by motor vehicles branch with 18.8%, fire and natural disasters branch with 17.8%, and health branch with 11.8%. Our Company ended the year 2020 with a technical profitability of over 9% and a technical profit figure of TL 735 million. Anadolu Sigorta 2020 Annual Report

39 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

FINANCIAL INFORMATION AND INDICATORS

ANADOLU SİGORTA POSTED A NET PROFIT OF TL 461 MILLION ON ITS 2020 OPERATIONS, UP BY 14.3% YEAR-TO- YEAR.

Financial Highlights (TL thousand) 2020 2019 Total Premium Production 8,015,704 6,606,856 Total Assets 12,075,878 9,767,228 Claims Paid 3,852,056 3,838,569 Paid‑in Capital 500,000 500,000 Shareholders’ Equity 2,810,378 2,155,296 Pretax Profit/Loss 560,672 567,748 Net Profit/Loss 460,638 403,062

Capital Adequacy Ratios 2020 2019 Premiums Received/Shareholders’ Equity 2.85 3.07 Shareholders’ Equity/Total Assets 0.23 0.22 Shareholders’ Equity/Technical Provisions 0.36 0.35

Asset Quality and Liquidity Ratios 2020 2019 Liquid Assets/Total Assets 0.66 0.67 Current Ratio 1.24 1.21 Liquidity Ratio 1.29 1.30 Premium and Reinsurance Receivables/Total Assets 0.18 0.18 Receivables from Agencies/Shareholders’ Equity 0.50 0.55

Operational Ratios 2020 2019 Retention Ratio (*) 0.68 0.68 Claims Payment Ratio 0.35 0.42

Profitability Ratios 2020 2019 Loss/Premium Ratio 0.84 0.87 Cost Ratio 0.23 0.24

Anadolu Sigorta 2020 Annual Report Combined Ratio (Loss/Premium Ratio+Cost Ratio) 1.06 1.11 Pretax Profit/Premiums Received 0.07 0.09 Financial Profit (Gross) (**)/Premiums Received (*) 0.11 0.15 Technical Profit/Premiums Received 0.09 0.10

(*) Including premiums transferred to the Social Security Institution (**) In the calculation of the financial profit, investment income that has been transferred from the non-technical division to the technical division was excluded.

40 TOTAL ASSETS (TL MILLION) CLAIMS PAID (TL MILLION)

12,076 +23.6% 3,839 3,852 9,767

Total assets increased 23.6% to TL 12,076 million at the end of 2020.

2019 2020 2019 2020

SHAREHOLDERS’ EQUITY (TL MILLION) NET PROFIT/LOSS (TL MILLION)

2,810 461 +30.4% 403 2,155 Anadolu Sigorta 2020 Annual Report Total shareholders’ equity was registered as TL 2,810 million at year-end 2020 with an increase of 30.4% year-on-year. 2019 2020 2019 2020

41 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

FINANCIAL INFORMATION AND INDICATORS

TOTAL PREMIUM PRODUCTION OF ANADOLU SİGORTA INCREASED BY 21.3% IN 2020.

PREMIUM GROWTH RATE (%) 154.1 31.2 21.5 17.9 16.6 15.4 15.2 9.5 Anadolu Sigorta 2020 Annual Report

Accident Health Motor Aircraft Watercraft Marine Fire and Natural General Losses Vehicles Disasters

42 Motor Vehicles Vehicles Motor (TL THOUSAND) PREMIUM PRODUCTION Liability

27.6 6,607 2019 Liability Aircraft 8,016

28.8 2020 General Liability

6.6 Motor Vehicles Health Accident Premium Production(TLthousand) Fire andNaturalDisasters Marine Watercraft Aircraft Motor VehiclesLiability General Losses Aircraft Liability Credit General Liability Bond Insurance Financial Losses Legal Protection Total Credit 66.0 Bond Bond Insurance

66.7 Financial Financial Losses 9.7 8,015,704 1,506,268 1,423,218 2,304,621 Protection 948,275 172,430 173,399 200,773 142,126 580,257 355,664 81,309 14,121 25,505 65,251 22,487 Legal Legal 2020 62.9 6,606,856 1,304,844 1,171,546 1,806,682 Total 822,909 157,405 148,680 152,978 492,014 333,686 55,924 63,104 15,304 59,473

21.3 13,801 8,506 2019

Annual Report Annual 2020 43 Sigorta Anadolu FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

ECONOMIC OVERVIEW

2020 HAS BEEN A YEAR DOMINATED BY THE CORONAVIRUS IN EVERY RESPECT.

THE WORLD ECONOMY

Growth (%) 2019 2020(E) 2021(P) 2025 (P) Global 2.8 -3.5 5.5 4.2 Developed Economies 1.6 -4.9 4.3 3.1 USA 2.2 -3.4 5.1 2.5 Eurozone 1.3 -7.2 4.2 3.6 Japan 0.3 -5.1 3.1 2.4 Other Developed Countries 1.8 -2.5 3.6 3.1 Developing Countries 3.7 -2.4 6.3 5.0 China 6.0 2.3 8.1 5.6 Brazil 1.4 -4.5 3.6 2.6 Turkey 0.9 1.2 6.0 3.5 Source: IMF World Economic Outlook, January 2021 (E): Estimated, (P): Projected

2020 has been a year dominated of cases enabled by the lockdown in October. The World Trade Organization by the Coronavirus in every respect, measures imposed, supports extended by stated that the global commercial activity and especially the economy. After its governments in the areas of employment that shrank sharply in the second quarter emergence in Wuhan city in China by the and income, and global cooperations in increased partially in the third quarter, but

Anadolu Sigorta 2020 Annual Report end of 2019, it spread across the whole the areas of investments and international that the recovery was slow. world at an unexpected speed and with an trade helped produce Q2 growth figures unexpected influence. that were less negative than expected, The same report by the IMF also reveals a which pointed that the contraction more hopeful outlook for 2021. The report By year-end 2020, the IMF and other would not be as deep as projected. In projects that the world trade volume will international organizations revised the World Economic Outlook report grow by 8.1% in 2021 after shrinking their forecasts, projecting a milder-than issued in January 2021, the IMF revised by 9.6% in 2020. The report states that anticipated contraction in the global its estimated contraction for 2020 the revival in global economic activity economic activity. The declined number upwards to 3.5% from 4.4% announced in the second half of the year was more

44 positive than estimated, but underlines new normal period will be elusive in the that economic recovery, the vaccination short-term. At this point, the OECD draws process and vaccine supply vary greatly the attention to the need for sustained % between regions and countries, and that fiscal policy support by governments -3.5 substantial uncertainties loom particularly and for avoiding rush with regard to over tourism and oil-based industries. budget tightening initiatives in 2021. The OECD also emphasizes the importance In the Temporary Economic Outlook for of continued opening of borders, and the period published in December, the strengthening free trade flow, and OECD improved its estimated global global unity in investments and medical In the World Economic economic downsizing to 4.2%, while equipment. The IMF, on the other hand, Outlook report issued in revising the contraction for the US notes the rise in public debt stock at a economy as 3.7% and for the Eurozone as global scale, while underlining the need to January 2021, the IMF 7.5%. Relying on the positive performance extend support to companies negatively revised its estimated of developed countries, vaccine efforts impacted by the pandemic. and the recuperation in the Asian contraction for 2020 economy, the OECD revised its global A closer look at advanced economies upwards to 3.5%. growth estimation for 2020 upwards, and indicates at a gradual recovery in the US indicated that GDP would return to pre- economy, although the YoY contraction crisis levels led by the strong recovery in in the economy continues at a decreasing China. It was stated that global economy extent. The labor market also remains would continue to recover slowly and weak. However, lead PMI data released in waveringly over the next two years, November in the US show that growth decreasing global growth projection from picked up in manufacturing and services 5% to 4.2% in 2021 and anticipating industries. 3.7% for 2022. In its new monetary policy announced Based on all these data and the in September, the US Federal Reserve developments that occurred, it is System (the Fed) targeted to have projected that the decline in global inflation average 2% over time, and production resulting from the Coronavirus announced that it would seek economic is lower than estimated, but a long growth and maximum employment at the process filled with uncertainties will same time. By the end of 2020, however, be experienced, which will slow down it was stated that recovery lost pace and growth in global economy. Global markets that support to the economy will need to keep a close eye particularly on vaccine be sustained for a long period to come. efforts. The first vaccine campaigns The Fed’s prediction that the low-rate began by end-December in the US policy will be maintained for an extended and Europe for certain individuals and period of time also backed the global risk professions. If the Coronavirus pandemic perception. abates more quickly than expected on the back of positive developments, The original epicenter of the Coronavirus then global activities might significantly outbreak but having overcome its grow in 2021. However, delay in impacts much more rapidly as compared Anadolu Sigorta 2020 Annual Report vaccine, the rise in the number of cases, to the rest of the world, the Chinese accompanying restrictions and measures economy attained 4.9% growth on an might decelerate global growth. It annual basis in the third quarter of the is acknowledged that, in either case, year, with strong support lent by private economic recovery will vary between consumption. While tension heightened countries and sectors, and achievement between the US and China for various of pre-pandemic economic values in the reasons during the course of the year

45 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

ECONOMIC OVERVIEW

THE PANDEMIC HAS BEEN THE KEY DETERMINANT FOR 2020 FOR THE TURKISH ECONOMY, AS IT WAS IN THE WHOLE WORLD, AND THE MOST SUDDEN CONTRACTION IN THE HISTORY OF THE COUNTRY’S ECONOMY WAS EXPERIENCED.

triggered concern regarding the future of of the pandemic in Europe and the THE TURKISH ECONOMY commercial relations, a restatement by establishment of a mutated variant of both countries that they would stick to the virus in the UK create uncertainty The pandemic has been the key the first phase of the agreement eased in the economy. The European Central determinant for 2020 for the Turkish these concerns. Bank (ECB) stated that it is ready to economy, as it was in the whole world, intervene as necessary with a broad set and the most sudden contraction in the Although the Euro economy attained a of tools against the said uncertainty. history of the country’s economy was rapid growth of 12.7% on a quarterly Consequently, the weaker economic experienced. 4.5% growth registered in basis in the third quarter of the year, it recuperation in the Eurozone is the first quarter of 2020 was followed by sustained a 4.3% contraction on an annual anticipated to put pressure on global 9.9% contraction in the second quarter basis. The data for this region reveal that growth in 2021. On another note, the in the aftermath of the disclosure of the economic activity here displays a commencement of vaccination campaigns the first case on 11 March 2020. The weaker recovery as compared to the rest by the end of 2020 and the agreement rate of contraction adjusted for season of the world. reached by the UK and the EU on the deal and calendar arises as 11%. While the governing the trade after Brexit have been industrial sector and the services sector The lockdown measures that remain in positive developments for global markets. (including construction) downsized existence in 2021 due to the continuation by 16.5% and 10.6% respectively, the agricultural sector expanded 4%. A mild recovery was achieved in the third quarter with the push given by normalization steps and the credits extended by reason of the pandemic, and 6.7% growth was

Anadolu Sigorta 2020 Annual Report registered.

PROJECTIONS OF NEP* and INTERNATIONAL FINANCIAL INSTITUTIONS FOR TURKEY FOR THE PERIOD 2020-2023 Growth GDP (%) Inflation (%) YEARS NEP IMF OECD NEP IMF OECD 2020 0.3 1.2 -1.3 10.5 11.9 12 2021 5.8 6 2.9 8 11.9 8.9 2022 5 3.5 3.2 6 11.4 2023 5 3.5 4.9 11

*New Economic Program 46 In its January issue of the World Tourism revenues that account for 4% Economic Outlook, the IMF revised the on average of the GDP also declined % 5% contraction it has estimated for during the pandemic. Number of foreign 14.6 Turkey in October as 1.2% growth. The tourists slumped by 72% in the January- IMF projected 6% growth for 2021 and November period YoY to 12 million 3.5% for 2022. The OECD, on the other people, and the same plummeted by hand, decreased its estimated contraction 61.9% in November on an annual basis. by 2.9% in September to 1.3% for the Turkish economy in its report published in Developments in demand, supply and Annual CPI has been December, while projecting 3.2% growth exchange rates create inflationist effects. announced as 14.6%. in the national economy for 2021. Annual CPI has been announced as 14.6%. Uncertainties in relation to the course Seasonally adjusted unemployment of the pandemic keep putting pressure rate in September 2020 declined by 0.4 on the budget outlook. Hence, new points YoY and was registered as 12.7%. measures were put into implementation in Industrial production index took a record November 2020 in an effort to take under fall of 31.4% in April with the impacts of control the spreading rate of the virus the restrictions implemented. The index fueled by the increased number of cases. moved to the positive segment in June Evidently, the Turkish economy will be as the number of cases decreased and shaped by the developments associated normalization steps kicked in, and rose to with the Coronavirus in 2021, as is the 9.4% on an annual basis in October. The case for other countries. In addition to future developments in the Coronavirus that, geopolitical conditions that Turkey pandemic will directly influence the is exposed to will be influential to a large course hereinafter. extent.

The rise in domestic demand that reflects the lagging effects of the strong credit support made available due to the pandemic also negatively affected the current accounts balance through exports. According to data released by the Ministry of Trade in January 2021, imports grew by 4.3% during 2020, while exports volume shrank by 6.3%. Accordingly, foreign trade deficit expanded by 69% in 2020 as compared to 2019. Signed between Turkey and the UK by end-2020 and effective from 1 January 2021, the free trade agreement covers all industrial and agricultural products, and is planned to be expanded to include investment and services sectors as well, according to Anadolu Sigorta 2020 Annual Report statements.

47 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

OVERVIEW OF THE WORLD AND TURKISH INSURANCE INDUSTRIES AND FUTURE OUTLOOK

THE CORONAVIRUS AFFECTED THE INSURANCE INDUSTRY, AS IT DID ALL THE OTHER SECTORS; HOWEVER, THE INSURANCE INDUSTRY WAS ABLE TO SHOW RESILIENCE AGAINST THE NEGATIVE IMPACTS OF THE PANDEMIC, EVEN TURNING THEM INTO THE POSITIVE IN SOME RESPECTS.

THE WORLD INSURANCE INDUSTRY*

Growth (%) 2019 2020 (E) 2021 (P) North America 2.1% 0.3% 2.0% EMEA (Europe, Middle East and Africa) 2.4% -5.7% 3.5% Asia-Pacific 4.4% -2.3% 2.7% Developing Countries (excl. China) 3.9% -3.0% 4.0% China 9.0% 5.1% 9.1% World Average 2.9% -1.4% 3.4% (E): Estimated, (P): Projected Total Insurance Premium Real Growth Chart Source: Swiss Re Sigma Research

The Coronavirus affected the insurance therewith, paving the way for the positive China remains the world’s fastest-growing industry, as it did all the other sectors; growth estimation; it is predicted that non-life insurance market. This results however, the insurance industry was this momentum will persist throughout from the double-digit growth in the able to show resilience against the the coming year owing to heightened health sector in 2020. Growth in other negative impacts of the pandemic, even awareness of risk and claims in relation to developing markets will likely be weaker. turning them into the positive in some the pandemic. respects. With the rapid transition to Due to the negative effect of the employing digital channels by insurers Contrary to the projected stagnation, non- pandemic, the market volume in life premiums are projected to go up by property and casualty (P&C) insurance Anadolu Sigorta 2020 Annual Report and brokers in response to restrictions such as lockdowns in the first half of the 3.6% in 2021 and 2022 on a global scale. is shrinking and the combined ratio is year, the growth in individual products It is expected that the premium volume increasing in commercial products. The achieved a more positive-than-expected will exceed the pre-pandemic levels by greatest portion of claims for damages growth in developed markets. On the the end of the next year. However, the is constituted by infectious diseases and part of commercial products, on the outlook of the insurance market will be business interruptions resulting from other hand, the capacity supplied to formed according to the speed of global event cancellations. Significant losses the market narrowed down because economic recovery in the period ahead. are anticipated also in commercial credit of tight market conditions. Hence, the insurance. On the other hand, restrictions premiums increased in connection against the Coronavirus pandemic such

48 as lockdowns and travel bans resulted in From the standpoint of catastrophe THE TURKISH INSURANCE lower loss frequencies particularly in the losses, after a rather milder period with INDUSTRY auto branch, along with a remarkable respect to natural phenomena in the first decline in theft losses. half of the year, catastrophe losses took Total premium production by the overall an upturn in the second half of the year, sector in 2020 went up by 19.3% year- Insurance companies, regulators, auditors particularly due to the hurricanes in the over-year to TL 82.58 billion. According to and other stakeholders in the industry US. The record-breaking heat wave in December 2020 data, the industry’s real respond to, and work on different, aspects the US west coast gave rise to wildfires growth was 4.1% on an annual basis. In of the Coronavirus pandemic. First and over an area of 5 million decares, while this period, non-life branches got 82.5% foremost, they ensured the continuity also hitting thousands of settlement share out of the total production with of their own operations, managed areas. According to the Global Risks TL 68.14 billion, whereas life insurance their solvencies and liquidity risks, and Report 2020, all of the top 5 risks in had 17.5% share with TL 14.43 billion. extended support to policyholders who terms of likelihood are associated with As at end-December, nominal growth in were negatively affected by the pandemic the environment and climate change, and non-life branches was 17.7%. The sector is in various ways such as the provision of climate change all around the world and anticipated to grow around 16% in non- additional coverages. the extreme weather events resulting life branches in 2021. therefrom is noted as an area that The Coronavirus pandemic is expected must be monitored more closely by the to have other implications for the sector. insurance industry in the coming period. Digital access to individual products such as auto and residential insurance will *Sources: Swiss Re Sigma Research, OECD become easier.

2019 2020 Total Production Market Share Total Production Market Share Change Branch (TL) (%) (TL) (%) (%) Accident 2,372,741,294 4.10% 2,237,228,105 3.28% -5.71% Health 8,358,100,508 14.44% 10,095,516,816 14.81% 20.79% Motor Vehicles 9,406,268,988 16.25% 10,737,412,046 15.76% 14.15% Motor Own Damage 9,406,268,988 16.25% 10,737,412,046 15.76% 14.15% Rail Vehicles 13,280 0.00% 15,272 0.00% 15.00% Aircraft 223,854,250 0.39% 369,664,551 0.54% 65.14% Watercraft 413,511,536 0.71% 621,688,667 0.91% 50.34% Marine 950,787,872 1.64% 1,204,301,235 1.77% 26.66% Fire and Natural Disasters 8,447,104,595 14.59% 10,585,806,877 15.53% 25.32% General Losses 5,876,737,145 10.15% 7,962,761,912 11.69% 35.50% Motor Vehicles Liability 18,712,174,135 32.33% 20,487,190,549 30.06% 9.49% Motor Vehicles TPL 18,009,126,923 31.11% 19,564,265,651 28.71% 8.64% Aircraft Liability 263,898,565 0.46% 298,548,469 0.44% 13.13% Watercraft Liability 44,655,983 0.08% 57,810,503 0.08% 29.46%

General Liability 1,712,228,206 2.96% 2,190,044,929 3.21% 27.91% Anadolu Sigorta 2020 Annual Report Credit 304,281,300 0.53% 399,061,225 0.59% 31.15% Bond 92,177,756 0.16% 123,951,705 0.18% 34.47% Financial Losses 505,294,367 0.87% 547,980,509 0.80% 8.45% Legal Protection 198,465,014 0.34% 224,970,171 0.33% 13.36% Support 158,666 0.00% 1,928 0.00% -98.78% Total Non-Life 57,882,453,461 83.60% 68,143,955,472 82.50% 17.70% Total Life 11,359,715,131 16.40% 14,431,890,533 17.50% 27.00% Grand Total 69,242,168,593 100.00% 82,575,846,005 100.00% 19.30%

Source: Based on Insurance Association of Turkey data.

49 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

OVERVIEW OF THE WORLD AND TURKISH INSURANCE INDUSTRIES AND FUTURE OUTLOOK

TOTAL PREMIUM PRODUCTION BY THE OVERALL SECTOR IN 2020 WENT UP BY 19.3% YEAR-OVER-YEAR TO TL 82.58 BILLION.

Based on non-life segment data for the insurance industry in our country spent coming year, cyber security insurance will first nine months of 2020, motor vehicle extreme efforts in a bid to protect the certainly attract greater interest. liability branch that represents the largest policyholders, employees and all other portion of the industry’s market share stakeholders from the negative impacts Other highlights of 2020 with respect posted TL 1.56 billion in technical profit. of this process and to effectively manage to the industry were the earthquakes in In the motor TPL segment that makes up the pandemic-induced risks. Thanks also Elazığ on 24 January and in İzmir on 30 a substantial portion of this branch, the to the support lent by the government, October, both of which led to loss of lives technical profit figure was TL 1.39 billion. the Insurance Association of Turkey and and property. The restrictions imposed in connection insurance companies introduced some During 2020, appointments were made with the pandemic have been influential quick and proper measures including to the positions of chairman and vice on the lower number of losses in this deferment of premium payments on chairmen, board memberships for the branch. Motor vehicles (own damage) compulsory insurance policies, additional Insurance and Private Pension Regulation branch registered a technical profit of discounts and expanded coverage scopes. and Supervision Agency (IPPRSA), which TL 1.99 million. Following motor TPL and While the pandemic is excluded from was established in 2019 representing an motor own damage, the highest profit coverage under normal circumstances, it important step toward expanding the generators for companies engaged in non- was included in insurance coverage by all non-bank financial system. In addition, life branches were, in order, health with insurers in this period. the organizational structure of the Agency TL 1.52 billion in total and accident with was also established in the regulation TL 1.00 billion in total. Posing a threat to health and also to the economy, the Coronavirus pandemic is published. Technical profit figure for all companies regarded as a period when the importance Another important development for engaged in non-life branches combined of insurance and awareness of the topic the industry was the finalization of the was TL 7.21 billion. Nonetheless, the were markedly heightened in the eyes

Anadolu Sigorta 2020 Annual Report merger of public insurance companies. effect of the amount of TL 6.06 billion of the public. The growth in demand In December 2019, the shares in 6 public needs to be taken into account, which particularly for health and life insurance insurance companies (Güneş Sigorta, was transferred from financial accounts. will most likely continue in 2021 as Ziraat Sigorta and Halk Sigorta, and At the bottom line, non-life companies well. The transformation in the lifestyles their Life and Pension companies) were booked a profit of TL 5.67 billion net after and purchasing behaviors of consumers transferred to the Turkey Wealth Fund. taxes and other liabilities in their financial during the pandemic affected also the The steps for the merger of the companies statements for the first nine months of insurance industry. The time spent were completed in September 2020, as 2020. online augmented with the enforcement a result of which Türkiye Sigorta A.Ş. and of practices such as teleworking and Türkiye Hayat ve Emeklilik A.Ş. companies As we witness a worldwide distance education, which increased were incorporated. extraordinary period in conjunction the importance of cyber security for with the Coronavirus pandemic, the individuals and businesses alike. In the 50 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

DEVELOPMENTS AND CHANGES IN LEGISLATION

Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company The amendment concerns the Regulation on Commercial Communication and Commercial Electronic Messages (“the Regulation) and institutes the Commercial Electronic Message Management System (“İYS”). Under the amendment, İYS is envisaged as the system for managing opt-in and opt- out requests and complaints related to commercial electronic messages. The basic obligation that service providers sending commercial messages must comply with under the new rules is the obligation to register with the Message Management System (“İYS”). Commercial message senders must file a preliminary application with İYS, which would be launched on 1 March 2020 pursuant to the provisions of the Regulation; get a user name and password, and then carry out approval and registration procedures. Under the amended provisions of the Regulation, prior consents that are not uploaded to the system by 1 June 2020 will be considered invalid. New consents can be obtained also via the İYS upon Regulation Amending the request by service providers. Electronic message consents can still be Regulation on Commercial obtained physically with wet signatures or in the electronic environment. Communication and Ministry of Trade 04.01.2020 Consents so obtained must be uploaded to the system within 3 (three) Commercial Electronic business days. Messages The provision imposing the burden of proof upon the service provider and/or intermediary service provider in cases subject to complaints was maintained; one-year retention period required for consent records following expiration of consent validity was extended to three years. Accordingly, İYS records are required to be completed, consents must be uploaded to the system and necessary technical upgrades need to be implemented for new consents to be obtained. The Insurance Association of Turkey Circular no. 2020-0590 announced that implementation and consent deadlines related to İYS were extended, and explained that the consents obtained under the Regulation would be transferred by service providers to the system by 1 December 2020; that after the said date, a message would be sent by İYS to users stating that the consents would be uploaded to İYS, that they will be considered valid if not checked before 16 January 2021, and that thereafter opt-out option can be exercised via İYS. The sector announcement basically dwelled on insurance policy sales made by unauthorized individuals/non-technical personnel both in distance and face-to-face sales. In this scope, it was emphasized that some intermediaries assign user to unauthorized individuals, that some insurance companies enabled sales via web service by unauthorized third parties, and that unauthorized individuals make sales by setting up systems such as kiosks etc., or similar individuals sell policies online. In this framework; • Insurance companies are required to regularly monitor the firms with which they share their web services, and to restrict system access if unauthorized users are detected, Sector Announcement for Ministry of Anadolu Sigorta 2020 Annual Report Prevention of Unauthorized • Flows and processes on all digital channels (Bank, Call Center, Anadolu Treasury and 07.02.2020 Insurance Sales and Sigorta’s own digital channels) of our Company should be documented in Finance Marketing (2019/10) detail, which document must be signed and bound, and then delivered to the agencies unit in complete form, • Related technical personnel in charge of Distance Sales at our Company should be monitored/controlled at regular intervals, and a control mechanism should be created to make sure that this service is provided solely by authorized individuals, • Agencies and brokers are required to consolidate the data for authorized users, and file an application with the Ministry of Treasury and Finance until 15 June under the legislation (During the pandemic, the Treasury extended the deadline until 30 June 2020).

51 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

DEVELOPMENTS AND CHANGES IN LEGISLATION

Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company The important articles of the said Regulation are mentioned below; • A.5(1) Information can be provided orally or in writing. Essentially, information should be provided in writing. • A.5(3) In cases where the insurer provided information via the call center or via phone, verbal information provision is permissible, provided that the conversation shall have been recorded on magnetic or digital medium. • A.5(2) In cases where the parties do not physically come together or in cases which is so compelled as a matter of course, information can be provided via permanent data keeper. • A.4(c) “permanent data keeper”: “Text message, electronic mail, internet, disk, CD, DVD, memory card, a structure to be set up via the Insurance Information and Monitoring Center or via E-Government and all kinds of similar devices or media, which will allow storage or duplication in “read- only” format and will enable retrieving the information sent or received, in unmodified form, by the insurance customer, insured and insurance beneficiaries so as to allow a reasonable amount of time for reviewing the same in accordance with the purpose of the information.” • A.9(2) In the event that the information is provided via permanent data keeper, the insurer will record the information text. Conclusion: The former regulation also stipulated that information could be provided orally and in writing. The new regulation only introduces the Regulation on Information Ministry of Trade 14.02.2020 opportunity to provide information via the permanent data keeper in cases in Insurance Contracts and Finance where the parties cannot get together physically or where it is so required as a matter of course. This opportunity can be utilized in distance sales. However, information provision via digital channels is not completely permitted even in face-to-face sales. Because also the new regulation stipulates that essentially information should be provided in writing. Due to the presence of the phrase “information can be provided via permanent data keeper in cases where it is so compelled as a matter of course”, information can be provided via permanent data keeper instead of written information in “face-to-face sales so compelled as a matter of course”. B) RESPONSIBILITY OF AGENCIES • A.6 The obligations stipulated for the insurer in this Regulation also apply to insurance agencies. However, if information is being provided for insurance contracts issued by the agency via the permanent data keeper set up by the insurance company as stipulated in the Regulation, then the agency’s obligation for providing information will cease to exist. Conclusion: The responsibility of agencies still remains. According to the new regulation, agencies are responsible for providing information as well as the insurance companies, as was the case in the former regulation. The

Anadolu Sigorta 2020 Annual Report responsibility of insurance agencies ceases to exist only in the event that insurance companies set up a system with permanent data keeper in case of distance sales and that agencies also make use of this system in such sales. However, especially in face-to-face sales, the agencies’ responsibility remains in existence.

52 Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company Circular for the Prevention of Practices Contrary to The circular stated that, in case of total loss; although such vehicles need to Legislation for Vehicles be forthwith delivered to scrap processing facilities accompanied with an Ministry of that have Sustained Total “off road document” and indemnification procedures need to be run after Treasury and 19.02.2020 Loss or Heavy Damage these processes, some vehicles with total loss were traded contrary to the Finance within the Scope of legislation. The Insurance Information and Monitoring Center emphasized Motor Vehicle Insurance that it would establish a control system for this process. (2020/3”) General Conditions The amendment to the Traffic Insurance general conditions clarified certain Amending the General Ministry of points open to interpretation in relation to calculations for loss of value and Conditions for Motor Treasury and 20.03.2020 bodily injury, thus eliminating the ambiguity. It is considered that the circular Vehicles Compulsory TPL Finance will serve to reduce the number of referrals to arbitration, and cost amounts Insurance will decline as a result of lower number of litigated files. Circular on Procedures for Determining the Credit Line Made Available to The Circular on Procedures for Determining the Credit Line Made Available Ministry of Buyers under the State- to Buyers under the State-Sponsored Trade Credit Insurance for SMEs Treasury and 01.04.2020 Sponsored Trade Credit establishes the principles for determination of the credit line and the criteria Finance Insurance for Small and for determining the credit line made available to the buyer. Medium Enterprises (SMEs) (2020/07) Decree Regarding the Extension of the The suspension period set out in Provisional Article 1(1) of the Law no. 7226 Suspension Periods to Amending Certain Laws was extended from 1 May 2020 until 15 June 2020 Prevent any Loss of Rights President 30.04.2020 save for the terms for the mandatory administrative applications stipulated in Legal Proceedings under the Public Procurement Law no. 4734. (Official Gazette issue 31114) Anadolu Sigorta 2020 Annual Report

53 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

DEVELOPMENTS AND CHANGES IN LEGISLATION

Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company While the said amendment introduces certain new rules regarding distance insurance sales, it also subjected insurance sales by establishments whose primary business is not insurance brokerage to the provisions of the legislation. Amended Article 9 of the Regulation requires the use of 3D Secure function in collections from debit and credit cards in distance insurance sales, and secure payment via virtual POS by entering the first 6 and last 4 digits of the credit card number if a virtual POS is to be used in sales where the parties get together physically. While the deadline for achieving compliance was set as Regulation Amending the 15 July 2020, it was postponed to 15 October 2020 with a letter sent later. Regulation Concerning Article 10 imposes certain restrictions and rules regarding sales of insurance Operations Considered policies linked to the services and goods offered by establishments whose within the Scope of Ministry of primary business is not insurance brokerage. Insurance Business, Treasury and 9.05.2020/31122 Insurance Contracts Finance Supplementary Article 10/A includes insurance sales via electronic processing in favor of Consumers devices such as kiosks, web pages, mobile applications etc. that enable and Distance Insurance performance of insurance transactions in part or in whole within insurance Contracts legislation. In addition, it was stipulated that Land Registry Offices, Water and Electricity Authorities that serve as the checkpoints of Compulsory Earthquake Insurance policies can only have distance sales devices of the Turkish Catastrophe Insurance Pool (TCIP) at their premises. It is stated that vehicle inspection stations that serve as the checkpoints for motor TPL insurance policies can perform sales only via distance sales devices to be installed by the Union of Chambers and Commodity Exchanges of Turkey (TOBB) Insurance Agencies Executive Committee (SAİK). All insurance companies licensed in Motor Vehicles Compulsory TPL Insurance branch must allow sales via these devices. The Circular imposed an equity-based quota on premium production of insurance companies on traffic insurance. The legislation also regulated the monthly premium increase rates. According to the new regulatory provisions, Circular Regarding total premiums derived by insurance companies on the motor TPL branch Premium/Equity Factor within one calendar year may not exceed 5 times of their shareholders’ Implementation and Ministry of equity in the preceding year. This factor will be applied as 4 for the period Maximum Premium Treasury and 13.05.2020 from 01 May 2020 until 31 December 2020, and it is underlined that if Increase Rates in Motor Finance this limit is exceeded, than the related insurance company will stop issuing Vehicles Compulsory TPL policies in the said branch. Insurance (2020/8) Article 2 of the circular sets out that maximum premium amounts in motor TPL insurance will increase by 0.75% (based on the maximum premium amount of the previous month) monthly from June 2020 and by 1% monthly from January 2021. Anadolu Sigorta 2020 Annual Report

54 Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company The amendments entailed in the said Law can be divided into two categories as those concerning undertaking and those related to the internal operation of the Competition Authority (the Authority). Articles 1, 2, 3, 4, 8 and 9 of the Law no. 7246 introduce changes that concern undertakings and can be summarized as follows: • The amendment made to Article 1 of the Law no. 7246 and to Article 5 titled “Exemption” of the Law no. 4054 strengthened the self-assessment method. • The amendment made to Article 2 of the Law no. 7246 and to Article 7 titled “Merger and Acquisition” of the Law no. 4054 introduced the test of “significant impediment of effective competition” for mergers/ acquisitions control analyses, which replaced the dominant position criterion. • The amendment made to Article 3 of the Law no. 7246 and Article 9 titled “Termination of Infringement” of the Law no. 4054 authorizes the Competition Board to impose structural measures for termination of Law Amending the Law competition infringement. on the Protection of President 24.06.2020 Competition (Official • The amendment made to Article 4 of the Law no. 7246 and Article 15 Gazette issue 31165) titled “On Site Inspection” of the Law no. 4054 provided a legal basis for inspecting electronic environment and information systems, which already existed in practice. • Article 8 of the Law no. 7246 and Article 41 titled “Conclusion of Preliminary Inquiry” of the Law no. 4054 introduced the “de minimis” practice, which stipulates that the Board might choose not to initiate an investigation on the agreements, concerted acts of undertakings and practices of associations of undertakings which have a low impact on competition. • Article 9 of the Law no. 7246 and Article 43 of the Law no. 4054, which was titled “Opening of Investigation” has been changed to “Opening of Investigation, Commitment and Settlement”, and new paragraphs governing commitment and settlement practices were inserted under the third paragraph of the said Article. • Under Article 10 of the Law no. 7246, the time granted for additional written opinion prepared following the second written defense of the parties can be doubled and thus increased up to 30 days. The amendment to the circular underlined that at least 20% of certain Circular Amending the equivalent parts to be used with respect to motor vehicle insurance must be Circular on the Principles Ministry of supplied from domestic producers. of Documenting Equivalent Treasury and 06.08.2019 “Minimum 20% of metal, plastic and lighting group equivalent parts Parts in Motor Vehicle Finance to be supplied by the insurance company must have been produced by Insurance (2019/7) manufacturers residing in Turkey. The Ministry can set a different ratio Anadolu Sigorta 2020 Annual Report depending on the emerging conditions.”

55 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

DEVELOPMENTS AND CHANGES IN LEGISLATION

Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company The Regulation published in the Official Gazette issue 31220 dated 21.08.2020 defines the establishments and legal entities offering public services which make use of the Identity Information Sharing System besides the Directorate General of Civil Registration and Citizenship as “Recipient Institution”, and persons authorized by the Recipient Institutions to make use of the Identity Information Sharing Service via web service through applications as “Sub-users”. Regulation on Identity Information Sharing President 21.08.2020 While the Recipient Institutions are the direct addressees of the regulation, in System (Decree No. 2837) summary it is explained that bilateral agreements need to be made in order to make use of the Identity Information Sharing System service, that the information obtained must not be used for other purposes and all necessary administrative/technical measures must be adopted; as well as the obligation to conduct internal audits and the obligation of the Directorate General of Civil Registration and Citizenship to conduct audits. It is also stated that the Recipient Institutions are obliged to determine and define the authorities of sub-users. The Constitutional Court judgment dated 17.07.2020 and numbered E: 2019/40, K: 2020/40 which was published in the Official Gazette issue 31269 dated 09.10.2020, resolved the matters in relation to the suit brought before the Constitutional Court for the revocation of some provisions contained The Constitutional in Articles 90, 92, 93, 97 and 99 of the Law on Road Traffic that govern the Court Judgment dated Motor Vehicles Compulsory TPL Insurance. 17.07.2020 and no. E: Constitutional 2019/40, K: 2020/40 09.10.2020 The said ruling adjudged that claims payments made in traffic policies must Court -Insurance Association of be made based on “real loss”, and revoked certain loss calculation criteria and Turkey Circular no. 2020- formulas in the traffic insurance general conditions, such as the mortality 0699 chart, technical interest rate, impairment in value, temporary disability and temporary caregiver costs. This will lead to increased final loss/premium ratio in the traffic branch, and specific criteria are awaited to be defined in the law or in general conditions in relation to the calculation methods for determining the “real loss”. Anadolu Sigorta 2020 Annual Report

56 Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company Law no. 7262 on the Prevention of the Financing of Proliferation of Weapons of Mass Destruction has been published in the Official Gazette issue 31351 (dup. 5) dated 31 December 2020 and went into force. The Law was drafted to achieve alignment with the UN Security Council decisions and Financial Action Task Force (FATF) recommendations, and was ratified by the Grand National Assembly of Turkey on 27 December 2020.

In order to fulfill its missions, the Financial Action Task Force (FATF) evaluates and audits countries on the basis of its 40 Recommendations and 11 short-term goals, and the Fourth Round Mutual Evaluation process tackling our country was brought to completion in October 2019, upon which the conclusion report was produced. The report emphasized the importance of strengthening legal/institutional capacity for achieving full alignment with the UNSC resolutions regarding the combat against the financing of the proliferation of weapons of mass destruction and with the related FATF Recommendations, and for combating the crimes of financing of terrorism and laundering. In order to eliminate the said determination in the report, Law no. 7262 has been published, which is in the nature of a blanket Law on the Prevention regulation for combating the financing of the proliferation of weapons of of the Financing of The Grand mass destruction, and the publication of a regulation is awaited for setting Proliferation of Weapons of National out the implementation principles and procedures of the Law. 31.12.2020 Mass Destruction (Official Assembly of For ensuring audit and cooperation within the scope of the implementation Gazette issue 31351 dup. Turkey of the UNSC resolutions for preventing the financing of the proliferation 5) of weapons of mass destruction, an “Audit and Cooperation Committee” is being established and its duties, powers and responsibilities are being defined. The Commission will be chaired by the Office of the Head of the Financial Crimes Investigation Board (in Turkish: MASAK), which will also provide the secretariat services. While the said Law covers provisions regarding the prevention of the financing of proliferation of weapons of mass destruction, it also led to important changes in the Laws listed below: • Law no. 5549 on Prevention of Laundering Proceeds from Crime • Law no. 6415 on Prevention of Financing of Terrorism • Law no. 2860 on Collecting Donations • Law no. 5253 on Associations • Turkish Commercial Code no. 6102 • Capital Markets Law no. 6362 • Criminal Procedure Code no. 5271 Anadolu Sigorta 2020 Annual Report

57 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

DEVELOPMENTS AND CHANGES IN LEGISLATION

Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company The articles of the Law no. 7262 which will bear maximum impact on our Company’s operations will stem from the amendments made to the Law on the Prevention of Laundering Proceeds from Crime. • The revision made to Article 3 of the Law no. 5549 on the Prevention of Laundering Proceeds from Crime replaced the phrase “identification [of the person]” with the phrase “know[ing] the customer”. • The “financial group” definition was supplemented to the Law no. 5549 on the Prevention of Laundering Proceeds from Crime, and it was defined as “a group consisting of financial institutions resident in Turkey, which are affiliated to, or controlled by, a parent headquartered in Turkey or abroad, and branches, agencies, representatives and commercial agents as well as similar affiliated units of such financial institutions”. Furthermore, obliged parties were required to establish a compliance program with a risk-based approach and effectively implement it at the financial group level. Accordingly, the Regulation on Compliance Program Law on the Prevention with the Obligations for Prevention of Laundering Proceeds from Crime of the Financing of The Grand and Financing of Terrorism is anticipated to be revised concerning the Proliferation of Weapons of National implementation details. 31.12.2020 Mass Destruction (Official Assembly of Gazette issue 31351 dup. Turkey • This paved the way for sharing the information about the customer’s 5) identification, accounts and transactions retained by the entities included in the financial group between the entities within the group to be used in the compliance program activities that will be created at the group level. In addition, it is stipulated that such sharing cannot be avoided on the grounds of the provisions of another specific law. • The revision is intended to introduce more effective and dissuasive punishments and to implement sanctions in the event of infringement of the liabilities imposed as part of the combat against the crimes of laundering of assets derived on crimes and of financing of terrorism. The statute of limitations envisaged for levying an administrative fine was increased from 5 (five) years to 8 (eight) in keeping with the retention and notification periods in Article 8 of the Law. The most striking rise in penalties was introduced under the second paragraph of Article 13 for the amount of fines for violations of training, internal audit, control and risk management systems and other measures (Article 5(1)), which was increased to TL 500 thousand. In addition, it was stipulated that up to ¼ of the fine to be levied will be levied on the responsible Board member. Anadolu Sigorta 2020 Annual Report

58 Date of Publication (Date of Official Legislation Issued By Gazette etc.) Obligations Imposed on the Company Based on the said circular and the IPPRSA decision dated 27 November 2020 and numbered 38, it has been decided to carry on with the maximum premium practice in compulsory traffic between the period 01.01.2021- Circular on Compulsory Insurance and 31.12.2021 within the frame of the procedures and principles set out in the Motor TPL Insurance Private Pension Approval no. 10271 dated 10.04.2017, Circular no. 2017/1 dated 10.04.2017 Premiums (2010/10) Regulation and 01.12.2020 and Article 2 of the Circular no. 2020/8 dated 13.05.2020. In the Circular no. -Insurance Association of Supervision 2017/1, the public authority set the maximum premiums in various charts Turkey Circular no. 2020- Agency and articles to make sure that the conditions of the related insurance are 0853 congruent with the nature of the compulsory insurance. The related circular announces that the maximum premium practice will be carried on in traffic insurance. At present, Incurred But Not Reported (IBNR) calculation is performed based on main branches. Moreover, the amount calculated for the main branch is distributed across sub-branches taking into account the weights Insurance and Circular Amending the of actualized loss amounts in sub-branches. However, taking place under Private Pension Circular no. 2014/16 on the “Motor Vehicles Liability” main branch, “714-Compulsory TPL for Road Regulation and 07.12.2020 Provisions for Outstanding Transportation” and “715-Compulsory TPL” sub-branches must be calculated Supervision Claims (2020/11) together, whereas “716-Motor Vehicles Optional Liability” sub-branch must Agency be calculated separately. The said Circular states that “730-Compulsory Medical Malpractice Liability Insurance” also needs to be calculated separately. Anadolu Sigorta 2020 Annual Report

59 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

IN 2020, DIRECT PREMIUM PRODUCTION OF ANADOLU SİGORTA REACHED TL 6,969 MILLION. WITH 28.8%, MOTOR VEHICLES LIABILITY BRANCH HAS THE HIGHEST SHARE WITHIN THE TOTAL PORTFOLIO.

PREMIUM PRODUCTION (TL THOUSAND) 8,015,704 2019 2020 6,606,856 2,304,621 1,806,682 1,506,268 1,423,218 1,304,844 1,171,546 948,275 822,909 580,257 492,014 355,664 333,686 Anadolu Sigorta 2020 Annual Report 200,773 172,430 173,399 157,405 142,126 152,978 148,680 55,924 63,104 81,309 65,251 59,473 8,506 25,505 13,801 22,487 14,121 15,304 Total Credit Health Marine Aircraft Accident Watercraft General Losses General Motor Vehicles Bond InsuranceBond Financial Losses Aircraft Liability Legal Protection General Liability General Motor Vehicles Liability Fire and Natural Disasters 60 Anadolu Sigorta is an insurer active in Premium Production and Technical With 28.8%, motor vehicle liability branch non-life branches, which include accident, Results commands the biggest share of the health, motor vehicles, aircraft, watercraft, total portfolio. This is followed by motor marine, fire and natural disasters, general In 2020, direct premium production of vehicle, fire and natural disasters, and losses, motor vehicle liability, aircraft Anadolu Sigorta reached TL 6,969 million; health branches. liability, general liability, credit, bond including the indirect premiums (Risky insurance, financial losses and legal Insureds Pool, Medical Insurance Pool, protection. Claims of Treaty Activities and other indirect business) received in the amount of TL 1,047 million, total premium production came to TL 8,016 million.

BREAKDOWN OF PREMIUM PRODUCTION BY BRANCHES (%) 28.8 18.8 17.8 11.8 7.2 4.4 2.5 Anadolu Sigorta 2020 Annual Report 2.2 2.2 1.8 1.0 0.8 0.3 0.3 0.2 Credit Health Marine Aircraft Accident Watercraft General Losses General Motor Vehicles Bond InsuranceBond Financial Losses Aircraft Liability Legal Protection General Liability General Motor Vehicles Liability Fire and Natural Disasters 61 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Accident PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) Premium production in the accident branch was up 9.5% year-on-year and amounted 172,430 28,269 to TL 172,430 thousand in 157,405 25,977 2020, while claims paid totaled TL 28,269 thousand. Technical profit in this branch increased by 3.1% year-on-year and amounted to TL 118,422 thousand.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

16.6 73.0 68.7 14.4 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

62 PREMIUM PRODUCTION CLAIMS PAID Health (TL THOUSAND) (TL THOUSAND) In 2020, premium production in the health branch grew 15.2% year- on-year and amounted 948,275 657,677 to TL 948,275 thousand, while 822,909 571,148 claims paid totaled TL 571,148 thousand. Having closed 2020 with an 18.9% technical profitability, the health branch posted TL 179,528 thousand in technical profit.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

87.7 18.9

70.4

-0.7 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

63 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Motor Vehicles PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) Premium production on motor vehicles insurance went up by 15.4% year-on-year, amounting to TL 1,506,268 thousand 1,506,268 882,347 in 2020. In the same period, 1,304,844 739,138 claims paid rose by 19.4% and were up to TL 882,347 thousand. In 2020, the technical profit figure was TL 303,001 thousand due to the rise in the loss/premium ratio.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

71.8 33.7 64.0

20.1 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

64 PREMIUM PRODUCTION CLAIMS PAID Aircraft (TL THOUSAND) (TL THOUSAND) Premium production on aircraft was worth TL 142,126 thousand with an increase of 31.2% 142,126 255,650 year-on-year while claims paid amounted to TL 166,159 thousand. After posting a 166,159 technical loss of TL 10,333 thousand in 2019, the technical 55,924 profit figure was registered as TL 9,428 thousand in 2020.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

124.3 6.6

-18.5

62.5 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

65 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Watercraft PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) In 2020, watercraft insurance premium production picked up by 31.2% year- on-year and amounted to TL 200,773 200,773 127,889 thousand. Claims paid in 2020 152,978 101,035 totaled TL 101,035 thousand. The decrease in claims paid and increase in premium production generated a technical profit of TL 9,494 thousand for the watercraft branch in 2020.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

131.6 4.70

98.3 -9.10 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

66 PREMIUM PRODUCTION CLAIMS PAID Marine (TL THOUSAND) (TL THOUSAND) During 2020, premium production in the marine branch rose by 16.6% to 173,399 43,438 42,824 TL 173,399 thousand while 148,680 claims paid amounted to TL 42,824 thousand. Technical profit was TL 39,334 thousand in 2020.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

56.5 35.8

38.7 22.7 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

67 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Fire and Natural Disasters PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) Premium production on fire and natural disasters insurance policies was up 21.5% in 2020 and reached TL 1,423,218 1,423,218 480,140 435,039 thousand while claims paid 1,171,546 amounted to TL 480,140 thousand. Having posted a technical profit of TL 156,042 thousand in 2019, the fire and natural disasters branch booked a technical profit of TL 61,969 thousand in 2020.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

73.2 13.3 63.7

4.4 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

68 PREMIUM PRODUCTION CLAIMS PAID General Losses (TL THOUSAND) (TL THOUSAND) During 2020, premium production in general losses branch was up by 17.9% and 580,257 309,251 305,091 amounted to TL 580,257 492,014 thousand. While claims paid amounted to TL 305,091 thousand, technical profit was down by 27.6% as compared with 2019 and registered as TL 40,873 thousand in the reporting period.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

82.6 11.5 77.5

7.0 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

69 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Motor Vehicles Liability PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) Premium production on motor vehicle liability insurance, which is responsible for the highest 1,102,064 1,112,841 share in the Company’s total 2,304,621 premium production, grew by 1,806,682 27.6% in 2020 to TL 2,304,621 thousand, while claims paid amounted to TL 1,112,841 thousand. While the branch had a technical loss of 140,317 in 2019, the decrease in the loss/premium ratio led to a technical profit of TL 153,107 2019 2020 2019 2020 thousand in 2020. The branch ceded premiums in the amount of TL 651,698 thousand to the Risky Insureds Pool in 2020, while the premiums taken over from the Pool amounted to CLAIMS PAID TECHNICAL PROFITABILITY TL 202,703 thousand. (%) RATIO (%)

113.4 6.6

94.3

-7.8 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

70 PREMIUM PRODUCTION CLAIMS PAID Aircraft Liability (TL THOUSAND) (TL THOUSAND) Premium production in the aircraft liability branch was TL 81,309 thousand in 2020, 81,309 5,643 up by 28.8%. Technical profit in this branch was TL 6,299 63,104 3,820 thousand, 25.2% above the 2019 figure.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

63.5 63.5 8.0 7.7 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

71 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

General Liability PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) During 2020, general liability insurance premium production grew 6.6% and amounted to 355,664 111,111 TL 355,664 thousand. While 333,686 claims paid increased by 39.2% year-on-year to TL 111,111 79,837 thousand, the branch closed the year with a technical loss of TL 193,347 thousand. While the branch ceded premiums in the amount of TL 18,055 thousand to the Medical Insurance Pool in 2020, the premiums taken over 2019 2020 2019 2020 from the Pool amounted to TL 8,784 thousand.

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

200.2 -11.0 -54.4

134.4 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

72 PREMIUM PRODUCTION CLAIMS PAID Credit (TL THOUSAND) (TL THOUSAND) The credit insurance branch realized a premium production 14,121 4,276 of TL 14,121 thousand in 2020 while TL 4,276 thousand was paid in claims. The branch booked a technical loss of 8,506 TL 7,823 thousand on its 2020 2,038 operations.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

145.50 19.70

-55.40

10.60 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

73 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Bond Insurance PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) Premium production in the bond insurance branch, where production started during 5,589 2017, was worth TL 25,505 25,505 thousand in 2020, while claims paid amounted to TL 1,728 thousand. The technical loss in 15,304 this branch was TL 31 thousand in 2020. 1,728

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

121.7 4.0 112.6

-0.1 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

74 PREMIUM PRODUCTION CLAIMS PAID Financial Losses (TL THOUSAND) (TL THOUSAND) Premium production in the financial losses branch totaled TL 62,251 thousand in 2020 65,251 48,720 59,473 and claims paid were worth 41,317 TL 41,317 thousand. While the financial losses branch posted a technical profit of TL 6,429 thousand in 2019, there was technical loss of TL 7,780 thousand in 2020.

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

198.20 10.80

-11.90

59.10 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

75 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Legal Protection PREMIUM PRODUCTION CLAIMS PAID (TL THOUSAND) (TL THOUSAND) Premium production in the legal protection branch stood at TL 22,487 thousand in 2020, 62.9% higher than the figure 22,487 420 of 2019. The branch attained a profitability of 99.8% in 2020 for a technical profit of 13,801 TL 22,431 thousand. 150

2019 2020 2019 2020

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

4.2 114.9 99.8 3.3 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

76 PREMIUM PRODUCTION CLAIMS PAID Total (TL THOUSAND) (TL THOUSAND) Anadolu Sigorta’s total premium production in 2020 was up 21.3% and reached 8,015,704 3,838,569 3,852,056 TL 8,015,704 thousand, while 6,606,856 claims paid grew by 0.4% to TL 3,852,056 thousand. With the negative effect of the 1.5-point decline in loss/ premium ratio, the technical profit figure surged by 14.2% to TL 734,905 thousand with the help of the strong impact of the income transferred from the 2019 2020 2019 2020 financial division.

CLAIMS PAID TECHNICAL PROFITABILITY (%) RATIO (%)

83.7 9.7 82.2 9.2 Anadolu Sigorta 2020 Annual Report

2019 2020 2019 2020

77 FINANCIAL STATUS FINANCIAL INFORMATION AND INDICATORS

AN ASSESSMENT OF ANADOLU SİGORTA IN 2020

Investment Income TL 8,663 thousand of this was from the bonds, mutual fund shares, repo trading, Investment income increased by 81% to sale of bills and bonds, while TL 58,519 and fixed-term deposits, amounted to amount TL 2,487,841 thousand in 2020. thousand was from the sale of equities, TL 127,963 thousand. and TL 85,085 thousand was from the sale The company, in 2020, derived TL 208,180 The company booked currency translation of mutual funds. The portion of TL 5,566 thousand as interest income on time gains in the amount of TL 1,017,311 thousand remaining outside these deposits, TL 121,938 thousand from the thousand a part of which was generated amounts consists of income generated by matured government securities and private from swap transactions, while income the sale of financial assets subject to repo sector bonds, and TL 1,285 thousand in from derivatives were worth TL 787,298 trading. dividend income from equities. thousand in 2020. Income from Anadolu The “financial investments valuation Sigorta’s equity participations amounted A total of TL 157,833 thousand was account”, which consists of valuation to TL 56,000 thousand. booked as income on sales of financial income derived from all equities, bills and investments during the reporting period. Investment Income (TL thousand) 2020 2019 Change (%) Income from Financial Investments 331,403 289,470 14.5 Revenues from the Sales of Financial Investments 157,833 85,209 85.2 Valuation of Financial Investments 127,963 41,088 211.4 FX Gains 1,017,311 427,939 137.7 Dividend from Affiliates 56,000 26,000 115.4 Income from Real Estate 10,033 6,128 63.7 Income from Derivatives 787,298 497,573 58.2 Other Investments ------Total 2,487,841 1,373,407 81.1

Investment Expenses which was calculated based on the TL 588,691 thousand -as mentioned Undersecretariat of Treasury Circular in the Investment Income section Anadolu Sigorta’s investment expenses on the Procedures and Principles of above-, derivative products expenses increased by 76.4% to TL 2,558,784 Keys Used in Financial Statements that of TL 776,356, losses from liquidation thousand in 2020. The biggest component went into effect on 1 January 2008. of investments in the amount of of this figure consisted of TL 1,053,155 Other significant amounts apart from TL 55,685 thousand, and investment and thousand in investment income that this item within investment expenses administration expenses in the amount of was transferred to the technical division, included FX losses in the amount of TL 19,157 thousand including TL interest.

Investments Expenses (TL thousand) 2020 2019 Change (%) Investment Management Expenses (incl. interests) -19,157 -38,232 -49.9 Devaluation of Investments -3,921 -4,981 -21.3 Loss from the Sales of Financial Investments -55,685 -62,299 -10.6 Investment Expenses Transferred to the Technical Division -1,053,155 -1,095,658 -3.9 Loss from Derivative Products -776,356 -30,741 2,425.5 FX Losses -588,691 -173,600 239.1 Depreciation Expenses -61,819 -45,456 36.0 Total -2,558,784 -1,450,967 76.4

Revenues, Income, Expenses and Losses stood at TL -103,290 thousand at year- tax liabilities in the amount of TL 14,574 from Other Operations end 2020. A major contributor to this thousand and other expenses and losses

Anadolu Sigorta 2020 Annual Report account balance stems from a TL 92,490 account in the amount of TL 3,091 The “revenues, income, expenses and thousand charge against the reserves thousand. losses from other operations” account account, which was followed by deferred

Revenues, Income, Expenses and Losses from Other Operations 2020 2019 Change (%) Provisions -92,490 -65,885 40.4 Rediscounts 2,188 5,676 -61.5 Deferred Tax Asset Income -- 58,806 -- Deferred Tax Asset Liabilities Loss -14,574 -- -- Other Revenues and Income 3,091 4,047 -23.7 Other Expenses and Losses -1,504 -654 129.8 Total -103,290 1,990 -5,289.5

78 Operating Results

Key ratios concerning the company’s performance are shown in the chart below along with prior-year results for comparison. 2020 2019 Technical Profitability Ratio 9.2% 9.7% Claims Ratio 82.2% 83.7% Return on Equity 16.4% 18.7% Return on Assets 3.8% 4.1%

2020 2019 Change (%) Technical Division Balance 734,905 643,318 14.2 Investment Income 2,487,841 1,373,407 81.1 Investment Expenses -2,558,784 -1,450,967 76.4 Revenues, Income, Expenses and Losses from Other Operations -103,290 1,990 -5,289.5 Total 560,672 567,748 -1.2 Income/Loss (Gross) 560,672 567,748 -1.2 Tax Provisions -100,035 -164,686 -39.3 Income/Loss (Net) 460,638 403,062 14.3 In 2020, the Covid-19 outbreak in our in net actual claims amount and policy center and digital channels, without any country and across the world significantly cancellations during the pandemic. interruptions. influenced all departments of life in In the health branch, net loss frequency The Company’s goal will be securing Turkey, as it did all over the world. Besides dropped in 2020, due to the fact that increased production in real terms and the health-related peril it posed, the policyholders refrained from going to attaining a sustainable profit, by further pandemic caused financial turbulences hospitals and postponed their treatments. leveraging the concepts of quality service, felt globally. In an effort to mitigate the Based on the analysis of inpatient and leadership, innovation and customer focus. negative impacts of the virus outbreak outpatient treatment data, it was decided Technical results will be monitored closely, upon the economies, countries announced to set aside an additional provision targeting to increase technical profitability economic measures in succession. With of TL 40,098,588 for treatments that through improving loss premium ratios the emergence of the virus in our country policyholders postponed by reason of particularly in unprofitable branches. In in March, numerous measures were Covid-19. striving to achieve its strategic goals, adopted in relation to social life and the the company aims to further increase its economy. In addition to the measures When we review our investment income, brand equity while continuing to offer its that regulated social life according to the on the other hand, we consider the well- services to the policyholders with strict pandemic, rate cuts were introduced in balanced composition of our marketable adherence to its quality service concept as the area of economy, while relief packages securities portfolio as another important it has always done. were declared for the sectors that were factor that keeps our assets from exposure likely to be negatively affected by the to high stress during the pandemic. In ASSESSMENT OF THE pandemic. addition to these data, when our financial indicators are addressed as a whole, COMPANY CAPITAL AND When dealing with this matter with it is considered that our operations respect to our industry, we monitor COMMENTS and profitability possess a sustainable the course of claims payments made structure. The key considerations that the companies in relation to health insurance, motor in the insurance sector will face in the vehicles and motor vehicles liability On another note, necessary steps are years ahead will be the satisfaction insurance in connection with the fact being taken to enable teleworking for of potential capital requirements that Anadolu Sigorta 2020 Annual Report that policyholders refrained from hitting our employees so as not to allow any might arise in line with growth, and due the roads and from going to healthcare disruptions in our operational activities, management of the capital. institutions, and the yields of marketable and our implementations are being securities. molded according to the developments When planning for growth and profitability during the pandemic. During the process, targets, Anadolu Sigorta observes capital Evidently, the pandemic did not no disruptions were experienced in needs as well. Attention is paid to ensure negatively affect our Company’s financial connection with teleworking in the areas that the company capital is at adequate performance as of 31 December 2020. of customer relations, operations and level, taking into consideration the In terms of the non-life insurance sector, information technologies. In addition, regulatory requirements. Information a comparison of premium production our customer services are being carried on capital adequacy is presented in the in 2019 and 2020 reveals a growth by on through all channels including our call relevant section of the notes to the 17.7%. There was not a significant rise financial statements. 79 FINANCIAL STATUS PROFIT DISTRIBUTION POLICY

PROFIT DISTRIBUTION POLICY

• The company’s profit distribution • The profit distribution policy espoused • Pursuant to the company’s Articles of principles for shareholders and by the Board of Directors is based Incorporation, our employees are paid other people participating in on the principle of proposing to the dividends up to three times of their the profit are governed by the General Assembly the distribution of salaries, which, in the aggregate, must applicable requirements of the at least 30% of the net distributable not be in excess of 3% of the amount Turkish Commercial Code, Capital profit for the period as bonus shares remaining after the first dividend is set Market legislation and our Articles of and/or in cash. aside. Incorporation. • In the event that the net distributable • The company may distribute advances • The dividend distribution proposals profit for the period calculated based on dividends in accordance with the presented by the Board of Directors for on the legal records remains below 5% principles and procedures set forth in the approval of the General Assembly of the company’s paid-in capital, the the Capital Market legislation. are prepared in a manner to preserve Board of Directors may propose to the the delicate balance between the General Assembly that no dividends be • There are no preference shares in the expectations of our shareholders distributed. company. and the company’s need to grow, • No founder’s bonus certificates are and taking into consideration future • Dividend distribution formalities and given, nor are dividends paid to the expectations regarding the company’s processes are carried out so as to be members of the Board Directors. operations, capital adequacy targets completed by no later than the end and the conditions prevailing in capital of the fiscal year in which the General markets, as well as the profitability of Assembly Meeting is convened. the company. Anadolu Sigorta 2020 Annual Report

80 RISKS AND AN ASSESSMENT BY THE GOVERNING BODY RISK MANAGEMENT POLICIES ADHERED TO BY TYPES OF RISKS

RISK MANAGEMENT POLICIES ADHERED TO BY TYPES OF RISKS

The company’s risk policies and related payables in high amounts such as known 1- Insurance Underwriting Risk Policy implementation procedures include or foreseeable advance taxes, corporate written standards devised and enforced by taxes, reinsurer payments and claims Insurance underwriting risk is defined as a the Board of Directors and implemented payments, as well as receivables from risk that might arise basically from failure by senior management. Determined insurance activity. to correctly and effectively implement and enforced by the Board of Directors the insurance technique within the in parallel with international practices Through scenario analyses and stress process of converting coverage provision on the basis of types of risks covered tests, the assets portfolio is exposed to for occurrences, which are probable, into under insurance underwriting risk, credit various shocks and tested with respect sustainable commercial earnings. The risk, assets and liabilities management to interest rates, exchange rates and scope of Insurance Underwriting Risk risk, operational risk, reputation risk and share certificate prices. These tests are Policies consists of the scope, conditions strategic risk, these are general standards conducted at quarterly intervals at a and price of the coverage to be provided that define the organization and scope minimum. Utmost attention is paid to for the risk; the principles applied in of the risk management function, risk maintaining a cash position in foreign determining which of the coverages measurement procedures, the procedures currency for potential catastrophic risks provided will be ceded up to what for determining risk limits, actions to be equivalent to the lower limit of excess amounts and to whom in the case of risks taken in possible limit violations, and the of loss agreements, as well as known decided to be transferred; conducting compulsory approvals and confirmations liabilities for any given period. effective monitoring of risk portfolio loss that are required to be given in various frequency so as to allow formulation of The Board of Directors, taking into cases and circumstances. fitting reinsurance strategies at sufficient account long-term strategies, equity frequency, and related monitoring and Besides insurance underwriting, credit, capabilities, returns to be derived and reporting system. assets and liabilities, reputation, strategic general economic expectations, sets and operational risks, other risks can the company’s risk tolerance, which is Management of insurance underwriting result from the reciprocal and successive then expressed in terms of risk limits. risk is based on the principle of forming interaction of these risks. Therefore, In line with the procedures set in the the risk portfolio with risks that represent an integrated consideration should be Policies and in view of the market a low potential to cause loss. In order to adopted for all risk elements stemming conditions in the relevant period, the avoid poor risk selection and incorrect from assets and liabilities positions. Risk Management and Internal Control pricing of insurance policies and to Department reports violations of limits create accurate reinsurance policies, The company’s basic strategy with respect submitted to the CEO and the Board effective monitoring is carried out on loss to the distribution of long-term assets and of Directors. Senior Management is frequency and loss severity of the risk liabilities is to ensure consistency between responsible for implementation of Risk portfolio. The risk portfolio is separately assets and liabilities at optimum liquidity Management Policies. For purposes of overseen on the basis of agents, industry, risk level so as to support the objective of ensuring compliance with policies, Senior branches, regions, brands, models, maximizing returns. Accordingly, utmost Management means the CEO, Deputy tariffs, products, customers and other importance is given to the following Chief Executive Officers, and relevant Unit parameters. points: Managers and Regional Managers. A comprehensive insurance underwriting The basic objective of the company’s On the other hand, all authorized risk reporting system is used to ensure activity in the money and capital markets employees performing the transactions measurement of loss performance, is to generate maximum possible return at regarded as a part of risk management oversee compliance with applicable a specified risk level. The priorities in asset processes are individually responsible for legislation and ensure reporting on the

investments are, in order of precedence, the accuracy and reliability of all kinds effectiveness of insurance underwriting Anadolu Sigorta 2020 Annual Report safe investment, liquidity and return. of data and information they provide in risk controls. The risk of the portfolio relation to their respective jobs within is regularly reported by executive When investing assets, the company the process, which form the basis of the departments and the Risk Management takes into account market and liquidity making of decisions. and Internal Control Department to the risks, portfolio concentration risk, CEO and the Board of Directors.

81 RISKS AND AN ASSESSMENT BY THE GOVERNING BODY RISK MANAGEMENT POLICIES ADHERED TO BY TYPES OF RISKS

RISK MANAGEMENT POLICIES ADHERED TO BY TYPES OF RISKS

2- Credit Risk Policy decisions based not only on the return said instruments, which loss might result derived or anticipated to be derived from the volatilities in interest rates, stock Credit risk means the possibility of from the counterparty at any time, but prices and exchange rates. the company’s sustaining loss due to also on the risk underwritten. The risks failure on the part of policyholders, of counterparties are regularly reported The basic and ultimate purpose of the agents, reinsurers, fronting companies, by the Risk Management and Internal company’s activities in money and capital coinsurers, and other parties to partially Control Department to the CEO and the markets is to generate returns. The basis or totally fulfill their obligations Board of Directors. The Risk Management of assets-labilities management policies is towards the company. It also indicates and Internal Control Department is also to measure, report and keep under control to the loss of market capitalization responsible for undertaking daily follow- the risk that the company is exposed to caused by the deterioration in the up of regional, sectoral and market trends by reason of such activity. The top priority financial standing of companies with that have an actual or possible impact is to ensure that the company’s assets- which there are subsidiary or affiliate on the company’s credit risk, and for labilities management risk exposure is relationships. The Credit Risk section of reporting the results to the CEO and the within the limits stipulated by applicable the Risk Management Policy sets out the Board of Directors. legislation and is compliant with the procedures and responsibilities related to company’s risk appetite In assets-labilities the management, control and monitoring 3-Assets and Liabilities Management management risk management, risk of credit risk, as well as matters in relation Risk Policy appetite is expressed in terms of limits to credit risk limits. assigned to the Fund Management and Assets and Liabilities Management risk Investor Relations Department within Early identification and definition of means all financial risks such as market, the investment limits determined by the issues are of the essence for effective liquidity, structural interest rate, capital Board of Directors and the contracted management of credit risk. For this investment and real estate investment asset management companies. Market purpose early warning signals are risks, which arise from the Company’s risk limits are categorized into two determined; these are indicators assets and liabilities. Internationally- groups: limits set employing the value pointing at cases that will adversely recognized approaches and advanced at risk method, and limits determined influence the credit risk and lead to a statistical methods are employed to based on the ratio of each group of credit risk that is above the company’s measure the risk. Since these calculations investment securities to the total risk tolerance. For insurance brokers, cover risk prediction for the following portfolio and shareholders’ equity. The these are declined collection ratios, days, the accuracy of predictions are Risk Management and Internal Control reduced production performances, compared subsequently with actual values Department and the Fund Management slackened discipline in conforming to and monitored on a daily basis. On the and Investor Relations Department closely company guidelines, and other data other hand, the portfolio is tested under and constantly monitor limit violations. In from intelligence. For Reinsurance different scenarios for determining the case limits are exceeded, the amount at companies and counterparties, these effects of occurrences, which pose a which a limit is exceeded and its reasons cover all kinds of data and information low probability in terms of occurrence, are reported to the CEO and the Board obtained in relation to negative ratings but big volume in terms of loss. The of Directors, along with the assessments and developments. It is the duty and assessments, which include the possible of the executive body. If limit violations responsibility of executive units to obtain mismatches among types and maturities are above the ratios or durations set by data and information in relation to credit of the company’s assets and liabilities, are the Board of Directors, necessary action is risk. All kinds of information obtained are regularly reported in detail to the CEO determined by the Board of Directors. urgently considered within the frame of and the Board of Directors. decision-making, monitoring, reporting 4- Operational Risk Policy

Anadolu Sigorta 2020 Annual Report and auditing processes. Among the components of the Assets- Labilities Management Risk, the Market Operational risk is defined as any risk A credit risk scoring system used, which Risk means the risk of loss in the value other than insurance underwriting, has the capability to be made use of of the company’s placements in financial credit, assets and liabilities management, in the management of credit risk and borrowing instruments whose return strategic and reputation risks which decision-making, to enable monitoring is linked to interest rate; stock, other might occur in relation to the risk on the basis of counterparties, to investment securities, all FX or FX-indexed organization, business continuity, take notice of expected and unexpected assets and liabilities in or off the balance insufficient or inoperative business losses, and to allow for making the sheet, derivative agreements based on the processes, technology, human resource,

82 underperformance by individuals, of its activities, and regularly reports on non-compliance. At a minimum, the administrative mistakes, unfortunate the same to the CEO and the Board of Company’s level of reputation risk events, misconduct, accident and fraud, Directors. exposure is monitored individually systems or external factors, legislation, and assessed as a whole, in view of management and business environment, Compliance risk, which is a sub category the perception and reputation survey and which might cause physical or of operational risk, is defined as the risk questionnaire results; the extent at reputational loss to the company. Within of fines imposed against the Company, which products and services offered the framework of this definition, risks such financial losses and reputational loss satisfy customer expectations; negative as IT risk, human capital management sustained due to non-compliance with comments in printed, visual, audio risk, compliance risk, model risk, fraud risk, the internal guidelines, as well as the and social media platforms; market operating environment risk, transaction laws, regulations, rules and standards capitalization; service continuity level; and process risk, and subheadings thereof governing its activities. The risk covers sanctions imposed and their implications; are addressed and monitored under the following sub-categories: the Risk lawsuits brought against the Company, operational risk. of the Use of the Services Offered by and risk/control analyses pertaining to the Company in Laundering Proceeds processes. Perception and reputation Limits are introduced for potential from Crime or Financing of Terrorism, survey questionnaire results, customer operational risks that might arise during Personal Data Protection Law Compliance complaints, negative news featured in the activities based on the “Company Risk, Insurance Legislation Compliance media platforms and similar occurrences Risk Catalogue,” which is the basic Risk, and the Risk Regarding Compliance are taken into consideration as warnings. document used in defining and classifying of the Company Operations’ with the Each element in relation to the level of all risks that may be faced with. The Risk Competition Law. All external legislations reputation risk is monitored individually Catalogue is updated in parallel with the and obligations governing the Company in and/or collectively, and assessment results changing conditions. addition to insurance legislation are taken are reported to the Board of Directors and into consideration in the management of the CEO by the Risk Management and “Self-Assessment Methodology” is used compliance risk. Internal Control Department quarterly at in the identification of operational risks. a minimum. The level of compliance with In this method, the risks in relation The basic strategy of the company the corporate governance understanding to activities conducted are exposed in terms of compliance risk is to that forms the basis of the reputation with the involvement of the personnel carefully plan, conduct and manage risk risk is also monitored by the Corporate performing the job. Qualitative and management activities independently, Governance Committee. quantitative methods are used jointly impartially, purposefully, productively in the measurement and evaluation and efficiently, employing a risk-focused 6-Strategic Risk Policy of operational risk. The measurement approach and in line with applicable process uses data obtained from “impact legislation and internationally accepted Strategic risk is the risk of taking - likelihood analysis” and internal and principles and standards. The basic inappropriate decisions when setting external “loss database.” principle in achieving this goal is to the strategies related to the Company’s employ the most advanced tools and activities or failure to duly implement When managing operational risk, efforts methods that are available and possible to the strategic decisions. Strategy-related are spent to develop controls to eliminate be used. Findings from risk management, activities and monitoring activities or mitigate the possibility of sustaining monitoring and control activities are carried out by the Corporate Strategy loss due to risks that the company may regularly reported to the Board of and Performance Management make sure be exposed to in relation to its activities. Directors by the Board Director who is that all executive units act in accordance Effectiveness and adequacy of existing delegated by the Board of Directors in with the Company’s strategies. The or subsequently developed controls, respect of this matter. Risk Management and Internal Control Anadolu Sigorta 2020 Annual Report and the implementation of action plans Department perform measurements and adopted in this regard are evaluated in 5- Reputation Risk Policy risk assessments in relation to relevant coordination with the Risk Management risk headings. Measurements, analyses and Reputation risk refers to potential loss and Internal Control Department and the suggestions in relation to strategic risks that may result from loss of confidence Board of Inspectors. The Risk Management are periodically reported to the Board of in the Company or injury to the and Internal Control Department monitors Directors by the Risk Management and Company’s reputation stemming from all operational risks that the company Internal Control Department. may be exposed to during the course failed operations or from regulatory

83 RISKS AND AN ASSESSMENT BY THE GOVERNING BODY ACTIVITIES OF THE COMMITTEE OF EARLY DETERMINATION OF RISK

ACTIVITIES OF THE COMMITTEE OF EARLY DETERMINATION OF RISK

Pursuant to the provisions of the considered that the measures adopted The Turkish economy was also directly Communiqué Serial: IV No: 56 on the during the pandemic that significantly affected by the pandemic in 2020, and Determination and Implementation of weakened economic activity caused factors such as the abrupt changes in Corporate Governance Principles enforced deterioration in numerous key economic risk perceptions, decelerated economic upon its publication in the Official Gazette indicators led by growth rates, whereas activities in connection with pandemic issue 28158 dated 30 December 2011, it the growing weight of expansionary measures, the volatile capital flows, and has been decided to set up a Committee monetary and fiscal policies in a bid to declined tourism revenues have been of Early Determination of Risk as of alleviate those impacts brings along the the main elements nurturing macro 27 February 2012. The committee risk of post-pandemic high inflation rate. financial risks. In the second quarter when will be responsible for carrying out pandemic measures were tightened, all relevant works and efforts for the Risks and uncertainties that increased on a the contraction the Turkish economy early determination of risks that might global scale and particularly in developed sustained similarly to other developed endanger the existence, progress and and developing countries can be listed as and developing countries was reversed as survival of the company, implementation follows: of the third quarter, while the measures of measures and remedies against tightened once again in the last quarter • Continued social and economic identified risks, and management of the put negative pressure on growth rates. uncertainties stemming from the risk. The committee makes an assessment The commencement of the vaccination pandemic, of the situation in its bimonthly reports process in 2021 instigated the expectation submitted to the Board of Directors; • Growth issues caused by pandemic that economic activities will gradually the said report is also shared with the measures, pick up, and the efficient management statutory auditor. of this process at a national and global • Heightened inflation risks in level will be telling with respect to the RISK MANAGEMENT ACTIVITIES AND connection with expansionary performances of the economies. RISK ASSESSMENT monetary and fiscal policies gaining prevalence, Despite the rise in exports, the current The Company’s risk exposure is deficit displayed an uptrend due to the monitored, assessed and controlled • Effects of the monetary policy effect of the weak tourism revenues, individually under the categories of decisions of the Fed and the ECB upon coupled with increased import demand insurance underwriting risk, credit risk, global economic activity, stemming from credit expansion assets and liabilities risk, reputation and stronger demand for gold. In the risk, strategic risk, and operational risk. • Global inequality and surged debts, wake of the rise in inflation rates and When the company’s risk exposure is • Increased unemployment rates heightened dollarization tendency, assessed with respect to the magnitude of tightened monetary policy steps were potential impact of those risks, the effects and the risk of higher structural unemployment, taken focused price stability, led by the of developments in global and national rate hike decisions of the Central Bank economy upon the technical and financial • Uncertainties associated with the of the Republic of Turkey (CBRT) by performance, the potential earthquake in anticipated post-pandemic new late 2020, and exchange rates showed İstanbul, and low technical profitability economic order, a downtrend. In 2021, factors including come to the fore. growth performance depending on • Climate change and increased the course of the combat against the Looking at global risks, the social and catastrophe risks, pandemic, the course of indebtedness and economic impacts of the Covid-19 unemployment rates, the impact of price pandemic have been telling during • High geopolitical risks, stability steps upon inflation rates, foreign

Anadolu Sigorta 2020 Annual Report 2020, and the risks stemming from the fund inflow and financing of growth will pandemic might possibly continue to • Increased economic sanctions triggered continue to act as critical agenda items put pressure on growth in 2021. It is by political risks. with respect to economic stability. In

84 addition, geopolitical developments and Although it is not deemed vital when the course of international relations will a potential earthquake in İstanbul is also be determining elements regarding considered individually, a Contingency economic stability. Action and Funding Plan and a Business Continuity Plan have been formulated for The compensation amounts that might the management of potential risks that result from earthquakes and other might be triggered simultaneously by such catastrophe risks that exceed the upper an earthquake and are likely to increase limits of various existing agreements substantially. The operability of these are of a nature that might lead the plans is tested at regular intervals. company to suffer losses of a magnitude that cannot be made up for in a typical Low operating profitability is at the top operating year. Modeling software is of the risk elements that are critical for used to determine the magnitude of an the company, which is the case also for all earthquake in İstanbul and the potential companies in the sector that are engaged losses that would arise therefrom, and in non-life branches. Although the the potential margin of error incorporated ultimate impact of technical profitability in such software is also taken into on companies’ financial statements are consideration when determining the balanced with the effect of investment final protection level. On the other income, its decline poses a risk with hand, scenario analysis are employed to respect to the sustainable growth of the establish some uncertainties that cannot sector. This predicament that results from be calculated by modeling programs, such excessive price competition and prevents as personal injury, motor own damage accumulation of capital is anticipated claims, tsunami, post-earthquake fire, to disappear gradually, in parallel with changes in our protection level due to the future depth to be achieved by the volatile exchange rates, inflation, high Turkish insurance industry. The Insurance level coverage in conjunction with loss of and Private Pension Regulation and profit, and a portfolio that expands during Supervision Agency (in Turkish: SEDDK), the course of the year, whereas a certain which is regarded as an important move safety margin is allowed for some other of structural reform in the industry, is uncertainties. expected to ensure important steps to be taken for strengthening financial structures. Anadolu Sigorta 2020 Annual Report

85 RISKS AND AN ASSESSMENT BY THE GOVERNING BODY INDEPENDENT AUDITOR’S REPORT ON THE EARY IDENTIFICATION OF THE RISK COMMITTEE AND SYSTEM

INDEPENDENT AUDITOR’S REPORT ON THE EARY IDENTIFICATION OF THE RISK COMMITTEE AND SYSTEM

Güney Bağımsız Denetim ve SMMM A.Ş. Tel: +90 212 315 3000 Maslak Mahallesi Eski Büyükdere Cad. Fax: +90 212 230 8291 Orjin Maslak İş Merkezi No: 27 ey.com Kat: 2-3-4 Daire: 54-57-59 Ticaret Sicil No: 479920 34485 Sarıyer Mersis no: 0-4350-3032-6000017 İstanbul - Türkiye

To the Board of Directors of Anadolu Anonim Türk Sigorta Şirketi,

We have audited the Early Identification of the Risk System and Committee established by Anadolu Anonim Türk Sigorta Şirketi.

Responsibility of the Board of Directors

Pursuant to paragraph 1 of Article 378 of the Turkish Commercial Code 6102 (“TCC”), the board of directors is obliged to establish a committee of experts and operate and improve the system for the purposes of: early identification of factors posing a threat on the company’s existence, development and continuation; implementation of necessary measures and solutions in this regard; and management of the risk.

Responsibility of the independent auditor

Our responsibility is to express a conclusion on the Early Identification of the Risk System and Committee based on our audit. Our audit was conducted in accordance with TCC and the “Principles on the Independent Auditor’s Report on Early Identification of the Risk System and Committee” and ethical requirements as announced by Public Oversight Accounting and Auditing Standards Authority (“POA”) of Turkey. These Principles require us to determine whether the early identification of the risk system and committee has been established, and if established, to evaluate whether the system and committee operate in accordance with Article 378 of TCC. Our audit does not involve auditing the appropriateness of the solutions on the risks identified by the Early Identification of the Risk System and Committee and the practices performed by the management against the risks.

Information Regarding the Early Identification of the Risk System and Committee

The Company established the Early Identification of the Risk System and Committee in February 24, 2012. The committee consists of two members, one of them is an independent board member, and the committee is chaired by an independent member. The committee has met for the purposes of early identification of factors posing a threat on the company’s existence and development, implementation of necessary measures and solutions in this regard and the management of the risk; and has submitted the reports it has prepared to the Board of Directors.

Conclusion

Based on our audit, we have reached the conclusion that the early identification of the risk system and committee of Anadolu Anonim Türk Sigorta Şirketi is, in all material respects, in compliance with article 378 of the TCC. Anadolu Sigorta 2020 Annual Report

86 OTHER MATTERS AND FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT ON THE ANNUAL REPORT OF THE BOARD OF DIRECTORS

INDEPENDENT AUDITOR’S REPORT ON THE ANNUAL REPORT OF THE BOARD OF DIRECTORS (Convenience translation of a report originally issued in Turkish)

To the Shareholders of Anadolu Anonim Türk Sigorta Şirketi 1) Opinion We have audited the annual report of Anadolu Anonim Türk Sigorta Şirketi (“the Company) for the period of January 1 – December 31, 2020. In our opinion, the consolidated and unconsolidated financial information provided in the annual report of the Board of Directors and the discussions made by the Board of Directors on the situation of the Company are presented fairly and consistent, in all material respects, with the audited full set consolidated and unconsolidated financial statements and the information we obtained during the audit. 2) Basis for Opinion We conducted our audit in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and Independent Auditing Standards (InAS) which are part of the Turkish Auditing Standards as issued by the Public Oversight Accounting and Auditing Standards Authority of Turkey (POA). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Annual Report section of our report. We are independent of the Company in accordance with the Code of Ethics for Independent Auditors (Code of Ethics) as issued by the POA, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 3) Our Auditor’s Opinion on the Full Set Financial Statements We have expressed an unqualified opinion in our auditor’s report dated January 29, 2021 on the full set consolidated and unconsolidated financial statements of the Company for the period of January 1 – December 31, 2020. 4) The Responsibility of the Board of Directors on the Annual Report In accordance with Articles 514 and 516 of the Turkish Commercial Code 6102 (“TCC”), the provisions of the Communiqué II-14.1 on the Principles of Financial Reporting In Capital Markets” (“the Communiqué”) of the Capital Market Board (“CMB”) and the Communiqué on Individual Retirement Saving and Investment System” (“Communiqué”) issued on 7 August 2007 dated and 26606 numbered, the management of the Company is responsible for the following items: a) Preparation of the annual report within the first three months following the balance sheet date and submission of the annual report to the general assembly. b) Preparation and fair presentation of the annual report; reflecting the operations of the Company for the year, along with its financial position in a correct, complete, straightforward, true and honest manner. In this report, the financial position is assessed according to the consolidated and unconsolidated financial statements. The development of the Company and the potential risks to be encountered

are also noted in the report. The evaluation of the board of directors is also included in this report. Anadolu Sigorta 2020 Annual Report

87 OTHER MATTERS AND FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT ON THE ANNUAL REPORT OF THE BOARD OF DIRECTORS

INDEPENDENT AUDITOR’S REPORT ON THE ANNUAL REPORT OF THE BOARD OF DIRECTORS

c) The annual report also includes the matters below: • Subsequent events occurred after the end of the fiscal year which have significance, • The research and development activities of the Company, • Financial benefits such as salaries and bonuses paid to the board members and to those charged governance, allowances, travel, accommodation and representation expenses, financial aids and aids in kind, insurances and similar deposits. When preparing the annual report, the board of directors takes into account the secondary legislative arrangements published by the Ministry of Trade and related institutions. 5) Auditor’s Responsibilities for the Audit of the Annual Report Our aim is to express an opinion, based on the independent audit we have performed on the annual report in accordance with provisions of the Turkish Commercial Code and the Communiqué, on whether the consolidated and unconsolidated financial information provided in this annual report and the discussions of the Board of Directors are presented fairly and consistent with the Company’s audited consolidated and unconsolidated financial statements and to prepare a report including our opinion. The independent audit we have performed is conducted in accordance with InAS and the standards on auditing as issued by the Capital Markets Board of Turkey. These standards require compliance with ethical provisions and the independent audit to be planned and performed to obtain reasonable assurance on whether the consolidated and unconsolidated financial information provided in the annual report and the discussions of the Board of Directors are free from material misstatement and consistent with the consolidated and unconsolidated financial statements. The name of the engagement partner who supervised and concluded this audit is Seda Akkuş Tecer. Anadolu Sigorta 2020 Annual Report

88 OTHER MATTERS AND FINANCIAL STATEMENTS AN ASSESSMENT OF THE BOARD DIRECTORS BY THE CORPORATE GOVERNANCE COMMITTEE

AN ASSESSMENT OF THE BOARD DIRECTORS BY THE CORPORATE GOVERNANCE COMMITTEE

Apart from the CEO, the Board of Pursuant to the Articles of Incorporation, • Determining the company’s policies Directors consists of non-executive the Board of Directors convenes on the about Shareholders, stakeholders and members. basis of absolute majority and makes Public Relations, decisions with the absolute majority of Chairman of the Board and CEO functions Directors present in the meeting. • Determining the company’s disclosure are carried out by different individuals. policy, Pursuant to the company’s Articles of Taking into consideration that there are Incorporation; • Setting the codes of ethics for the no non-corporate ultimate shareholders company and its employees, with a controlling interest in our The Board of Directors is authorized to company, it is thought that the Board pass decisions on any and all acts and • Establishing the operating principles Directors naturally possess the advantage transactions that are necessary for the of committees; ensuring their efficient to act independently and therefore, to be achievement of the company’s operating and productive functioning, impartial in their decisions, upholding the scope, save for those for which the • Taking necessary action so as to ensure interests of our company and stakeholders General Assembly is authorized as per the the company’s organizational structure above everything else. law and the Articles of Incorporation. responds to current circumstances, The Board of Directors meets regularly Without prejudice to the duties and Examining the activities of former boards and at least monthly as pre-scheduled, powers that cannot be delegated as of directors. and at any time as and when deemed set out in Article 375 of the Turkish necessary. The Board of Directors met Commercial Code and in other articles, The Board of Directors consists of eleven 12 times in 2020. The Board Directors, in the Board of Directors may delegate Directors, which number enables efficient principle, attend every meeting. management, in part of in whole, by way organization of the activities of the Board. of an internal bylaws in accordance with Three independent Directors serve on the Care is paid to determine the Board Article 367 of the Turkish Commercial company’s Board of Directors. meeting date during the immediately Code. preceding meeting, followed by written Although there are no set rules on non- invitation. It is intended to set the The Board of Directors fulfills its independent Directors’ undertaking meeting date so as to allow all Directors responsibilities remaining outside the other duties outside the company, the to participate, and save for unforeseeable scope of its basic functions taking Directors do not have any other duties exceptional events, the Board meetings into consideration the opinions and apart from their natural duties in the are held with the participation of all recommendations of executive bodies and entities they represent and from those in Directors. committees. Such responsibilities include, the establishments owned by the entities but are not limited to the following: they represent. Yet, Board Directors The Board meeting agenda is determined devote sufficient amount of time for by the Chairman of the Board of Directors • Approving the company’s annual company affairs, and exercise their powers in line with the proposals of the CEO and budget and business plans, prudently and within the frame of good the Board Directors. • Preparing the company’s annual faith, possessing all necessary knowledge Utmost care is paid to ensure that the reports and finalizing the same to be to ensure full performance of the duty. information and documents about the presented to the General Assembly, Past experiences, and outside positions topics covered in the Board meeting held, if any, of the independent Board agenda are made available for the • Ensuring that the General Assemblies Directors are disclosed in their résumés examination of the Directors at least five are held in compliance with the and presented on our website and in our days in advance, and when such timing legislation and the company’s Articles annual report. Anadolu Sigorta 2020 Annual Report cannot be met, efforts are spent to ensure of Incorporation, equal flow of information to the Board • Taking necessary action in relation to Directors. General Assembly decisions, Each Director is entitled to one vote and • Approving the executives’ career plans none has weighted vote or affirmative/ and rewarding provided to them, negative vetoing rights.

89 OTHER MATTERS AND FINANCIAL STATEMENTS AN ASSESSMENT OF THE BOARD DIRECTORS BY THE CORPORATE GOVERNANCE COMMITTEE

AN ASSESSMENT OF THE BOARD DIRECTORS BY THE CORPORATE GOVERNANCE COMMITTEE

When fulfilling its decision-making Director nominees serve and on the graduated from a four-year university function, the Board of Directors acts on compliance or non-compliance to minimum, and have knowledge and the basic consideration of: internal regulations set exclusively on experience in at least one of the fields this topic. mentioned above. • Maximizing the fair value of the company, Directors just starting to serve on the The Directors possess these qualifications Board are offered an orientation program and have; • Pursuing the company operations so covering the following at a minimum: as to ensure long-term and stable • Satisfactory knowledge and skills in earnings for our Shareholders, • Introduction with our executives and banking and insurance business, visits to the company’s units, • Maintaining the delicate balance • The skill to read and analyze financial between the Shareholders and the • The CVs and performance assessments statements and reports, company’s need to grow. of our executives, • Basic knowledge about the In the formation of the Board of Directors, • Strategic goals, current status and legal regulations governing our care is given to; issues of the company, company, and about general market circumstances, Ensure that the nominees are present in • Market share, financial structure the meeting at the time of election to the and performance indicators of the • The will and the opportunity to seats on the Board of Directors, company. regularly attend the Board meetings for the period of time for which they • Inform the Shareholders about the Pursuant to legislation, general managers are elected to serve. nominees, of insurance companies must have graduated from a four-year university The Board of Directors adopted the • Allow Shareholders to ask questions to minimum, and have at least ten years’ necessary measures for preventing the nominees, experience in any one of insurance, undisclosed information and/or trade banking, economy, business management, secrets from being disseminated out of • Inform the Shareholders, during accounting, law, finance, mathematics, the company. the General Assemblies, on other statistics or engineering fields. More than companies on the boards of which half of the Board Directors must have

Dr. Fatih Anıl Fatih Gören Board Director and Head of the Deputy Chief Executive and Member of the Corporate Governance Committee Corporate Governance Committee 23 February 2021 23 February 2021 Anadolu Sigorta 2020 Annual Report

Kemal Emre Sayar Fikret Utku Özdemir Board Director and Member of the Board Director and Member of the Corporate Governance Committee Corporate Governance Committee 23 February 2021 23 February 2021

90 OTHER MATTERS AND FINANCIAL STATEMENTS DISCLOSURE POLICY

DISCLOSURE POLICY

Disclosure policy of our company, Turkey’s Trade Registry Journal and Disclosures for special cases, which approved by the Board of Directors, is company’s official website for informing must be notified pursuant to the Capital described herein. the public. Markets Board (CMB) legislation, are notified to PDP within its legal deadline. Any modification thereto, including the Authorization and Responsibility Disclosures for special cases are published justification will also be disclosed to on the company website of Anadolu The Board of Directors is responsible public after it is approved by the Board of Sigorta on the next business day at the and authorized for preparation, Directors. latest following the public disclosure and monitoring, auditing and improvement stays on the website for a duration of 5 General Framework of public disclosure policy of our years. company. Directors in charge of Anadolu Anonim Türk Sigorta Şirketi financial management and reporting For the purpose of ensuring the fulfills its obligations of public disclosure and Investor Relations Department have confidentiality during the time until the of financial and other type of information been appointed for the responsibility of public disclosure of special cases, persons as required mainly by the Law on conducting and coordination of disclosure who have access to insider information Insurances and relevant regulations function under the policy. The officials are informed about the requirements hereunder and Capital Markets Legislation, of the mentioned department perform stemming from the relevant legislation. Turkish Commercial Code and the their duties in coordination with the As for those who may have access to legislation governing the Istanbul Stock Audit Committee, Corporate Governance insider information through the service Exchange (BIST), through which our Committee and the Board of Directors. supplied from them, their contracts shares were listed and exchanged, in line include a clause of confidentiality. On with the generally accepted accounting Public Disclosure Operations and the other hand, Anadolu Sigorta carefully principles and corporate governance Methods and Instruments Used complies with the legislative requirements principles; therefore, it follows a detailed imposed by the Law on Insurance No. public disclosure policy. Public Disclosure operations and methods and instruments used for these operations 5684 and relevant legislation requiring the Main purpose of the disclosure policy is under the legislation on insurances, safekeeping the customers’ secrets and to ensure true, complete, convenient, Capital Markets Legislation, Turkish not disclosing them to parties other than less costly, understandable and fair Commercial Code and other relevant those who are explicitly authorized by conveyance of necessary information and legislation are described below: the law. This requirement binds not only disclosures, other than those classified as the Anadolu Sigorta employees but also trade secret, to shareholders, investors, Financial statements and notes and the employees of the companies through employees, clients, creditors, reinsurers explanations thereof for each quarter, which the company gets support services. and other concerned parties. which are prepared in accordance with the legislation issued by the Ministry of In accordance with the legislation and Having an active approach for the Treasury and Finance, Directorate General the provisions of the Company Charter, adoption and implementation of of Insurance and Capital Markets Board announcements and notifications for Corporate Governance Principles, our and signed with an attestation by the changes to the Company Charter, company attaches utmost care for Committee Members in charge of Audit General Assembly meetings, capital raise, compliance with the requirements of the and the Director General or Directors in reporting of year-end financial statements relevant legislation and best international charge of financial reporting, and external are given on the TTRJ and national practices with respect to public disclosure. audit reports, issued annually semi- newspapers. Documents and information Anadolu Anonim Türk Sigorta Şirketi annually are published on our website about the General Assembly are delivered Disclosure Policy has been prepared within and reported to the Public Disclosure to shareholders through Electronic the scope of above principles and put into Platform (PDP) within its legal deadline. General Assembly System in line with Anadolu Sigorta 2020 Annual Report practice after its approval by the Board of Furthermore, our company issues financial the provisions of the Turkish Commercial Directors. statements for each quarter and upload Code. them to the portal managed by the Each year before the General Assembly Anadolu Anonim Türk Sigorta Şirketi Ministry of Treasury and Finance and meeting, annual activity report, in line uses Public Disclosure Platform (PDP), convey most of these statements also with the relevant legislation, is presented Central Registry Institution (E-Company), to the Turkish Insurers Union (TIU) for for the examination of shareholders with a Electronic General Assembly System informative reasons. (EGAS), national/local newspapers, view to include all necessary information

91 OTHER MATTERS AND FINANCIAL STATEMENTS DISCLOSURE POLICY

DISCLOSURE POLICY

and descriptions and is published on our ensure that all market participants are Defining the Persons with Administrative website (Both in Turkish and in English) simultaneously and equally informed, the Responsibility and reported to PDP. When requested, this reports and presentations disclosed during report may be obtained in print from our the introductory and information meetings Persons with administrative responsibility Investor Relations Department. held with investors are published on the are the members of the Board of Directors company website under the Investor and those, who are not a member of the Regular meetings and briefings are Relations Section. Board, yet, have regular access to internal not part of our policy. Instead, where information of our company, directly or requested or needed to respond to Investor Relations Department delivers indirectly, and who are entitled to take questions raised by the press members, via e-mail necessary information, mainly administrative decisions which may affect press releases are made on the printed and financial statements, to shareholders, the future development and commercial visual media. national and international investors and to ends of our company. those companies which releases research Press statements to printed and visual reports on our company. Therefore, in defining the persons with media may be made by the Chairman administrative responsibility, the duties of of the Board, the Director General or Investor Relations Section of the the persons in the Company organization its Deputy or other officials assigned by official website of our company (www. and the nature of the information which them. News about our company published anadolusigorta.com.tr) includes detailed may be accessed by these persons are on national or international media information and data on our company. taken into account. are followed by a professional media This section is managed and kept monitoring agency. Therefore, in case of a up-to-date by the Investor Relations In addition to Members of the necessity of a disclosure for special case, Department. All questions sent by all Board, Director General and Deputy which must be notified pursuant to the stakeholders via e-mail, regular mail, Director Generals, managers of certain relevant legislation, necessary briefing phone, etc. are answered at the shortest departments, who have access to all is made on the subject gathering the delay under the coordination of the information regarding the Company and departmental information from concerned Investor Relations Department. who are entitled to take administrative departments. decisions on matters such as assets- Other Notifications liabilities structure, profit-loss, cash-flow, When making a statement to press on strategic targets, (decisions, which may news and talks, which are not classified as Notifications other than above are affect these matters at macro level) have a special case disclosure by a legislation, disclosed to public with signature of the also been determined as persons with type and content of the statement are officials whose power of signature was administrative responsibility. defined according to certain factors such indicated in the company’s certificate of as the news’ feature, size of the target signature. Official Website of Anadolu Sigorta: audience of the media, whether the news www.anadolusigorta.com.tr Forecasts affect the company reputation. If these Our company’s official website is news and rumors inherit a matter which In case of disclosure of forecasts for the actively used for informing the public requires the company to make a public company, which may affect the investor and disclosure. The website includes disclosure, a special case disclosure is decisions, the Board of Directors, Director all information and data envisaged by then made in line with the provisions of General or other officials assigned by the Corporate Governance Principles relevant legislation. the latter make necessary disclosures via and Regulatory Authorities in Turkish Public Disclosure Platform, activity reports International and national investor and English. This website is always kept or other means defined by the legislation. meetings and road-shows are used to updated with due care. Anadolu Sigorta 2020 Annual Report In case of a significant difference between convey information to shareholders the issues disclosed earlier and realizations, E-Company platform may also be used and to other concerned parties. These a statement may be released according to in communication with shareholders, a meetings and visits which were organized relevant legislation. platform which was established within and managed by Investor Relations Central Registry Institution in accordance Department are sometimes attended by with pursuant to the provisions of Turkish Director General, Directors in charge of Commercial Code on websites, which financial management and reporting and can be accessed through “Bilgi Toplum the personnel of the Investor Relations Hizmetleri” link. Documents indicated in Department. Where needed, the size of the relevant legislation can be accessed these contact teams may be enlarged. To through this platform.

92 OTHER MATTERS AND FINANCIAL STATEMENTS STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES

STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES

CRF, which is used to report compliance Three women members serve on our While there are no provisions stipulating with voluntary principles, and CGIF Board of Directors; a Company policy has stakeholder participation in the General templates, which are used to provide not been created governing the number Assembly meetings in our articles of information about the existing corporate of women members on the Board of incorporation, stakeholders wishing to governance practices, have been prepared Directors. participate as observers in those meetings in accordance with the formats set out in may do so provided that they inform the the Corporate Governance Communiqué Necessary succession planning is made Company of their such desire prior to no. II-17.1 based on the Capital Markets within the scope of the Company’s HR the General Assembly meeting. Hence, Board of Turkey (CMB) decision no. 2/49 Policy. some stakeholders such as the audit firm dated 10 January 2019. The same are representative, rating company specialist While there are no rules governing outside disclosed on the Public Disclosure Platform and some Company employees have positions held by our non-independent and in our Annual Report. participated in the General Assembly Board directors, they do not have any meeting as observers within the roles apart from their natural duties at the We deem extreme benefit in the knowledge of the Company. implementation of the Corporate organizations they work for and apart from Governance Principles, which we their natural duties at the establishments An insurance policy has been issued to consider to be as important as financial owned by the organizations they work cover the risk of damage that our Board performance, for the thriving of the for. As a matter of principle, care is taken directors and executives may cause to national and international capital markets to guarantee that the said situation does the Company as a result of their fault in and for the interests of our Company. not lead to any conflicts of interest and the discharge of their duties within the does not disrupt the member’s duties scope of İşbank Group’s (İşbank and its Our Company is subjected to corporate at the Company. External positions held Subsidiaries) liability policy. However, no governance rating by SAHA Kurumsal by our Board directors are presented for disclosure was made about the subject on Yönetim ve Kredi Derecelendirme A.Ş., a the information of our shareholders and the Public Disclosure Platform. rating agency that holds an activity license stakeholders in our annual report and on to carry out rating under the applicable our website. Principles that are not yet implemented as legislation. Corporate Governance Rating an exception have not caused any conflicts Reports and information about our scores In principle, our Board directors do not of interest between stakeholders to date. are disclosed on the Public Disclosure serve on more than one committee. Platform, and also presented for the Notwithstanding, since the entire information of our investors under the Audit Committee and the heads of the Investor Relations tab of our corporate Corporate Governance Committee and website. Early Detection of Risk Committee must be elected from amongst independent Our Company implements the principles Board directors, one independent that are defined as compulsory Board director serves on two different principles in the Corporate Governance committees, and one independent Communiqué Serial: II-17.1. Board director serves on three different committees. In addition, one non- In this context, our articles of independent Board director serves on incorporation do not contain any three different committees. provisions stipulating stakeholder participation in the Company’s The Company’s annual and medium- management and expanding the scope of term goals are not publicly disclosed; the Anadolu Sigorta 2020 Annual Report minority rights beyond the provisions of Board of Directors evaluates financial applicable legislation; minority shares are performance on a monthly basis. not represented on our Board of Directors. The remunerations and similar benefits While our Company has Charitable provided to the Board directors and senior Donations Guidelines, we do not have a management are disclosed cumulatively in Donations and Grants Policy, nor a section the footnotes of our financial statements on our corporate website where the said and in our annual report. is posted.

93 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE COMPLIANCE REPORT

CORPORATE GOVERNANCE COMPLIANCE REPORT

Compliance Level Not Corporate Governance Compliance Report Yes Partial No Exempted Applicable Remarks 1.1. FACILITATING THE EXERCISE OF SHAREHOLDER RIGHTS 1.1.2 - Up-to-date information and disclosures which X may affect the exercise of shareholder rights are available to investors at the corporate website. 1.2. RIGHT TO OBTAIN AND REVIEW INFORMATION 1.2.1- Management did not enter into any transaction X that would complicate the conduct of special audit. 1.3. GENERAL ASSEMBLY 1.3.2 -The company ensures the clarity of the General X Assembly agenda, and that an item on the agenda does not cover multiple topics. 1.3.7- Insiders with privileged information have X No such transactions were informed the board of directors about transactions carried out in 2020. conducted on their behalf within the scope of the company’s activities in order for these transactions to be presented at the General Shareholders’ Meeting. 1.3.8 - Members of the board of directors who are X concerned with specific agenda items, auditors, and other related persons, as well as the officers who are responsible for the preparation of the financial statements were present at the General Shareholders’ Meeting. 1.3.10 - The agenda of the General Shareholders’ X Meeting included a separate item detailing the amounts and beneficiaries of all donations and contributions. 1.3.11 - The General Shareholders’ Meeting was held X Stakeholders wishing to open to the public, including the stakeholders, without participate in the meeting having the right to speak. as observers may do so provided that they inform the company of their such demand in advance of the meeting. 1.4. VOTING RIGHTS 1.4.1-There is no restriction preventing shareholders X from exercising their shareholder rights.

Anadolu Sigorta 2020 Annual Report 1.4.2-The company does not have shares that carry X privileged voting rights. 1.4.3-The company withholds from exercising its X voting rights at the General Shareholders’ Meeting of any company with which it has cross-ownership, in case such cross-ownership provides management control. 1.5. MINORITY RIGHTS 1.5.1- The company pays maximum diligence to the X exercise of minority rights.

94 Compliance Level Not Corporate Governance Compliance Report Yes Partial No Exempted Applicable Remarks 1.5.2-The Articles of Association extend the use X The company’s articles of of minority rights to those who own less than one association do not define twentieth of the outstanding shares, and expand the minority rights as those scope of the minority rights. who own less than one twentieth of the capital and care is taken to inform all shareholders equally. 1.6. DIVIDEND RIGHT 1.6.1 -The dividend policy approved by the General X Shareholders’ Meeting is posted on the company website. 1.6.2-The dividend distribution policy comprises the X minimum information to ensure that the shareholders can have an opinion on the procedure and principles of dividend distributions in the future. 1.6.3 - The reasons for retaining earnings, and their X Dividends have been allocations, are stated in the relevant agenda item. distributed in 2020. 1.6.4 - The board reviewed whether the dividend X policy balances the benefits of the shareholders and those of the company. 1.7. TRANSFER OF SHARES 1.7.1 - There are no restrictions preventing shares X from being transferred. 2.1. CORPORATE WEBSITE 2.1.1.-The company website includes all elements X listed in Corporate Governance Principle 2.1.1. 2.1.2-The shareholding structure (names, privileges, X number and ratio of shares, and beneficial owners of more than 5% of the issued share capital) is updated on the website at least every 6 months. 2.1.4 -The company website is prepared in other X A substantial portion of the selected foreign languages, in a way to present exactly information available on our the same information with the Turkish content. website is also presented in English so that international investors may make use of them. 2.2. ANNUAL REPORT 2.2.1-The board of directors ensures that the annual X report represents a true and complete view of the Anadolu Sigorta 2020 Annual Report company’s activities. 2.2.2 - The annual report includes all elements listed in X Corporate Governance Principle 2.2.2. 3.1. CORPORATION’S POLICY ON STAKEHOLDERS 3.1.1- The rights of the stakeholders are protected X pursuant to the relevant regulations, contracts and within the framework of bona fides principles.

95 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE COMPLIANCE REPORT

CORPORATE GOVERNANCE COMPLIANCE REPORT

Compliance Level Not Corporate Governance Compliance Report Yes Partial No Exempted Applicable Remarks 3.1.3-Policies or procedures addressing stakeholders’ X rights are published on the company’s website. 3.1.4 - A whistleblowing program is in place for X reporting legal and ethical issues. 3.1.5-The company addresses conflicts of interest X among stakeholders in a balanced manner. 3.2. SUPPORTING THE PARTICIPATION OF THE STAKEHOLDERS IN THE CORPORATION’S MANAGEMENT 3.2.1-The Articles of Association, or the internal X regulations (terms of reference/manuals), regulate the participation of employees in management. 3.2.2 - Surveys/other research techniques, X consultation, interviews, observation method etc. were conducted to obtain opinions from stakeholders on decisions that significantly affect them. 3.3. HUMAN RESOURCES POLICY 3.3.1- The company has adopted an employment X policy ensuring equal opportunities, and a succession plan for all key managerial positions. 3.3.2-Recruitment criteria are documented. X 3.3.3 - The company has a policy on human resources X development, and organizes trainings for employees. 3.3.4-Meetings have been organized to inform X employees on the financial status of the company, remuneration, career planning, education and health. 3.3.5 - Employees, or their representatives, were X notified of decisions impacting them. The opinion of the related trade unions was also taken. 3.3.6 - Job descriptions and performance criteria X have been prepared for all employees, announced to them and taken into account to determine employee remuneration. 3.3.7 - Measures (procedures, trainings, raising X awareness, goals, monitoring, complaint mechanisms) have been taken to prevent discrimination, and to protect employees against any physical, mental, and emotional mistreatment.

Anadolu Sigorta 2020 Annual Report 3.3.8 - The company ensures freedom of association X and supports the right for collective bargaining. 3.3.9 - A safe working environment for employees is X maintained.

96 Compliance Level Not Corporate Governance Compliance Report Yes Partial No Exempted Applicable Remarks 3.4. RELATIONS WITH CUSTOMERS AND SUPPLIERS 3.4.1-The company measured its customer X satisfaction, and operated to ensure full customer satisfaction. 3.4.2-Customers are notified of any delays in handling X their requests. 3.4.3 - The company complied with the quality X standards with respect to its products and services. 3.4.4 - The company has in place adequate controls X to protect the confidentiality of sensitive information and business secrets of its customers and suppliers. 3.5. ETHICAL RULES AND SOCIAL RESPONSIBILITY 3.5.1-The board of the corporation has adopted a code X of ethics, disclosed on the corporate website. 3.5.2-The company has been mindful of its social X responsibility and has adopted measures to prevent corruption and bribery. 4.1. ROLE OF THE BOARD OF DIRECTORS 4.1.1 - The board of directors has ensured strategy X and risks do not threaten the long-term interests of the company, and that effective risk management is in place. 4.1.2 - The agenda and minutes of board meetings X indicate that the board of directors discussed and approved strategy, ensured resources were adequately allocated, and monitored company and management performance. 4.2. ACTIVITIES OF THE BOARD OF DIRECTORS 4.2.1-The board of directors documented its meetings X and reported its activities to the shareholders. 4.2.2-Duties and authorities of the members of the X board of directors are disclosed in the annual report. 4.2.3-The board has ensured the company has an X internal control framework adequate for its activities, size and complexity. 4.2.4-Information on the functioning and effectiveness X of the internal control system is provided in the annual report. 4.2.5 - The roles of the Chairman and Chief Executive X Anadolu Sigorta 2020 Annual Report Officer are separated and defined. 4.2.7 - The board of directors ensures that the Investor X Relations department and the corporate governance committee work effectively. The board works closely with them when communicating and settling disputes with shareholders.

97 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE COMPLIANCE REPORT

CORPORATE GOVERNANCE COMPLIANCE REPORT

Compliance Level Not Corporate Governance Compliance Report Yes Partial No Exempted Applicable Remarks 4.2.8 - The company has subscribed to a Directors and X Our Company’s Board Officers liability insurance covering more than 25% of Members and Managers are the capital. insured within the scope of the umbrella liability insurance policy, which includes the companies in our group as insured, against the risk of loss caused by their faults during their duties, but the insurance cost is not determined as an amount exceeding 25% of the capital specified in the Communiqué. 4.3. STRUCTURE OF THE BOARD OF DIRECTORS 4.3.9-The board of directors has approved the policy X While we do not have a on its own composition, setting a minimal target dedicated policy about this of 25% for female directors. The board annually matter, women members evaluates its composition and nominates directors so serve on our Board of as to be compliant with the policy. Directors. 4.3.10-At least one member of the audit committee X has 5 years of experience in audit/accounting and finance. 4.4. BOARD MEETING PROCEDURES 4.4.1-Each board member attended the majority of X Participations in electronic the board meetings in person. media are also included due to pandemic conditions. 4.4.2-The board has formally approved a minimum X time by which information and documents relevant to the agenda items should be supplied to all board members. 4.4.3 - The opinions of board members that could not X In principle, our Board of attend the meeting, but did submit their opinion in Directors members take care written format, were presented to other members. to attend each meeting; during the reporting period, there were no members who were unable to attend a meeting, but submitted their opinions to the Board of Anadolu Sigorta 2020 Annual Report Directors in writing. 4.4.4-Each member of the board has one vote. X 4.4.5-The board has a charter/written internal rules X defining the meeting procedures of the board. 4.4.6-Board minutes document that all items on the X agenda are discussed, and board resolutions include director’s dissenting opinions if any.

98 Compliance Level Not Corporate Governance Compliance Report Yes Partial No Exempted Applicable Remarks 4.4.7-There are limits to external commitments of X While there are no explicit board members. Shareholders are informed of board limits in this respect, as a members’ external commitments at the General matter of principle, care Shareholders’ Meeting. is taken to guarantee that the said situation does not lead to any conflicts of interest and does not disrupt the member’s duties at the company. Outside positions held by our Board members are presented for the information of our shareholders and stakeholders on the Public Disclosure Platform and in our annual report. 4.5. BOARD COMMITTEES 4.5.5-Board members serve in only one of the Board’s X In principle, our Board committees. members do not serve on more than one committee. Notwithstanding, since the entire Audit Committee and the heads of the Corporate Governance Committee and Early Detection of Risk Committee must be elected from amongst independent Board directors, two independent Board members serve on two different committees, and one independent Board member serve on three different committees. In addition, one non-independent Board member serves on three different committees. 4.5.6 - Committees have invited persons to the X meetings as deemed necessary to obtain their views. 4.5.7-If external consultancy services are used, the X No need arose for the use of Anadolu Sigorta 2020 Annual Report independence of the provider is stated in the annual external consultancy services report. within the scope of the committee’s activities.

99 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE COMPLIANCE REPORT

CORPORATE GOVERNANCE COMPLIANCE REPORT

Compliance Level Not Corporate Governance Compliance Report Yes Partial No Exempted Applicable Remarks 4.5.8-Minutes of all committee meetings are kept and X reported to board members. 4.6. FINANCIAL RIGHTS 4.6.1-The board of directors has conducted a board X The Company’s annual and performance evaluation to review whether it has medium-term goals are discharged all its responsibilities effectively. not publicly disclosed; the Board of Directors evaluates financial performance on a monthly basis. Moreover, the Board of Directors is not evaluated on the basis of individual members. 4.6.4-The company did not extend any loans to its X board directors or executives, nor extended their lending period or enhanced the amount of those loans, or improve conditions thereon, and did not extend loans under a personal credit title by third parties or provided guarantees such as surety in favor of them. 4.6.5-The individual remuneration of board members X Remunerations were and executives is disclosed in the annual report. disclosed cumulatively divided into two categories as remunerations of Board members and benefits provided to the senior management. Anadolu Sigorta 2020 Annual Report

100 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE INFORMATION FORM

CORPORATE GOVERNANCE INFORMATION FORM

1. SHAREHOLDERS 1.1. Facilitating the Exercise of Shareholders Rights The number of investor meetings (conference, seminar/etc.) organized by 23 the company during the year 1.2. Right to Obtain and Examine Information The number of special audit request(s) 0 The number of special audit requests that were accepted at the General 0 Shareholders’ Meeting 1.3. General Assembly Link to the PDP announcement that demonstrates the information https://www.kap.org.tr/tr/Bildirim/821345 requested by Principle 1.3.1. (a-d) Whether the company provides materials for the General Shareholders’ Provided. Meeting in English and Turkish at the same time The links to the PDP announcements associated with the transactions There were no transactions that are not approved by the that are not approved by the majority of independent directors or by majority of independent directors or by unanimous votes of unanimous votes of present board members in the context of Principle present Board members in the context of Principle 1.3.9. 1.3.9 The links to the PDP announcements associated with related party There are no related party transactions in the context of transactions in the context of Article 9 of the Communique on Corporate Article 9 of the Communiqué on Corporate Governance. Governance (II-17.1) The links to the PDP announcements associated with common and There are no common and continuous transactions to continuous transactions in the context of Article 10 of the Communique be publicly disclosed in the context of Article 10 of the on Corporate Governance (II-17.1) Communiqué on Corporate Governance. The name of the section on the corporate website that demonstrates the While our Company has Charitable Donations Guidelines, donation policy of the company we do not have a Donations and Grants Policy, nor a section on our corporate website where the said is posted. The relevant link to the PDP with minute of the General Shareholders’ There is no PDP disclosure about the subject. Meeting where the donation policy has been approved The number of the provisions of the articles of association that discuss There are no provisions stipulating stakeholder participation the participation of stakeholders to the General Shareholders’ Meeting in the General Assembly meetings in our articles of association. Identified stakeholder groups that participated in the General Some stakeholders such as the audit firm representative, Shareholders’ Meeting, if any rating company specialist and some company employees participated in the General Assembly meeting as observers within the knowledge of the Company. 1.4. Voting Rights Whether the shares of the company have differential voting rights No In case that there are voting privileges, indicate the owner and There are no privileged shares. percentage of the voting majority of shares. The percentage of ownership of the largest shareholder 57.31% 1.5. Minority Rights Whether the scope of minority rights enlarged (in terms of content or No the ratio) in the articles of the association If yes, specify the relevant provision of the articles of association - Anadolu Sigorta 2020 Annual Report 1.6. Dividend Right The name of the section on the corporate website that describes the https://www.anadolusigorta.com.tr/en/investor-relations/ dividend distribution policy corporate-governance Minutes of the relevant agenda item in case the board of directors The Board of Directors did not propose against distribution proposed to the general assembly not to distribute dividends, the reason of profit. for such proposal and information as to use of the dividend PDP link to the related general shareholder meeting minutes in case the - board of directors proposed to the general assembly not to distribute dividends

101 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE INFORMATION FORM

CORPORATE GOVERNANCE INFORMATION FORM

General Assembly Meetings The number Specify the name of information of the page of the requests corporate website Specify the name received by that contains of the page of the The number of the company the General corporate website the relevant item The regarding the Shareholder Shareholders’ that contains all or paragraph number of The link to clarification participation Percentage Meeting minutes, questions asked of General declarations the related of the agenda rate to the of shares Percentage and also indicates for in the general Shareholders’ by insiders PDP general General of the General General directly of shares each resolution the assembly meeting Meeting minutes in received by shareholder Meeting Shareholders’ Shareholders’ present at represented voting levels for or and all responses relation to related the board meeting Date Meeting Meeting the GSM by proxy against to them party transactions of directors notification 24.03.2020 0 68.07% 0% 100% https://www. https://www. None 0 https://www. anadolusigorta. anadolusigorta. kap.org.tr/tr/ com.tr/en/investor- com.tr/en/ Bildirim/821345 relations/general- investor-relations/ assembly-agenda- general-assembly- minutes-of-general- agenda-minutes- assembly-meetings- of-general- and-additional- assembly- information meetings-and- additional- information

2. DISCLOSURE AND TRANSPARENCY 2.1. Corporate Website Specify the name of the sections of the website providing the https://www.anadolusigorta.com.tr/en/investor-relations information requested by the Principle 2.1.1. If applicable, specify the name of the sections of the website https://www.anadolusigorta.com.tr/en/about-us/company-profile providing the list of shareholders (ultimate beneficiaries) who directly or indirectly own more than 5% of the shares. List of languages for which the website is available Turkish, English 2.2. Annual Report 2.2.2. The page numbers and/or name of the sections in the Annual Report that demonstrate the information requested by principle a) The page numbers and/or name of the sections in the Annual Board of Directors - Corporate Governance Compliance Report Report that demonstrate the information on the duties of the - Declarations of Independence by Independent Members of the members of the board of directors and executives conducted Board of Directors out of the company and declarations on independence of board members b) The page numbers and/or name of the sections in the Annual Committees Operating Within Anadolu Sigorta and an Report that demonstrate the information on committees formed Assessment by the Board of Directors within the board structure c) The page numbers and/or name of the sections in the Annual Information on Board Meetings Held in 2020 Fiscal Year An Report that demonstrate the information on the number of board Assessment of the Board Directors by the Corporate Governance meetings in a year and the attendance of the members to these Committee Anadolu Sigorta 2020 Annual Report meetings ç) The page numbers and/or name of the sections in the Annual Developments and Changes in Legislation Report that demonstrate the information on amendments in the legislation which may significantly affect the activities of the corporation d) The page numbers and/or name of the sections in the Annual Financial Statements and Independent Auditor’s Report / 42 - Report that demonstrate the information on significant lawsuits Risks filed against the corporation and the possible results thereof

102 e) The page numbers and/or name of the sections in the Annual An Assessment of the Board Directors by the Corporate Report that demonstrate the information on the conflicts Governance Committee - An Assessment of the Operation of of interest of the corporation among the institutions that it the Independent Audit Firm in 2020 Activity Period via the Audit purchases services on matters such as investment consulting and Committee rating and the measures taken by the corporation in order to avoid from these conflicts of interest f) The page numbers and/or name of the sections in the Annual There are no cross-ownership relations. Report that demonstrate the information on the cross ownership subsidiaries that the direct contribution to the capital exceeds 5% g) The page numbers and/or name of the sections in the Annual Human Resources Practices at Anadolu Sigorta - Commitment to Report that demonstrate the information on social rights and Social Responsibility professional training of the employees and activities of corporate social responsibility in respect of the corporate activities that arises social and environmental results 3. STAKEHOLDERS 3.1. Corporation’s Policy on Stakeholders The name of the section on the corporate website that https://www.anadolusigorta.com.tr/en/investor-relations/ demonstrates the employee remedy or severance policy corporate-governance The number of definitive convictions the company was subject to There were two definitive convictions in 2020. in relation to breach of employee rights The position of the person responsible for the alert mechanism Audit Committee (i.e. whistleblowing mechanism) The contact detail of the company alert mechanism. Notifications received via [email protected] are referred to the Audit Committee and the Internal Audit Department for investigation. 3.2. Supporting the Participation of the Stakeholders in the Corporation’s Management Name of the section on the corporate website that demonstrates https://www.anadolusigorta.com.tr/en/hr/hr-policies-and- the internal regulation addressing the participation of employees practices on management bodies. Corporate bodies where employees are actually represented The employees of our Company are members of the Bank, Finance and Insurance Workers Union (Basisen) and there are union representative employees at the Head Office and Regional Branches. Our union representative employees play an important role in the handling of relations between our Company and our employees. 3.3. Human Resources Policy The role of the board on developing and ensuring that the The Board of Directors is authorized to make appointments to company has a succession plan for the key management positions key managerial positions. Additional work is undertaken by the Corporate Governance Committee. The name of the section on the corporate website that https://www.anadolusigorta.com.tr/en/investor-relations/ demonstrates the human resource policy covering equal corporate-governance Anadolu Sigorta 2020 Annual Report opportunities and hiring principles. Also provide a summary of relevant parts of the human resource policy. Whether the company provides an employee stock ownership None program

103 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE INFORMATION FORM

CORPORATE GOVERNANCE INFORMATION FORM

The name of the section on the corporate website that https://www.anadolusigorta.com.tr/en/investor-relations/ demonstrates the human resource policy covering discrimination corporate-governance and mistreatments and the measures to prevent them. Also Measures are taken to prevent discrimination among our provide a summary of relevant parts of the human resource policy. employees on the basis of race, religion, language or sex, to ensure that human rights are respected, and to safeguard the employees from internal physical, mental and/or emotional abuse. The number of definitive convictions the company is subject to in None relation to health and safety measures 3.5. Ethical Rules and Social Responsibility The name of the section on the corporate website that https://www.anadolusigorta.com.tr/en/investor-relations/ demonstrates the code of ethics corporate-governance The name of the section on the company website that https://www.anadolusigorta.com.tr/en/media/social- demonstrates the corporate social responsibility report. If such a responsibilities report does not exist, provide the information about any measures taken on environmental, social and corporate governance issues. Any measures combating any kind of corruption including Audit Committee, Internal Audit Department and Risk embezzlement and bribery Management and Internal Control Department actively work on these matters. 4. BOARD OF DIRECTORS-I 4.2. Activity of the Board of Directors Date of the last board evaluation conducted 22.12.2020 Whether the board evaluation was externally facilitated No Whether all board members released from their duties at the GSM Yes Name(s) of the board member(s) with specific delegated duties Füsun Tümsavaş (Chairman of the Board of Directors), Fikret and authorities, and descriptions of such duties Utku Özdemir (Vice Chairman of the Board of Directors), Kemal Emre Sayar (Board Director responsible for Internal Systems) Number of reports presented by internal auditors to the audit In 2020, the Internal Audit Department presented 4 reports and committee or any relevant committee to the board the Internal Control presented 2 reports. Specify the name of the section or page number of the Internal Control System and Internal Audit Activities annual report that provides the summary of the review of the effectiveness of internal controls Name of the Chairman Füsun Tümsavaş Name of the CEO Mehmet Şencan If the CEO and Chair functions are combined: provide the link to The functions of Chairman of the Board and the General Manager the relevant PDP announcement providing the rationale for such who is the chief executive officer are fulfilled by different combined roles individuals. Link to the PDP notification stating that any damage that may While there is an insurance policy for the group to which our be caused by the members of the board of directors during the Company belongs, no PDP notification was made about the discharge of their duties is insured for an amount exceeding 25% same. of the company’s capital Anadolu Sigorta 2020 Annual Report The name of the section on the corporate website that None demonstrates current diversity policy targeting women directors The number and ratio of female directors within the Board of 3 female directors / 33.3% Directors

104 Composition of Board of Directors Whether the Whether She/ Whether the Link to PDP Independent He is the Director Has At Notification Director Director Who Least 5 Years’ Whether Whether The First That Considered Ceased to Experience on Executive Independent Election Includes the by The Satisfy the Audit, Accounting Name, Surname Director or Director or Date to Independency Nomination Independence And/or Finance of Board Member Not Not Board Declaration Committee or Not or Not Füsun Tümsavaş Non-Executive Not an 29.04.2021 No Yes Independent Director Fikret Utku Non-Executive Not an 12.09.2019 No Yes Özdemir Independent Director Mehmet Şencan Executive Not an 26.08.2019 No Yes Independent Director Hafız Ekrem Non-Executive Not an 24.03.2015 No Yes Kürkçü Independent Director Kemal Emre Sayar Non-Executive Not an 26.11.2015 No Yes Independent Director Vedat Non-Executive Not an 12.09.2019 No Yes Karahanoğlu Independent Director Dilek Demirbaş Non-Executive Independent 26.03.2018 Specified in Considered No Yes Director the Annual Report. Ayşegül Toker Non-Executive Independent 26.03.2018 Specified in Considered No Yes Director the Annual Report. Fatih Anıl Non-Executive Independent 26.03.2018 Specified in Considered No Yes Director the Annual Report.

4. BOARD OF DIRECTORS-II 4.4. Meeting Procedures of the Board of Directors The Board of Directors met 12 times during 2020. While two meetings were held physically, some members electronically Number of physical board meetings in the reporting period (meetings participated in the remaining 10 meetings due to the conditions in person) imposed by the pandemic. Director average attendance rate at board meetings 98% Whether the board uses an electronic portal to support its work or

not Yes Anadolu Sigorta 2020 Annual Report Number of minimum days ahead of the board meeting to provide information to directors, as per the board charter 5 The name of the section on the corporate website that demonstrates Investor Relations/About Anadolu Sigorta/Anadolu Sigorta information about the board charter Articles of Incorporation Number of maximum external commitments for board members as per the policy covering the number of external duties held by directors None 4.5. Board Committees Page numbers or section names of the annual report where Committees Operating Within Anadolu Sigorta and an information about the board committees are presented. Assessment by the Board of Directors Link(s) to the PDP announcement(s) with the board committee https://www.kap.org.tr/tr/Bildirim/187240 charters https://www.kap.org.tr/tr/Bildirim/831777 105 OTHER MATTERS AND FINANCIAL STATEMENTS CORPORATE GOVERNANCE INFORMATION FORM

CORPORATE GOVERNANCE INFORMATION FORM

Composition of Board Committees-I Whether Committee Name of Committees Defined as Name-Surname of Chair or Whether Board Names of The Board Committees “Other” in the First Column Committee Members Not Member or Not Audit Committee Ayşegül Toker Yes Director Audit Committee Dilek Demirbaş No Director Corporate Governance Committee Fatih Anıl Yes Director Corporate Governance Committee Fikret Utku Özdemir No Director Corporate Governance Committee Fatih Gören No Not a director Corporate Governance Committee Kemal Emre Sayar No Director Early Detection of Risk Committee Dilek Demirbaş Yes Director Early Detection of Risk Committee Kemal Emre Sayar No Director Other Digital Insurance Committee Ayşegül Toker Yes Director Other Digital Insurance Committee Dilek Demirbaş No Director Other Digital Insurance Committee Kemal Emre Sayar No Director Other Digital Insurance Committee Filiz Tiryakioğlu No Not a Director Other Digital Insurance Committee Levent Sönmez No Not a Director Other Digital Insurance Committee Mehmet Abacı No Not a Director

4. BOARD OF DIRECTORS-III 4.5. Board Committees-II Specify where the activities of the audit committee are presented https://www.anadolusigorta.com.tr/en/investor-relations/ in your annual report or website (Page number or section name in corporate-governance the annual report/website) Specify where the activities of the corporate governance https://www.anadolusigorta.com.tr/en/investor-relations/ committee are presented in your annual report or website (Page corporate-governance number or section name in the annual report/website) Specify where the activities of the nomination committee are https://www.anadolusigorta.com.tr/en/investor-relations/ presented in your annual report or website (Page number or corporate-governance section name in the annual report/website) Specify where the activities of the early detection of risk https://www.anadolusigorta.com.tr/en/investor-relations/ committee are presented in your annual report or website (Page corporate-governance number or section name in the annual report/website) Specify where the activities of the remuneration committee https://www.anadolusigorta.com.tr/en/investor-relations/ are presented in your annual report or website (Page number or corporate-governance section name in the annual report/website) 4.6. Financial Rights Specify where the operational and financial targets and their Summary Report by the Board of Directors / Message from the achievement are presented in your annual report (Page number or Chairman / Message from the CEO

Anadolu Sigorta 2020 Annual Report section name in the annual report) Specify the section of website where remuneration policy for Investor Relations/Corporate Governance/Remuneration Policy executive and non-executive directors are presented. Specify where the individual remuneration for board members Financial Statements and Independent Auditor’s Report / 1.6 - and senior executives are presented in your annual report (Page Wages and similar benefits provided to the senior management number or section name in the annual report)

106 Composition of Board Committees-II The Percentage of The Number Name of Independent of Reports on Committees Directors The Number of its Activities Names of the Board Defined As “Other” The Percentage of Non- in the Meetings Held Submitted to the Committees in the First Column executive Directors Committee in Person Board 8 (Held electronically due to the Audit Committee 100% 100% pandemic) 8 4 (Held electronically Corporate Governance due to the Committee 75% 25% pandemic) 7 8 (Held electronically Early Detection of Risk due to the Committee 100% 50% pandemic) 8 6 (Held electronically Digital Insurance due to the Other Committee 50% 33% pandemic) 6 Anadolu Sigorta 2020 Annual Report

107 OTHER MATTERS AND FINANCIAL STATEMENTS ADDITIONAL INFORMATION ON CORPORATE GOVERNANCE

ADDITIONAL INFORMATION ON CORPORATE GOVERNANCE

Outside Positions Held by the Members of the Board of Directors In- or Professional Out- Experience Name Position Outside Positions Currently Held Group (Years) FÜSUN Chairman Chairperson at İşbank / Vice Chairperson of the Board of İşbank In-Group 40 TÜMSAVAŞ Supplementary Pension Fund. FİKRET UTKU Vice Chairman Member of the Board of Directors and CEO at Millî Reasürans T.A.Ş. In-Group 24 ÖZDEMİR / Chairman at MİLTAŞ Turizm İnşaat Ticaret Anonim Şirketi MEHMET Director and CEO Vice Chairman at the Insurance Association of Turkey In-Group 32 ŞENCAN HAFIZ EKREM Director Division Manager at İşbank In-Group 27 KÜRKÇÜ KEMAL EMRE Director Unit Manager at Türkiye İş Bankası A.Ş. / Member of the Board of In-Group 21 SAYAR Directors at Anadolu Hayat Emeklilik A.Ş. / Member of the Board of Directors at Millî Reasürans T.A.Ş. / Member of the Board of Directors at Trakya Yatırım Holding A.Ş. / Member of the Board of Directors at Softtech Yazılım Teknolojileri Araştırma Geliştirme ve Pazarlama Ticaret A.Ş. / Deputy Chairman at GullsEye Lojistik Teknolojileri A.Ş. - / Deputy Chairman at Livewell Giyilebilir Sağlık Ürün Hizmet ve Teknolojileri San. ve Tic. A.Ş. - / Member of the Board of Directors at Topkapı Danışmanlık Elektronik Hizmetler Pazarlama ve Ticaret A.Ş. / Member of the Board of Directors at Kasaba Gayrimenkul İnşaat Taahhüt ve Ticaret A.Ş. / Member of the Board of Directors at Batı Karadeniz Elektrik Dağıtım ve Ticaret A.Ş- VEDAT Director Division Manager at İşbank In-Group 21 KARAHANOĞLU DİLEK DEMİRBAŞ Independent Faculty Member at İstanbul University Faculty of Economics Out- 37 Director Group AYŞEGÜL TOKER Independent Faculty Member at the Faculty of Economics and Business Out- 33 Director Administration of Boğaziçi University Group FATİH ANIL Independent Faculty Member at Nişantaşı University / Faculty Member at Out- 35 Director Bahçeşehir University / Member of the Executive Committee at Group Orka Holding (Damat&Tween-DS)

Shareholders

Shareholder Relations Department

An Investor Relations Unit has been set up in the company in 2005. Messrs. Fatih Gören, Barış Hüseyin Şafak, Birkan Karataş and Ahmet Tevfik Gedikkaya have been serving in the Investor Relations Unit. The head of the unit is Mr. Fatih Gören, Deputy Chief Executive, who also serves as a member of the Corporate Governance Committee. Contact information for our employees working in this unit is as follows. Anadolu Sigorta 2020 Annual Report Name Title Phone No E-Mail Mr. Fatih Gören Deputy Chief Executive +90 850 744 00 55 [email protected] Mr. Barış H. Şafak Manager +90 850 744 02 54 [email protected] Mr. Birkan Karataş Specialist +90 850 744 03 59 [email protected] Mr. Ahmet Tevfik Gedikkaya Assistant Specialist +90 850 744 07 36 [email protected]

108 This unit plays an active part in the • Observe and monitor the fulfillment Stakeholders protection of shareholding rights and of all liabilities arising from the capital facilitates their exercise, mainly regarding market legislation, including all Keeping Stakeholders Informed the right to obtain and review information, requirements in relation to corporate In cases where the rights of stakeholders and establishes the communication governance and public disclosure, are not regulated by the legislation between the Board of Directors and or contractually, the interests of the shareholders. Employees serving in the • Ensure representation of our company stakeholders are protected within the Investor Relations Department possess the in investor relations meetings organized framework of the rules of good faith and required licenses. in Turkey or abroad by international establishments through participation in to the extent permitted by the company’s The Investor Relations Department reports such events, facilities, observing the company’s its activities to the Board of Directors four credibility at the same time. The necessary times a year, on a quarterly basis. • Prepare the presentation materials to structure is in place to enable stakeholders be used in meetings. to report such transactions of the • In essence, the Investor Relations company that are contradictory to the Department works to; General Assembly Meetings legislation or are unethical.

• Ensure maintenance of the records For Shareholders who will have themselves Stakeholder Participation in about Shareholders in a healthy, secure represented in the General Assemblies in Management and up-to-date manner, proxy, a specimen of a proxy statement is publicized along with the meeting While the Articles of Incorporation contain • Respond to the Shareholders’ and announcements, and is also made no provisions on stakeholder participation potential investors’ written information available to Shareholders on the electronic in the company’s management, the requests about the company, apart medium. company’s internal regulations cover from those that are not publicly practices to this end. disclosed, are of a confidential and/or In line with our Articles of Incorporation, commercial secret nature, General Assemblies are held in the place An employee proposal guideline has been where our company headquarters is formulated. Proposals that are innovative • Make available to the shareholders located and at a venue that will enable and aimed at improvement are assessed such information and disclosures that participation by all our Shareholders. within the framework of this guideline and may have an effect on the exercise of put into life across the company. shareholding rights on the company Voting Rights and Minority Rights website in an up-to-date manner Stakeholders’ opinions and complaints are There are no cross-shareholding interests followed up on by the Audit Committee. • Ensure that the General Assembly between any Shareholder and the Meetings are convened in accordance company. Agencies Meetings, İşbank Branches with the applicable legislation, the Meetings and Managers Meetings are held, There are no upper limits with regard to Articles of Incorporation and other where the stakeholders, i.e. employees and the number of votes that our Shareholders internal regulations, suppliers, share their opinions. are allowed to cast in the General • Prepare the documents the Assemblies. Human Resources Policy Shareholders could make use of in the Cash dividends in the amount of TL 135 Succession planning is made to identify General Assembly, million were paid out to shareholders in the new managers to be appointed in • Ensure that the results of the voting are 2020. cases where it is predicted that changes in Anadolu Sigorta 2020 Annual Report recorded and the reports thereon are a managerial position will cause hitches in communicated to the Shareholders, the management of the company.

109 OTHER MATTERS AND FINANCIAL STATEMENTS ADDITIONAL INFORMATION ON CORPORATE GOVERNANCE

ADDITIONAL INFORMATION ON CORPORATE GOVERNANCE

Board of Directors Strategic Goals of the Company

Structure and Formation of the Board of Our strategic goals are set by our Directors executives with a keen eye on competitive conditions, general economic conjuncture, Taking into consideration that there are overall expectations in national and no non-corporate ultimate Shareholders international financial markets, and the with a controlling interest in the company, company’s medium and long-term targets it is thought that the Board Directors and they are presented to the approval all naturally possess the advantage to of the Board of Directors. Strategies act independently, and therefore, to be and targets proposed are negotiated impartial in their decisions, upholding comprehensively by the Board of Directors the interests of our company and the on a broad perspective. Actualizations in stakeholders above everything else. relation to approved strategies and targets are reviewed during Board meetings The independent Board Directors have and monthly within the scope of the not served as members for more than six assessment of company operations, years in the past ten years. Term of office financial structure and performance for all Board Directors is one year. level. In principle, the Board of Directors Operating Principles of the Board of meets monthly in order to efficiently and Directors continuously fulfills its monitoring and supervision function. In the meetings, The Board meeting agenda is determined the basic topics of assessment are the by the Chairman of the Board of Directors company activities, approved annual in line with the proposals of the CEO and budget and target realizations, the the Board Directors. company’s place in the sector, financial structure and performance level, The Board of Directors decisions passed in reporting, and compliance of operations 2020 were adopted with the unanimous to international standards. votes of the members present in those meetings. Anadolu Sigorta 2020 Annual Report

110 OTHER MATTERS AND FINANCIAL STATEMENTS COMPLIANCE WITH SUSTAINABILITY PRINCIPLES

COMPLIANCE WITH SUSTAINABILITY PRINCIPLES

Pursuant to the Communiqué Amending we develop. Our policies covering our Sustainability Report. Since we are the Corporate Governance Communiqué sustainability strategies and approaches engaged in a low-impact sector, Anadolu published by the Capital Markets Board are available to the public under the Sigorta’s activities are not included in any of Turkey (CMB) in the Official Gazette Sustainability tab on our corporate carbon pricing system. issue 31262 dated 2 October 2020, our website. level of compliance with the sustainability Although it has given rise to various principles are disclosed via the Public The Sustainability Committee is our main crises in economic and social terms, the Disclosure Platform and our annual report. management body for sustainability Coronavirus outbreak brought along activities. Anadolu Sigorta manages certain environmental impacts that can Within the scope of sustainability the issues related to environment and be regarded as positive. Following the initiatives, which we have been giving climate change within the principle of full disclosure of the first Coronavirus case weight to since 2018 at Anadolu Sigorta, compliance with the governing legislation. in Turkey on 11 March 2020, a group of Sustainability Reports were published In the absence of related regulatory our employees switched to the work- in 2019 and 2020. Our Sustainability framework, the Company adopts from-home order on 12 March, which Reports cover all our initiatives and efforts internationally-accepted management was made possible by our longstanding carried out in line with our sustainability principles. activities and efforts. Following gradual strategies and are prepared in accordance expansion of the teleworking model, it with the internationally accepted GRI All details about the environmental was established that the work-from-home Sustainability Reporting Standards. The indicators for Anadolu Sigorta, including system ran successfully, and finally, the Sustainability Reports are available for those related to climate change, can be entire workforce began teleworking as of the public under the Sustainability tab found in the Sustainability Report. Our 18 March 2020. Teleworking resulted in on our corporate website. (https://www. Company’s consumptions bearing an significant decline in our environmental anadolusigorta.com.tr/en/sustainability) impact upon climate change are also impacts resulting from our operational measured, and various implementations activities, which we monitor within the At Anadolu Sigorta, the fundamental are being introduced in our service scope of sustainability management; objective we adopt in relation to buildings for more efficient consumption the system also produced significant sustainability management is to eliminate of energy resources across our operations. employee satisfaction. For perpetuating environmental, economic and social these positive effects, hybrid working Our Key Performance Indicators in risks with potential negative impacts, models are being studied under which relation to environment and climate which stem from our activities, upon the teleworking will continue in the post- change are reported in Sustainability Company’s operations, and to increase pandemic period. The table below Reports, in comparison with previous our performance in topics possessing shows the changes in energy and water years. All environmental indicators can be the potential to create opportunities. consumptions in 2019 and 2020. Data found in the “Environmental Performance” In addition, another goal towards for January-February 2020, and for tables under the “Performance Indicators” sustainability management is to act as the March-April 2020, when teleworking section in our Sustainability Report. main business partner of our customers commenced, are also separately reviewed Information about the reporting period for the management of their sustainability in greater detail. risks through the products and services and circumstances are addressed in the “About the Report” section of the Anadolu Sigorta 2020 Annual Report

111 OTHER MATTERS AND FINANCIAL STATEMENTS COMPLIANCE WITH SUSTAINABILITY PRINCIPLES

COMPLIANCE WITH SUSTAINABILITY PRINCIPLES

2019 2020 2020 2020 12 MONTHS 12 MONTHS January-February March-April Natural gas (GJ) 783.24 421.26 237.71 146.08 Gasoline (L) 30,507.86 30,647.57 6,713.79 3,126.95 Diesel (L) (Company vehicles) 123,263.14 57,193.15 16,624.61 6,641.39 Electricity (GJ) 10,320.5 8,241.4 2,046.89 1,254.71 Water (m3) 14,694 11,133 3,841.50 3,005

Anadolu Sigorta addresses environmental Sigorta Ethical Rules and Implementation Sustainability Report. All of our other and climate change issues under two Principles Policy) covering our approach social responsibility projects are dealt with main headings: “impacts arising from to human rights, supporting diversity and under the heading “Social Responsibility”. the Company’s operational activities” equality, anti-discrimination and ethics in and “impacts arising from products and its entirety is published on our website. It is a fundamental goal for Anadolu services. As the latest step in this regard, Detailed information on all programs such Sigorta to deliver the best experience Environmental and Social Management as investments in our people, work-life to our customers across all product System was set up by late 2020 with balance solutions and talent management and service processes from product the goal of embedding sustainability are dealt with under the “Working Life” development to sales. In keeping with in work processes, as a result of which section of our Sustainability Reports. this goal, we hold ISO 9001 Quality sustainability principles became Various training programs are organized Management System and ISO 10002 applicable also in our direct insurance for our employees within the scope of Customer Satisfaction Management and investment processes, in addition to sustainability. System certifications. At the same operational activities. time, Anadolu Sigorta is a participant of As Anadolu Sigorta, we publish our United Nations Global Compact (Global Regarded as the Insurance School initiatives related to social investment, Compact), and our Sustainability Report of Turkey, Anadolu Sigorta first and social responsibility and financial inclusion also serves as our Communication on foremost offers a fair, egalitarian, and safe on various platforms. Our efforts for Progress. workplace where human and labor rights heightening insurance awareness are recognized in order to help develop can be found under “The Future of the human factor. Code of Ethics (Anadolu the Insurance Sector” section of our Anadolu Sigorta 2020 Annual Report

112 OTHER MATTERS AND FINANCIAL STATEMENTS COMMITTEES OPERATING WITHIN ANADOLU SİGORTA AND AN ASSESSMENT BY THE BOARD OF DIRECTORS

COMMITTEES OPERATING WITHIN ANADOLU SİGORTA AND AN ASSESSMENT BY THE BOARD OF DIRECTORS

In order to ensure that the Board of been based on the Corporate Governance • The committee shall keep a resolution Directors duly performs its duties and Communiqué issued by the Capital book, in which the decisions, assigned responsibilities, a Corporate Governance Markets Board of Turkey (CMB) and put a sequence number, will be entered. Committee, an Audit Committee, a into force with the Board of Directors Committee of Early Determination of Risk decision no. 06838 dated 26 June 2014. • The committee shall enter the and a Digital Insurance Committee were These provisions are carried out by the conclusions reached in a meeting set up at the company. The Corporate Board of Directors. in the minutes, and submit the Governance Committee also fulfills the assessments made and decisions functions of the Nomination Committee The committee consists of a minimum of passed, along with the grounds and Remuneration Committee. two members to be elected from among therefor, in a written report to the directors and the Investor Relations Board of Directors within no later than The Board of Directors makes all kinds of Manager. one month following the relevant resources and support available necessary committee meeting. for the performance of their duties by The members will elect the head of the the committees. The committees hold committee from among themselves. The • Committee decisions shall take meetings at the frequency deemed head of the committee is elected from effect upon approval of the Board of necessary for ensuring efficiency of their among independent directors. Non- Directors. activities and specified in their respective director individuals, who have expertise in • The committee shall forthwith present operating principles, and submit the their respective fields, can be members of its determinations, assessments and reports covering information about their the committee. suggestions in relation to its duties and activities and meeting outcomes to the If the number of committee members scope of responsibilities in writing to Board of Directors. elected from among Board Directors is the Board of Directors. The objectives, formations, operating two, then both of them must be non- • The committee may invite the principles and procedures, and activities of executive directors; if such number is individuals it deems necessary to its our committees are described below. greater than two, then the majority of the members must be non-executive meetings and seek their opinions. CORPORATE GOVERNANCE directors. The CEO may not serve on this • Investor Relations Unit/Department COMMITTEE committee. shall determine the meeting agenda of Head of Committee: Dr. Fatih Anıl The Investor Relations Managers must the committee, make the invitations to be a full-time employee of the company the meeting, establish communication Member: Fikret Utku Özdemir and must be assigned as a member of the with committee members, keep the Corporate Governance Committee. book of resolutions, and handle other Member: Fatih Gören secretarial tasks for the committee. A member’s term of office on the Member: Kemal Emre Sayar Corporate Governance Committee is • As the committee fulfills its functions, the Board of Directors shall make Objective terminated when his/her term of office on the Board of Directors expires or upon all necessary resources and support Overseeing compliance of the company a decision to such effect by the Board of available. with corporate governance principles, Directors. • The committee may seek independent undertaking improvement efforts thereon, expert opinion upon approval of the and submitting proposals to the Board of Operating Procedures and Principles Board of Directors on matters that Directors.

• The Corporate Governance Committee call for expertise and the committee Anadolu Sigorta 2020 Annual Report Formation holds at least four meetings a year, deems necessary in relation to its which must take place at least on a activities. The cost of the consultancy The Corporate Governance Committee quarterly basis. service needed by the committee shall was set up upon approval by the Board be borne by the company. of Directors’ decision no. 5508 dated • Committee meetings are held with 10 March 2005. The provisions governing the attendance of all its members • Committee members shall observe the formation, principles and procedures and decisions are passed with the the principles of independence and and activities of the committee have votes of the majority of members in impartiality when performing their attendance. duties.

113 OTHER MATTERS AND FINANCIAL STATEMENTS COMMITTEES OPERATING WITHIN ANADOLU SİGORTA AND AN ASSESSMENT BY THE BOARD OF DIRECTORS

COMMITTEES OPERATING WITHIN ANADOLU SİGORTA AND AN ASSESSMENT BY THE BOARD OF DIRECTORS

Activities Carries out activities to ensure that • Presenting its suggestions regarding the corporate governance culture is the remuneration to be paid to The committee carries out the following established within the company, and is Board directors and executives with activities with respect to corporate espoused by managers and employees administrative responsibility, which will governance: working at any level. The committee be determined in view of the extent follows up the developments related to the remuneration criteria have been • Establishes whether the corporate corporate governance in and out of Turkey achieved; governance principles are implemented and examines their possible implications in the company, as well as the grounds for the company. • Developing suggestions and for non-implementation, if applicable; assessments for the formulation identifies conflicts of interest, if any, The duties of the Nomination and and revision of the company’s arising from failure to fully comply Remuneration Committees shall be remuneration policy, which sets out with these principles, and presents fulfilled by the Corporate Governance the remuneration principles for the proposals to the Board of Directors Committee, until these committees shall Board directors and executives with for the improvement of corporate have been set up. administrative responsibility, and governance practices; presenting its opinions to the Board of The committee’s duties and Directors. • Oversees the activities of the responsibilities with respect to nomination company’s Investor Relations are presented below: The Corporate Governance Committee Department. Within this context, the shall fulfill other duties and responsibilities committee sets and regularly reviews • Works to create a transparent to be assigned to it by the Board of the basic principles for the company’s system regarding identification, Directors in relation to its field of activity. communication with investors; assessment, training and rewarding of nominees eligible for the Board of AUDIT COMMITTEE • Works in cooperation with the Investor Directors and managerial positions Relations Department to present with administrative responsibility, Head of Committee: Prof. Ayşegül Toker suggested improvements for ensuring and establishes related policies and Member: Prof. Dilek Demirbaş efficient communication between strategies; the company and investors, and Objective elimination and resolution of potential • Regularly evaluates the structure and conflicts to the Board of Directors; efficiency of the Board of Directors and Overseeing the operation and efficiency presents its suggestions for possible of the company’s accounting system, • Reviews the company’s Corporate revisions to the Board of Directors; public disclosure of financial information, Governance Compliance Report before independent auditing of the company and it is published within the company’s • The committee is charged with internal control system. Annual Report, and presents its performing the duties set out in the comments to the Board of Directors; legislation concerning the nomination Formation of independent members to the Board • Makes proposals and assessments of Directors, which are announced The Audit Committee was set up upon regarding the determination or revision every year by the Board and which approval by the Board of Directors’ of the company’s disclosure policy, are compulsory to be implemented decision no. 5317 dated 26 June 2003. and presents the same to the Board by the group to which the company is The provisions governing the principles of Directors. The committee reviews affiliated. and procedures and activities of the that the Disclosure Policy covers the committee have been based on the Anadolu Sigorta 2020 Annual Report minimum content as stipulated by The committee’s duties and Corporate Governance Communiqué the legislation with respect to the responsibilities with respect to issued by the Capital Markets Board of company’s communication with remuneration are presented below: Turkey (CMB) and put into force with the stakeholders, as well as the scope, Board of Directors decision no. 06839 • Setting and overseeing the principles, quality, consistency and accuracy dated 26 June 2014. These provisions are criteria and practices applicable for of documents, presentations and carried out by the Board of Directors. explanations prepared by the company the remuneration of Board directors for informative purposes, and oversees and executives with administrative The committee consists of a minimum of that the same are developed in responsibility, taking into consideration two members to be elected from among accordance with the Disclosure Policy; the company’s long-term targets; the Board of Directors members.

114 The members will elect the head of the • The committee’s activities and and every phase of the work carried committee from among themselves. meeting results shall be described out by the independent audit firm; in the annual report. The annual All members of the committee are elected report shall also specify the number • Determines the independent audit firm from among independent directors. of written reports the committee from which the company will procure submitted to the Board of Directors services and the services to be supplied To the extent possible, at least one during the fiscal year. therefrom, and submits the same for member of the Audit Committee should the approval of the Board of Directors; preferably have minimum five years • The committee may invite the of experience in audit/accounting and individuals it deems necessary to its • Establishes the methods and criteria finance. meetings and seek their opinions. for the handling and resolution of complaints received by the company in A member’s term of office on the Audit • Board of Inspectors/Audit Department relation to the company’s accounting, Committee is terminated when his/her shall determine the meeting agenda of internal control and internal audit term of office on the Board of Directors the committee, make the invitations to systems and its independent audit; expires or upon a decision to such effect the meeting, establish communication and for addressing the company by the Board of Directors. with committee members, keep the employees’ notifications about book of resolutions, and handle other the company’s accounting and Operating Procedures and Principles secretarial tasks for the committee. independent audit within the frame of • The committee holds at least four confidentiality principle; • As the committee fulfills its functions, meetings a year, which must take place the Board of Directors shall make • Assesses the conformity of annual at least on a quarterly basis. all necessary resources and support and interim financial statements to be • Committee meetings are held with available. publicly disclosed to the accounting the attendance of all its members principles pursued by the company, as • The committee may seek independent and decisions are passed with the well as their accuracy and fairness, and expert opinion upon approval of the votes of the majority of members in reports its written assessments to the Board of Directors on matters that attendance. Board of Directors, by incorporating call for expertise and the committee the opinions of the company’s • The committee shall keep a resolution deems necessary in relation to its responsible managers and of the book, in which the decisions, assigned activities. The cost of the consultancy independent audit firm. a sequence number, will be entered. service needed by the committee shall be borne by the company. The Audit Committee shall fulfill other • The committee shall enter the duties and responsibilities to be assigned conclusions reached in a meeting • Committee members shall observe to it by the Board of Directors in relation in the minutes, and submit the the principles of independence and to its field of activity. assessments made and decisions impartiality when performing their passed, along with the grounds duties. COMMITTEE OF EARLY therefor, in a written report to the DETERMINATION OF RISK Activities Board of Directors within no later than Head of Committee: Prof. Dilek Demirbaş one month following the relevant In essence, the Audit Committee; committee meeting. Member: Kemal Emre Sayar • Oversees the operation and efficiency • Committee decisions shall take of the company’s accounting Objective Anadolu Sigorta 2020 Annual Report effect upon approval of the Board of system, public disclosure of financial Directors. information, independent auditing, Managing the risks that might threaten internal control and internal audit the existence, progress and survival of the • The committee shall forthwith present systems; company. its determinations, assessments and suggestions in relation to its duties and • Supervises the selection of the scope of responsibilities in writing to independent audit firm, preparation the Board of Directors. of independent audit contracts and initiation of independent audit process,

115 OTHER MATTERS AND FINANCIAL STATEMENTS COMMITTEES OPERATING WITHIN ANADOLU SİGORTA AND AN ASSESSMENT BY THE BOARD OF DIRECTORS

COMMITTEES OPERATING WITHIN ANADOLU SİGORTA AND AN ASSESSMENT BY THE BOARD OF DIRECTORS

Formation Operating Procedures and Principles • As the committee fulfills its functions, the Board of Directors shall make The Committee of Early Determination • The committee holds at least four all necessary resources and support of Risk was set up as a result of meetings a year, which must take place available. the discussion of the General at least on a quarterly basis. Directorate proposal no. 3550 dated • The committee may seek independent 24 February 2012, pursuant to Article • Committee meetings are held with expert opinion upon approval of the 4.5.1 of the Communiqué Serial:IV-56 on the attendance of all its members Board of Directors on matters that Determination and Implementation of and decisions are passed with the call for expertise and the committee Corporate Governance Principles enforced votes of the majority of members in deems necessary in relation to its upon its publication in the Official Gazette attendance. activities. The cost of the consultancy issue 28158, dated 30 December 2011. service needed by the committee shall • The committee shall keep a resolution The provisions governing the formation, be borne by the company. book, in which the decisions, assigned principles and procedures and activities of a sequence number, will be entered. the committee have been based on Article • Committee members shall observe the principles of independence and 378 of the Turkish Commercial Code and • The committee shall enter the impartiality when performing their the Corporate Governance Communiqué conclusions reached in a meeting duties. issued by the Capital Markets Board of in the minutes, and submit the Turkey (CMB) and put into force with the assessments made and decisions Activities Board of Directors decision no. 06840 passed, along with the grounds dated 26 June 2014. They are carried out therefor, in a written report to the The Committee of Early Determination by the Board of Directors. Board of Directors within no later than of Risk: one month following the relevant The committee consists of a minimum of committee meeting. • Works to early detect the risks that two members to be elected from among might endanger the existence, progress the Board directors. • Committee decisions shall take and survival of the company, to ensure effect upon approval of the Board of necessary measures are adopted in The members shall elect the head of the Directors. relation to the identified risks, and to committee from among themselves. The manage the risk; head of the committee shall be elected • The committee shall forthwith present from among independent directors. Non- its determinations, assessments and • Informs the Board of Directors director individuals, who have expertise in suggestions in relation to its duties and of its opinions and comments in their respective fields, can be members of scope of responsibilities in writing to writing regarding the creation and the committee. the Board of Directors. development of the company’s risk management system which will be If the committee is formed of two • The committee may invite the aimed at minimizing the impact of members, then both of them must be individuals it deems necessary to its risks that might affect the shareholders non-executive directors; if such number meetings and seek their opinions. in particular and all stakeholders in is greater than two, then the majority general; of the members must be non-executive • Risk Management Unit/Department directors. The CEO may not serve on this shall determine the meeting agenda of • Reviews the company’s risk committee. the committee, make the invitations to management systems at least on an the meeting, establish communication annual basis; A member’s term of office on the with committee members, keep the Anadolu Sigorta 2020 Annual Report committee is terminated when his/her book of resolutions, and handle other • Oversees that risk management term of office on the Board of Directors secretarial tasks for the committee. practices are carried out in accordance expires or upon a decision to such effect with the decisions of the Board of by the Board of Directors. Directors and the committee;

116 • Reviews the determinations and Operating Procedures and Principles • Defines, evaluates and reports the assessments about risk management opportunities and risks involved in that will be incorporated in the Digital Insurance Committee holds at digital insurance. Ensures the creation company’s annual report. least four meetings a year, which must of procedures for the management of take place at least on a quarterly basis. those opportunities and risks; • The Committee of Early Determination of Risk fulfills other duties and The committee shall present its • Follows up the current digital insurance responsibilities to be assigned to it by assessments, decisions, activities during models and trends in our country and the Board of Directors in relation to its the year and their outcomes to the Board around the world, and explores their field of activity. of Directors on a quarterly basis. applicability to our Company;

DIGITAL INSURANCE COMMITTEE The Board of Directors Reporter shall • Assesses and supports InsurTech determine the meeting agenda of the ventures and initiatives; Head of Committee: Prof. Ayşe Gül Toker committee, make the invitations to the meeting, establish communication with • Determines internal resource and Member: Prof. Dilek Demirbaş the committee members, keep record of outsourcing requirements that may be the decisions passed, and handle other needed in the implementation of the Member: Kemal Emre Sayar secretarial tasks for the committee. digital insurance process; Member: Filiz Tiryakioğlu The committee may seek independent • Fulfills other duties and responsibilities Member: M. Levent Sönmez expert opinion on matters that call for to be assigned to it by the Board of expertise and the committee deems Directors in relation to its field of Member: Mehmet Abacı necessary in relation to its activities. activity.

Objective Activities

Monitoring the Company’s digital Anadolu Sigorta Board of Directors insurance activities, submitting approved the “Digitalization Strategy” improvement suggestions to the Board of on 22 December 2015, devised its formal Directors, ensuring the implementation intent and goals in relation to the ongoing of approved suggestions and following up technological change and put its roadmap the outcomes to take additional steps as into writing. The roadmap was designed necessary. to identify the points that will secure added value along the value chain by Formation making use of the possibilities offered by technology and to drive our Company Digital Insurance Committee was set forward and ahead of competition by up upon the approval of the Board of taking the necessary steps. Directors granted by its decision no. 7508 dated 26 November 2018. The To achieve this goal, the Committee Committee consists of at least two carries out the following activities: Board directors and the Digital Channels Manager. The committee members shall • Identifies the digital insurance topics elect the head of the committee from that will put our Company ahead of the competition;

among themselves. Anadolu Sigorta 2020 Annual Report

• Oversees the implementation of annual plans presented by the Digital Channel Management Unit;

117 OTHER MATTERS AND FINANCIAL STATEMENTS AN ASSESSMENT OF THE OPERATION OF THE INDEPENDENT AUDIT FIRM IN 2020 ACTIVITY PERIOD VIA THE AUDIT COMMITTEE

AN ASSESSMENT OF THE OPERATION OF THE INDEPENDENT AUDIT FIRM IN 2020 ACTIVITY PERIOD VIA THE AUDIT COMMITTEE

Periodic financial statements and their integrity and straightforwardness, without Independent conduct of the external footnotes are prepared in a manner to being involved in any conflicts of interests auditing of our company testifies to the represent the actual financial status that might restrict its independence. The accuracy and veracity of our financial and within the framework of existing external auditor auditing our company statements in the face of the public, legislation and insurance business acts independently and also refrains from and is perceived as guarantee by our accounting standards. They are subjected any activity that might lead third parties Shareholders. The independent opinion of to independent auditing and publicly to doubt its independence. the external auditor further strengthens disclosed at time intervals stipulated by our company’s corporate image in the legislation. No service is obtained, directly or that they enhance the reliability of our indirectly from the firms we obtain financial statements. Having made it a The independent audit firm we work with independent audit service, save for the principle to undertake public disclosure is alternated at certain intervals, and an audit service itself, and no fees are paid and to assure transparency in line with independent audit firm is selected for a to these firms, apart from the reasonable its ethical values, our company earns the maximum of 7 fiscal years for regular and/ audit fee at current market conditions. trust of its investors by giving importance or special audit. At least two years are to independence of the external The factors that contribute to the allowed to pass before re-signing a regular auditor, and therefore, aims to serve the independence of the firms we obtain and/or special audit contract with the development of national economy by independent audit service from are the same independent audit firm. contributing to accumulation of capital. existence of our Audit Committee, the External auditing of our company is efficient accounting and internal audit conducted in a fully independent manner, system in place at the company, and and the external auditor performs the strongly established ethical rules attaching relevant tasks adhering strictly to the importance to correct public disclosures. principles of accuracy, professional

Prof. Dr. Dilek Demirbaş Prof. Dr. Ayşegül Toker Member of the Audit Committee Head of the Audit Committee Anadolu Sigorta 2020 Annual Report

118 OTHER MATTERS AND FINANCIAL STATEMENTS HUMAN RESOURCES PRACTICES AT ANADOLU SİGORTA

HUMAN RESOURCES PRACTICES AT ANADOLU SİGORTA

Human Resources Policy their qualification for the technical know- and their dependent family members how and competence levels required by are covered by our company under its Our company is proud to be the first the related position. Healthcare Assistance Regulations. All national insurance company in Turkey, our personnel are able to fulfill all their established in 1925 at the directives Our employees in specialist position, healthcare needs free of charge through of Mustafa Kemal Atatürk. Ever since which is the midpoint for all of our the company’s outsourced healthcare its establishment, our company has positions, are offered dual career paths, system. Employees are provided with free continuously grown and developed and which give the option of advancing as a transportation services to and from work has been recognized and acknowledged as manager or a specialist in the relevant and with lunches as well. the grande école of the Turkish insurance field. Career paths at this level are shaped industry. and supported within the scope of the In the wake of the teleworking system company’s Development Center Initiative. that made its way into our lives along Utmost importance is given to our The initiative that assesses managerial with the pandemic, innovative solutions employees as they are the ones to and specialist competencies provides our were devised in line with our human undertake the biggest duty in carrying employees with personalized development resources policies. out our company’s key policies. For plans, while supporting them with various this reason, the primary goal of our Services prioritizing the healthy and happy resources, readying them for the next human resources policies and practices employees principle were put into life by level. A number of training opportunities is to identify our company’s needs for delivering packages containing carefully are provided to our employees at any personnel in line with its objectives considered details from the coffee and level who join us and become a member and strategies and assist the creation tea that our employees would consume of our team in line with the competencies of human resources that are open to to daybooks and pen sets they would use they need to acquire to further their change and are focused on continuous to their home addresses, besides offering careers, as well as their existing skills. success by recruiting high-quality people, special amenities like ergonomic office motivating them, evaluating their Performance Management chairs that would ensure high motivation performance, and encouraging interaction by providing them a comfortable and Our employees are evaluated twice a and communication among individuals ergonomic working setting, internet year in line with specific performance and groups. access packages, etc. criteria. The content of such evaluation Career Development varies depending on the competence Retirement Benefits requirements on the basis of job families. Various career paths within the frame of Our employees are covered by two On the basis of the results of these job families are available at the company. private pension funds that have been set performance evaluations, an employee’s Employees recruited into any job family up in accordance with the company’s training needs are identified and a career and level have the opportunity to advance special status. The pensions paid by these plan is developed. to senior management positions in the funds enable former employees to enjoy company. Job Guarantee a good standard of living during their retirement years. Our company’s human resources strategy Our employees enjoy a substantial degree is defined as “Creating the organizational of job guarantee within the framework of Training climate conducive to promoting creativity unionization composed by the Union and Competency-based training programs and innovation directed at ensuring our company. and technical and professional trainings customer satisfaction, and establishing Compensation Policy required by our employees’ jobs are a culture of superior performance provided in line with their career supporting employees’ development. In Our employees’ salaries are adjusted in progression plans. keeping with this strategy, employees accordance with the terms of a collective successfully completing the training bargaining agreement that is renewed Training has special importance at Anadolu Sigorta 2020 Annual Report and development plans designed for every two years and with annual or semi- Anadolu Sigorta owing to the fact that the relative job families can advance annual raises based on current conditions. our company is an organization that to a higher level, if they display the fills managerial positions from within. In addition to their salaries, employees performance and capabilities required for Therefore, orientation program and receive extensive fringe benefits as well. the relevant level in the predetermined professional training provided to new- time. Social Benefits hires are followed by necessary planning for improving their managerial skills, When rising to the specialist position, Our company’s employees are entitled thereby extending the necessary support employees take the promotion exam that to a variety of social rights and benefits to our employees. differs according to the job families and in keeping with current conditions. positions, and thus undergo assessment of The healthcare costs of our employees

119 OTHER MATTERS AND FINANCIAL STATEMENTS AGENDA OF THE ANNUAL GENERAL ASSEMBLY MEETING

AGENDA OF THE ANNUAL GENERAL ASSEMBLY MEETING

1. Opening, election of the Presiding Board and authorization of the Presiding Board to sign the minutes of the Annual General Assembly

2. Presentation of and discussion on the Board of Directors’ 2020 Activity Report, and presentation of the Independent Audit Report for 2020 fiscal year

3. Review, deliberation and ratification of 2020 financial statements

4. Information on matters falling under principle no. 1.3.6 of the CMB’s Corporate Governance Principles

5. Approval of the memberships of members elected as per Article 363 of the Turkish Commercial Code to fill the Board of Directors seats vacated during the reporting period

6. Individual acquittal of Board Directors

7. Information on dividend distribution policy and decision on profit distribution

8. Election of the Board Directors and determination of their terms of office

9. Authorizing the Board Directors to perform the transactions specified in Articles 395 and 396 of the Turkish Commercial Code

10. Determination of remuneration for the members of the Board of Directors

11. Designation of the independent audit firm

12. Presentation of information on the donations and grants made during the reporting period

13. Ratification of the limit on donations intended to be made in 2021 Anadolu Sigorta 2020 Annual Report

120 OTHER MATTERS AND FINANCIAL STATEMENTS 2020 PROFIT DISTRIBUTION PROPOSAL

2020 PROFIT DISTRIBUTION PROPOSAL

The dividend distribution proposal Accordingly, it is proposed as follows: • Profit from sales of participation shares prepared within the frame of the in the amount of TL 940,498, which company’s Dividend Distribution Policy • Since general legal reserves account for will not be distributed, be transferred and approved of the General Assembly is more than 20% of the capital, general to related reserves so as to benefit presented below: legal reserves not be set aside as per from the exemption provisions granted the provision of the applicable law, under Article 5 of the Corporate Tax Our Company booked a net profit for the Law no. 5520. current period on its 2020 operations. • TL 160,000,000, which is 30.798% of Profit for the period according to our legal TL 519,085,067, which is the amount • Dividend payout be initiated on records is calculated as TL 469,697,214, remaining according to the capital 30 March 2021, if profit distribution which is the amount mentioned in the market legislation in the amount of proposal is approved. previous sentence less the undistributed 519,510,067 plus TL 425,000 which profit for the period plus provisions set is total donations made during the • The Profit Distribution Table and aside under the “Turkish Accounting reporting period, be distributed as first the Dividend Ratio Chart prepared Standard 19 – Employee Benefits”, taking dividend to shareholders, regarding profit distribution are into consideration the fact that a portion presented in attachment. • TL 10,785,302 be set aside as dividend of the net profit for the fiscal period is to employees as per the Articles of I hereby submit the above mentioned for distributed as dividends to employees Incorporation, your review and approval. under Article 58 of our Company’s Articles of Association. • TL 34,829,977 be set aside as Sincerely, statutory reserves as per the Articles of In the Capital Markets Board of Turkey Incorporation, (CMB) meeting of 27 January 2010, it has been resolved that companies obliged to • TL 14,578,530, which is calculated as draw up consolidated financial statements 10% of the portion of the aggregate Mehmet Şencan should compute the net distributable of all dividends distributed that exceed CEO profit taking into account the net 5% of the company’s paid-in capital, profits for the period descending in the be added to general legal reserves, consolidated financial statements that will be drawn up and publicly disclosed as per • TL 35,000,000 in funds be set aside for the Communiqué II-14.1 on Principles of acquiring venture capital mutual fund Financial Reporting in the Capital Market, participation shares or venture capital provided that the net distributable profit investment trust share certificates can be covered from the sources reflected under Article 325/A of the Tax in their legal records. In this context, after Procedure Law and Article 10 of the consolidation of Anadolu Hayat Emeklilik Corporate Tax Law, A.Ş., after deducting the undistributed profit for the period in our unconsolidated • TL 214,503,405 (based on legal financial statements and after adding records) that remains after the items the dividends to employees, for which a mentioned above be allocated to provision is set aside, a consolidated net extraordinary reserves, and profit of TL 519,085,067 arises. Anadolu Sigorta 2020 Annual Report

121 OTHER MATTERS AND FINANCIAL STATEMENTS 2020 PROFIT DISTRIBUTION TABLE

2020 PROFIT DISTRIBUTION TABLE

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ 2020 Profit Distribution Table (TL) 1. Paid-in/Issued Capital 500,000,000 2. General Legal Reserves (according to legal records) 111,909,214 If there are privileges for distribution of profits according to the Articles of Incorporation, information on such privileges None Based on CMB Based on Legal Records 3. Profit for the Period (*) 619,119,819 569,731,966 4. Taxes Payable (-) (100,034,752) (100,034,752) 5. Net Profit for the Period (=) 519,085,067 469,697,214 6. Losses in Prior Years (-) -- -- 7. General Legal Reserves (-) -- -- 8. NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=) 519,085,067 469,697,214 9. Donations during the Year (+) 425,000 10. Net Distributable Profit for the Period Including Donations 519,510,067 11. First Dividend to Shareholder - Cash 160,000,000 - Bonus Shares -- - Total 160,000,000 12. Dividends Distributed to Owners of Privileged Shares -- 13. Other Dividends Distributed (to Board Members, Employees, etc.) 10,785,302 14. Dividends Distributed to Owners of Redeemed Shares -- 15. Second Dividend to Shareholders -- 16. General Legal Reserves 14,578,530 17. Statutory Reserves 34,829,977 34,829,977 18. Special Reserves 35,000,000 35,000,000 19. EXTRAORDINARY RESERVES (**) 263,891,258 214,503,405 20. Other Resources to be Distributed - Prior Year Profit - Extraordinary Reserves - Other Distributable Reserves Pursuant to the Law and the Articles of Incorporation

(*) Pursuant to Article 13 of the Dividend Communiqué featured in the CMB Weekly Bulletin numbered 2014/2 and published in the Official Gazette dated 23 January 2014, profit distribution was made based on the consolidated profit figure. Provision for dividends to personnel in the amount of TL 10,000,000, which was set aside pursuant to TAS 19 was added to the profit for the period on 31 December 2020, and undistributed profit for the period in the amount of TL 940,498 in the unconsolidated balance sheet was deducted.

(**) TL 325,000,000 in funds has been set aside for acquiring venture capital mutual fund participation shares or venture capital investment trust share certificates under Article 325/A of the Tax Procedure Law and Article 10 of the Corporate Tax Law.

(***)As a result of profit distribution, TL 214,503,405 calculated according to legal records will be taken into account as extraordinary reserves. DIVIDEND RATIO CHART TOTAL DIVIDENDS

Anadolu Sigorta 2020 Annual Report DISTRIBUTED/NET DISTRIBUTABLE PROFIT DIVIDENDS PER SHARE WITH A TOTAL DIVIDENDS DISTRIBUTED FOR THE PERIOD NOMINAL VALUE OF TL 1 NET (****) CASH (TL) BONUS (TL) RATIO (%) CASH (TL) BONUS (TL) TOTAL 136,000,000 0 26.20% 0.272 27.20% (****)15% income tax will not be withheld from cash dividend payouts to resident institutions,

TOTAL DIVIDENDS DISTRIBUTED/NET DIVIDENDS PER SHARE WITH A TOTAL DIVIDENDS DISTRIBUTED DISTRIBUTABLE PROFIT NOMINAL VALUE OF TL 1 FOR THE PERIOD GROSS CASH (TL) BONUS (TL) RATIO (%) AMOUNT (TL) RATIO (%) TOTAL 160,000,000 0 30.82% 0.32 32.00% 122 OTHER MATTERS AND FINANCIAL STATEMENTS 2020 ANNUAL REPORT COMPLIANCE STATEMENT

2020 ANNUAL REPORT COMPLIANCE STATEMENT

Our company’s 2020 Annual Report has been drawn up within the frame of the principles and procedures set forth in the Regulation on the Financial Structures of Insurance, Reinsurance and Pension Companies, which went into force upon its publication in the Official Gazette issue 26606 dated 7 August 2007.

Murat TETİK Fatih GÖREN Mehmet ŞENCAN Füsun TÜMSAVAŞ Accounting and Financial Deputy Chief Executive Officer Chief Executive Officer Chairman Affairs Manager 23 February 2021 23 February 2021 23 February 2021 23 February 2021 Anadolu Sigorta 2020 Annual Report

123 OTHER MATTERS AND FINANCIAL STATEMENTS DETAILED INCOME STATEMENT (TL)

DETAILED INCOME STATEMENT (TL)

FIRE AND MOTOR MOTOR NATURAL GENERAL VEHICLES AIRCRAFT GENERAL BOND FINANCIAL LEGAL I- TECHNICAL PART ACCIDENT HEALTH VEHICLES AIRCRAFT WATERCRAFTS MARINE DISASTERS LOSSES LIABILITY LIABILITY LIABILITY CREDIT INSURANCE LOSSES PROTECTION Total Explanation A- Non-Life Technical Income 207,666,567 976,478,288 1,689,211,422 39,290,081 79,308,075 105,934,194 688,628,400 391,324,479 1,595,893,198 16,980,064 278,404,375 12,779,663 3,445,042 13,425,421 26,871,265 6,125,640,534 1- Earned Premiums (Net of Reinsurer Share) 152,150,693 832,007,966 1,387,887,075 30,548,788 69,486,780 80,289,548 549,640,678 329,362,569 1,246,266,764 11,519,769 214,544,148 9,949,671 2,394,668 9,292,718 17,875,877 4,943,217,712 1-1. Premiums (Net of Reinsurer Share) 153,601,212 898,115,206 1,499,676,771 39,538,416 79,778,078 85,214,586 618,547,831 364,673,362 1,403,405,172 16,191,517 225,750,625 10,555,285 2,682,960 15,257,732 22,486,859 5,435,475,612 1.2- Change in Unearned Premium Provisions (Net of Reinsurers Shares and Reserves Carried Forward) (+/-) -1,261,647 -66,107,240 -111,789,696 -12,705,225 -13,425,365 -4,925,038 -68,907,153 -35,310,793 -180,521,244 -4,671,748 2,031,843 -40,309 785,345 -2,097,170 -4,610,982 -503,556,422 1.3- Changes in Unexpired Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) -188,872 0 0 0 0 0 0 0 19,761,124 0 0 0 0 0 0 19,572,252 1.4- Changes in Ongoing Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 0 0 0 3,715,597 3,134,067 0 0 0 3,621,712 0 -13,238,320 -565,305 -1,073,637 -3,867,844 0 -8,273,730 2- Investment Income Transferred from Non-Technical Divisions 55,020,714 144,377,695 252,622,791 8,723,231 9,660,541 23,204,416 120,712,717 57,889,381 303,140,555 4,623,688 56,377,987 2,829,992 850,335 4,132,550 8,988,463 1,053,155,056 3- Other Technical Income 5,537 92,627 4,701,048 18,062 82,338 11,562 842,464 39,767 23,759 0 14,809 0 39 0 0 5,832,012 4- Accrued Salvage and Subrogation Income 489,623 0 44,000,508 0 78,416 2,428,668 17,432,541 4,032,762 46,462,120 836,607 7,467,431 0 200,000 153 6,925 123,435,754 B- Non-Life Technical Expense (-) -89,244,606 -796,950,382 -1,386,210,481 -29,862,290 -69,813,818 -66,599,764 -626,659,605 -350,451,675 -1,442,786,593 -10,680,813 -471,751,279 -20,602,451 -3,475,943 -21,205,784 -4,439,906 -5,390,735,390 1- Realized Claims (Net of Reinsurer Share) -25,225,966 -585,773,568 -997,150,735 -19,085,869 -68,289,793 -45,347,221 -402,268,054 -272,193,669 -1,175,207,342 -7,314,009 -429,476,959 -14,471,946 -2,913,992 -18,422,087 -583,887 -4,063,725,097 1.1- Claims Paid (Net of Reinsurer Share) -21,435,023 -543,670,828 -879,492,830 -18,123,058 -56,061,642 -28,248,205 -322,200,505 -222,556,081 -840,746,763 -4,840,454 -87,414,112 -3,607,710 -1,574,063 -5,112,403 -420,361 -3,035,504,038 1.2- Changes in Outstanding Claims Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) -3,790,943 -42,102,740 -117,657,905 -962,811 -12,228,151 -17,099,016 -80,067,549 -49,637,588 -334,460,579 -2,473,555 -342,062,847 -10,864,236 -1,339,929 -13,309,684 -163,526 -1,028,221,059 2- Changes in Bonus and Discount Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 0 -4,000,000 0 0 0 0 0 0 0 0 0 0 0 0 0 -4,000,000 3- Changes in Other Technical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-) -807,831 -334,181 -3,877,260 0 0 0 -27,992,268 -2,338,243 0 0 0 -1,266,634 0 -909,579 0 -37,525,996 4- Operating Expenses (-) -59,950,908 -187,263,619 -301,674,556 -5,885,245 -1,017,249 -20,256,490 -183,852,752 -73,383,200 -240,598,647 -2,444,473 -39,706,246 -4,754,611 -526,951 -1,208,404 -3,852,832 -1,126,376,183 5- Other Technical Expenses -3,259,901 -19,579,014 -83,507,930 -4,891,176 -506,776 -996,053 -12,546,531 -2,536,563 -26,980,604 -922,331 -2,568,074 -109,260 -35,000 -665,714 -3,187 -159,108,114 C- Non Life Technical Profit (A-B) 118,421,961 179,527,906 303,000,941 9,427,791 9,494,257 39,334,430 61,968,795 40,872,804 153,106,605 6,299,251 -193,346,904 -7,822,788 -30,901 -7,780,363 22,431,359 734,905,144 II- NON TECHNICAL PART C- Non Life Technical Profit (A-B) 734,905,144 J- Total Technical Profit (C) 734,905,144 K- Investment Income 2,487,840,886 1- Income from Financial Investments 331,403,221 2- Income from Sales of Financial Assets 157,832,503 3- Revaluation of Financial Assets 127,963,463 4- Foreign Exchange Gains 1,017,311,373 5- Dividend Income from Affiliates 56,000,000 6- Income form Subsidiaries and Joint Ventures 0 7- Real Estate Income 10,032,805 8- Income from Derivative Instruments 787,297,521 9- Other Investments 0 10- Investment Income transferred from Life Technical Division 0 L- Investment Expenses (-) -2,558,783,717 1- Investment Management Expenses (including interest) (-) -19,156,686 2- Valuation Allowance of Investments (-) -3,920,793 3- Losses On Sales of Investments (-) -55,684,845 4- Investment Income Transferred to Non - Life Technical Division (-) -1,053,155,056 5- Losses from Derivative Instruments (-) -776,356,453 6- Foreign Exchange Losses (-) -588,690,933 7- Depreciation Expenses (-) -61,818,951 8- Other Investment Expenses (-) 0 M- Income and Expenses (+/-) -103,289,849 1- Reserves (Provisions) Account (+/-) -92,489,708 2- Rediscount Account (+/-) 2,187,526 3- Specialized Insurances Account (+/-) 0 4- Inflation Adjustment Account (+/-) 0 5- Deferred Tax Asset Accounts (+/-) 0 6- Deferred Tax Liability Expense (+/-) -14,573,998 7- Other Income and Revenues 3,090,608 8- Other Expense and Losses (-) -1,504,277 Anadolu Sigorta 2020 Annual Report 9- Prior Period Income 0 10- Prior Period Losses (-) 0 N- Net Profit/(Loss) 460,637,712 1- Profit/(Loss) Before Tax 560,672,464 2- Taxes Provisions (-) -100,034,752 3- Net Profit (Loss) after Tax 460,637,712 4- Inflation Adjustment Account (+/-) 0

124 FIRE AND MOTOR MOTOR NATURAL GENERAL VEHICLES AIRCRAFT GENERAL BOND FINANCIAL LEGAL I- TECHNICAL PART ACCIDENT HEALTH VEHICLES AIRCRAFT WATERCRAFTS MARINE DISASTERS LOSSES LIABILITY LIABILITY LIABILITY CREDIT INSURANCE LOSSES PROTECTION Total Explanation A- Non-Life Technical Income 207,666,567 976,478,288 1,689,211,422 39,290,081 79,308,075 105,934,194 688,628,400 391,324,479 1,595,893,198 16,980,064 278,404,375 12,779,663 3,445,042 13,425,421 26,871,265 6,125,640,534 1- Earned Premiums (Net of Reinsurer Share) 152,150,693 832,007,966 1,387,887,075 30,548,788 69,486,780 80,289,548 549,640,678 329,362,569 1,246,266,764 11,519,769 214,544,148 9,949,671 2,394,668 9,292,718 17,875,877 4,943,217,712 1-1. Premiums (Net of Reinsurer Share) 153,601,212 898,115,206 1,499,676,771 39,538,416 79,778,078 85,214,586 618,547,831 364,673,362 1,403,405,172 16,191,517 225,750,625 10,555,285 2,682,960 15,257,732 22,486,859 5,435,475,612 1.2- Change in Unearned Premium Provisions (Net of Reinsurers Shares and Reserves Carried Forward) (+/-) -1,261,647 -66,107,240 -111,789,696 -12,705,225 -13,425,365 -4,925,038 -68,907,153 -35,310,793 -180,521,244 -4,671,748 2,031,843 -40,309 785,345 -2,097,170 -4,610,982 -503,556,422 1.3- Changes in Unexpired Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) -188,872 0 0 0 0 0 0 0 19,761,124 0 0 0 0 0 0 19,572,252 1.4- Changes in Ongoing Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 0 0 0 3,715,597 3,134,067 0 0 0 3,621,712 0 -13,238,320 -565,305 -1,073,637 -3,867,844 0 -8,273,730 2- Investment Income Transferred from Non-Technical Divisions 55,020,714 144,377,695 252,622,791 8,723,231 9,660,541 23,204,416 120,712,717 57,889,381 303,140,555 4,623,688 56,377,987 2,829,992 850,335 4,132,550 8,988,463 1,053,155,056 3- Other Technical Income 5,537 92,627 4,701,048 18,062 82,338 11,562 842,464 39,767 23,759 0 14,809 0 39 0 0 5,832,012 4- Accrued Salvage and Subrogation Income 489,623 0 44,000,508 0 78,416 2,428,668 17,432,541 4,032,762 46,462,120 836,607 7,467,431 0 200,000 153 6,925 123,435,754 B- Non-Life Technical Expense (-) -89,244,606 -796,950,382 -1,386,210,481 -29,862,290 -69,813,818 -66,599,764 -626,659,605 -350,451,675 -1,442,786,593 -10,680,813 -471,751,279 -20,602,451 -3,475,943 -21,205,784 -4,439,906 -5,390,735,390 1- Realized Claims (Net of Reinsurer Share) -25,225,966 -585,773,568 -997,150,735 -19,085,869 -68,289,793 -45,347,221 -402,268,054 -272,193,669 -1,175,207,342 -7,314,009 -429,476,959 -14,471,946 -2,913,992 -18,422,087 -583,887 -4,063,725,097 1.1- Claims Paid (Net of Reinsurer Share) -21,435,023 -543,670,828 -879,492,830 -18,123,058 -56,061,642 -28,248,205 -322,200,505 -222,556,081 -840,746,763 -4,840,454 -87,414,112 -3,607,710 -1,574,063 -5,112,403 -420,361 -3,035,504,038 1.2- Changes in Outstanding Claims Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) -3,790,943 -42,102,740 -117,657,905 -962,811 -12,228,151 -17,099,016 -80,067,549 -49,637,588 -334,460,579 -2,473,555 -342,062,847 -10,864,236 -1,339,929 -13,309,684 -163,526 -1,028,221,059 2- Changes in Bonus and Discount Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 0 -4,000,000 0 0 0 0 0 0 0 0 0 0 0 0 0 -4,000,000 3- Changes in Other Technical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-) -807,831 -334,181 -3,877,260 0 0 0 -27,992,268 -2,338,243 0 0 0 -1,266,634 0 -909,579 0 -37,525,996 4- Operating Expenses (-) -59,950,908 -187,263,619 -301,674,556 -5,885,245 -1,017,249 -20,256,490 -183,852,752 -73,383,200 -240,598,647 -2,444,473 -39,706,246 -4,754,611 -526,951 -1,208,404 -3,852,832 -1,126,376,183 5- Other Technical Expenses -3,259,901 -19,579,014 -83,507,930 -4,891,176 -506,776 -996,053 -12,546,531 -2,536,563 -26,980,604 -922,331 -2,568,074 -109,260 -35,000 -665,714 -3,187 -159,108,114 C- Non Life Technical Profit (A-B) 118,421,961 179,527,906 303,000,941 9,427,791 9,494,257 39,334,430 61,968,795 40,872,804 153,106,605 6,299,251 -193,346,904 -7,822,788 -30,901 -7,780,363 22,431,359 734,905,144 II- NON TECHNICAL PART C- Non Life Technical Profit (A-B) 734,905,144 J- Total Technical Profit (C) 734,905,144 K- Investment Income 2,487,840,886 1- Income from Financial Investments 331,403,221 2- Income from Sales of Financial Assets 157,832,503 3- Revaluation of Financial Assets 127,963,463 4- Foreign Exchange Gains 1,017,311,373 5- Dividend Income from Affiliates 56,000,000 6- Income form Subsidiaries and Joint Ventures 0 7- Real Estate Income 10,032,805 8- Income from Derivative Instruments 787,297,521 9- Other Investments 0 10- Investment Income transferred from Life Technical Division 0 L- Investment Expenses (-) -2,558,783,717 1- Investment Management Expenses (including interest) (-) -19,156,686 2- Valuation Allowance of Investments (-) -3,920,793 3- Losses On Sales of Investments (-) -55,684,845 4- Investment Income Transferred to Non - Life Technical Division (-) -1,053,155,056 5- Losses from Derivative Instruments (-) -776,356,453 6- Foreign Exchange Losses (-) -588,690,933 7- Depreciation Expenses (-) -61,818,951 8- Other Investment Expenses (-) 0 M- Income and Expenses (+/-) -103,289,849 1- Reserves (Provisions) Account (+/-) -92,489,708 2- Rediscount Account (+/-) 2,187,526 3- Specialized Insurances Account (+/-) 0 4- Inflation Adjustment Account (+/-) 0 5- Deferred Tax Asset Accounts (+/-) 0 6- Deferred Tax Liability Expense (+/-) -14,573,998 7- Other Income and Revenues 3,090,608 8- Other Expense and Losses (-) -1,504,277 9- Prior Period Income 0 Anadolu Sigorta 2020 Annual Report 10- Prior Period Losses (-) 0 N- Net Profit/(Loss) 460,637,712 1- Profit/(Loss) Before Tax 560,672,464 2- Taxes Provisions (-) -100,034,752 3- Net Profit (Loss) after Tax 460,637,712 4- Inflation Adjustment Account (+/-) 0

125 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 TOGETHER WITH THE INDEPENDENT AUDITOR’S REVIEW REPORT (Convenience Translation of Unconsolidated Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) Anadolu Sigorta 2020 Annual Report

126 INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Anadolu Anonim Türk Sigorta Şirketi A) Report on the Audit of the Unconsolidated Financial Statements 1) Opinion We have audited the unconsolidated financial statements of Anadolu Anonim Türk Sigorta Şirketi (the Company), which comprise the unconsolidated statement of financial position as at December 31, 2020, and the unconsolidated statement of comprehensive income, unconsolidated statement of changes in equity, unconsolidated statement of cash flows and unconsolidated statement of profit distribution for the year then ended, and notes to the unconsolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying unconsolidated financial statements present fairly, in all material respects, the unconsolidated financial position of the Company as at December 31, 2020, and its unconsolidated financial performance, its unconsolidated cash flows and its unconsolidated profit distribution for the year then ended in accordance with the prevailing accounting principles and standards as per the insurance legislation and Turkish Financial Reporting Standards for the matters not regulated by insurance legislation; “Insurance Accounting and Financial Reporting Legislation”. 2) Basis for Opinion We conducted our audit in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and Independent Auditing Standards (InAS) which are part of the Turkish Auditing Standards as issued by the Public Oversight Accounting and Auditing Standards Authority of Turkey (POA). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Unconsolidated Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Independent Auditors (Code of Ethics) as issued by the POA, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 3) Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the unconsolidated financial statements of the current period. These matters were addressed in the context of our audit of the unconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Anadolu Sigorta 2020 Annual Report

127 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

INDEPENDENT AUDITOR’S REPORT

Key audit matter How our audit addressed the key audit matter Incurred but not reported outstanding claims reserve

As of December 31, 2020, the Company has insurance liabilities We have performed the audit procedures related the actuarial of TL 7.774.427.606 representing 64% of the Company’s total assumptions which disclosed in the Note 2 and 17 together with liabilities. The Company made net provision of TL 4.730.536.781 the actuary auditor who is part of our audit team. for the future outstanding claims for insurance contracts. These procedures are primarily intended to assess whether In the calculation of Incurred But Not Reported (IBNR) the estimates and methods that used in the calculation of the claims provisions (net amount of TL 3.080.574.309) which is outstanding claims reserve by the Company are appropriate. accounted under the outstanding claims reserves, the Company Management has used the actuarial assumptions and estimates In this context, we have performed the audit procedures related detailed in note 2 and 17. to the recording the Company’s incurred outstanding claims; performed the analytical review the incurred case files which The significance of the provision amount allocated for selected randomly; obtained the signed lawyer letter from compensations for incurred but not reported losses within the Company’s attorney for litigated case files; assessed the Company’s financial tables and also the calculations of such average claim amount and opening claim amounts determined provisions include significant actuarial judgements and forecast, by the Company’s actuary; have performed the audit IBNR calculations has been considered as a key audit matter. procedures related to the completeness of the data used in the correct calculation of insurance contract liabilities; assessed the properness of the IBNR calculation method used by the Company for each line of businesses both the relevant claim characteristics and the Company’s claim history; performed the recalculation procedure on the amount of IBNR calculated by the Company; reviewed the claim analyzes made by the Company’s actuary and questioned these analyzes in terms of suitability and consistency of both legislation and Company past experience; assessed whether the disclosures in the notes of the financial statements are sufficient.

4) Responsibilities of Management and Those Charged with Governance for the Unconsolidated Financial Statements Management is responsible for the preparation and fair presentation of these unconsolidated financial statements in accordance with Insurance Accounting and Financial Reporting Legislation and designing, implementing and maintaining internal systems relevant to the preparation and fair presentation of the unconsolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the unconsolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. 5) Auditor’s Responsibilities for the Audit of the Unconsolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the unconsolidated financial statements as a whole are free from Anadolu Sigorta 2020 Annual Report material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and InAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these unconsolidated financial statements. As part of an audit in accordance with InAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: -- Identify and assess the risks of material misstatement of the unconsolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 128 -- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. -- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. -- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the unconsolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. -- Evaluate the overall presentation, structure and content of the unconsolidated financial statements, including the disclosures, and whether the unconsolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the unconsolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. B) Report on Other Legal and Regulatory Requirements 1) Auditors’ report on Risk Management System and Committee prepared in accordance with paragraph 4 of Article 398 of Turkish Commercial Code (“TCC”) 6102 is submitted to the Board of Directors of the Company on January 29, 2021. 2) In accordance with paragraph 4 of Article 402 of the TCC, no significant matter has come to our attention that causes us to believe that the Company’s bookkeeping activities for the period 1 January - 31 December 2020 and financial statements are not in compliance with laws and provisions of the Company’s articles of association in relation to financial reporting. 3) In accordance with paragraph 4 of Article 402 of the TCC, the Board of Directors submitted to us the necessary explanations and provided required documents within the context of audit. The name of the engagement partner who supervised and concluded this audit is Seda Akkuş Tecer. Anadolu Sigorta 2020 Annual Report

129 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED FINANCIAL STATEMENTS PREPARED AS OF DECEMBER 31, 2020

We confirm that the unconsolidated financial statements and related disclosures and notes for the as of December 31, 2020 which were prepared in accordance with the accounting principles and standards in force as per the regulations of Republic of Turkey Ministry of Treasury and Finance are in compliance with the “Code Related to the Financial Reporting of Insurance, Reinsurance and Private Pension Companies” and the financial records of our Company. İstanbul, January 29, 2021

Mehmet ŞENCAN Fatih GÖREN Chief Executive Officer Executive Vice President of Finance

Murat Tetik Taylan MATKAP Accounting Reporting Manager Actuary Anadolu Sigorta 2020 Annual Report

130 CONTENTS

BALANCE SHEET 132 STATEMENT OF INCOME 137 STATEMENT OF CHANGES IN EQUITY 140 STATEMENT OF CASH FLOW 142 STATEMENT OF PROFIT DISTRIBUTION 143 NOTES TO THE FINANCIAL STATEMENTS 144-208 NOTE 1 General information 144 NOTE 2 Summary of significant accounting policies 145 NOTE 3 Critical accounting estimates and judgments in applying accounting policies 165 NOTE 4 Management of insurance and financial risk 167 NOTE 5 Segment reporting 179 NOTE 6 Tangible assets 182 NOTE 7 Investment properties 183 NOTE 8 Intangible assets 184 NOTE 9 Investments in associates 185 NOTE 10 Reinsurance assets and liabilities 185 NOTE 11 Financial assets 186 NOTE 12 Loans and receivables 190 NOTE 13 Derivative financial instruments 191 NOTE 14 Cash and cash equivalents 192 NOTE 15 Equity 192 NOTE 16 Other reserves and equity component of discretionary participation feature 194 NOTE 17 Insurance contract liabilities and reinsurance assets 195 NOTE 18 Investment contract liabilities 199 NOTE 19 Trade and other payables and deferred income 200 NOTE 20 Financial liabilities 200 NOTE 21 Deferred tax 201 NOTE 22 Retirement benefit obligations 201 NOTE 23 Other liabilities and provisions 202 NOTE 24 Net insurance premium 202 NOTE 25 Fee revenue 202 NOTE 26 Investment income 202 NOTE 27 Net income accrual on financial assets 202 NOTE 28 Assets held at fair value through profit or loss 202 NOTE 29 Insurance rights and claims 203 NOTE 30 Investment contract benefits 203 NOTE 31 Other expenses 203 NOTE 32 Operating expenses 203 NOTE 33 Employee benefits expenses 203 NOTE 34 Financial costs 203 NOTE 35 Income tax 204

NOTE 36 Net foreign Exchange gains 205 Anadolu Sigorta 2020 Annual Report NOTE 37 Earnings per share 205 NOTE 38 Dividends per share 205 NOTE 39 Cash generated from operations 205 NOTE 40 Convertible bonds 205 NOTE 41 Redeemable preference shares 205 NOTE 42 Risks 205 NOTE 43 Commitments 205 NOTE 44 Business comibanitons 205 NOTE 45 Related party transactions 206 NOTE 46 Events after the reporting date 207 NOTE 47 Other 208 131 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

ASSETS Audited Audited Current Period Prior Period I- Current Assets Note December 31, 2020 December 31, 2019 A- Cash and Cash Equivalents 14 3.277.307.929 4.636.399.852 1- Cash 14 54.640 57.552 2- Cheques Received - - 3- Banks 14 2.505.781.929 4.049.035.413 4- Cheques Given and Payment Orders 14 (8.020) (35.083) 5- Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months 14 771.479.380 587.341.970 6- Other Cash and Cash Equivalents - - B- Financial Assets and Financial Investments with Risks on Policyholders 11 4.634.923.390 1.879.349.091 1- Available-for-Sale Financial Assets 11 3.366.966.567 1.719.898.375 2- Held to Maturity Investments 11 1.038.057.085 - 3- Financial Assets Held for Trading 11 229.899.738 159.450.716 4- Loans and Receivables - - 5- Provision for Loans and Receivables - - 6- Financial Investments with Risks on Saving Life Policyholders - - 7- Company’s Own Equity Shares - - 8- İmpairment in Value of Financial Investments - - C- Receivables from Main Operations 12 2.311.524.655 1.843.388.811 1- Receivables from Insurance Operations 12 1.883.850.409 1.487.843.012 2- Provision for Receivables from Insurance Operations 2.21,12 (24.744.443) (28.174.144) 3- Receivables from Reinsurance Operations 12 259.752.903 239.692.491 4- Provision for Receivables from Reinsurance Operations - - 5- Cash Deposited to Insurance and Reinsurance Companies 12 192.665.786 144.027.452 6- Loans to the Policyholders - - 7- Provision for Loans to the Policyholders - - 8- Receivables from Individual Pension Operations - - 9- Doubtful Receivables from Main Operations 12 453.175.122 360.768.832 10- Provision for Doubtful Receivables from Main Operations 12 (453.175.122) (360.768.832) D- Due from Related Parties - - 1- Due from Shareholders - - 2- Due from Associates - - 3- Due from Subsidiaries - - 4- Due from Joint Ventures - - 5- Due from Personnel - - 6- Due from Other Related Parties - - 7- Rediscount on Receivables from Related Parties - - 8- Doubtful Receivables from Related Parties - - 9- Provision for Doubtful Receivables from Related Parties - - E- Other Receivables 12 21.338.631 30.411.193 1- Finance Lease Receivables - - 2- Unearned Finance Lease Interest Income - - 3- Deposits and Guarantees Given 11.124 5.838 4- Other Miscellaneous Receivables 21.327.507 30.406.295 5- Rediscount on Other Miscellaneous Receivables - (940) 6- Other Doubtful Receivables - - 7- Provision for Other Doubtful Receivables - - F- Prepaid Expenses and Income Accruals 742.082.443 461.396.275 1- Prepaid Expenses 17 553.402.984 434.608.716 2- Accrued Interest and Rent Income - - Anadolu Sigorta 2020 Annual Report 3- Income Accruals 12 188.679.459 26.787.559 4- Other Prepaid Expenses - - G- Other Current Assets 34.415.013 1.010.793 1- Stocks to be Used in the Following Months 1.064.668 1.010.793 2- Prepaid Taxes and Funds 19 33.246.172 - 3- Deferred Tax Assets - - 4- Job Advances 4.2,12 104.173 - 5- Advances Given to Personnel - - 6- Inventory Count Differences - - 7- Other Miscellaneous Current Assets - - 8- Provision for Other Current Assets - - I- Current Assets 11.021.592.061 8.851.956.015

The accompanying notes are an integral part of these unconsolidated financial statements. 132 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

ASSETS Audited Audited Current Period Prior Period II- Non-Current Assets Note December 31, 2020 December 31, 2019 A- Receivables from Main Operations - - 1- Receivables from Insurance Operations - - 2- Provision for Receivables from Insurance Operations - - 3- Receivables from Reinsurance Operations - - 4- Provision for Receivables from Reinsurance Operations - - 5- Cash Deposited for Insurance and Reinsurance Companies - - 6- Loans to the Policyholders - - 7- Provision for Loans to the Policyholders - - 8- Receivables from Individual Pension Business - - 9- Doubtful Receivables from Main Operations - - 10- Provision for Doubtful Receivables from Main Operations - - B- Due from Related Parties - - 1- Due from Shareholders - - 2- Due from Associates - - 3- Due from Subsidiaries - - 4- Due from Joint Ventures - - 5- Due from Personnel - - 6- Due from Other Related Parties - - 7- Rediscount on Receivables from Related Parties - - 8- Doubtful Receivables from Related Parties - - 9- Provision for Doubtful Receivables from Related Parties - - C- Other Receivables 12 326.932 326.932 1- Finance Lease Receivables - - 2- Unearned Finance Lease Interest Income - - 3- Deposits and Guarantees Given 12 326.932 326.932 4- Other Miscellaneous Receivables - - 5- Rediscount on Other Miscellaneous Receivables - - 6- Other Doubtful Receivables - - 7- Provision for Other Doubtful Receivables - - D- Financial Assets 9 744.760.000 584.800.000 1- Investments in Equity Shares - - 2- Investments in Associates 9 744.760.000 584.800.000 3- Capital Commitments to Associates - - 4- Investments in Subsidiaries - - 5- Capital Commitments to Subsidiaries - - 6- Investments in Joint Ventures - - 7- Capital Commitments to Joint Ventures - - 8- Financial Assets and Financial Investments with Risks on Policyholders - - 9- Other Financial Assets - - 10- Impairment in Value of Financial Assets - - E- Tangible Assets 6 180.976.858 180.203.693 1- Investment Properties 6,7 74.097.500 66.885.000 2- Impairment for Investment Properties - - 3- Owner Occupied Property 6 18.262.500 15.672.000 4- Machinery and Equipment 6 92.149.319 91.841.231 5- Furniture and Fixtures 6 17.505.041 14.899.853 6- Motor Vehicles 6 4.593.622 4.593.622 7- Other Tangible Assets (Including Leasehold Improvements) 6 30.451.919 28.826.269 8- Tangible Assets Acquired Through Finance Leases 6 66.761.644 62.419.133 9- Accumulated Depreciation 6 (122.844.687) (104.933.415) 10- Advances Paid for Tangible Assets (Including Construction in Progress) - - F- Intangible Assets 8 126.054.434 100.241.244 1- Rights - - 2- Goodwill 8 16.250.000 16.250.000 3- Pre-operating Expenses - - 4- Research and Development Costs - - 5- Other Intangible Assets 8 277.556.554 217.145.084 6- Accumulated Amortization 8 (176.873.429) (137.838.791) 7- Advances Paid for Intangible Assets 8 9.121.309 4.684.951 G- Prepaid Expenses and Income Accruals 17 2.167.444 1.444.448 Anadolu Sigorta 2020 Annual Report 1- Prepaid Expenses 17 2.167.444 1.444.448 2- Income Accruals - - 3- Other Prepaid Expenses and Income Accruals - - H- Other Non-Current Assets 21 - 48.255.857 1- Effective Foreign Currency Accounts - - 2- Foreign Currency Accounts - - 3- Stocks to be Used in the Following Years - - 4- Prepaid Taxes and Funds - - 5- Deferred Tax Assets 21 - 48.255.857 6- Other Miscellaneous Non-Current Assets - - 7- Amortization on Other Non-Current Assets - - 8- Provision for Other Non-Current Assets - - II- Total Non-Current Assets 1.054.285.668 915.272.174 TOTAL ASSETS 12.075.877.729 9.767.228.189 The accompanying notes are an integral part of these unconsolidated financial statements. 133 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

LIABILITIES Audited Audited Current Period Prior Period III- Short-Term Liabilities Note December 31, 2020 December 31, 2019 A- Financial Liabilities 6,20 3.029.771 61.701.226 1- Loans to Financial Institutions - - 2- Finance Lease Liabilities - - 3- Deferred Leasing Costs - - 4- Current Portion of Long Term Debts - - 5- Principal Instalments and Interests on Bonds Issued - - 6- Other Financial Assets Issued - - 7- Valuation Differences of Other Financial Assets Issued - - 8- Other Financial Liabilities 6,20 3.029.771 61.701.226 B- Payables Arising from Main Operations 19 933.510.705 754.579.442 1- Payables Due to Insurance Operations 19 662.434.195 529.985.548 2- Payables Due to Reinsurance Operations 19 5.376.465 3.914.287 3- Cash Deposited by Insurance and Reinsurance Companies 10,19 5.458.061 4.871.763 4- Payables Due to Individual Pension Operations - - 5- Payables Due to Other Main Operations 19 267.527.913 219.094.708 6- Rediscount on Payables from Other Main Operations (7.285.929) (3.286.864) C- Due to Related Parties 19 88.233 227.287 1- Due to Shareholders 25.191 15.362 2- Due to Associates - - 3- Due to Subsidiaries - - 4- Due to Joint Ventures - - 5- Due to Personnel 63.042 211.925 6- Due to Other Related Parties - - D- Other Payables 19 135.195.913 131.300.458 1- Deposits and Guarantees Received 11.377.402 9.550.921 2- Medical Treatment Payables to Social Security Institution 45.849.660 40.724.732 3- Other Miscellaneous Payables 79.323.782 81.769.605 4- Discount on Other Miscellaneous Payables (1.354.931) (744.800) E- Insurance Technical Provisions 17 7.509.203.444 5.984.640.844 1- Reserve for Unearned Premiums - Net 17 2.716.207.650 2.232.139.839 2- Reserve for Unexpired Risks - Net 2.26,17 58.459.013 50.185.283 3- Mathematical Provisions - Net - - 4- Provision for Outstanding Claims - Net 4.1, 17 4.730.536.781 3.702.315.722 5- Provision for Bonus and Discounts - Net 17 4.000.000 - 6- Other Technical Provisions - Net - - F- Provisions for Taxes and Other Similar Obligations 19 75.787.480 134.326.972 1- Taxes and Funds Payable 68.889.621 57.790.970 2- Social Security Premiums Payable 6.897.859 5.392.985 3- Overdue, Deferred or By Instalment Taxes and Other Liabilities - - 4- Other Taxes and Similar Payables - - 5- Corporate Tax Payable 35 100.034.752 164.686.276 6- Prepaid Taxes and Other Liabilities Regarding Current Period Income 19 (100.034.752) (93.543.259) 7- Provisions for Other Taxes and Similar Liabilities - - G- Provisions for Other Risks - - 1- Provision for Employee Termination Benefits - - Anadolu Sigorta 2020 Annual Report 2- Provision for Pension Fund Deficits - - 3- Provisions for Costs - - H- Deferred Income and Expense Accruals 240.855.935 232.614.776 1- Deferred Income 19 152.701.193 127.057.883 2- Expense Accruals 23 88.031.182 105.542.934 3- Other Deferred Income and Expense Accruals 123.560 13.959 I- Other Short-Term Liabilities 3.997.046 2.905.069 1- Deferred Tax Liabilities - - 2- Inventory Count Differences - - 3- Other Various Short-Term Liabilities 23 3.997.046 2.905.069 III - Total Short-Term Liabilities 8.901.668.527 7.302.296.074

The accompanying notes are an integral part of these unconsolidated financial statements. 134 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

LIABILITIES Audited Audited Current Period Prior Period IV- Long-Term Liabilities Note December 31, 2020 December 31, 2019 A- Financial Liabilities 6,20 55.725.100 54.555.236 1- Loans to Financial Institutions - - 2- Finance Lease Liabilities - - 3- Deferred Leasing Costs - - 4- Bonds Issued - - 5- Other Financial Assets Issued - - 6- Valuation Differences of Other Financial Assets Issued - - 7- Other Financial Liabilities 6,20 55.725.100 54.555.236 B- Payables Arising from Main Operations - - 1- Payables Due to Insurance Operations - - 2- Payables Due to Reinsurance Operations - - 3- Cash Deposited by Insurance and Reinsurance Companies - - 4- Payables Due to Individual Pension Operations - - 5- Payables Due to Other Operations - - 6- Rediscount on Payables from Other Operations - - C- Due to Related Parties - - 1- Due to Shareholders - - 2- Due to Associates - - 3- Due to Subsidiaries - - 4- Due to Joint Ventures - - 5- Due to Personnel - - 6- Due to Other Related Parties - - D- Other Payables - - 1- Deposits and Guarantees Received - - 2- Medical Treatment Payables to Social Security Institution - - 3- Other Miscellaneous Payables - - 4- Discount on Other Miscellaneous Payables - - E-Insurance Technical Provisions 17 265.224.162 227.781.807 1- Reserve for Unearned Premiums - Net 17 1.920.318 2.003.959 2- Reserve for Unexpired Risks - Net - - 3- Mathematical Provisions - Net - - 4- Provision for Outstanding Claims - Net - - 5- Provision for Bonus and Discounts - Net - - 6- Other Technical Provisions - Net 17 263.303.844 225.777.848 F-Other Liabilities and Relevant Accruals - - 1- Other Liabilities - - 2- Overdue, Deferred or By Instalment Taxes and Other Liabilities - - 3- Other Liabilities and Expense Accruals - - G- Provisions for Other Risks 23 33.341.951 27.298.621 1- Provision for Employee Termination Benefits 23 33.341.951 27.298.621 Anadolu Sigorta 2020 Annual Report 2- Provision for Pension Fund Deficits - - H-Deferred Income and Expense Accruals - - 1- Deferred Income - - 2- Expense Accruals - - 3- Other Deferred Income and Expense Accruals - - I- Other Long-Term Liabilities 21 9.539.732 - 1- Deferred Tax Liabilities 21 9.539.732 - 2- Other Long-Term Liabilities - - IV- Total Long-Term Liabilities 363.830.945 309.635.664

The accompanying notes are an integral part of these unconsolidated financial statements. 135 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

EQUITY Audited Audited Current Period Prior Period V- Equity Note December 31, 2020 December 31, 2019 A- Paid in Capital 500.000.000 500.000.000 1- (Nominal) Capital 2.13,15 500.000.000 500.000.000 2- Unpaid Capital - - 3- Positive Capital Restatement Differences - - 4- Negative Capital Restatement Differences - - 5- Register in Progress Capital - - B- Capital Reserves 15 37.697.469 34.452.255 1- Share Premiums - - 2- Cancellation Profits of Equity Shares - - 3- Profit on Asset Sales That Will Be Transferred to Capital - - 4- Currency Translation Adjustments - - 5- Other Capital Reserves 15 37.697.469 34.452.255 C- Profit Reserves 1.780.233.762 1.186.179.897 1- Legal Reserves 15 111.909.214 79.495.589 2- Statutory Reserves 15 84.190.450 54.795.571 3- Extraordinary Reserves 15 600.169.801 418.663.457 4- Special Funds 15 25.000.000 - 5- Revaluation of Financial Assets 15 921.262.318 594.183.789 6- Other Profit Reserves 15 37.701.979 39.041.491 D- Retained Earnings 31.809.314 31.601.927 1- Retained Earnings 31.809.314 31.601.927 E- Accumulated Losses - - 1- Accumulated Losses - - F-Net Profit/(Loss) for the Period 460.637.712 403.062.372 1- Net Profit for the Period 459.697.214 402.406.988 2- Net Loss for the Period - - 3- Net Profit not Subject to Distribution 15 940.498 655.384 V- Total Equity 2.810.378.257 2.155.296.451 TOTAL EQUITY AND LIABILITIES 12.075.877.729 9.767.228.189 Anadolu Sigorta 2020 Annual Report

The accompanying notes are an integral part of these unconsolidated financial statements. 136 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period Prior Period I- TECHNICAL SECTION Note January 1 - December 31, 2020 January 1 - December 31, 2019 A- Non-Life Technical Income 6.125.640.534 5.338.665.066 1- Earned Premiums (Net of Reinsurer Share) 4.943.217.712 4.183.778.556 1.1- Written Premiums (Net of Reinsurer Share) 17 5.435.475.612 4.524.378.683 1.1.1- Written Premiums, gross 17 8.015.704.097 6.606.856.218 1.1.2- Written Premiums, ceded 10,17 (2.410.127.788) (1.946.409.476) 1.1.3- Premiums Transferred to Social Security Institutions 17 (170.100.697) (136.068.059) 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) 17,29 (483.984.170) (350.605.984) 1.2.1- Reserve for Unearned Premiums, gross 17 (759.412.264) (475.450.498) 1.2.2- Reserve for Unearned Premiums, ceded 17 255.855.842 113.993.635 1.2.3 - Reserve for Unearned Premiums, Social Security Institution Share 19.572.252 10.850.879 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) 17,29 (8.273.730) 10.005.857 1.3.1- Reserve for Unexpired Risks, gross 17 (59.231.251) 33.692.786 1.3.2- Reserve for Unexpired Risks, ceded 17 50.957.521 (23.686.929) 2- Investment Income - Transferred from Non-Technical Section 1.053.155.056 1.095.657.559 3- Other Technical Income (Net of Reinsurer Share) 5.832.012 7.750.539 3.1- Other Technical Income, gross 5.832.012 7.750.539 3.2- Other Technical Income, ceded - - 4- Accrued Salvage and Subrogation Income 123.435.754 51.478.412 B - Non-Life Technical Expense (5.390.735.390) (4.695.346.892) 1- Incurred Losses (Net of Reinsurer Share) 17 (4.063.725.097) (3.499.764.077) 1.1- Claims Paid (Net of Reinsurer Share) 17,29 (3.035.504.038) (2.854.850.723) 1.1.1- Claims Paid, gross 17 (3.852.056.039) (3.838.569.062) 1.1.2- Claims Paid, ceded 10,17 816.552.001 983.718.339 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) 17,29 (1.028.221.059) (644.913.354) 1.2.1- Change in Provisions for Outstanding Claims, gross 17 (1.744.278.774) (924.930.272) 1.2.2- Change in Provisions for Outstanding Claims, ceded 17 716.057.715 280.016.918 2- Change in Provision for Bonus and Discounts (Net of Reinsurer Share and Less the Amounts Carried Forward) 17 (4.000.000) - 2.1- Provision for Bonus and Discounts, gross 17 (4.000.000) - 2.2- Provision for Bonus and Discounts, ceded - - 3- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) 17,29 (37.525.996) (42.328.548) 4- Operating Expenses 32 (1.126.376.183) (1.003.282.108) 5- Change in Mathematical Provisions (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 5.1- Change in Mathematical Provisions, gross - - 5.2 - Change in Mathematical Provisions, ceded - - 6- Change in Other Technical Provisions (Net of Reinsurer and Less the Amounts Carried Forward) 47 (159.108.114) (149.972.159) 6.1- Change in Other Technical Provisions, gross (166.236.852) (155.791.797) 6.2- Change in Other Technical Provisions, ceded 7.128.738 5.819.638 C- Net Technical Income-Non-Life (A - B) 734.905.144 643.318.174 D- Life Technical Income - - 1- Earned Premiums (Net of Reinsurer Share) - - 1.1- Written Premiums (Net of Reinsurer Share) - - 1.1.1- Written Premiums, gross - - 1.1.2- Written Premiums, ceded - - 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Share and Less the Amounts Carried Forward) - - Anadolu Sigorta 2020 Annual Report 1.2.1- Reserve for Unearned Premiums, gross - - 1.2.2- Reserve for Unearned Premiums, ceded - - 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 1.3.1- Reserve for Unexpired Risks, gross - - 1.3.2- Reserve for Unexpired Risks, ceded - - 2- Investment Income - - 3- Unrealized Gains on Investments - - 4- Other Technical Income (Net of Reinsurer Share) - - 4.1- Other Technical Income. gross - - 4.2- Other Technical Income. ceded - - 5- Accrued Salvage Income - - The accompanying notes are an integral part of these unconsolidated financial statements. 137 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period Prior Period January 1 - January 1 - I- TECHNICAL SECTION Note December 31, 2020 December 31, 2019 E- Life Technical Expense - - 1- Incurred Losses (Net of Reinsurer Share) - - 1.1- Claims Paid (Net of Reinsurer Share) - - 1.1.1- Claims Paid, gross - - 1.1.2- Claims Paid, ceded - - 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 1.2.1- Change in Provisions for Outstanding Claims, gross - - 1.2.2- Change in Provisions for Outstanding Claims, ceded - - 2- Change in Provision for Bonus and Discounts (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 2.1- Provision for Bonus and Discounts, gross - - 2.2- Provision for Bonus and Discounts, ceded - - 3- Change in Mathematical Provisions (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 3.1- Change in Mathematical Provisions, gross - - 3.1.1- Change in Actuarial Mathematical Provisions, gross - - 3.1.2- Change in Profit Share Provisions (Provision for Financial Investments with Risks on Saving Life Policyholders), gross - - 3.2- Change in Mathematical Provisions, ceded - - 3.2.1- Change in Actuarial Mathematical Provisions, ceded - - 3.2.2- Change in Profit Share Provisions (Provision for Financial Investments with Risks on Saving Life Policyholders). ceded - - 4- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 5- Operating Expenses - - 6- Investment Expenses - - 7- Unrealized Losses on Investments - - 8- Investment Income Transferred to the Non-Life Technical Section - - F- Net Technical Income- Life (D - E) - - G- Pension Business Technical Income - - 1- Fund Management Income - - 2- Management Fee - - 3- Entrance Fee Income - - 4- Management Expense Charge in case of Suspension - - 5- Income from Private Service Charges - - Anadolu Sigorta 2020 Annual Report 6- Increase in Value of Capital Allowances Given as Advance - - 7- Other Technical Expense - - H- Pension Business Technical Expense - - 1- Fund Management Expense - - 2- Decrease in Value of Capital Allowances Given as Advance - - 3- Operating Expenses - - 4- Other Technical Expenses - - I- Net Technical Income - Pension Business (G - H) - -

The accompanying notes are an integral part of these unconsolidated financial statements. 138 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period Prior Period January 1 - January 1 - II-NON-TECHNICAL SECTION Note December 31, 2020 December 31, 2019 C- Net Technical Income - Non-Life (A-B) 734.905.144 643.318.174 F- Net Technical Income - Life (D-E) - - I - Net Technical Income - Pension Business (G-H) - - J- Total Net Technical Income (C+F+I) 734.905.144 643.318.174 K- Investment Income 2.487.840.886 1.373.406.933 1- Income from Financial Assets 4.2 331.403.221 289.470.340 2- Income from Disposal of Financial Assets 4.2 157.832.503 85.209.297 3- Valuation of Financial Assets 4.2 127.963.463 41.087.922 4- Foreign Exchange Gains 4.2 1.017.311.373 427.938.663 5- Income from Associates 4.2,9 56.000.000 26.000.000 6- Income from Subsidiaries and Joint Ventures - - 7- Income from Property, Plant and Equipment 10.032.805 6.127.900 8- Income from Derivative Transactions 4.2 787.297.521 497.572.811 9- Other Investments - - 10- Income Transferred from Life Section - - L- Investment Expense (2.558.783.717) (1.450.966.839) 1- Investment Management Expenses (incl. interest) 4.2 (19.156.686) (38.231.786) 2- Impairment in Value of Investments 4.2 (3.920.793) (4.981.343) 3- Loss from Disposal of Financial Assets 4.2 (55.684.845) (62.299.358) 4- Investment Income Transferred to Non-Life Technical Section (1.053.155.056) (1.095.657.559) 5- Loss from Derivative Transactions 4.2 (776.356.453) (30.741.125) 6- Foreign Exchange Losses 4.2 (588.690.933) (173.599.648) 7- Depreciation and Amortization Expenses 6,8 (61.818.951) (45.456.020) 8- Other Investment Expenses - - M- Income and Expenses From Other and Extraordinary Operations (103.289.849) 1.990.380 1- Provisions 47 (92.489.708) (65.885.360) 2- Rediscounts 47 2.187.526 5.675.809 3- Specified Insurance Accounts - - 4- Monetary Gains and Losses - - 5- Deferred Taxation (Deferred Tax Assets) 35 - 58.806.353 6- Deferred Taxation (Deferred Tax Liabilities) 35 (14.573.998) - 7- Other Income 3.090.608 4.048.054 8- Other Expenses and Losses (1.504.277) (654.476) 9- Prior Year’s Income - - 10- Prior Year’s Expenses and Losses - -

N- Net Profit for the Period 460.637.712 403.062.372 Anadolu Sigorta 2020 Annual Report 1- Profit for the Period 560.672.464 567.748.648 2- Corporate Tax Provision and Other Fiscal Liabilities 35 (100.034.752) (164.686.276) 3- Net Profit for the Period 460.637.712 403.062.372 4- Inflation Adjustment Account - -

The accompanying notes are an integral part of these unconsolidated financial statements. 139 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Unconsolidated Statement of Changes in Equity - December 31, 2019 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2018 500.000.000 - 389.114.177 - - 55.788.874 34.160.337 327.966.399 307.574.340 31.601.927 1.646.206.054 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2019) 500.000.000 - 389.114.177 - - 55.788.874 34.160.337 327.966.399 307.574.340 31.601.927 1.646.206.054 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------840.444 6.500.000 - 7.340.444 D - Change in the value of financial assets 11,15 - - 205.069.612 ------205.069.612 E- Currency translation adjustments ------F- Other gains or losses ------G- Inflation adjustment differences ------H- Net profit for the period ------403.062.372 - 403.062.372 I - Dividends paid 2.23 ------(106.382.031) - (106.382.031) J - Transfers to reserves 15 - - - - - 23.706.715 20.635.234 163.350.360 (207.692.309) - - IV - Balance at the end of the period - December 31, 2019 500.000.000 - 594.183.789 - - 79.495.589 54.795.571 492.157.203 403.062.372 31.601.927 2.155.296.451

Audited Unconsolidated Statement of Changes in Equity - December 31, 2020 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2019 500.000.000 - 594.183.789 - - 79.495.589 54.795.571 492.157.203 403.062.372 31.601.927 2.155.296.451 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2020) 500.000.000 - 594.183.789 - - 79.495.589 54.795.571 492.157.203 403.062.372 31.601.927 2.155.296.451 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------1.457.705 10.000.000 - 11.457.705 D - Change in the value of financial assets 11,15 - - 327.078.529 ------327.078.529 E- Currency translation adjustments ------Anadolu Sigorta 2020 Annual Report F- Other gains or losses ------G- Inflation adjustment differences ------H- Net profit for the period ------460.637.712 - 460.637.712 I - Dividends paid 2.23 ------(144.092.140) - (144.092.140) J - Transfers to reserves 15 - - - - - 32.413.625 29.394.879 206.954.341 (268.970.232) 207.387 - IV - Balance at the end of the period - December 31, 2020 500.000.000 - 921.262.318 - - 111.909.214 84.190.450 700.569.249 460.637.712 31.809.314 2.810.378.257

The accompanying notes are an integral part of these unconsolidated financial statements. 140 Audited Unconsolidated Statement of Changes in Equity - December 31, 2019 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2018 500.000.000 - 389.114.177 - - 55.788.874 34.160.337 327.966.399 307.574.340 31.601.927 1.646.206.054 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2019) 500.000.000 - 389.114.177 - - 55.788.874 34.160.337 327.966.399 307.574.340 31.601.927 1.646.206.054 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------840.444 6.500.000 - 7.340.444 D - Change in the value of financial assets 11,15 - - 205.069.612 ------205.069.612 E- Currency translation adjustments ------F- Other gains or losses ------G- Inflation adjustment differences ------H- Net profit for the period ------403.062.372 - 403.062.372 I - Dividends paid 2.23 ------(106.382.031) - (106.382.031) J - Transfers to reserves 15 - - - - - 23.706.715 20.635.234 163.350.360 (207.692.309) - - IV - Balance at the end of the period - December 31, 2019 500.000.000 - 594.183.789 - - 79.495.589 54.795.571 492.157.203 403.062.372 31.601.927 2.155.296.451

Audited Unconsolidated Statement of Changes in Equity - December 31, 2020 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2019 500.000.000 - 594.183.789 - - 79.495.589 54.795.571 492.157.203 403.062.372 31.601.927 2.155.296.451 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2020) 500.000.000 - 594.183.789 - - 79.495.589 54.795.571 492.157.203 403.062.372 31.601.927 2.155.296.451 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------1.457.705 10.000.000 - 11.457.705 D - Change in the value of financial assets 11,15 - - 327.078.529 ------327.078.529 E- Currency translation adjustments ------F- Other gains or losses ------Anadolu Sigorta 2020 Annual Report G- Inflation adjustment differences ------H- Net profit for the period ------460.637.712 - 460.637.712 I - Dividends paid 2.23 ------(144.092.140) - (144.092.140) J - Transfers to reserves 15 - - - - - 32.413.625 29.394.879 206.954.341 (268.970.232) 207.387 - IV - Balance at the end of the period - December 31, 2020 500.000.000 - 921.262.318 - - 111.909.214 84.190.450 700.569.249 460.637.712 31.809.314 2.810.378.257

141 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period Prior Period Note December 31, 2020 December 31, 2019 A - Cash flows from operating activities 1- Cash provided from insurance activities 8.529.101.501 7.774.133.105 2- Cash provided from reinsurance activities - - 3- Cash provided from individual pension business - - 4- Cash used in insurance activities (8.126.378.565) (7.116.049.420) 5- Cash used in reinsurance activities (68.698.746) (143.011.452) 6- Cash used in individual pension business - - 7- Cash provided by operating activities 334.024.190 515.072.233 8- Interest paid - - 9- Income taxes paid 19 (204.423.941) (54.673.728) 10- Other cash inflows 22.828.401 17.555.977 11- Other cash outflows (89.416.050) (28.930.474) 12-Net cash provided by operating activities 63.012.600 449.024.008 B - Cash flows from investing activities 1- Proceeds from disposal of tangible assets 96.520 785.050 2- Acquisition of tangible assets 6, 8 (73.965.584) (70.542.899) 3- Acquisition of financial assets 11 (2.856.799.947) (4.570.175.356) 4- Proceeds from disposal of financial assets 11 910.842.326 3.999.420.502 5- Interests received 693.492.111 374.679.637 6- Dividends received 56.000.000 26.000.000 7- Other cash inflows 3.108.229.065 776.763.295 8- Other cash outflows (1.444.231.429) (658.189.697) 9- Net cash provided by investing activities 393.663.062 (121.259.468) C- Cash flows from financing activities 1- Equity shares issued - - 2- Cash provided from loans and borrowings - - 3- Finance lease payments - - 4- Dividends paid 2.23 (144.092.140) (106.382.031) 5- Other cash inflows - - 6- Other cash outflows - - 7- Net cash used in financing activities (144.092.140) (106.382.031) D- Effect of exchange rate fluctuations on cash and cash equivalents (47.476.403) 95.823.195 E- Net increase in cash and cash equivalents 265.107.119 317.205.704 F- Cash and cash equivalents at the beginning of the year 14 2.169.604.542 1.852.398.838 G- Cash and cash equivalents at the end of the year 14 2.434.711.661 2.169.604.542 Anadolu Sigorta 2020 Annual Report

The accompanying notes are an integral part of these unconsolidated financial statements. 142 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ UNCONSOLIDATED STATEMENT OF PROFIT DISTRIBUTION FOR YEAR ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period(**) Prior Period(***) Note December 31, 2020 December 31, 2019 I. PROFIT DISTRIBUTION 1.1. CURRENT YEAR PROFIT(*) 619.119.819 618.812.434 1.2. TAX AND FUNDS PAYABLE (100.034.752) (164.686.276) 1.2.1. Corporate Income Tax(Income Tax) 35 (100.034.752) (164.686.276) 1.2.2. Income tax deduction - - 1.2.3. Other taxes and Duties - - A NET PROFIT(1.1 - 1.2) 519.085.067 454.126.158 1.3. PREVIOUS PERIOD LOSSES (-) - - 1.4. FIRST LEGAL RESERVE - 20.620.349 1.5. STATUTORY FUND (-) - - B NET PROFIT DISTRIBUTION [(A-(1.3 + 1.4 + 1.5)] 519.085.067 433.505.809 1.6. FIRST DIVIDEND TO SHAREHOLDERS (-) - - 1.6.1. Holders of shares - - 1.6.2. Holders of Preferred shares - - 1.6.3 Holders of Redeemed shares - - 1.6.4 Holders of Participation Bond - - 1.6.5 Holders of Profıt and Loss sharing certificate - - 1.7. DIVIDEND TO PERSONNEL (-) - - 1.8. DIVIDENDS TO BOARD OF DIRECTORS (-) - - 1.9. SECOND DIVIDEND TO SHAREHOLDERS (-) - - 1.9.1. Holders of shares - - 1.9.2. Holders of Preferred shares - - 1.9.3. Holders of Redeemed shares - - 1.9.4. Holders of Participation Bond - - 1.9.5. Holders of Profıt and Loss sharing certificate - - 1.10. SECOND LEGAL RESERVE (-) - - 1.11. STATUTORY RESERVES (-) - - 1.12. EXTRAORDINARY RESERVES - - 1.13. OTHER RESERVES - - 1.14. SPECIAL FUNDS - - II. DISTRIBUTION OF RESERVES - - 2.1. DISTRIBUTION OF RESERVES - - 2.2. SECOND LEGAL RESERVES (-) - - 2.3. COMMON SHARES (-) - - 2.3.1. Holders of shares - - 2.3.2 Holders of Preferred shares - - 2.3.3. Holders of Redeemed shares - - 2.3.4 Holders of Participation Bond - - 2.3.5 Holders of Profıt and Loss sharing certificate - - 2.4. DIVIDENDS TO PERSONNEL (-) - - 2.5. DIVIDENDS TO BOARD OF DIRECTORS (-) - - III. PROFIT PER SHARE (****) - - 3.1. HOLDERS OF SHARES 0,00921 0,00806 3.2. HOLDERS OF SHARES (%) 0,921 0,806 3.3. HOLDERS OF PREFERRED SHARES - - 3.4. HOLDERS OF PREFERRED SHARES (%) - - Anadolu Sigorta 2020 Annual Report IV. DIVIDEND PER SHARE - - 4.1. HOLDERS OF SHARES - - 4.2. HOLDERS OF SHARES (%) - - 4.3. HOLDERS OF PREFERRED SHARES - - 4.4. HOLDERS OF PREFERRED SHARES (%) - - (*) According to the Law no. 13 of the Profit Share Annunciation which was announced in Capital Markets Board of Turkey’s weekly bulletin numbered 2014/2, which was then published in the official gazette on January 23, 2014, the profit shares have been distributed based on consolidated profit. As of December 31, 2020, dividend to be paid to the personnel amounting to TL 10.000.000, which has made provision in accordance with TAS 19, has been added to the period profit. (**) Statement of profit distribution has not been filled yet due to the Board of Directors Meeting has not made as of preparation date of the financial statements. (***) The Figures of 2019 was filled by using the data which is located in “According to CMB” of the Profit Distribution. (****) Dividends per share is calculated over the unconsolidated net profit for the period. The accompanying notes are an integral part of these unconsolidated financial statements. 143 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

1 General information 1.1 Name of the Company and the ultimate owner of the group The shareholding structure of Anadolu Anonim Türk Sigorta Şirketi (“the Company”) is presented below. As of December 31, 2020, the shareholder having indirect control over the shares of Anadolu Anonim Türk Sigorta Şirketi (“the Company”) is Türkiye İş Bankası A.Ş. (“İş Bankası”). December 31, 2020 December 31, 2019 Shareholding Shareholding Shareholding Shareholding Name Amount (TL) Rate (%) Amount (TL) Rate (%)

Milli Reasürans T.A.Ş. 286.550.106 57,31 286.550.106 57,31 Other* 213.449.894 42,69 213.449.894 42,69 Paid in Capital 500.000.000 100,00 500.000.000 100,00

(*) Consists of publicly traded shares. 1.2 Domicile and the legal structure of the Company, country and the address of the registered office (address of the operating centre if it is different from the registered office) The Company was registered in Turkey and has the status of ‘Incorporated Company. The Company’s address “Rüzgarlıbahçe Mahallesi, Kavak Sokak, No: 31 34805 Kavacık/İstanbul”. Company has nine regional offices; two of them established in İstanbul and others established in Antalya, İzmir, Samsun, Adana, Ankara, Trabzon and Bursa, a sales centre in Gaziantep and a branch in Turkish Republic of Northern Cyprus. 1.3 Business of the Company The Company operates in almost all non-life insurance branches consisting of mainly accident, health, motor vehicles, air vehicles, water vehicles, marine, fire and natural disasters, general loss, credit, financial losses, and legal protection. As of December 31, 2020, the Company serves through, 2.369 authorized agencies and 104 unauthorized agencies (December 31,2019 : 2.198 authorized agencies and 100 unauthorized agencies) of which, 2.473 agencies (December 31,2019: 2.298 authorized). 1.4 Description of the main operations of the Company The Company conducts its operations in accordance with the Insurance Law No.5684 (the “Insurance Law”) issued in June 14, 2007 dated and 26552 numbered Official Gazette and the communiqués and other regulations in force issued by the T.C. Ministry of Treasury and Finance based on the Insurance Law. The Company operates in insurance branches as mentioned above Note 1.3 Business of the Company. The Company’s shares have been listed on the Istanbul Stock Exchange (“BIST”). The Company operates based on its own specific laws and regulations in matters of establishment, auditing, supervision/oversight, accounting and financial reporting in accordance Capital Market Law No: 6362, part of VIII and paragraph of 5 of Article 136. 1.5 The average number of the personnel during the period in consideration of their categories The average number of the personnel during the period in consideration of their categories is as follows: December 31, 2020 December 31, 2019 Anadolu Sigorta 2020 Annual Report Senior level managers 7 8 Directors 42 40 Officers 2 2 Intermediate directors 206 189 Contracted personnel 1.104 1.078

Total 1.361 1.317

144 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

1.6 Wages and similar benefits provided to the senior management For the period ended December 31, 2020, wages and similar benefits provided to the members of the board of directors is amounting to TL 1.861.834 (December 31, 2019: TL 1.705.896), chairman TL 8.678.111 (December 31, 2019: TL 8.798.466). 1.7 Keys used in the distribution of investment income and operating expenses (personnel, administrative, research and development, marketing and selling, services rendered from third parties and other operating expenses) in the financial statements Procedures and principles related to keys used in the financial statements of the companies are determined in accordance with the 4 January 2008 dated and 2008/1 numbered “Communiqué Related to the Procedures and Principles for the Keys Used in the Financial Statements Being Prepared In Accordance With Insurance Accounting Plan” issued by the T.C. Ministry of Treasury and Finance . In accordance with the above mentioned Communiqué, insurance companies are allowed to transfer technical section operating expense to insurance section through methods determined by T.C. Ministry of Treasury and Finance or by the Company itself. Methods determined by the Company should be approved by the T.C. Ministry of Treasury and Finance, Known and exactly distinguishable operating expenses are distributed to related branches directly, while operating expenses are distributed to the sub-branches in accordance with the average of 3 ratios calculated by dividing “number of the policies produced within the last three years”, “gross premium written within the last three years”, and “number of the claims reported within the last three years” to the “total number of the policies”, “total gross written premiums” and the “total number of the claims reported”, respectively. Income from the assets invested against non-life technical provisions is transferred to technical section from non-technical section; remaining income is transferred to the non-technical section. 1.8 Information on the financial statements as to whether they comprise an individual company wor a group of companies The accompanying financial statements comprise only the unconsolidated financial information of the Company. As further discussed in note 2.2 - Consolidation, the Company has prepared additionally consolidated financial statements as of December 31, 2020. 1.9 Name or other identity information about the reporting entity and the changes in this information after previous reporting date Trade name of the Company: Anadolu Anonim Türk Sigorta Şirketi Registered address of the head office: Rüzgarlıbahçe Mahallesi, Kavak Sokak, No:3 34805 Kavacık/İstanbul The web page of the Company: www.anadolusigorta.com.tr

The information presented above has not any change since the end of the previous reporting period. 1.10 Events after the reporting date After the balance sheet date, there has been no change in the Company’s activities, the registration of these activities, the document structure and Company policies. As of December 31, 2020, the unconsolidated financial statements prepared has been approved by the Board of Directors of the Company on January 29, 2021. 2 Summary of significant accounting policies 2.1 Basis of preparation

2.1.1 Information about the principles and the specific accounting policies used in the preparation of the financial statements Anadolu Sigorta 2020 Annual Report In accordance with Article 136(5) in Section VIII of the Capital Markets Law, numbered 6362 insurance companies have to comply with their own specific laws and regulations in matters of establishment, auditing, supervision/oversight, accounting and financial reporting. Therefore, the Company maintains its books of account and prepares its financial statements in accordance with the Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”), and other accounting and financial reporting principles, statements and guidance (collectively “the Reporting Standards”) in accordance with the “Communiqué Related to the Financial Reporting of Insurance, Reinsurance, and Individual Pension Companies” as promulgated by the T.C. Ministry of Treasury and Finance based on Article 18 of the Insurance Law and Article 11 of the 4632 numbered Individual Pension Savings and Investment System Law (‘‘Individual Retirement Law’’). According to numbered 4th related law Accounting for subsidiaries, associates, joint ventures is, consolidated financial statements, financial statements which disclosed public regulated by the T.C. Ministry of Treasury and Finance. 145 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

The Company prepare their financial statements are regulated in terms of form and content ın order to compare the financial statements of prior period and with other companies according to “Communiqué on Presentation of Financial Statements “ which is published in the Official Gazette dated April 18, 2008 and numbered 26851. The financial statements are prepared in accordance with the accounting and financial reporting regulations in force in accordance with the insurance legislation and the provisions of Turkish Accounting Standards on matters not regulated by them. Additional paragraph for convenience translation to English The differences between the accounting principles, as described in the preceding paragraphs, and the accounting principles generally accepted in countries, in which the accompanying unconsolidated financial statements are to be distributed, and International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying unconsolidated financial statements. Accordingly, the accompanying unconsolidated financial statements are not intended to present the financial position and results of operations in accordance with the accounting principles generally accepted in such countries other than Turkey and IFRS. 2.1.2 Other accounting policies appropriate for the understanding of the financial statements Accounting in hyperinflationary countries Financial statements of the Turkish entities have been restated for the changes in the general purchasing power of the Turkish Lira based on “TAS 29 - Financial Reporting in Hyperinflationary Economies” as of December 31, 2004. TAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the reporting date, and that corresponding figures for previous years be restated in the same terms. With respect to the declaration of the T.C. Ministry of Treasury and Finance with the article dated April 4, 2005 and numbered 19387, financial statements as of December 31, 2004 are adjusted for the opening balances of 2005 in accordance with the section with respect to inflation accounting of the Capital Markets Board (“CMB”) Communiqué No: 25 of Series XI, “Communiqué on Accounting Standards in Capital Market” published in the Official Gazette dated January 15, 2003 and numbered 25290. Inflation accounting is no longer applied starting from January 1, 2005, in accordance with the same declaration of the T.C. Ministry of Treasury and Finance. Accordingly, as of June 30, 2017, non-monetary assets and liabilities and items included in shareholders’ equity including paid-in capital recognized or recorded before December 31, 2004 in order to reflect inflation adjustments. Non-monetary assets and liabilities and items included in shareholders’ equity including paid-in capital recognized or recorded after December 31, 2004 are measured at their nominal values. Other accounting policies Information regarding other accounting polices is disclosed above in “Note 2.1.1 - Information about the principles and the specific accounting policies used in the preparation of the financial statements” and each under its own caption in the following sections of this report. 2.1.3 Valid and presentation currency The accompanying unconsolidated financial statements are presented in TL, which is the Company’s functional currency. 2.1.4 Rounding scale of the amounts presented in the financial statements Financial information presented in TL, has been rounded to the nearest TL values. 2.1.5 Basis of measurement used in the preparation of the financial statements

Anadolu Sigorta 2020 Annual Report The accompanying financial statements are prepared on the historical cost basis as adjusted for the effects of inflation that lasted until December 31, 2004, except for the financial assets at fair value through profit or loss, available-for-sale financial assets, derivative financial instruments and associates which are measured at their fair values unless reliable measures are available. 2.1.6 Accounting policies, changes in accounting estimates and errors No changes or errors have occured in the accounting policies for the current period. Explanations on accounting estimates are given in the “Note 3” which is critical accounting estimates and judgments.

146 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.2 Consolidation “Circular Related to the Preparation of the Consolidated Financial Statements of Insurance, Reinsurance, and Individual Pension Companies” issued by the T.C. Ministry of Treasury and Finance in the December 31, 2008 dated and 27097 numbered Official Gazette, has been in force since March 31, 2009. Accordingly, consolidated financial statements are also prepared using the equity method of accounting to consolidate the Company’s associate; Anadolu Hayat Emeklilik A.Ş. (“Anadolu Hayat”). In the August 12, 2008 dated and 2008/36 numbered “Sector Announcement Related to the Accounting of Subsidiaries, Associates and Joint Ventures in the Stand Alone Financial Statements of Insurance, Reinsurance and Individual Pension Companies” of the T.C. Ministry of Treasury and Finance, it is stated that although insurance, reinsurance and individual pension companies are exempted from TAS 27 - Consolidated and Separate Financial Statements, subsidiaries, associates and joint-ventures could be accounted in accordance with TAS 39 - Financial Instruments: Recognition and Measurement or at cost in accordance with the 37th paragraph of TAS 27 - Consolidated and Separate Financial Statements, Parallel to the related sector announcements mentioned above, as of the reporting date the Company has accounted for its associate at fair value based on quoted market price. 2.3 Segment reporting An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components, whose operating results are reviewed regularly by the Board of Directors (being chief operating decision maker) to make decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is available. Since the main economic environment, where the Company operates, is Turkey, a geographical segment reporting has not been presented. A business segment reporting of the Company is presented in Note 5 in accordance with TFRS 8- Operating Segments standard. 2.4 Foreign currency transactions Transactions are recorded in TL, which is the Company’s functional currency. Transactions in foreign currencies are recorded at the rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates ruling at the reporting date and foreign currency exchange differences are offset and all exchange differences are recognized in the statement of income. Foreign currency exchange differences of unrecognized gains or losses arising from the difference between their fair value and the discounted values calculated per effective interest rate method of foreign currency available-for-sale financial assets are recorded in “Revaluation of financial assets” under equity and the realized gain or losses are recognized directly in the statement of income. 2.5 Tangible assets Tangible assets of the Company are recorded at their historical costs that have been adjusted for the effects of inflation until the end of December 31, 2004. There have been no other inflationary adjustments for these tangible assets for the following years and therefore they have been recorded at their costs restated for the effects of inflation until December 31, 2004. Tangible assets that have been purchased after January 1, 2005 have been recorded at their costs after deducting any exchange rate differences and finance expenses. The Company has started to show based on the revaluation model by measuring over fair value as of the third quarter of the 2015 year by making changes in the use of the property which is measuring the cost model in the financial statements before. Buildings for own use is recognized by fair value that determined in valuations made by independent valuation experts who have professional competency by reducing their following accumulated depreciation. Accumulated depreciation which is at the date of revaluation net of gross book value and net amount brought to values after revaluation. Anadolu Sigorta 2020 Annual Report Increase of revaluation results in the carrying value of use of land and building account in equity in the balance sheet under “Other Capital Account” as the net of tax effects. As a result of the evaluation of real estate an increase on the corresponding impairments are deducted from the fund; all other decrease are reflected the profit/loss account. Gains/losses arising from the disposal of the tangible assets are calculated as the difference between the net carrying value and the proceeds from the disposal of related tangible assets and reflected to the statement of income of the related period. Land is not depreciated to have indefinite life. Depreciation are allocated based on the useful life of tangible assets at cost or revalued amounts of tangible assets by using the straight-line method basis. Maintenance and repair costs incurred in the ordinary course of the business are recorded as expense. There are no pledges, mortgages and other encumbrances on tangible fixed assets.

147 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

There are no changes in accounting estimates that have significant effect on the current period or that are expected to have significant effect on the following periods. Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of tangible assets since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Depreciation rates and estimated useful lives are as follows: Estimated useful Depreciation rates Tangible Assets lives (years) (%) Buildings for own use 50 2,0 Machinery and equipment 3 - 16 6,3 - 33,3 Furniture and fixtures 4 - 16 6,3 - 25,0 Vehicles 5 20,0 Other tangible assets (including leasehold improvements) 5 - 10 10,0 - 20,0 Leased tangible assets 10 10,0

2.6 Investment properties Investment properties are held either to earn rentals and/or for capital appreciation or for both. In the event of investment property of first registration is measured on fair value including transaction costs after measured at cost. The changes which result of fair value valuation recognised in the income statement. Any gains or losses on the retirement or disposal of an investment property are recognized in profit or loss in the period of retirement or disposal. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The fair value on the date of change in the usage is considered as cost in the reclassification recognition when investment property that measured with fair value is reclassified as a tangible asset. 2.7 Intangible assets The Company’s intangible assets consist of computer software, goodwill and advances paid for tangible assets. Intangible assets are recorded at cost in compliance with “TAS 38 - Accounting for intangible assets”. The cost of the intangible assets purchased before December 31, 2004 are restated from the purchasing dates to December 31, 2004, the date the hyperinflationary period is considered to be ended. The intangible assets purchased after this date are recorded at their historical costs. Amortization is charged on a straight-line basis over their estimated useful lives over the cost of the asset. The period of redemption of intangible assets is 3 to 15 years. Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of the acquired subsidiary/associate at the date of the acquisition. Goodwill on acquisitions of associates is included in ‘investments in associates’ and is tested for impairment as part of the overall balance. Separately recognized goodwill is tested annually for impairment and carried at cost less accumulated impairment losses, Impairment losses on goodwill are not reversed. Gain or losses on the disposal of an entity includes the carrying amount of goodwill relating to the entity disposed of. Anadolu Sigorta 2020 Annual Report For the purpose of impairment testing, goodwill is allocated to cash-generating units. The allocations made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arises. The Company has acquired the health portfolio of Anadolu Hayat Emeklilik A.Ş. at August 31, 2004 with all of its rights and liabilities. The value at acquisition of the portfolio amounting to TL 16.250.000 is capitalized as goodwill by the Company. 2.8 Financial assets A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset from another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.

148 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Financial assets are classified in four categories; as financial assets held for trading, available-for-sale financial assets, held to maturity financial assets, and loans and receivables. Financial assets at fair value through profit or loss are presented as financial assets held for trading in the accompanying financial statements and trading securities and derivatives are included in this category. Financial assets at fair value through profit or loss measured at their fair values and gain/loss arising due to changes in the fair values of related financial assets is recorded in profit/ loss. Interest income earned on trading purpose financial assets and the difference between their fair values and acquisition costs are recorded as interest income in the statement of income. In case of disposal of such financial assets before their maturities, the gains/losses on such disposal are recorded under trading income/losses. Accounting policies of derivatives are detailed in note 2.10 - Derivative financial instruments. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables those are not interest earning are measured by discounting of future cash flows less impairment losses, and interest earning loans and receivables are measured at amortized cost less impairment losses. Held to maturity financial assets are the financial assets with fixed maturities and fixed or pre-determined payment schedules that the Company has the intent and ability to hold until maturity, excluding loans and receivables. Subsequent to initial recognition, held to maturity financial assets and loans and receivables are measured at amortized cost using effective interest rate method less impairment losses, if any. The Company has no financial assets that are not allowed to be classified as held to maturity financial assets for two years due to the tainting rules applied for the breach of classification rules. Available-for-sale financial assets are the financial assets other than assets held for trading purposes, held-to-maturity financial assets and loans and receivables. Available-for-sale financial assets are initially recorded at cost and subsequently measured at their fair values. Unrecognized gains or losses derived from the difference between their fair value and the discounted values calculated per effective interest rate method are recorded in “Revaluation of financial assets” under shareholders’ equity. Upon disposal, the realized gain or losses are recognized directly in the statement of income. The determination of fair values of financial instruments not traded in an active market is determined by using valuation techniques. Observable market prices of the quoted financial instruments which are similar in terms of interest, maturity and other conditions are used in determining the fair value. The Company has accounted equity shares classified as available-for-sale according to quoted market prices or dealer price quotations for financial instruments traded in active markets or according to cost less impairment losses for financial instruments not traded in active markets. Securities are recognized and derecognized at the date of settlement. Associates; shares of the associate of the Company; Anadolu Hayat Emeklilik A.Ş. are classified as available-for-sale financial assets in the unconsolidated financial statements and are recorded at their fair values since those shares are traded in an active market. A financial asset is derecognized when the control over the contractual rights that comprise that asset is lost. This occurs when the rights are realized, expire or are surrendered. Impairment on financial asset Financial assets or group of financial assets are reviewed at each reporting date to determine whether there is objective evidence of Anadolu Sigorta 2020 Annual Report impairment. If any such indication exists, the Company estimates the amount of impairment. A financial asset is impaired if, and only if, there is objective evidence that the expected future cash flows of financial asset or group of financial assets are adversely affected by an event(s) (“loss event(s)”) incurred subsequent to recognition. The losses expected to incur due to future events are not recognized even if the probability of loss is high. Receivables are presented net of specific allowances for uncollectibility. Specific allowances are made against the carrying amounts of loans and receivables that are identified as being impaired based on regular reviews of outstanding balances to reduce these loans and receivable to their recoverable amounts. The recoverable amount of an equity instrument is its fair value. The recoverable amount of debt instruments and purchased loans measured to fair value is calculated as the present value of the expected future cash flows discounted at the current market rate of interest.

149 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in the statement of operations. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in equity. 2.9 Impairment on assets Impairment on tangible assets On each reporting date, the Company evaluates whether there is an indication of impairment of tangible and intangible assets. If there is an objective evidence of impairment, the asset’s recoverable amount is estimated in accordance with the “TAS 36 - Impairment of Assets” and if the recoverable amount is less than the carrying value of the related asset, a provision for impairment loss is made. Rediscount and provision expenses of the period are detailed in Note 47. 2.10 Derivative financial instruments As of December 31, 2020, the Company has a derivative financial instruments recognized in the financial assets held for trading amounting to TL 63.599.896 (December 31, 2019: TL 11.471.123). As of December 31, 2020, the Company has accounted in income accruals amounting to TL 183.754.467 (December 31, 2019: TL 24.850.393) that is increase in value and there is no other financial liabities due to forward foreign currency agreement (December 31, 2019: TL 59.472.753). Derivative instruments are treated as held for trading financial assets in compliance with the standard TAS 39 - Financial Instruments: Recognition and measurement. The Company offseted foreign forward currency agreements income/expense accruals in the income statement. Derivative financial instruments are initially recognized at their fair value. Collateral amounts and valuations that are necessary for derivative transactions are included in trading financial assets. The receivables and liabilities arising from the derivative transactions are recognized under the off-balance sheet accounts through the contract amounts. Derivative financial instruments are subsequently remeasured at fair value and positive fair value differences are presented either as “financial assets held for trading” and negative fair value differences are presented as “other financial liabilities” in the accompanying financial statements. All unrealized gains and losses on these instruments are included in the statement of income. 2.11 Offsetting of financial assets Financial assets and liabilities are offset and the net amount is presented in the balance sheet when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the Reporting Standards, or for gains and losses arising from a group of transactions resulting from the Company’s similar activities like trading transactions. 2.12 Cash and cash equivalents Cash and cash equivalents, which is the basis for the preparation of the statement of cash flows includes cash on hand, cheques

Anadolu Sigorta 2020 Annual Report received, other cash and cash equivalents, demand deposits and time deposits at banks having an original maturity less than 3 months which are ready to be used by the Company or not blocked for any other purpose.

150 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.13 Share Capital The shareholder having direct or indirect control over the shares of the Company is İş Bankası Group, as of December 31, 2020 and 2019, the share capital and ownership structure of the Company are as follows: December 31, 2020 December 31, 2019 Shareholding Shareholding Shareholding Shareholding Name Amount (TL) Rate (%) Amount (TL) Rate (%)

Milli Reasürans T.A.Ş. 286.550.106 57,31 286.550.106 57,31 Other* 213.449.894 42,69 213.449.894 42,69 Paid in capital 500.000.000 100,00 500.000.000 100,00

* Consists of publicly traded shares. Sources of capital increases during the period The Company has not performed capital increase as of December 31, 2020 (December 31, 2019: None). Privileges on common shares representing share capital As of December 31, 2020, the issued share capital of the Company is TL 500.000.000 (December 31, 2019: TL 500.000.000) and the Company unregistered Group 150 A shares which each of value is TL 1,5 as of April 11, 2013 in which approved in Main Article of the Company dated in April 11, 2013. The share capital of the Company consists of 50.000.000.000 (December 31, 2019: 50.000.000.000 shares) issued shares with TL 1 nominal value each. Registered capital system in the Company The Company has accepted the registered capital system. As of December 31, 2020, the Company’s registered capital is TL 700.000.000 (December 31, 2019: TL 700.000.000). Repurchased own shares by the Company None. 2.14 Insurance and investments contracts - classification An insurance contract is a contract under which the Company accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Insurance risk covers all risk except for financial risks. All premiums have been received within the coverage of insurance contracts recognized as revenue under the account caption “written premiums”. Investment contracts are those contracts which transfer financial risk with no significant insurance risk. Financial risk is the risk of a possible future change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable, provided, that it is not specific to a party to the contract, in the case of a non- financial variable. As of the reporting date, the Company does not have a contract which is classified as an investment contract. 2.15 Insurance contracts and investment contracts with discretionary participation feature

Discretionary participation feature within insurance contracts and investment contracts is the right to have following benefits in Anadolu Sigorta 2020 Annual Report addition to the guaranteed benefits. (i) that are likely to comprise a significant portion of the total contractual benefits; (ii) whose amount or timing is contractually at the discretion of the Issuer; and (iii) that are contractually based on: (1) the performance of a specified pool of contracts or a specified type of contract; (2) realized and/or unrealized investments returns on a specified pool of assets held by the Issuer; or (3) the profit or loss of the Company, Fund or other entity that issues the contract. As of the reporting date, the Company does not have any insurance or investment contracts that contain a discretionary participation feature. 151 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

2.16 Investment contracts without discretionary participation feature As of the reporting date, the Company does not have any insurance contracts and investment contracts without discretionary participation feature. 2.17 Liabilities Financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another entity. Financial liabilities of the Company are measured at their discounted values. A financial liability is derecognized when it is extinguished. 2.18 Income taxes Corporate tax Statutory income is subject to corporate tax at 22%.(However, according to the Provisional Article 10 added to the Corporate Tax Law, the corporate tax rate of 20% is calculated as 22% for the corporate earnings for the fiscal periods starting in the related year for the institutions whose special accounting periods are assigned to the taxation periods of 2018, 2019 and 2020 will be implemented. This rate is applied to accounting income modified for certain exemptions (like dividend income) and deductions (like investment incentives), and additions for certain non-tax deductible expenses and allowances for tax purposes. If there is no dividend distribution planned, no further tax charges are made. Dividends paid to the resident institutions and the institutions working through local offices or representatives are not subject to withholding tax. The withholding tax rate on the dividend payments other than the ones paid to the non-resident institutions generating income in Turkey through their operations or permanent representatives and the resident institutions is 15%. In applying the withholding tax rates on dividend payments to the non-resident institutions and the individuals, the withholding tax rates covered in the related Double Tax Treaty Agreements are taken into account. Appropriation of retained earnings to capital is not considered as profit distribution and therefore is not subject to withholding tax. Prepaid taxes are calculated and paid at the rates valid for the earnings of the related years. The payments can be deducted from the annual corporate tax calculated for the whole year earnings. In Turkey, there is no procedure for a final and definite agreement on tax assessments. Companies file their tax returns with their tax offices by the end of 25th of the fourth month following the close of the accounting period to which they relate. Tax returns are open for five years from the beginning of the year that follows the date of filing during which time the tax authorities have the right to audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based on their findings. Deferred taxes In accordance with TAS 12 - Income taxes, deferred tax assets and liabilities are recognized on all taxable temporary differences arising between the carrying values of assets and liabilities in the financial statements and their corresponding balances considered in the calculation of the tax base, except for the differences not deductible for tax purposes and initial recognition of assets and liabilities which affect neither accounting nor taxable profit. Deferred tax assets and liabilities are reported as net in the financial statements if, and only if, the Company has a legally enforceable right to offset current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity. In case where gains/losses resulting from the subsequent measurement of the assets are recognized in the statement of income, then the related current and/or deferred tax effects are also recognized in the statement of income. On the other hand, if such gains/losses

Anadolu Sigorta 2020 Annual Report are recognized as an item under equity, then the related current and/or deferred tax effects are also recognized directly in the equity. As of January 1, 2021, the corporate tax rate is 20%, the tax rate has been used for the temporary differences. Transfer pricing In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated November 18, 2007 sets details about implementation. If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for corporate income tax purposes. 152 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.19 Employee benefits Pension and other post-retirement obligations A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee and his/her dependants will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. Employees of the Company are the members of “Anadolu Anonim Türk Sigorta Şirketi Pension Fund” which is established in accordance with the temporary Article 20 of the Social Security Act No: 506. As per the temporary sub article No: 20 of the Article 73 of the Social Security Law, pension funds should be transferred to the Social Security Institution within three years after the publication of the a aforementioned Law published in the Official Gazette numbered 26870 and dated May 8, 2008. The related three-year transfer period has been prolonged for two years by the Cabinet decision, which was published on the Official Gazette dated April 9, 2011. Accordingly, the three-year period expired on May 8, 2011 was extended to the May 8, 2015. The principles and applications of the transfer will be determined by the Decree of the Council of Ministers separately. Lastly, first paragraph of temporary 20th article of 5510 numbered Law, article 51 of the law regarding changing of several laws and delegated legislations and the law of occupational health and safety which are published in April 23, 2015 dated Official Gazette is changed as following; insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or which constitutes their union personnel and associates of funds “The Council is authorized to determine the date of transfer within the scope of article 20 th of the law, 506 banks, insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or which constitutes their union personnel and associates of funds to the social security institution. The date of the transfer of the first paragraph of Article 4 of this law pension fund contributors as are considered insured”. According to this arrangement the bank within the scope of Act 506, article No.20, insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or associations which constitute their union personnel and associates of funds are required to be transferred until 08.05.2015 to Social Security Administration, authority to determine the date of transfer is given the Council of Ministers thus the transfer of the funds has been postponed to an unknown date. The application which containing temporary transfer provision on June 19, 2008 cancellation and cessation of claims by Republican People’s Party, it is rejected in accordance with the decision at the court’s meeting on March 30, 2011 The cash value of the obligations of the pension fund for each member of the fund including members left the fund as of the transfer date will be calculated according to following assumptions: a) Technical deficit rate of 9,80% shall be used in the actuarial calculation of the value in cash. b) Gains and losses of the funds stems from benefits covered by the aforementioned Law taken into accounts to calculate present value of the obligations. Employee termination benefits In accordance with existing Turkish Labour Law, the Company is required to make lump-sum termination indemnities to each employee who has completed one year of service with the Company and whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The amount payable for each year of service to the employee union members in the cases of death, disability, retirement, pension bonding is equivalent to their 60-day salary, in other cases it is equivalent to 45-day salary. For other employees, it is one month’s salary. The computation of the liability is based upon the retirement pay ceiling announced by the Government. The applicable ceiling amount as of December 31, 2020 is TL 7.117,71 (December 31, 2019: TL 6.379,86). In Accordance IAS 19 which published by Public Company Accounting Oversight Board(PCAOB) dated March 12, 2013 is about “Benefits Employee Accounting Standard” and defined by beginning from December 31, 2012 net defined benefit liabilityu of the actuarial gains and losses arising on re-measurement should be recognized in other comprehensive income under shareholders’ equity and this effect should be Anadolu Sigorta 2020 Annual Report applied retrospectively. The Company started to account current actuarial gains and losses under equity (other profit reserves) due to the fact that prior period actuarial gains and losses have remained below the materiality. The Company accounted for employee severance indemnities using actuarial method in compliance with the TAS 19 - Employee Benefits, The major actuarial assumptions used in the calculation of the total liability as of December 31, 2020 and 2019 are as follows: December 31, 2020 December 31, 2019 Discount rate 4,07% 4,20% Expected rate of salary/limit increase 12,00% 10,30% Estimated employee turnover rate 4,03% 4,11%

153 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Other employee benefits The Company has provided for undiscounted short-term employee benefits earned during the period as per services rendered in compliance with TAS 19 in the accompanying financial statements. 2.20 Provisions A provision is made for an existing obligation resulting from past events if it is probable that the commitment will be settled and a reliable estimate can be made of the amount of the obligation. Provisions are calculated based on the best estimates of management on the expenses to incur as of the reporting date and, if material, such expenses are discounted to their present values. If the amount is not reliably estimated and there is no probability of cash outflow from the Company to settle the liability, the related liability is considered as “contingent” and disclosed in the notes to the financial statements. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realized. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, the Company discloses the contingent asset. 2.21 Revenue recognition Written premiums and claims paid Written premiums represent premiums on policies written during the period net of taxes, premiums of the cancelled policies which were produced in prior periods and premium ceded to reinsurance companies,. Premiums ceded to reinsurance companies are accounted as “written premiums, ceded” in the statement of income. Claims are recognized as expense as they are paid. Outstanding claims provision is provided for both reported unpaid claims at period- end and incurred but not reported claims. Reinsurer’s shares of claims paid and outstanding claims provisions are off-set against these reserves. Subrogation, salvage and quasi income According to the Circular 2010/13 dated September 20, 2010; the Company may account for income accrual for subrogation receivables without any voucher after the completion of the claim payments made to the insurer. If the amount cannot be collected from the counterparty insurance company, the Company provides provision for uncollected amounts due for six months. If the counter party is not an insurance Company, the provision is provided after four months. As of the reporting date, in accordance with the related circular the Company provided TL 62.093.125 (December 31, 2019: TL 55.051.547) subrogation receivables and recorded TL 88.399.103 (December 31, 2019: TL 61.848.008) (Not 12) net subrogation and salvage receivables under receivables from main operations. The Company provided allowance for uncollected subrogation receivables amounting to TL 24.744.443 (December 31, 2019: TL 28.174.144) (Note 12) in accordance with circular. Anadolu Sigorta 2020 Annual Report

154 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

For the years ended December 31, 2020 and 2019, salvage and subrogation collected are as follows: December 31, 2020 December 31, 2019 Motor vehicles 610.070.256 488.773.672 Third party liability for motor vehicles (MTPL) 10.175.098 9.773.051 Fire and natural disaster 4.823.627 3.697.414 Marine 2.204.341 1.046.428 Credit - - General losses 657.535 592.116 General liability 171.732 59.570 Accident 12.459 1.725 Water vehicles 617.188 22.492 Financial losses - - Legal protection 32 - Total 628.732.268 503.966.468

As of December 31, 2020 and 2019, accrued subrogation and salvage income per branches are as follows: December 31, 2020 December 31, 2019 Motor vehicles 65.010.849 36.130.567 Third party liability for motor vehicles (MTPL) 15.088.472 16.014.366 Fire and natural disaster 5.708.556 7.752.757 General losses 995.426 824.538 Marine 767.440 705.698 Accident 527.346 232.701 Water vehicles 250.401 131.857 General liability 50.613 55.524 Total 88.399.103 61.848.008

Commission income and expense As further disclosed in Note 2.24 - Reserve for unearned premiums, commissions paid to the agencies related to the production of the insurance policies and the commissions received from the reinsurance firms related to the premiums ceded are recognized over the life of the contract by deferring commission income and expenses within the calculation of reserve for unearned premiums for the policies produced before January 1, 2008 and recognizing deferred commission income and deferred commission expense in the financial statements for the policies produced after January 1, 2008. Interest income and expense Interest income and expense are recognized using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. The effective interest rate is established on initial recognition of the financial asset and liability and is not revised subsequently.

The calculation of the effective interest rate includes all fees and points paid or received transaction costs, and discounts or premiums Anadolu Sigorta 2020 Annual Report that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability. Trading income/expense Trading income/expense includes gains and losses arising from disposals of financial assets held for trading purpose and available-for- sale financial assets. Trading income and trading expenses are recognized as “Income from disposal of financial assets” and “Loss from disposal of financial assets” in the accompanying unconsolidated financial statements.

155 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Dividends Dividend income is recognized when the Company’s right to receive payment is ascertained. 2.22 Leasing transactions Tangible assets acquired by way of finance leasing are recognised in tangible assets and the obligations under finance leases arising from the lease contracts are presented under finance lease payables account in the financial statements. In the determination of the related assets and liabilities, the lower of the fair value of the leased asset and the present value of leasing payments is considered. Financial costs of leasing agreements are expanded in lease periods at a fixed interest rate. If there is impairment in the value of the assets obtained through financial lease and in the expected future benefits, the leased assets are valued with net realisable value. Depreciation for assets obtained through financial lease is calculated in the same manner as tangible assets. Set out below are the accounting policies of the Company upon adoption of TFRS 16. Right-of-use assets The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of the right-of-use asset includes: (a) initial direct costs incurred, (b) lease payments made at or before the commencement date less any lease incentives received, and (c) All initial costs incurred by the company. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right- of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment. Right-of-use assets are subject to impairment. Lease liabilities The company measures the lease liability based on the present value of the lease payments that were not paid at the actual start of the lease. The lease payments, which are included in the measurement of the lease liability at the actual start of the lease, consist of the following payments to be made for the right of use of the underlying asset during the lease term and which were not paid at the actual start of the lease: (a) fixed payments, (b) variable lease payments based on an index or ratio, the first measurement of which was made using an index or ratio at the actual beginning of the lease, (c) amounts expected to be paid by the company under residual value commitments (d) if the company is reasonably confident that it will exercise the option to purchase, the price at which the option is used and

Anadolu Sigorta 2020 Annual Report (e) penalty payments for termination of the lease if the lease term indicates that the company will exercise an option to terminate the lease. Variable lease payments that are not linked to an index or ratio are recorded as expenses in the period in which the event or condition that triggered the payment occurs Right-of-use assets calculated regarding to lease liabilities are accounted in “Tangible Assets” located in balance sheet. The company sets the revised discount rate for the remainder of the lease period as this rate if the implied interest rate on the lease can be easily determined; if it cannot be easily determined as the alternative borrowing rate at the date of the company’s reassessment.

156 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

After the actual start of the lease, the company measures the lease liability as follows: (a) increases the book value to reflect the interest on the lease obligation, and (b) reduces the book value to reflect the lease payments made. In addition, a change in the fixed lease payments is essentially the lease or a change in the assessment of the option to purchase the underlying asset in case of a change in the value of finance lease liabilities is measured again. Right-of-use assets calculated regarding to lease liabilities are accounted in “Tangible Assets” located in balance sheet. Interest expense on lease liabilities and depreciation expense of right-of-use asset are accounted in “Investment Management Expenses (inc. interest)” and “Depreciation and Amortisation Expenses” respectively. The details related to contracts term of operating leases and applied discount rates are presented below: Contract term Discount rate - TL Assets subject to operating leases (Year) (%) Buildings 10 years 24,42

2.23 Dividend distribution Based on the guidelines and principals issued by the CMB dated January 27, 2010 for the distribution of dividends from the profit generated from operating activities in 2009, there is no requirement of minimum profit distribution for joint stock companies that are traded in the stock market and in this context, it has decided that dividend distribution will be performed in accordance with principles in Dividend Decleration numbered II-19.1 of the Board, clauses contained in the articles of association of the partnership and dividend policies which are disclosed the public of companies. Additionally, as stated within the aforementioned decision of CMB, for entities required to prepare consolidated financial statements, it has been agreed upon to require the net distributed profit calculations to be performed on the net profit for the period as stated on the consolidated financial statements, so long that the distribution can be funded through statutory resources. Board of Directors proposal which is related with distribution of the profits gained from the operations of the 2019 was approved unanimously in the framework of the General Assembly dated March 24 2020. Consequently, TL 20.504.411 of the distributable net profit of the period that is amounting to TL 391.902.577 which is remaining amount after deducting the legal reserve amounting to TL 135.000.000, distributed to shareholders as cash dividend since March 26, 2020. The Company distributed dividend amounting to TL 9.092.140 to its employee and reserved second legal reserve and statutory reserve amounting to TL 29.394.879 and TL 25.000.000 respectively. The remaining of the distributable net profit of the period which is amounting to TL 181.506.344 was transferred to extraordinary reserves (2019:TL 100.000.000 distributed to shareholders). 2.24 Reserve for unearned premiums In accordance with the “Communiqué on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves” (“Communiqué on Technical Reserves”) which was issued in 26606 numbered and August 7, 2007 dated Official Gazette and put into effect starting from January 1, 2008, the reserve for unearned premiums represents the proportions of the gross premiums written without deductions of commission or any other allowance, in a period that relate to the period of risk subsequent to the reporting date for all short-term insurance policies. For commodity marine policies with indefinite expiration dates, 50% of the remaining portion of the premiums accrued in the last three months, less any commissions is also provided as unearned premium reserves. Anadolu Sigorta 2020 Annual Report Reserve for unearned premiums is calculated for all insurance contracts except for the contracts for which the mathematical reserve is provided. Reserve for unearned premiums is also calculated for the annual premiums of the annually renewed long term insurance contracts. Since the Communiqué on Technical Reserves was effective from January 1, 2008, the T.C. Ministry of Treasury and Finance issued July 4, 2007 dated and 2007/3 numbered “Circular to Assure the Compliance of the Technical Reserves of Insurance, Reinsurance and Pension Companies With the Insurance Law No, 5684” (“Compliance Circular”) to regulate the technical provisions between the issuance date and enactment date of the Communiqué on Technical Reserves. In accordance with the Compliance Circular, it is stated that companies should consider earthquake premiums written after June 14, 2007 in the calculation of the reserve for unearned premiums while earthquake premiums were deducted in the calculation of the reserve for unearned premiums before. Accordingly, the Company has started to calculate reserve for unearned premiums for the earthquake premiums written after June 14, 2007, while the Company had not calculated reserve for unearned premiums for the earthquake premiums written before June 14, 2007. 157 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

According to the 2009/9 Numbered Circular Related to Application of Technical Reserves issued on March 27, 2009 which published by Undersecretariat of Treasury reserve for unearned premiums is calculated by taking into account that all polices become active at 12:00 at noon and end at 12:00 at noon. According to the Communiqué on Technical Reserves, for the calculation of unearned premium reserves of foreign currency indexed insurance agreements, foreign currency selling exchange rates announced by Turkish Central Bank will be considered, unless there is a specified exchange rate in the agreement. The Company has reclassified TL 1.920.318 of provision for long-term health and personal accident policies to long-term liabilities (December 31, 2019: 2.003.959). As of the reporting date, the Company has provided reserve for unearned premiums amounting to TL 3.976.446.193 (December 31, 2019 : TL 3.217.033.929) and reinsurer share in reserve for unearned premiums amounting TL 1.164.283.370 (December 31,2019: TL 908.427.528). Furthermore, reserve for unearned premiums includes Social Security Institution (“SSI”) share amounting to TL 94.034.855 (December 31, 2019: TL 74.462.603). 2.25 Provision for outstanding claims Claims are recorded in the year in which they occur, based on reported claims or on the basis of estimates when not reported. Provision for outstanding claims represents the estimate of the total reported costs of notified claims on an individual case basis at the reporting date as well as the corresponding handling costs. Incurred but not reported claims (“IBNR”) are also provided. In accordance with December 5, 2014 dated and 2014/16 numbered “Circular for Provision for Outstanding Claims” of T.C. Ministry of Treasury and Finance, by the Undersecretariat of Treasury the compensation which occured but not was not reported since January 1, 2015 is being calculated with the best of ability of the Company’s actuary. The best estimate assumption is calculating the damages which will be paid in the future according to a model and assumption, and by utilizing the risk free return curves to calculate today’s value. The methods, corrections, the suitable data and the growth factor choice and the intervention is being decided by the Company’s actuary using actuarial methods. According to Actuaries Regulations Law no. 11, an actuarial report has been sent the Undersecretariat of Treasury and these calculations are detailed there. Company’s actuary tests damage growth factors with some methods by using software tools and then making some choices for actuarial analysis. As of December 31, 2020 and 2019, IBNR amounts calculated by the Company actuary’s on the basis of branches are as follows: December 31, 2020* December 31, 2019 Gross additional Net additional Gross additional Net additional Branch provision provision provision provision Third party liability for motor vehicles (mtpl) 2.845.738.486 1.838.343.569 2.271.825.844 1.632.944.856 General liability 862.295.402 628.204.336 599.574.013 434.293.863 Voluntary financial liability 386.495.829 386.395.266 251.354.255 251.063.514 Fire and natural disasters 119.033.698 84.079.070 89.122.290 61.942.941 Accident 22.396.290 17.465.093 21.233.726 16.243.421 General losses 44.990.913 32.017.121 43.215.995 27.320.876 Air crafts liability 8.578.958 4.071.666 12.839.952 4.504.520 Air crafts 13.835.451 5.558.120 22.125.336 7.038.288 Water vehicles 25.313.189 14.287.654 24.542.847 15.113.771 Health 49.269.085 45.971.283 4.300.945 3.779.594 Financial losses 12.698.933 4.976.501 16.481.372 2.700.585 Anadolu Sigorta 2020 Annual Report Credit 15.936.781 11.345.437 2.228.405 69.983 Legal protection 767.351 767.351 532.644 532.644 Marine 18.013.883 9.162.731 9.466.975 5.303.723 Breach of trust 6.605.319 4.876.443 3.631.172 3.270.792 Motor vehicles (7.066.569) (6.947.332) (49.424.754) (49.248.069) Total 4.424.902.999 3.080.574.309 3.323.051.017 2.416.875.302 (*) Provisions regarding to Risky Insured Pool and TKU (Medical Malpractice) Pool and provision allocated for treaties received has been included in the provision amount allocated for the related period. In the health branch, it is observed that the frequency of claims for 2020, due to insurers have avoided going to the hospital and postponed their treatment to future dates. As a result of the examination of inpatient and outpatient treatment data, the Company has added 40.098.588 TL provision for treatments postponed by the insured to future dates due to COVID-19.

158 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

The Constitutional Court has cancelled “general conditions” in the articles of the Highway Traffic Law No. 2918, which are subject to branch of third party liability for motor vehicles, due to unconstitutional. As of December 31, 2020, effect of the cancellation decision has been analysed and reflected in the amount of incurred but not reported claims.. The Company has made the Net IBNR calculation on the basis of branches and current reinsurance shares to reflect the effect of reinsurance agreements in force. Amounts transferred to the Risky Insured and TKU (Medical Malpractice) Pool have also been included in the Net IBNR account. In the compulsory traffic branch the physical and bodily damages, and in the General Responsibility branch the Employer Third Party Liability, Compulsory Medical Malpractice, Professional Liability, Compulsory Third Party Liability for Dangerous Materials and Hazardous Waste and other liability branches are being analysed separately. As of December 31, 2020, the Company’s actuary has used 9% which is the latest statutory rate of interest in the Official Gazette for the discount process in accordance with “General Instructions Regarding The Cash Flow From Provision for Outstanding Claim And Their Discounts” which was published in June 10th, 2016 numbered 2016/22 which regulates the processes involving the discount of cash flow from provision for outstanding claim. As of December 31, 2020, Company has made a net discount of TL 1.189.385.664 (December 31, 2019: TL 950.450.472). The Company has used the gradual transition curve which was published by the Undersecretariat of Treasury’s “General Instructions Regarding to the Changes in the General Instructions Regarding Provision for Outstanding Claim (2014/16)” which was published in February 29th, 2016 with the number 2016/11. The Company has used these gradual transition curve with 100% accuracy and has reflected the calculations on the official statements as well as possible as of December 31, 2016 and the Company has continued the method exact same at this period. According to Provisional Article 12 of the Regulation on the Amendment of the Regulation on Tariff Implementation Principles in the Compulsory Motor Insurance for Compulsory Liability for Motor Vehicles, published in the Official Gazette dated July 11, 2017 and numbered 30121, the frequency of damage for high staged and/or vehicle groups the “Risk Insured Pool” has been announced. In this context, it began to be shared between insurance companies in the pool covered by premium and claims amounts related to disposed traffic insurance policy Turkey Motor Vehicle Bureau by the Undersecretariat determined by conformity to start since April 12, 2017. The Company, after changes in legislation, Turkey Motor Vehicle Bureau (TMTB) by the accounting records are created on the basis of the premiums, claims and commission amounts transferred to the pool within the scope of the monthly receipts that have been finalized and taken over from the pool within the scope of the share, and the financial statements are reflected by working on the amounts not yet transmitted by the deed TMTB. For the transferred and received pool portfolio within the scope of the aforementioned pool practice, IBNR calculation has been made based on “The Summary of Actuarial Estimations Report Regarding the Risky Insured Pool Final Damage/Premium Rate Range Estimation” which was shared by TMTB on December. In accordance with the Communiqué on the Amendment of the Communiqué on the Procedures and Principles of the Contribution of the Institution in the Compulsory Financial Liability Insurance for Medical Malpractice Law, published in the Official Gazette dated October 7, 2017 and numbered 30203, the Compulsory Financial Liability Insurance for Medical Malpractice the rules for premium and damage sharing have been established. The transactions related to the sharing are in the General Liability executed by Güneş Sigorta A.Ş. T.C. Private Pension Regulation and Supervision Agency Board dated September 1, 2020 according to the board decision, Türk Reasürans Anonim Şirketi has been appointed of such transactions has been indefinitely. Anadolu Sigorta 2020 Annual Report In this context, premiums and claims related to the policies issued as of October 1, 2017 have been started to be allocated among the insurance companies within the framework of the principles determined by the Undersecretariat. After the change in legislation, Güneş Sigorta A.Ş., the accounting records are created on the basis of the premiums, claims and commission amounts transferred from the pool within the scope of the share transferred within the scope of the monthly declarations which are finalized by the Ministry of Finance and also the financial statements are reflected by the works related to the turnover not yet delivered. As of December 31, 2020, the Company has outstanding claims provision amounting to TL 7.008.542.208 (December 31, 2019: TL 5.264.263.435) and TL 2.278.005.427 outstanding claims provision reinsurer share (December 31, 2019: TL 1.561.947.712) in the unconsolidated financial statements.

159 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

According to the “Circular on the Explanation of the Notification of the Undersecretariat of Treasury on the Calculation of the Realized But Unreported Compensation (IBNR)” dated November 26, 2011 and numbered 2011/23, the companies are opened against the Company in sub-branches according to the last five years’ (15% in the branches where there is no new five-year data and started the new activity) by calculating a win rate over the amounts of the cases by not exceeding 25% of the outstanding files accrued for the files in the trial period. As of December 31, 2020, the Company did not any discount against provisions for litigious file claims. (December 31, 2019: net TL 240.658.639) 2.26 Reserve for unexpired risks In accordance with the Communiqué on Technical Reserves, while providing reserve for unearned premiums, in each accounting period, the companies should perform adequacy test covering the preceding 12 months due to the probability that future claims and compensations of the outstanding policies may be in excess of the reserve for unearned premiums already provided. In performing this test, it is required to multiply the reserve for unearned premiums, net with the expected claim/premium ratio. Expected claim/ premium ratio is calculated by dividing incurred losses (provision for outstanding claims, net at the end of the period + claims paid, net - provision for outstanding claims, net at the beginning of the period) to earned premiums (written premiums, net + reserve for unearned premiums, net at the beginning of the period - reserve for unearned premiums, net at the end of the period). In the calculation of earned premiums; deferred commission expenses paid to the agencies and deferred commission income received from the reinsurance firms which were netted off from reserve for unearned premiums both at the beginning of the period and at the end of the period are not taken into consideration. In accordance with T.C. Ministry of Treasury and Finance circular numbered 2012/15, unexpired risk reserve started to be calculated over main branches as of December 31, 2012. The test is performed on branch basis and in case where the expected claim/premium ratio is higher than 95%, reserve calculated by multiplying the exceeding portion of the expected claim/premium ratio with the reserve for unearned premiums of that specific branch is added to the reserves of that branch. In accordance with T.C. Ministry of Treasury and Finance circular numbered 2015/30, the amount of the opening provision for outstanding claims which is determined unexpired risk reserve redefined in a manner consistent with the current period as of December 31, 2017. According to the Circular numbered 2011/18 of the In accordance with T.C. Ministry of Treasury and Finance, the Company excluded both the premiums transferred to SSI and claims related to treatment costs from calculation of reserve for unexpired risks in Motor Third Party Liability, Compulsory Third Party Liability Insurance for Road Passenger Transportation and Compulsory Road Passenger Transportation Personal Accident branches. According to Undersecretariat of Treasury’s 2019/5 numbered general instructions has remarked that the method below can be used to calculate the reserve for unexpired risks in all branches. T.C. Ministry of Treasury and Finance allows insurance companies with the circular 2019/5 to calculate their unexpired risks reserve on all branches by considering only the last 4 accident quarters’ loss ratios. According to this new method, loss ratios exceeding 85% will be multiplied by unearned premiums reserve for the calculation of unexpired risk reserve. In accordance with amendment made with the circular numbered 2020/1 issued by Republic of Turkey Ministry of Treasury and Finance, in case of making separate calculation for the activities which are 100% of the production is transferred to pools established in Turkey, unexpired risk reserve is calculated if the gross loss premium rate is above 100%, and for other activities the provision is calculated if the gross loss premium rate is above 85%. The results of the calculations of unexpired risk reserves of the Company for Risky Insureds’ Pool and TKU (Medical Malpractice) Pool are presented below.

Anadolu Sigorta 2020 Annual Report December 31, 2020 December 31, 2019 Gross URR Net URR Gross URR Net URR RSH - Received 25.571.927 25.571.927 29.193.639 29.193.639 TKU Pool - Received 10.497.890 10.497.890 10.603.298 10.603.298 General Liability - Non pool 24.470.753 13.343.728 - - Toplam 60.540.570 49.413.545 39.796.937 39.796.937

160 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.27 Equalization provision In accordance with the Communiqué on Technical Reserves put into effect starting from January 1, 2008, the companies should provide equalization provision in credit insurance and earthquake branches to equalize the fluctuations in future possible claims and for catastrophic risks. Equalization provision, started to be provided in 2008, is calculated as 12% of net premiums written in credit insurance and earthquake branches. In the calculation of net premiums, fees paid for un-proportional reinsurance agreements are considered as premiums ceded to the reinsurance firms. The companies should provide equalization provision up to reaching 150% of the highest premium amount written in a year within the last five years. In case where claims incurred, the amounts below exemption limits as stated in the contracts and the share of the reinsurance firms cannot be deducted from equalization provisions. Claims payments are deducted from first year’s equalization provisions by first in first out method. Equalization provisions are presented under “other technical reserves” in the accompanying financial statements. As of the reporting date, the Company provided equalization provision amounting to TL 255.601.084 in the accompanying unconsolidated financial statements (December 31, 2019: TL 218.075.088). 2 Summary of significant accounting policies 2.28 Related parties Parties are considered related to the Company if; (a) directly, or indirectly through one or more intermediaries, the party: --controls, is controlled by, or is under common control with the Company (this includes parent, subsidiaries and fellow subsidiaries); --has an interest in the Company that gives it significant influence over the Company; or --has joint control over the Company; (b) the party is an associate of the Company; (c) the party is a joint venture in which the Company is a venturer; (d) the party is member of the key management personnel of the Company and its parent; (e) the party is a close member of the family of any individual referred to in (a) or (d); (f) the party is an entity that is controlled or significantly influenced by, or for which significant voting power in such entity resides with directly or indirectly, any individual referred to in (d) or (g) the party is a post-employment benefit plan for the benefit of employees of the Company, or of any entity that is a related party of the Company. A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. A number of transactions are entered into with related parties in the normal course of business. 2.29 Earnings per share Earnings per share are determined by dividing the net income by the weighted average number of shares outstanding during the year attributable to the shareholders of the Company. In Turkey, companies can increase their share capital by making a pro- rata distribution of shares (“Bonus Shares”) to existing shareholders from retained earnings. For the purpose of earnings per share computations, such bonus shares issued are regarded as issued shares. Accordingly, the weighted average number of shares used in Anadolu Sigorta 2020 Annual Report these calculations has been determined taking into account the retrospective effects of such stock distributions. 2.30 Events after the reporting date Events after the reporting date that provide additional information about the Company’s position at the reporting dates (adjusting events) are reflected in the financial statements. Events after the reporting date that are not adjusting events are disclosed in the notes when material.

161 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

2.31 The new standards, amendments and interpretations The accounting policies adopted in preparation of the unconsolidated financial statements as at December 31, 2020 are consistent with those of the previous financial year, except for the adoption of new and amended IFRS and IFRIC interpretations effective as of January 1, 2020. The effects of these standards and interpretations on the Company’s financial position and performance have been disclosed in the related paragraphs. i) The new standards, amendments and interpretations which are effective as of January 1, 2020 are as follows: Definition of a Business (Amendments to TFRS 3) In May 2019, the POA issued amendments to the definition of a business in TFRS 3 Business Combinations standards. The amendments are intended to assist entities to remove the assessment regarding the definition of business. The amendments: -- clarify the minimum requirements for a business; -- remove the assessment of whether market participants are capable of replacing any missing elements; -- add guidance to help entities assess whether an acquired process is substantive; -- narrow the definitions of a business and of outputs; and -- introduce an optional fair value concentration test. The amendments to TFRS 3 are effective for annual reporting periods beginning on or after January 1, 2020 and apply prospectively. The amendments issued to TFRS 9 and TAS 39 which are effective for periods beginning on or after January 1, 2020 provide reliefs which enable hedge accounting to continue. For these reliefs, it is assumed that the benchmark on which the cash flows of hedged risk or item are based and/or, the benchmark on which the cash flows of the hedging instrument are based, are not altered as a result of IBOR reform. in connection with interest rate benchmark reform. Reliefs used as a result of amendments in TFRS 9 and TAS 39 is aimed to be disclosed in financial statements based on the amendments made in TFRS 7. Amendments to TFRS 9, TAS 39 and TFRS 7- Interest Rate Benchmark Reform The amendments issued to TFRS 9 and TAS 39 which are effective for periods beginning on or after January 1, 2020 provide reliefs which enable hedge accounting to continue. For these reliefs, it is assumed that the benchmark on which the cash flows of hedged risk or item are based and/or, the benchmark on which the cash flows of the hedging instrument are based, are not altered as a result of IBOR reform. in connection with interest rate benchmark reform. Reliefs used as a result of amendments in TFRS 9 and TAS 39 is aimed to be disclosed in financial statements based on the amendments made in TFRS 7. The amendments did not have a significant impact on the financial position or performance of the Company. Definition of Material (Amendments to TAS 1 and TAS 8) In June 2019, the POA issued amendments to TAS 1 Presentation of Financial Statements and TAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The new definition states that, ’Information is material if omitting, misstating or obscuring it could reasonably be expected to influence

Anadolu Sigorta 2020 Annual Report decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The amendments clarify that materiality will depend on the nature or magnitude of information, or both. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. The amendments to TAS 1 and TAS 8 are required to be applied for annual periods beginning on or after January 1, 2020. The amendments must be applied prospectively and earlier application is permitted. The amendments did not have a significant impact on the financial position or performance of the Company.

162 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Amendments to TFRS 16 - Covid-19 Rent Related Concessions In June 5, 2020, the POA issued amendments to TFRS 16 Leases to provide relief to lessees from applying TFRS 16 guidance on lease modifications to rent concessions arising a direct consequence of the Covid-19 pandemic. A lessee that makes this election accounts for any change in lease payments related rent concession the same way it would account for the change under the standard, if the change were not a lease modification. The practical expedient applies only to rent concessions occurring as a direct consequence of the Covid-19 pandemic and only if all of the following conditions are met: -- The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change. -- Any reduction in lease payments affects only payments originally due on or before June 30, 2021 -- There is no substantive change to other terms and conditions of the lease. A lessee will apply the amendment for annual reporting periods beginning on or after June 1, 2020. Early application of the amendments is permitted. The amendments did not have a significant impact on the financial position or performance of the Company. ii) Standards issued but not yet effective and not early adopted Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the unconsolidated financial statements are as follows. The Company will make the necessary changes if not indicated otherwise, which will be affecting the unconsolidated financial statements and disclosures, when the new standards and interpretations become effective. TFRS 10 and TAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments) In December 2017, POA postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. Early application of the amendments is still permitted. The Company will wait until the final amendment to assess the impacts of the changes. TFRS 17 - The new Standard for insurance contracts The POA issued TFRS 17 in February 2019, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. TFRS 17 model combines a current balance sheet measurement of insurance contract liabilities with the recognition of profit over the period that services are provided. Certain changes in the estimates of future cash flows and the risk adjustment are also recognised over the period that services are provided. Entities will have an option to present the effect of changes in discount rates either in profit and loss or in OCI. The standard includes specific guidance on measurement and presentation for insurance contracts with participation features. TFRS 17 will become effective for annual reporting periods beginning on or after January 1, 2023; early application is permitted. The Company is in the process of assessing the impact of the standard on financial position and performance of the Company. Amendments to TAS 1- Classification of Liabilities as Current and Non-Current Liabilities On March 12, 2020, the POA issued amendments to TAS 1 Presentation of Financial Statements. The amendments issued to TAS 1 which are effective for periods beginning on or after January 1, 2023, clarify the criteria for the classification of a liability as either current or non-current. Amendments must be applied retrospectively in accordance with TAS 8 Accounting Policies, Changes

in Accounting Estimates and Errors. Early application is permitted. The Company is in the process of assessing the impact of the Anadolu Sigorta 2020 Annual Report amendments on financial position and performance of the Company. Amendments to TFRS 3 - Reference to the Conceptual Framework In July 2020, the POA issued amendments to TFRS 3 Business combinations. The amendments are intended to replace to a reference to a previous version of the Conceptual Framework (the 1989 Framework) with a reference to the current version issued in March 2018 (the Conceptual Framework) without significantly changing requirements of TFRS 3. At the same time, the amendments add a new paragraph to TFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date. The amendments issued to TFRS 3 which are effective for periods beginning on or after January 1, 2022 and must be applied prospectively. Earlier application is permitted if, at the same time or earlier, an entity also applies all of the amendments contained in the Amendments to References to the Conceptual Framework in TFRS standards (March 2018). The Company is in the process of assessing the impact of the amendments on financial position and performance of the Company. 163 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Amendments to TAS 16 - Proceeds before intended use In July 2020, the POA issued amendments to TAS 16 Property, plant and equipment. The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment (PP&E), any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and costs of producing those items, in profit or loss. The amendments issued to TAS 16 which are effective for periods beginning on or after January 1, 2022. Amendments must be applied retrospectively only to items of PP&E made available for use on or after beginning of the earliest period presented when the entity first applies the amendment. There is no transition relief for the first time adopters. The Company is in the process of assessing the impact of the amendments on financial position and performance of the Company. Amendments to TAS 37 - Onerous contracts - Costs of Fulfilling a Contract In July 2020, the POA issued amendments to TAS 37 Provisions, Contingent Liabilities and Contingent assets. The amendments issued to TAS 37 which are effective for periods beginning on or after January 1, 2022, to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making and also apply a “directly related cost approach”. Amendments must be applied retrospectively to contracts for which an entity has not fulfilled all of its obligations at the beginning of the annual reporting period in which it first applies the amendments (the date of initial application). Earlier application is permitted. The Company is in the process of assessing the impact of the amendments on financial position and performance of the Company. Interest Rate Benchmark Reform - Phase 2 - Amendments to TFRS 9, TAS 39, TFRS 7, TFRS 4 and TFRS 16 In December 2020, the POA issued Interest Rate Benchmark Reform - Phase 2, Amendments to TFRS 9, TAS 39, TFRS 7, TFRS 4 and TFRS 16 to provide temporary reliefs which address the financial reporting effects when an interbank offering rate (IBOR) is replaced with an alternative nearly risk-free rate (RFR, amending the followings. The amendments are effective for periods beginning on or after January 1, 2021. Earlier application is permitted. Practical expedient for changes in the basis for determining the contractual cash flows as a result of IBOR reform The amendments include a practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest. Under this practical expedient, if the interest rates applicable to financial instruments change as a result of the IBOR reform, the situation is not considered as a derecognition or contract modification; instead, this would be determined by recalculating the carrying amount of the financial instrument using the original effective interest rate to discount the revised contractual cash flows. The practical expedient is required for entities applying TFRS 4 Insurance Contracts that are using the exemption from TFRS 9 Financial Instruments (and, therefore, apply TAS 39 Financial Instruments: Classification and Measurement) and for TFRS 16 Leases, to lease modifications required by IBOR reform. Relief from discontinuing hedging relationships -- The amendments permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued. -- Amounts accumulated in the cash flow hedge reserve are deemed to be based on the RFR. -- For the TAS 39 assessment of retrospective hedge effectiveness, on transition to an RFR, entities may elect on a hedge-by-hedge basis, to reset the cumulative fair value changes to zero. Anadolu Sigorta 2020 Annual Report -- The amendments provide relief for items within a designated group of items (such as those forming part of a macro cash flow hedging strategy) that are amended for modifications directly required by IBOR reform. The reliefs allow the hedging strategy to remain and not be discontinued. -- As instruments transition to RFRs, a hedging relationship may need to be modified more than once. The phase two reliefs apply each time a hedging relationship is modified as a direct result of IBOR reform.

164 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Separately identifiable risk components The amendments provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component. Additional disclosures Amendments need additional TFRS 7 Financial Instruments disclosures such as; How the entity is managing the transition to RFRs, its progress and the risks to which it is exposed arising from financial instruments due to IBOR reform, quantitative information about financial instruments that have yet to transition to RFRs and If IBOR reform has given rise to changes in the entity’s risk management strategy, a description of these changes. The amendments are mandatory, with earlier application permitted. While application is retrospective, an entity is not required to restate prior periods. The amendments are not applicable for the Company and will not have an impact on the financial position or performance of the Company. Annual Improvements - 2018-2020 Cycle In July 2020, the POA issued Annual Improvements to TFRS Standards 2018-2020 Cycle, amending the followings: -- TFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter: The amendment permits a subsidiary tto measure cumulative translation differences using the amounts reported by the parent. The amendment is also applied to an associate or joint venture. -- TFRS 9 Financial Instruments - Fees in the “10 per cent test” for derecognition of financial liabilities: The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either borrower or lender on the other’s behalf. -- TAS 41 Agriculture - Taxation in fair value measurements: The amendment removes the requirement in paragraph 22 of TAS 41 that entities exclude cash flows for taxation when measuring fair value of assets within the scope of TAS 41. Improvements are effective for annual reporting periods beginning on or after January 1, 2022. Earlier application is permitted for all. The Company is in the process of assessing the impact of the amendments/improvements on financial position or performance of the Company. 3 Critical accounting estimates and judgments in applying accounting policies The notes given in this section are provided in addition to the commentary on the management of insurance risk note 4.1 - Management of insurance risk and note 4.2 - Financial risk management. The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Anadolu Sigorta 2020 Annual Report

165 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

In particular, information about significant areas at estimation uncertainty and critical judgment in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: Note 4.1 - Management of insurance risk Note 4.2 - Financial risk management Note 10 - Reinsurance assets and liabilities Note 11 - Financial assets Note 12 - Loans and receivables Note 17 - Insurance contract liabilities and reinsurance assets Note 17 - Deferred commissions Note 19 - Trade and other payables, deferred income Note 21 - Deferred tax Note 23 - Other liabilities and provisions Evaluation of the effect of Covid 19 pandemic on the Company’s activities Covid 19 pandemic brought economical problems with it in global scale. Within this scope to reduce the negative effects in question economical precautions are started to be implemented by many countries. In our country, with the first coronavirus case seen in March and the increasing number of cases, many measures have been taken in the field of social life and economy. In addition to the measures that regulate social life according to the epidemic, support packages to reduce the negative effects of the epidemic have been announced in the field of economy. When the pandemic is evaluated in terms of our sector due to the decrease in traffic density and postponement of health claims, claim payments in the motor vehicles, motor vehicle third party liability and health branches, and marketable securities profits are monitored. As of December 31, 2020, the pandemic has not negatively affected the financial performance of the Company. When the premium production compared to 2019 in non-life insurance sector, there was an increase of 17.7% in 2020. During the pandemic period, there was no significant increase in the net damage amount and policy cancellations. In the health branch, it is observed that the frequency of claims for 2020, due to insurers have avoided going to the hospital and postponed their treatment to future dates. As a result of the examination of inpatient and outpatient treatment data, the Company has added 40.098.588 TL provision for treatments postponed by the insured to future dates due to COVID-19. When we analyse our investment income, the balanced distribution of our securities portfolio is considered as another important factor that prevents our assets from being exposed to high stress during the pandemic process. In line with these data, when our financial indicators are considered as a whole, it is considered that our activities and profitability level have a sustainable structure. On the other hand, necessary precautions have been taken for our personnel to work remotely and our practises have been shaped in this direction not to disrupt our operational activities. In this period, there was no disruption caused by remote working in the fields of customer relations, operations and information technologies. In addition, our customer service is maintained without interruption from all contact points including our call center and digital channels. Anadolu Sigorta 2020 Annual Report

166 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

4 Management of insurance and financial risk 4.1 Management of insurance risk Insurance risk is defined as coverage for exposures that exhibit a possibility of financial loss due to applying inappropriate and insufficient insurance techniques. Main reasons of insurance risk exposure result from the risk selection and inaccurate calculation of insurance coverage, policy terms and fee or inaccurate calculation of coverage portion kept within the Company and coverage portion transfers to policyholders and transfer conditions. Objective of managing risks arising from insurance contracts and policies used to minimize such risks Potential risks that may be exposed in transactions are managed based on the requirements set out in the Company’s “Risk Management Policies” issued by the approval of the Board of Directors. The main objective of risk management policies is to determine the risk measurement, assessment, and control procedures and maintain consistency between the Company’s asset quality and limitations allowed by the insurance standards together with the Company’s risk tolerance of the accepted risk level assumed in return for a specific consideration. In this respect, instruments that are related to risk transfer, such as; insurance risk selection, risk quality follow-up by providing accurate and complete information, effective monitoring of level of claims by using risk portfolio claim frequency, treaties, facultative reinsurance contracts and coinsurance agreements, and risk management instruments, such as; risk limitations, are used in achieving the related objective. Risk tolerance is determined by the Company’s Board of Directors by considering the Company’s long-term strategies, equity resources, potential returns and economical expectations, and it is presented by risk limitations. Authorization limitations during policy issuing include authorizations for risk acceptances granted based on geographical regions in relation to unacceptable special risks or pre- approved acceptable special risks, insurance coverage to agencies, district offices, technical offices, assistant general managers and top management in the policy issuance period and authorizations for claim payment granted to district offices, claim management administration, automobile claims administration and Claim Committee established by the managing director and assistant managing director in the claim payment period. In any case, risk acceptance is based on technical income expectations under the precautionary principle. In determining insurance coverage, policy terms and fee, these expectations are based accordingly It is essential that all the authorized personnel in charge of executing policy issuance transactions, which is the initial phase of insurance process, should ensure to gather or provide all the accurate and complete information to issue policies in order to obtain evidence on the acceptable risks that the Company can tolerate from the related insurance transactions. On the other hand, decision to be made on risk acceptance will be possible by transferring the coverage to the reinsurers and/or co-insurers and considering the terms of the insurance policy. In order to avoid destructive losses over company’s financial structure, company transfers the exceeding portion of risks assumed over the Company’s risk tolerance and equity resources through treaties, facultative reinsurance contracts and coinsurance agreements to reinsurance and coinsurance companies. Insurance coverage and policy terms of reinsurance are determined by assessing the nature of each insurance branch. Insurance risks do not generally have significant unrecoverable losses in the course of ordinary transactions, except for risks associated with earthquake and other catastrophic risks. Therefore, there is a high sensitivity to earthquake and catastrophic risks. The case of potential claims’ arising from earthquake and other catastrophic risks exceeding the maximum limit of the excess of loss agreements, such risks are treated as the primary insurance risks and are managed based on the precautionary principle. Maximum limit of excess of loss agreements is determined based on the worst case scenario on the possibility of an earthquake that Istanbul might be Anadolu Sigorta 2020 Annual Report exposed to in terms of its severity and any potential losses incurred in accordance with the generally accepted international earthquake models. The total amount of protection for catastrophic risks of the Company is identified taking into the compensation amount for an earthquake will occur in a 1000 years.

167 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Insurance risk concentration The Company’s gross and net insurance risk concentrations (net of reinsurer share) in terms of insurance branches are summarized as below: Total claims liability (*) Gross total Reinsurance share of Net total December 31, 2020 claims liability total claims liability claims liability Motor vehicles liability (MTPL) 3.434.131.323 (972.614.103) 2.461.517.220 General liability 1.732.231.840 (575.606.873) 1.156.624.967 Fire and natural disasters 689.952.705 (293.065.879) 396.886.826 General losses 256.136.378 (99.764.412) 156.371.966 Motor vehicles 281.856.081 (975.834) 280.880.247 Water vehicles 135.902.709 (78.887.425) 57.015.284 Marine 98.631.174 (53.131.470) 45.499.704 Accident 53.300.112 (13.591.537) 39.708.575 Financial losses 67.884.960 (49.068.952) 18.816.008 Air crafts liability 54.963.820 (33.034.874) 21.928.946 Air crafts 96.928.646 (81.077.134) 15.851.512 Health 58.948.513 (3.553.111) 55.395.402 Credit 21.463.649 (8.478.188) 12.985.461 Breach of trust 25.371.770 (15.155.635) 10.216.135 Legal protection 838.528 - 838.528 Total 7.008.542.208 (2.278.005.427) 4.730.536.781

Total claims liability (*) Gross total Reinsurance share of Net total December 31, 2019 claims liability total claims liability claims liability Motor vehicles liability (MTPL) 2.757.989.836 (630.933.195) 2.127.056.641 General liability 1.194.449.392 (379.887.273) 814.562.119 Fire and natural disasters 547.395.933 (230.576.655) 316.819.278 General losses 242.194.661 (129.901.722) 112.292.939 Motor vehicles 164.116.549 (894.208) 163.222.341 Water vehicles 99.681.496 (54.894.362) 44.787.134 Marine 63.249.747 (34.849.060) 28.400.687 Accident 50.167.205 (14.249.572) 35.917.633 Financial losses 48.673.125 (43.166.801) 5.506.324 Air crafts liability 35.593.428 (16.138.037) 19.455.391 Air crafts 37.611.686 (22.722.985) 14.888.701 Health 14.060.081 (767.418) 13.292.663 Credit 4.731.130 (2.609.905) 2.121.225 Breach of trust 3.674.164 (356.519) 3.317.645 Legal protection 675.001 - 675.001

Anadolu Sigorta 2020 Annual Report Total 5.264.263.434 (1.561.947.712) 3.702.315.722

(*) Total claims liability includes outstanding claims reserve (excluding contingent amounts deducted from claims reserve determined by winning probability) and incurred but not reported claims.

168 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Gross and net insurance risk concentrations of the insurance contracts (net of reinsurer share) based on geographical regions are summarized as below: Total claims liability (*) Gross total Reinsurance share of Net total December 31, 2020 claims liability total claims liability claims liability

Turkey 3.527.479.389 1.230.774.992 2.296.704.397 Europe 68.378.994 46.240.711 22.138.283 America 7.500.428 5.803.705 1.696.723 Asia 64.034.221 49.642.402 14.391.819 Australia 110.306 - 110.306 Africa 6.474.843 2.838.935 3.635.908 Total 3.673.978.181 1.335.300.745 2.338.677.436

Total claims liability (*) Gross total Reinsurance share of Net total December 31, 2020 claims liability total claims liability claims liability

Marmara Region 1.437.521.562 545.930.522 891.591.040 Middle Anatolian Region 658.157.477 240.523.729 417.633.748 Aegean Region 385.661.476 102.603.386 283.058.090 Mediterranean Region 378.549.504 132.485.870 246.063.634 Black Sea Region 287.297.568 108.581.601 178.715.967 East Anatolian Region 155.693.753 48.020.571 107.673.182 South East Anatolian Region 224.598.049 52.629.313 171.968.736 Total 3.527.479.389 1.230.774.992 2.296.704.397

(*)Total claims liability includes estimated compensation indemnity for realized claims. Gross incurred but not reported claims amounting to TL 3.766.208.194, discount of outstanding claim reserves amounting to TL (1.502.363.156), amounting to TL (522.922.583) Risky Insured Pool and TKU (Medical Malpractice) Pool IBNR and discount, outstanding claims of treaty activities which could not be distributed to geographical regions amounting to TL 547.796.406 are excluded from the table. Total claims liability (*) Gross total Reinsurance share of Net total December 31, 2019 claims liability total claims liability claims liability

Turkey 3.058.581.260 935.991.869 2.122.589.391 Europe 46.245.730 35.828.370 10.417.360 America 2.828.374 2.637.734 190.640 Asia 22.877.420 17.398.434 5.478.986 Australia 1.788.601 1.574.723 213.878 Africa 1.240.367 632.599 607.768 Total 3.133.561.752 994.063.729 2.139.498.023 Anadolu Sigorta 2020 Annual Report

169 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Total claims liability (*) Gross total claims Reinsurance share of Net total December 31, 2019 liability total claims liability claims liability

Marmara Region 1.292.549.469 462.137.756 830.411.713 Middle Anatolian Region 537.114.497 168.228.466 368.886.031 Aegean Region 320.556.887 75.914.641 244.642.246 Mediterranean Region 298.294.446 85.197.722 213.096.724 Black Sea Region 194.479.315 39.913.745 154.565.570 South East Anatolian Region 183.981.114 59.207.930 124.773.184 East Anatolian Region 231.605.532 45.391.609 186.213.923 Total 3.058.581.260 935.991.869 2.122.589.391

(*)Total claims liability includes estimated compensation indemnity for realized claims. Gross incurred but not reported claims amounting to TL 2.666.263.074, discount of outstanding claim reserves amounting to TL (1.035.782.760), amounting to TL (268.537.006) Risky Insured Pool and TKU (Medical Malpractice) Pool IBNR and discount, outstanding claims of treaty activities which could not be distributed to geographical regions amounting to TL 441.533.030 and the amounting TL (240.658.639) potential income deducted from the outstanding claims processed in the case are excluded from the table. Given insurance collateral amounts in respect to branches December 31, 2020 December 31, 2019

Motor vehicles liability (MTPL) 5.562.229.936.481 4.381.468.022.099 Fire and natural disasters 490.304.484.506 334.963.358.206 Health 203.616.493.952 104.933.815.558 Accident 147.865.505.164 85.706.225.278 General liability 83.143.493.570 69.241.457.809 General losses 168.542.050.357 90.949.839.508 Motor vehicles 988.648.769.850 208.191.468.654 Marine 31.198.685.454 21.155.205.408 Air crafts liability 12.169.903.515 7.647.446.368 Legal protection 5.429.439.020 4.625.438.228 Water vehicles 17.360.344.364 4.049.541.782 Breach of trust 10.304.363 - Financial losses 7.489.884.589 1.309.671.282 Aircrafts 1.757.666.019 2.120.924.845 Total(*) 7.719.766.961.204 5.316.362.415.025

(*) Net amount which deducted share of reinsurance and social security 4.2 Management of financial risk Introduction and overview This note presents information about the Company’s exposure to each of the below risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. The Company has exposure to the following Anadolu Sigorta 2020 Annual Report risks from its use of financial instruments: -- credit risk -- liquidity risk -- market risk The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. Duties and responsibilities of the Risk Management and Internal Control Department include design and implementation of risk management system and identification and implementation of risk management policies. It is also responsible for ensuring that the Company implements all necessary risk management techniques. Activities of the Risk Management and Internal Control Department are managed directly by General Manager. The Board of Directors monitors the effectiveness of the risk management system through the internal audit department.

170 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Risk management policies and guidelines are set by the Board of Directors and applied by the top management. These policies include organisation and scope of the risk management function, risk measurement and assessment methods, duties and responsibilities of the Board of Directors, top management and all of the employees, procedures followed in the case of limit extension and compulsory approval and confirmation processes for certain situations.. Credit risk Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The balance sheet items that the Company is exposed to credit risks are as follows: -- Cash at banks -- Other cash and cash equivalents -- Available for sale financial assets (except equity-shares) -- Financial assets held for trading (except equity-shares) -- Held to maturity financial asset -- Premium receivables from policyholders -- Receivables from intermediaries (agencies) -- Receivables from reinsurance companies related to commissions and claims paid -- Reinsurance shares of insurance liability -- Receivables from related parties -- Other receivables Reinsurance contracts are the most common method to manage insurance risk. The contract does not, however, discharge the Company’s liability as the primary insurer. If a reinsurer fails to pay a claim for any reason, the Company remains liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an annual basis by reviewing their financial strength prior to finalization of the reinsurance contract. Net book value of the assets that is exposed to credit risk is shown in the table below. December 31, 2020 December 31, 2019

Cash and cash equivalents (Note 14) 3.277.261.309 4.636.377.383 Receivables from main operations (Note 12) 2.311.524.655 1.843.388.811 Reinsurer share in provision for outstanding claims (Note 10), (Note 17) 2.278.005.427 1.561.947.712 Financial assets (Note 11) (*) 4.290.727.270 1.689.487.069 Other receivables (Note 12) 21.665.563 30.738.125 Other miscellaneous current assets (Note 12) 104.173 - Income accruals (Note 12) 188.679.459 26.787.559 Total 12.367.967.856 9.788.726.659

(*) Equity shares amounting to TL 344.196.120 are not included (December 31, 2019: TL 189.862.023). As of December 31, 2020 and 2019, the aging of the receivables from main operations are as follows: December 31, 2020 December 31, 2019 Anadolu Sigorta 2020 Annual Report Gross Amount Provision Gross Amount Provision

Not past due 2.063.630.923 - 1.605.333.096 - Past due 0-30 days 228.788.466 (2.022.721) 220.601.874 (4.212.086) Past due 31-60 days 26.005.034 (19.386.963) 20.962.920 (2.229.697) Past due 61-90 days 16.170.485 (1.660.569) 6.765.707 (2.223.380) More than 90 days (*) 454.849.312 (454.849.312) 378.668.190 (380.277.813) Total 2.789.444.220 (477.919.565) 2.232.331.787 (388.942.976)

(*) As per the February 3, 2005 dated and B.02.1.HM.O.SGM.0.3.1/01/05 numbered Circular issued by the T.C. Ministry of Treasury and Finance, in case where subrogation is subject to claim/legal action, related subrogation amount is recognized as doubtful receivables and allowance for doubtful receivables is provided by the same amount in the financial statements. Related amounts are presented in “More than 90 days” line in the above table. 171 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

The movements of the allowances for receivables from main operations during the period are as follows: December 31, 2020 December 31, 2019

Provision for receivables from insurance operations at the beginning of the period 360.768.832 296.775.530 Provision for receivables provided for subrogation - salvage receivables during the period (Note 47) 90.299.815 60.835.701 Provision for losses provided during the period (Note 47) 2.151.009 3.410.377 Collections during the period (44.534) (252.776) Provision for receivables from insurance operations at the end of the period 453.175.122 360.768.832

Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet cash commitments associated with financial instruments. Management of the liquidity risk The Company considers the maturity match between asset and liabilities for the purpose of avoiding liquidity risk and ensure that it will always have sufficient liquidity to meet its liabilities when due. Maturity distribution of monetary assets and liabilities: 6 to 12 December 31, 2020 Net book value Up to 1 month 1 to 3 months 3 to 6 months months Over 1 year Unallocated

Cash and cash equivalents 3.277.307.929 1.034.083.133 1.880.806.913 309.554.246 - - 52.863.637 Financial assets 4.634.923.390 95.076.091 277.243.442 207.144.555 214.025.254 2.763.980.295 1.077.453.753 Receivables from main operations 2.311.524.655 115.910.267 737.831.864 604.207.270 107.667.249 745.908.005 - Other receivables 21.665.563 16.488.790 2.483.938 784.926 1.569.853 326.932 11.124 Income accruals 188.679.459 128.968.086 36.251.729 18.534.652 - - 4.924.992 Total monetary assets 10.434.100.996 1.390.526.367 2.934.617.886 1.140.225.649 323.262.356 3.510.215.232 1.135.253.506

Financial liabilities 58.754.871 252.481 504.962 757.443 1.514.885 55.725.100 - Payables arising from main operations 933.510.705 280.906.342 100.456.130 155.290.024 396.858.209 - - Other liabilities 135.195.913 63.771.855 60.046.656 - 11.377.402 - - Insurance technical provisions (*) 4.730.536.781 292.917.992 585.835.983 392.728.647 543.202.447 2.915.851.712 - Provisions for taxes and other similar obligations 75.787.480 75.787.480 - - - - - Provisions for other risks and expense accruals 125.370.179 - 16.661.387 - 67.892.342 - 40.816.450 Total monetary liabilities 6.059.155.929 713.636.150 763.505.118 548.776.114 1.020.845.285 2.971.576.812 40.816.450

172 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

6 to 12 December 31, 2019 Net book value Up to 1 month 1 to 3 months 3 to 6 months months Over 1 year Unallocated

Cash and cash equivalents 4.636.399.852 1.393.190.126 2.411.408.850 624.889.903 188.920.556 - 17.990.417 Financial assets 1.879.349.091 8.498.152 8.302.786 65.830.035 16.173.675 526.741.497 1.253.802.946 Receivables from main operations 1.843.388.811 94.986.101 629.973.942 511.589.167 576.056.165 30.783.436 - Other receivables 30.738.125 19.340.694 4.309.675 2.251.662 4.503.323 326.932 5.839 Income accruals 26.787.559 18.582.609 7.735.389 - - - 469.561 Total monetary assets 8.416.663.438 1.534.597.682 3.061.730.642 1.204.560.767 785.653.719 557.851.865 1.272.268.763

Financial liabilities 116.256.462 14.040.290 26.179.673 15.354.631 6.126.632 54.555.236 - Payables arising from main operations 754.579.442 277.067.144 116.417.425 137.173.134 223.921.739 - - Other liabilities 131.300.458 71.619.644 50.129.893 - 9.550.921 - - Insurance technical provisions (*) 3.702.315.722 217.125.796 434.251.593 303.790.155 426.862.650 2.320.285.528 - Provisions for taxes and other similar obligations 134.326.972 63.183.955 71.143.017 - - - - Provisions for other risks and expense accruals 135.746.624 4.360.015 19.661.118 - 78.276.864 - 33.448.627 Total monetary liabilities 4.974.525.680 647.396.844 717.782.719 456.317.920 744.738.806 2.374.840.764 33.448.627

(*) Provision for outstanding claims is presented as short term liabilities in the accompanying unconsolidated financial statements whereas maturity distribution is presented according to projected payment dated in the above table. Market risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and credit spreads will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk. Currency risk The Company is exposed to currency risk through insurance and reinsurance transactions in foreign currencies. Foreign exchange gains and losses arising from foreign currency transactions are recorded at transaction dates. At the end of the periods, foreign currency assets and liabilities evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates and the differences arising from foreign currency rates are recorded as foreign exchange gain or loss in the statement of income. Anadolu Sigorta 2020 Annual Report

173 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

The Company’s exposure to foreign currency risk is as follows: December 31, 2020 US Dollar Euro Other currencies Total

Receivables from main operations 611.273.897 183.594.209 130.384.508 925.252.614 Financial assets 2.481.701.254 249.698.442 - 2.731.399.696 Cash and cash equivalents 114.010.930 837.120.165 13.080.445 964.211.540 Total foreign currency assets 3.206.986.081 1.270.412.816 143.464.953 4.620.863.850

Financial liabilities 414.281.115 146.687.309 121.746.314 682.714.738 Insurance technical provisions 287.240.691 91.458.814 (1.486.131) 377.213.374 Payables arising from main operations 2.211.365.385 1.037.827.549 - 3.249.192.934 Total foreign currency liabilities 2.912.887.191 1.275.973.672 120.260.183 4.309.121.046

Net financial position 294.098.890 (5.560.856) 23.204.770 311.742.804

December 31, 2019 US Dollar Euro Other currencies Total

Receivables from main operations 449.103.814 133.734.673 95.583.286 678.421.773 Financial assets 505.368.533 17.113.531 - 522.482.064 Cash and cash equivalents 43.062.595 2.986.092.687 3.009.149 3.032.164.431 Total foreign currency assets 997.534.942 3.136.940.891 98.592.435 4.233.068.268

Financial liabilities 226.054.310 2.951.667.120 - 3.177.721.430 Insurance technical provisions 363.321.085 107.152.249 74.161.618 544.634.952 Payables arising from main operations 209.298.512 43.675.728 (343.540) 252.630.700 Total foreign currency liabilities 798.673.907 3.102.495.097 73.818.078 3.974.987.082

Net financial position 198.861.035 34.445.794 24.774.357 258.081.186

TL equivalents of the related monetary amounts denominated in foreign currencies are presented in the above table. If technical provision denominated in any currency not specified, it is evaluated are evaluated by the Central Bank of the Republic of Turkey’s spot sales rates as of December 31, 2020 and Foreign currency transactions are recorded at the foreign exchange rates ruling at the dates of the transactions and foreign currency denominated monetary items are evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates as of December 31, 2020. Exposure to currency risk Foreign currency rates used for the translation of foreign currency denominated assets and liabilities as of December 31, 2020 and 2019 are as follows: US Dollar Euro

December 31, 2020 7,3405 9,0079 Anadolu Sigorta 2020 Annual Report December 31, 2019 5,9402 6,6506

A 10 percent depreciation of the TL against the following currencies as of December 31, 2020 and 2019 would have increased or decreased equity and profit or loss (excluding tax effects) by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. In case of a 10 percent appreciation of the TL against the following currencies, the effect will be in opposite direction.

174 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

December 31, 2020 December 31, 2019 Profit or loss Equity (*) Profit or loss Equity (*)

US Dollar 29.409.889 29.409.889 19.886.103 19.886.103 Euro (556.086) (556.086) 3.444.579 3.444.579 Other 2.320.477 2.320.477 2.477.436 2.477.436 Total, net 31.174.280 31.174.280 25.808.118 25.808.118

(*) Equity effect also includes profit or loss effect of 10% depreciation of TL against related currencies. Exposure to interest rate risk The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows or fair values of financial instrument because of a change in market interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for repricing bands. As of reporting date; the interest rate profile of the Company’s interest earning financial assets and interest bearing financial liabilities are detailed as below: December 31, 2020 December 31, 2019

Financial assets/(liabilities) with fixed interest rates: Available for sale financial assets - Other (Note 11) 54.114.245 13.313.760 Cash at banks (Note 14) (*) 2.452.964.912 4.031.067.465 Other-financial liabilities (Note 20) (58.754.871) (56.783.709) Available for sale financial assets - Government bonds (Note 11) 725.184.724 203.004.585 Available for sale financial assets - Private debt securities (Note 11) 1.463.708.774 320.178.020 Held to maturity investments - Government bonds (Note 11) 322.276.101 - Held to maturity investments - Private debt securities (Note 11) 715.780.984 - Cash deposited to insurance and reinsurance companies (Note 12) 192.665.786 144.027.452

Financial assets with variable interest rates: Available for sale financial assets - Government bonds (Note 11) 23.496.468 25.339.522 Available for sale financial assets - Private debt securities (Note 11) 252.784.521 77.024.018

(*) Demand deposits amounting to TL 52.817.017 are not included. (December 31, 2019: TL 17.967.948). Anadolu Sigorta 2020 Annual Report

175 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Interest rate sensitivity of the financial instruments The interest rate sensitivity of the income statement is the effect of changes in interest rates on net interest income for the period ended December 31, 2020 and 2019. This analysis assumes that the other variables remain constant. The table below does not include the effect of the change in interest rates on the income statement and equity, the related loss or tax effects on income. Income Statement Equity (*) December 31, 2020 100 bp increase 100 bp decrease 100 bp increase 100 bp decrease

Financial assets held for trading - - - - Available for sale financial assets - - (54.359.720) 56.761.532 Held to maturity investments (20.591.607) 21.406.557 - - Total, net (20.591.607) 21.406.557 (54.359.720) 56.761.532

(*) Equity effect also includes profit or loss effect of assumed change in interest rates.. Income Statement Equity (*) December 31, 2019 100 bp increase 100 bp decrease 100 bp increase 100 bp decrease

Financial assets held for trading - - - - Available for sale financial assets - - (12.643.815) 13.126.972 Total, net - - (12.643.815) 13.126.972

(*) Equity effect also includes profit or loss effect of assumed change in interest rates. Fair value information The estimated fair values of financial instruments have been determined using available market information, and where they exist, appropriate valuation methodologies. The Company has classified its financial assets as held for trading, available for sale or held to maturity. As of the reporting date, available for sale financial assets and financial assets held for trading are measured at their fair values based on their quoted prices or fair value information obtained from brokers in the accompanying unconsolidated financial statements. Equity shares not traded in active markets are measured at cost less impairment losses if any. The Company has no held to maturity investment measured at amortised cost calculating the effective interest method. Management estimates that the fair value of other financial assets and liabilities are not materially different than their net book value Fair value sensitivity of the equity shares Equity share price risk is the risk that the fair values of equity shares decrease as a result of the changes in the levels of equity shares indices and the value of equity shares. The effect on income as a result of 10% change in the fair value of equity share instruments held as held for trading financial assets (traded at İstanbul Stock Exchange) due to a reasonably possible change in equity share indices, with all other variables held constant, is as follows (excluding tax effect): December 31, 2020 December 31, 2019 Profit or loss Equity (*) Profit or loss Equity (*) Anadolu Sigorta 2020 Annual Report Financial assets held for trading (2.975.447) (2.975.447) (2.735.839) (2.735.839) Available for sale financial assets - (31.444.165) - (16.250.363) Associates - (74.476.000) - (58.480.000) Total, net (2.975.447) (108.895.612) (2.735.839) (77.466.202)

(*) Equity effect also includes profit or loss effect of assumed change in interest rates.

176 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Classification of fair value measurements TFRS 7 - Financial instruments: Disclosures requires the classification of fair value measurements into a fair value hierarchy by reference to the observability and significance of the inputs used in measuring fair value of financial instruments measured at fair value to be disclosed. This classification basically relies on whether the relevant inputs are observable or not. Observable inputs refer to the use of market data obtained from independent sources, whereas unobservable inputs refer to the use of predictions and assumptions about the market made by the Company. This distinction brings about a fair value measurement classification generally as follows: Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3: Fair value measurements using inputs for the assets or liability that are not based on observable market data (unobservable inputs). Classification requires the utilization of observable market data, if available. The classification of fair value measurements of financial assets and liabilities measured at fair value are as follows: December 31, 2020 Level 1 Level 2 Level 3 Total

Financial assets: Associates (Note 9) 744.760.000 - - 744.760.000 Financial assets held for trading (Note 11) 182.206.776 47.692.962 - 229.899.738 Available for sale financial assets (*) (Note 11) 2.853.898.997 512.127.114 - 3.366.026.111 Held to maturity investments (Note 11) 1.038.057.085 - - 1.038.057.085 Total financial assets 4.818.922.858 559.820.076 - 5.378.742.934

December 31, 2019 Level 1 Level 2 Level 3 Total

Financial assets: Associates (Note 9) 584.800.000 - - 584.800.000 Financial assets held for trading (Note 11) 135.592.200 23.858.516 - 159.450.716 Available for sale financial assets (*) (Note 11) 978.066.040 740.295.183 - 1.718.361.223 Total financial assets 1.698.458.240 764.153.699 - 2.462.611.939

(*) As of December 31, 2020, equity shares that are not publicly traded and the determination of fair values could not be obtained reliably amounting to TL 940.456 have been measured at cost value (December 31, 2019: TL 1.537.152). Anadolu Sigorta 2020 Annual Report

177 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Gains and losses from financial assets Gains and losses recognized in the statement of income: December 31, 2020 December 31, 2019

Interest income from bank deposits 227.366.056 241.228.664 Foreign exchange gains 1.017.311.373 427.938.663 Income from investments in associates 56.000.000 26.000.000 Income from debt securities classified as available-for-sale financial assets 158.075.430 71.974.640 Income from debt securities classified as trading financial assets - - Income from debt securities classified as held to maturity financial investments 56.474.517 - Income from equity shares classified as available-for-sale financial assets 34.236.406 5.826.619 Income from equity shares classified as trading financial assets 33.099.883 10.167.315 Income from investment funds as available for sale financial assets 80.367.752 45.937.127 Income from investment funds as trading financial assets 21.988.483 30.033.219 Income from derivative transactions 787.297.521 497.572.811 Other 5.590.660 10.599.975 Investment income 2.477.808.081 1.367.279.033

Loss from valuation of financial assets (3.920.793) (4.981.343) Foreign exchange losses (588.690.933) (173.599.648) Loss from derivative transactions (776.356.453) (30.741.125) Loss from disposal of financial assets (55.684.845) (62.299.358) Investment expenses - including interest (19.156.686) (38.231.786) Investment expenses (1.443.809.710) (309.853.260)

Financial gains and losses recognized in the statement of income, net 1.033.998.371 1.057.425.773

Financial gains and losses recognized in equity: December 31, 2020 December 31, 2019

Fair value changes in investments in associates (Note 15) 215.960.000 93.940.000 Net gains transferred from statement of equity to the statement of income on disposal of available for sale financial assets (Note 15) (79.745.401) 5.577.018 Fair value changes in available-for-sale financial assets (Note 15) 190.863.930 105.552.594 Gains and losses recognized in equity, net 327.078.529 205.069.612

178 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

In accordance with the “Communiqué on Measurement and Assessment of Capital Adequacy for Insurance, Reinsurance and Individual Pension Companies” issued by T.C. Ministry of Treasury and Finance on January 19, 2008 dated and 26761 numbered; capital adequacy calculations are carried out twice a year in June and December, within the following two months. As of the reporting date, the Company measured its minimum capital requirement as TL 2.083.507.686 in the calculation of the Company’s last reporting period June 30, 2020. As of June 30, 2020, the capital amount of the Company presented in the unconsolidated financial statements is TL 462.284.037 above the minimum capital requirement amounts calculated according to the communiqué. 5 Segment reporting A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Business segment A business segment reporting of the Company is presented in accordance with TFRS 8 - Operating Segments standard in this section. Insurance on Fire and Natural Disaster Insurance on fire and natural disasters covers material damages occurred due to fire, lightening, explosion or smoke, steam and temperature resulted from fire, lightning and explosion up to insurance policy limits. Insurance on Motor Third Party Liability According to the Motorway Traffic Code numbered 2918, Motor Third Party Liability Insurance is covers vehicle owner’s legal liability for all bodily damages to third persons and financial damages to other vehicles. Damages caused by the trailer or semi-trailers (included light trailers) or the vehicles pulled is covered by the insurance of the trailer. However, the trailers used for transportation of people should be included in an additional liability insurance in order to obtain coverage. In order to reduce and prevent the damage in the accident happened, reasonable and necessary expenses of the policyholder is compensated by the Company. This insurance also covers unfair claims against the policyholders. Insurance on Motor Vehicles Insurance on motor vehicles covers the following dangers related with vehicles. It is possible to widen policy scope for accessories or audio, display and communication devices which are not included in standard version of the vehicle by specifying on the insurance policy. -- Accident with the motorized or non-motorized vehicles which used in high-ways, -- Crash with fixed or moving items without desire of the driver or accidents due to crash, capsize, fall or tumble, -- The actions of third parties resulted from bad intention or mischief, -- Burn, -- Theft or attempted theft. Insurance on Health Insurance on health compensates treatment costs of illnesses or accidental injuries during the period of insurance and, if any, daily

allowances in this general framework with special conditions up to the amount written in the policy. Geographical limits of the Anadolu Sigorta 2020 Annual Report insurance are stated in the policy.

179 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Geographical segment The main geographical segment which the Company operates is Turkey. Hence, the Company has not disclosed report on geographical segments. Fire and Motor third Motor natural party liability Health vehicles disasters Other Unallocated Total

January 1 - December 31, 2020 1- Earned Premiums (Net of Reinsurer Share) 1.246.266.764 832.007.966 1.387.887.075 549.640.678 927.415.229 - 4.943.217.712 1.1- Written Premiums (Net of Reinsurer Share) 1.403.405.172 898.115.206 1.499.676.771 618.547.831 1.015.730.632 - 5.435.475.612 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) (160.760.120) (66.107.240) (111.789.696) (68.907.153) (76.419.961) - (483.984.170) 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) 3.621.712 - - - (11.895.442) - (8.273.730) 2- Other Technical Income (Net of Reinsurer Share) 23.759 92.627 4.701.048 842.464 172.114 - 5.832.012 3- Accrued Salvage and Subrogation Income 46.462.120 - 44.000.508 17.432.541 15.540.585 - 123.435.754 Technical income (*) 1.292.752.643 832.100.593 1.436.588.631 567.915.683 943.127.928 - 5.072.485.478

1- Incurred Losses (Net of Reinsurer Share) (1.175.207.342) (585.773.568) (997.150.735) (402.268.054) (903.325.398) - (4.063.725.097) 1.1- Claims Paid (Net of Reinsurer Share) (840.746.763) (543.670.828) (879.492.830) (322.200.505) (449.393.112) - (3.035.504.038) 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) (334.460.579) (42.102.740) (117.657.905) (80.067.549) (453.932.286) - (1.028.221.059) 2- Changes in provision for bonus and discounts Net of Reinsurer Share and Less the Amounts Carried Forward), - (4.000.000) - - - - (4.000.000) 3- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) - (334.181) (3.877.260) (27.992.268) (5.322.287) - (37.525.996) 4- Operating Expenses (240.598.647) (187.263.619) (301.674.556) (183.852.752) (212.986.609) - (1.126.376.183) 5- Other Technical Expenses (26.980.604) (19.579.014) (83.507.930) (12.546.531) (16.494.035) - (159.108.114) Technical expense (1.442.786.593) (796.950.382) (1.386.210.481) (626.659.605) (1.138.128.329) - (5.390.735.390)

Investment Income 2.487.840.886 2.487.840.886 Investment Expense (*) (1.505.628.661) (1.505.628.661) Other (**) (88.715.851) (88.715.851) Net income before tax 575.246.462

Income tax (114.608.750) (114.608.750)

Net income 460.637.712

(*) Investment income transferred to non-technical section from technical section amounting to TL 1.053.155.056 is not included. (**) Deferred tax expense amounting TL 14.573.998 is presented as income tax. Anadolu Sigorta 2020 Annual Report

180 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Fire and Motor third Motor natural party liability Health vehicles disasters Other Unallocated Total

January 1 - December 31, 2019 1- Earned Premiums (Net of Reinsurer Share) 1.014.332.516 709.742.248 1.169.716.718 490.196.173 799.790.901 - 4.183.778.556 1.1- Written Premiums (Net of Reinsurer Share) 1.094.356.555 769.539.431 1.299.303.721 517.497.388 843.681.588 - 4.524.378.683 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) (72.690.126) (59.797.183) (129.587.003) (27.301.215) (61.230.457) - (350.605.984) 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) (7.333.913) - - - 17.339.770 - 10.005.857 2- Other Technical Income (Net of Reinsurer Share) 19.678 276.804 6.767.836 590.624 95.597 - 7.750.539 3- Accrued Salvage and Subrogation Income 23.955.961 - 4.312.689 24.525.290 (1.315.528) - 51.478.412 Technical income (*) 1.038.308.155 710.019.052 1.180.797.243 515.312.087 798.570.970 - 4.243.007.507

1- Incurred Losses (Net of Reinsurer Share) (1.150.522.600) (622.174.518) (748.225.417) (312.241.186) (666.600.356) - (3.499.764.077) 1.1- Claims Paid (Net of Reinsurer Share) (876.920.740) (619.729.808) (735.730.063) (248.155.237) (374.314.875) - (2.854.850.723) 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) (273.601.860) (2.444.710) (12.495.354) (64.085.949) (292.285.481) - (644.913.354) 2- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) - - (5.317.687) (31.698.751) (5.312.110) - (42.328.548) 3- Operating Expenses (217.417.298) (157.456.516) (263.025.154) (160.398.377) (204.984.763) - (1.003.282.108) 4- Other Technical Expenses (31.248.437) (25.842.109) (61.762.442) (16.388.869) (14.730.302) - (149.972.159) Technical expense (1.399.188.335) (805.473.143) (1.078.330.700) (520.727.183) (891.627.531) - (4.695.346.892)

Investment Income 1.373.406.933 1.373.406.933 Investment Expense (*) (355.309.280) (355.309.280) Other (**) (56.815.973) (56.815.973) Net income before tax 508.942.295

Income tax (105.879.923) (105.879.923)

Net income 403.062.372

(*) Investment income transferred to non-technical section from technical section amounting to TL 1.095.657.559 is not included. (**) Deferred tax income amounting TL 58.806.353 is presented as income tax. Anadolu Sigorta 2020 Annual Report

181 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

6 Tangible assets Movements in tangible assets in the period of January 1 - December 31, 2020 are presented below: January 1, Valuation 2020 Additions Disposal Differences December 31, 2020

Cost: Investment properties (Note 7) 66.885.000 - - 7.212.500 74.097.500 Buildings for own use 15.672.000 - (208.000) 2.798.500 18.262.500 Machinery and equipment 91.841.231 4.842.705 (4.534.617) - 92.149.319 Furniture and fixtures 14.899.853 2.647.564 (42.376) - 17.505.041 Motor vehicles 4.593.622 - - - 4.593.622 Other tangible assets (including leasehold improvements) 28.826.269 1.627.487 (1.837) - 30.451.919 Leased tangible assets 3.858.074 - - - 3.858.074 Operating leases buildings 58.561.059 4.342.511 - - 62.903.570 Total 285.137.108 13.460.267 (4.786.830) 10.011.000 303.821.545

Accumulated depreciation: Buildings for own use 27.533 318.988 (13.915) (309.520) 23.086 Machinery and equipment 59.615.956 12.669.645 (4.506.356) - 67.779.245 Furniture and fixtures 12.403.220 865.248 (41.413) - 13.227.055 Motor vehicles 895.790 908.180 - - 1.803.970 Other tangible assets (including leasehold improvements) 22.399.858 1.744.078 (1.837) - 24.142.099 Leased tangible assets 3.858.074 - - - 3.858.074 Operating leases buildings 5.732.984 6.278.174 - - 12.011.158 Total 104.933.415 22.784.313 (4.563.521) (309.520) 122.844.687

Net book value 180.203.693 180.976.858

The Company’s property for own use is valuated over fair value as of 2020 and 2019 year-end and subjected to valuation in this context. Expertise reports regarding this property are prepared by CMB licenced Property Valuation Company in December 2020. There is no any pledge over Company’s property for own use. As of December 31, 2020 and 2019, property for own use’s fair value (except VAT) and net book value is as following: Expertise Net Book Value Net Book Value Landings and buildings for own use Expertise date value (December 31, 2020) (December 31, 2019)

İzmir Regional Office December 2020 9.510.000 9.494.289 8.081.870 Adana Regional Office December 2020 2.945.000 2.942.774 1.958.237

Anadolu Sigorta 2020 Annual Report Lefkoşe Kıbrıs Branch December 2020 4.350.000 4.346.962 4.215.177 Adana Office December 2020 592.500 591.972 319.486 Others December 2020 865.000 863.417 1.069.697

Total 18.262.500 18.239.414 15.644.467

182 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Fair value measurement Fair value of landings and buildings for own use is determined by equivalence value method. Fair value measurement of landings and buildings for own use those fair value is determined by equivalence value method is reclassified as Level 2. Movements in tangible assets in the period of January 1 - December 31, 2019 are presented below: January 1, Valuation December 2019 Additions Disposal Transfers Differences 31, 2019

Cost: Investment properties (Note 7) 63.680.000 - (85.000) - 3.290.000 66.885.000 Buildings for own use 14.956.000 - - - 716.000 15.672.000 Machinery and equipment 80.830.314 12.438.871 (1.435.729) - 7.775 91.841.231 Furniture and fixtures 14.507.592 762.870 (313.334) (53.100) (4.175) 14.899.853 Motor vehicles 1.777.765 2.943.851 (127.994) - - 4.593.622 Other tangible assets (including leasehold improvements) 26.004.573 2.860.440 (91.844) 53.100 - 28.826.269 Leased tangible assets 3.858.074 - - - - 3.858.074 Operating leases buildings - 59.052.884 (491.825) - - 58.561.059 Total 205.614.318 78.058.916 (2.545.726) - 4.009.600 285.137.108

Accumulated depreciation: Buildings for own use 75.541 235.271 - - (283.278) 27.534 Machinery and equipment 48.783.505 12.243.345 (1.410.895) - - 59.615.955 Furniture and fixtures 11.972.425 744.129 (313.334) - - 12.403.220 Motor vehicles 81.472 827.117 (12.799) - - 895.790 Other tangible assets (including leasehold improvements) 20.917.634 1.574.068 (91.844) - - 22.399.858 Leased tangible assets 3.858.074 - - - - 3.858.074 Operating leases buildings - 5.732.984 - - - 5.732.984 Total 85.688.651 21.356.914 (1.828.872) - (283.278) 104.933.415

Net book value 119.925.667 180.203.693

There is not any mortgage over tangible assets of the Company as of December 31, 2020 and 2019. 7 Investment properties Additions and disposals for investment properties is given “6- Tangible Assets” note in table of current period movement of tangible assets. Investment property is presented by fair value method as of December 31, 2020 and 2019 on balance sheet. The Company’s investment property expertise reports are prepared by independent professional valuation specialists authorized by Capital Markets Board. As of December 31, 2020, the Company has gained the rent income from investment properties amounting to Anadolu Sigorta 2020 Annual Report TL 2.820.305 (December 31, 2019: TL 2.837.900). The expertise (excluding VAT) and net book values of investment properties are as follows on the basis of real estate. Expertise reports regarding these properties are prepared by independent professional valuation specialists authorized by CMB in December 2020. There is no pledge on the real estates.

183 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Net book value Net book value Investment land and buildings Expertise date Expertise value December 31, 2020 December 31, 2019

Building/İzmir December 2020 37.855.000 37.855.000 34.400.000 Building/Mersin December 2020 20.350.000 20.350.000 18.075.000 Building/İzmir December 2020 12.500.000 12.500.000 11.450.000 Building/Bursa December 2020 2.520.000 2.520.000 2.360.000 Building/Adana December 2020 872.500 872.500 600.000 Total 74.097.500 74.097.500 66.885.000

Fair value measurement Fair value of investment property is determined by equivalence value method. Fair value measurement of investment property which is determined by equivalence value method, is reclassified as Level 2. 8 Intangible assets Movements in intangible assets in the period of January 1 - December 31, 2020 are presented below: January 1, 2020 Additions Transfers Disposal December 31, 2020

Cost: Goodwill 16.250.000 - - - 16.250.000 Advances given for intangible assets 4.684.951 57.502.910 (53.066.552) - 9.121.309 Other intangible assets 217.145.084 7.344.918 53.066.552 - 277.556.554 Total 238.080.035 64.847.828 - - 302.927.863

Accumulated amortization: Other intangible assets 137.838.791 39.034.638 - - 176.873.429 Total 137.838.791 39.034.638 - - 176.873.429

Net book value 100.241.244 126.054.434

Movements in tangible assets in the period of January 1 - December 31, 2019 are presented below: January 1, 2019 Additions Transfers Disposal December 31, 2019

Cost: Goodwill 16.250.000 - - - 16.250.000 Advances given for intangible assets 28.571.117 47.280.016 (71.166.182) - 4.684.951 Other intangible assets 141.722.051 4.256.851 71.166.182 - 217.145.084 Total 186.543.168 51.536.867 - - 238.080.035 Anadolu Sigorta 2020 Annual Report Accumulated amortization: Other intangible assets 113.739.685 24.099.106 - - 137.838.791 Total 113.739.685 24.099.106 - - 137.838.791

Net book value 72.803.483 100.241.244

184 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

9 Investments in associates December 31, 2020 December 31, 2019 Net book value Participation rate Net book value Participation rate Anadolu Hayat Emeklilik A.Ş. 744.760.000 20,0% 584.800.000 20,0% Investments in associates, net 744.760.000 584.800.000

Total financial assets (Note 4.2) 744.760.000 584.800.000

Total Shareholders’ Retained Profit for Audited Name assets equity earnings the period or not Period Anadolu Hayat Emeklilik A.Ş. December 31, (consolidated) 36.087.752.603 1.601.893.365 102.198.183 526.939.264 Audited 2020

The Company has TL 56.000.000 of dividend income from subsidiaries. (December 31, 2019: TL 26.000.000) 10 Reinsurance assets and liabilities As of December 31, 2020 and 2019, reinsurance assets and liabilities of the Company in accordance with existing reinsurance contracts are as follows: Reinsurance assets December 31, 2020 December 31, 2019

Provision for outstanding claims, ceded (Note 4.2), (Note 17) 2.278.005.427 1.561.947.712 Reserve for unearned premiums, ceded (Note 17) 1.164.283.370 908.427.528 Reserve for unexpired risks, ceded 68.861.780 17.904.259 Cash deposited to reinsurance companies (Note 12) 192.665.786 144.027.452 Reinsurers share in the provision for subrogation and salvage receivables 2.522.147 1.807.570 Total 3.706.338.510 2.634.114.521

There is no impairment losses recognised for reinsurance assets. Reinsurance liabilities December 31, 2020 December 31, 2019

Payables to the reinsurers related to premiums written (Note 19) 576.715.444 461.708.036 Deferred commission income (Note 19) 152.701.193 127.057.883 Commission payables to the reinsurers related to written premiums (Note 23) - 10.626.863 Cash deposited by reinsurance companies (Note 19) 5.458.061 4.871.763 Total 734.874.698 604.264.545 Anadolu Sigorta 2020 Annual Report

185 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Gains and losses recognized in the statement of income in accordance with existing reinsurance contracts are as follows: December 31, 2020 December 31, 2019

Premiums ceded during the period (Note 17) (2.410.127.788) (1.946.409.476) Reserve for unearned premiums, ceded at the beginning of the period (Note 17) (908.427.528) (794.433.893) Reserve for unearned premiums, ceded at the end of the period (Note 17) 1.164.283.370 908.427.528 Premiums earned, ceded (Note 17) (2.154.271.946) (1.832.415.841)

Claims paid, ceded during the period (Note 17) 816.552.001 983.718.339 Provision for outstanding claims, ceded at the beginning of the period (Note 17) (1.561.947.712) (1.281.930.794) Provision for outstanding claims, ceded at the end of the period (Note 17) 2.278.005.427 1.561.947.712 Claims incurred, ceded (Note 17) 1.532.609.716 1.263.735.257

Commission income accrued from reinsurers during the period 321.343.585 254.192.161 Deferred commission income at the beginning of the period 127.057.883 117.840.030 Deferred commission income at the end of the period (152.701.193) (127.057.883) Commission income earned from reinsurers (Note 32) 295.700.275 244.974.308

Commission debt accrued to reinsurers - 10.626.863 Total, net (2.410.127.788) (313.079.413)

The movement table of commission expenses realized within the scope of reinsurance activities of the Company are as follows: December 31, 2020 December 31, 2019 Commission expense accrued from reinsurers during the period (202.814.621) (170.843.037) Deferred commission expense at the beginning of the period (38.549.536) (31.875.716) Deferred commission expense at the end of the period 46.435.447 38.549.536 Commission expense from reinsurance operations (Note 32) (194.928.710) (164.169.217)

11 Financial assets As of December 31, 2020 and 2019, financial assets of the Company are as follows: December 31, 2020 December 31, 2019 Available for sale financial assets 3.366.966.567 1.719.898.375 Financial assets held for trading 1.038.057.085 - Available for sale financial assets 229.899.738 159.450.716 Total 4.634.923.390 1.879.349.091 Anadolu Sigorta 2020 Annual Report

186 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

As of December 31, 2020 and 2019, the details of the Company’s available for sale financial assets are as follows: December 31, 2020 Nominal Fair Net book value Cost value value Debt instruments: Government bonds - TL 591.504.806 567.215.973 578.550.705 578.550.705 Private sector bonds - TL 219.950.000 216.455.235 220.683.438 220.683.438 Issued by İş Faktöring A.Ş. (Note 45) 15.000.000 14.479.400 14.816.394 14.816.394 Issued by Yatırım Finansman Menkul Değerler A.Ş. (Note 45) 5.000.000 4.828.750 4.941.870 4.941.870 Other 199.950.000 197.147.085 200.925.174 200.925.174 Government bonds - USD 152.315.375 153.410.692 160.623.333 160.623.333 Government bonds - EUR 8.827.742 8.991.902 9.507.154 9.507.154 Private sector bonds - USD 1.440.925.469 1.386.204.895 1.495.809.857 1.495.809.857 Issued by Türkiye İş Bankası A.Ş. (Note 45) 131.908.785 123.488.460 135.337.175 135.337.175 Issued by Türkiye Sınai Kalkınma Bankası A.Ş. (Note 45) 128.385.345 121.915.114 132.576.522 132.576.522 Others 1.180.631.339 1.140.801.321 1.227.896.160 1.227.896.160 Total 2.413.523.392 2.332.278.697 2.465.174.487 2.465.174.487

Other non-fixed income financial assets: Investment funds 308.048.553 528.690.837 587.350.435 587.350.435 Issued by İş Portföy Yönetimi A.Ş (Note 45) 120.369.810 289.181.578 331.181.705 331.181.705 Others 187.678.743 239.509.259 256.168.730 256.168.730 Equity shares 81.518.513 124.274.232 314.441.645 314.441.645 Total 389.567.066 652.965.069 901.792.080 901.792.080

Total available for sale financial assets (Note 4.2) 2.803.090.458 2.985.243.766 3.366.966.567 3.366.966.567

December 31, 2019 Nominal Fair Net book value Cost value value Debt instruments: Government bonds - TL 203.645.804 200.229.115 216.169.741 216.169.741 Private sector bonds - TL 84.540.000 84.281.407 85.023.928 85.023.928 Government bonds - USD 11.880.400 12.093.929 12.174.366 12.174.366 Private sector bonds - USD 306.050.984 284.286.916 312.178.110 312.178.110 Issued by Türkiye İş Bankası A.Ş. (Note 45) 68.858.798 64.161.930 70.083.546 70.083.546 Issued by Türkiye Sınai Kalkınma Bankası A.Ş. (Note 45) 41.224.988 38.345.303 41.955.002 41.955.002 Others 195.967.198 181.779.683 200.139.562 200.139.562 Total 606.117.188 580.891.367 625.546.145 625.546.145

Other non-fixed income financial assets: Anadolu Sigorta 2020 Annual Report Investment funds 4.933.855.530 899.941.844 931.848.598 931.848.598 Issued by İş Portföy Yönetimi A.Ş (Note 45) 599.732.419 750.056.764 773.646.692 773.646.692 Others 4.334.123.111 149.885.080 158.201.906 158.201.906 Equity shares 80.142.129 102.962.094 162.503.632 162.503.632 Total 5.013.997.659 1.002.903.938 1.094.352.230 1.094.352.230

Total available for sale financial assets (Note 4.2) 5.620.114.847 1.583.795.305 1.719.898.375 1.719.898.375

187 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

As of December 31, 2020, and 2019, financial assets held for trading of the Company are as follows: December 31, 2020 Nominal Fair Net book value Cost value value

Debt instruments: Reverse repurchases 54.089.810 54.114.245 54.114.245 Total 54.089.810 54.114.245 54.114.245

Other non-fixed income financial assets: Investment funds 18.109.391 39.316.955 82.431.122 82.431.122 Issued by İş Portföy Yönetimi A.Ş. (Note 45) 18.019.260 31.512.955 61.419.454 61.419.454 Issued by İşbank AG (Note 45) 90.131 7.804.000 21.011.668 21.011.668 Equity shares 3.244.031 21.340.238 29.754.475 29.754.475 Derivatives 28.087.000 61.319.726 63.599.896 63.599.896 Total 49.440.422 121.976.919 175.785.493 175.785.493

Total financial assets held for trading (Note 4.2) 49.440.422 176.066.729 229.899.738 229.899.738

December 31, 2019 Nominal Fair Net book value Cost value value

Debt instruments: Reverse repurchases 13.310.217 13.313.760 13.313.760 Total 13.310.217 13.313.760 13.313.760

Other non-fixed income financial assets: Investment funds 208.209.525 77.430.047 107.307.443 107.307.443 Issued by İş Portföy Yönetimi A.Ş. (Note 45) 6.532.394 63.853.767 84.367.644 84.367.644 Issued by İşbank AG (Note 45) 90.131 7.804.000 17.113.532 17.113.532 Other 201.587.000 5.772.280 5.826.267 5.826.267 Equity shares 6.435.081 27.805.318 27.358.390 27.358.390 Derivatives 120.000 11.638.912 11.471.123 11.471.123 Total 214.764.606 116.874.277 146.136.956 146.136.956

Total financial assets held for trading (Note 4.2) 214.764.606 130.184.494 159.450.716 159.450.716 Anadolu Sigorta 2020 Annual Report

188 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

As of December 31, 2020, the Company has no marketable securities presented above held to maturity (December 31, 2019: None). December 31, 2020 Nominal Fair Net book value Cost value value

Debt instruments: Government bonds - EUR 214.919.486 215.932.705 221.860.155 219.179.621 Government bonds - USD 106.437.250 100.814.428 113.170.388 103.096.481 Private sector bonds - USD 730.577.944 695.113.138 751.985.979 715.780.983 Issued by Türkiye İş Bankası A.Ş. (Note 45) 123.386.465 121.752.346 126.465.531 123.624.298 Issued by Türkiye Sınai Kalkınma Bankası A.Ş (Note 45) 200.527.779 194.581.962 206.831.979 200.488.960 Otherr 406.663.700 378.778.830 418.688.469 391.667.725 Total held to maturity financial assets 1.051.934.680 1.011.860.271 1.087.016.522 1.038.057.085

As of December 31, 2020, equity shares classified as available for sale financial assets with a net book value of TL 940.456 are not publicly traded (December 31,2019: TL 1.537.152). There is no debt security issued during the period or issued before and paid during the period by the Company. There is no financial asset that is overdue but not impaired among the Company’s financial investments portfolio. Value increases in financial assets including equity shares classified as available for sale financial assets for the last 3 years (including tax effects): Change in value Total Year increase/(decrease) increase/(decrease)

2020 327.078.529 921.262.318 2019 205.069.612 594.183.789 2018 (239.947.304) 389.114.177

Movements of the financial assets during the period are presented below: December 31, 2020 Available Held to Trading(*) for sale maturity Total Balance at the beginning of the period 146.136.956 1.719.898.375 - 1.866.035.331 Acquisitions during the period 52.254.259 1.865.175.316 939.370.372 2.856.799.947 Disposals (sale and redemption) (69.263.882) (744.781.388) (96.797.056) (910.842.326) Change in the fair value of financial assets (Note 15) 46.658.160 274.371.120 - 321.029.280 Change in the amortized costs of financial assets - 252.303.144 195.483.769 447.786.913 Balance at the end of the period 175.785.493 3.366.966.567 1.038.057.085 4.580.809.145

(*) The amount of other in financial assets held for trading to TL 54.114.245 (December 31, 2019: TL 13.313.760) are excluded. December 31, 2019

Available Held to Anadolu Sigorta 2020 Annual Report Trading(*) for sale maturity Total Balance at the beginning of the period 171.752.320 848.053.222 - 1.019.805.542 Acquisitions during the period 1.911.737.578 2.658.437.778 - 4.570.175.356 Disposals (sale and redemption) (1.972.103.440) (2.073.233.675) - (4.045.337.115) Change in the fair value of financial assets (Note 15) 34.750.498 286.641.050 - 321.391.548 Balance at the end of the period 146.136.956 1.719.898.375 - 1.866.035.331

(*) The amount of other in financial assets held for trading to TL 13.313.760 (December 31, 2018: TL 7.800.426) are excluded.

189 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

12 Loans and receivables December 31, 2020 December 31, 2019

Receivables from main operations (Note 4.2) 2.311.524.655 1.843.388.811 Other receivables (Note 4.2)(*) 21.665.563 30.738.125 Income accruals (Note 4.2), 188.679.459 26.787.559 Other current assets (Note 4.2) 104.173 - Total 2.521.973.850 1.900.914.495

Short-term receivables 2.521.646.918 1.900.587.563 Long and medium-term receivables 326.932 326.932 Total 2.521.973.850 1.900.914.495

(*) As of December 31, 2020, other receivables amounting to TL 21.665.563 (December 31, 2019: TL 30.738.125) comprise of receivables from DASK and TARSİM amounting to TL 18.187.802 (December 31, 2019: TL 21.398.706) and other miscellaneous receivables amounting to TL 3.477.761 (December 31, 2019: TL 9.339.419). As of December 31, 2020 and 2019, the details of the receivables from main operations are as follows: December 31, 2020 December 31, 2019

Receivables from agencies, brokers and intermediaries 1.379.824.798 1.167.036.824 Receivables from insurance and reinsurance companies 66.508.000 28.031.706 Salvage and subrogation receivables 88.399.103 61.848.008 Receivables from policyholders 25.449.268 32.225.302 Long term receivable which is bank guarantee and three months credit card 323.669.240 198.701.172 Total receivables from insurance operations, net 1.883.850.409 1.487.843.012

Receivables from reinsurance operations 259.752.903 239.692.491 Cash deposited to insurance and reinsurance companies (Note 4.2), (Note 10) 192.665.786 144.027.452 Provisions for receivables from insurance operations - subrogation receivables (24.744.443) (28.174.144) Doubtful receivables from insurance operations - subrogation receivables 416.224.077 325.924.262 Provisions for doubtful receivables from insurance operations - subrogation receivables (Note 4.2) (416.224.077) (325.924.262) Doubtful receivables from main operations - premium receivables 36.951.045 34.844.570 Provisions for doubtful receivables from main operations - premium receivables (Note 4.2) (36.951.045) (34.844.570) Receivables from main operations 2.311.524.655 1.843.388.811 Anadolu Sigorta 2020 Annual Report

190 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

As of December 31, 2020 and 2019, the details of mortgages and other guarantees for the Company’s receivables are presented below: December 31, 2020 December 31, 2019

Letters of guarantees 96.436.638 83.902.138 Mortgages notes 119.715.940 113.964.477 Other guarantees 84.678.406 79.691.851 Government bonds and treasury bills 2.873.656 2.878.656 Total 303.704.640 280.437.122

Provisions for overdue receivables and receivables not due yet a) Receivables under legal or administrative follow up (due): TL 36.951.045 (December 31, 2019: TL 34.844.570). b) Provision for subrogation receivables under legal or administrative follow up: TL 440.968.520 (December 31, 2019: TL 354.098.406). The Company’s receivables from and payables to shareholders, associates and subsidiaries are detailed in note 45 - Related party transactions. The details of the receivables and payables denominated in foreign currencies and foreign currency rates used for the translation are presented in Note 4.2- Financial risk management. 13 Derivative financial instruments As of December 31, 2020, the Company has a derivative financial instruments recognized in the financial assets held for trading amounting to TL 63.599.896 (December 31, 2019: TL 11.471.123). As of December 31, 2019, the Company has accounted in income accruals amounting to TL 183.754.467 (December 31, 2019: TL 24.850.393) that is increase in value and there is no other financial liabities due to forward foreign currency agreement (December 31, 2019: TL 59.472.753). Anadolu Sigorta 2020 Annual Report

191 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

14 Cash and cash equivalents As of December 31, 2020 and 2019, the details of the cash and cash equivalents are as follows: December 31, 2020 December 31, 2019 At the end of At the beginning At the end of At the beginning the period of the period the period of the period

Cash on hand 54.640 57.552 57.552 50.393 Checks on hand - - - - Bank deposits 2.505.781.929 4.049.035.413 4.049.035.413 3.622.011.617 Cheques given and payment orders (8.020) (35.083) (35.083) (79.251) Bank guaranteed credit card receivables with maturities less than three months 771.479.380 587.341.970 587.341.970 451.595.523 Cash and cash equivalents in the balance sheet 3.277.307.929 4.636.399.852 4.636.399.852 4.073.578.282

Bank deposits - blocked (*) (Note 17) (836.221.106) (467.204.188) (467.204.188) (567.003.315) Time deposits with maturities longer than 3 months - (1.994.444.191) (1.994.444.191) (1.645.419.289) Interest accruals on banks deposits (6.375.162) (5.146.931) (5.146.931) (8.756.840) Cash and cash equivalents in the statement of cash flows 2.434.711.661 2.169.604.542 2.169.604.542 1.852.398.838

(*) Bank deposits in cash and cash equivalents has been kept in favour of the T.C. Private Pension Regulation and Supervision Agency as a guarantee for the insurance activities amounting is 809.151.366 TL and for Agricultural Insurance Pool amounting is 27.069.740 TL. As of December 31, 2020, and 2019, the details of the bank deposits are as follows: December 31, 2020 December 31, 2019

Foreign currency denominated bank deposits - time deposits 922.848.657 3.019.474.146 - demand deposits 41.324.543 12.656.422

Bank deposits in Turkish Lira - time deposits 1.530.116.255 1.011.593.319 - demand deposits 11.492.474 5.311.526 Bank deposits 2.505.781.929 4.049.035.413

15 Equity Paid in capital The shareholder having direct or indirect control over the shares of the Company is İş Bankası Group. The Company does not increase its share capital in the current period.

Anadolu Sigorta 2020 Annual Report As of December 31, 2020, the issued share capital of the Company is TL 500.000.000 (December 31, 2019: TL 500.000.000) and the Company unregistered Group 150 A shares which each of value is TL 1,5 as of April 11, 2013 in which approved in Main Article of the Company dated in April 11, 2013. The share capital of the Company consists of 50.000.000.000 (December 31, 2019: 50.000.000.000 shares) issued shares with TL 1 nominal value each.

192 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Other capital reserves In accordance with tax legislation, 75% of profits from sales of participation shares and 50% real estates included in the assets of companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years. As of December 31, 2020, the tax exempt which obtained thanks to sale of participation shares and real estate in 2010, 2011, 2013, 2014, 2015 and 2016 years respectively, amounting to TL 8.081.516, TL 80.025, TL 647.763, TL 920.272, TL 2.541.500 and TL 15.094 and real estate revaluation funds of 2018, 2019 and 2020 and the profit not subject to distribution for 2018, 2019 and 2020 are classified as other capital reserves. December 31, 2020 December 31, 2019

Other capital reserves at the beginning of the period 34.452.255 30.848.808 Transfer from profit 655.384 2.704.097 Use property revaluation fund (Note 6) 2.589.830 899.350 Other capital reserves at the end of the period 37.697.469 34.452.255

Legal reserves The legal reserves consist of first and second legal reserves in accordance with the Turkish Commercial Code. The first legal reserve is appropriated out of the statutory profits at the rate of 5%, until the total reserve reaches a maximum of 20% of the entity’s share capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the entity’s share capital. The first and second legal reserves are not available for distribution unless they exceed 50% of the share capital, but may be used to absorb losses in the event that the general reserve is exhausted. The movement of legal reserves are presented below: December 31, 2020 December 31, 2019

Legal reserves at the beginning of the period 79.495.589 55.788.874 Transfer from profit 32.413.625 23.706.715 Legal reserves at the end of the period 111.909.214 79.495.589

Extraordinary reserves The movement of extraordinary reserves are presented below: December 31, 2020 December 31, 2019

Extraordinary reserves at the beginning of the period 418.663.457 258.017.194 Transfer from profit 181.506.344 160.646.263 Extraordinary reserves at the end of the period 600.169.801 418.663.457

Statutory reserves The movement of statutory reserves are presented below:

December 31, 2020 December 31, 2019 Anadolu Sigorta 2020 Annual Report

Statutory reserves at the beginning of the period 54.795.571 34.160.337 Transfer from profit 29.394.879 20.635.234 Statutory reserves at the end of the period 84.190.450 54.795.571

193 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Special reserves The movement of special funds are presented below: December 31, 2020 December 31, 2019

Special reserves at the beginning of the period - - Venutre capital investment fund 25.000.000 - Special funds at the end of the period 25.000.000 -

Valuation of financial assets The movements of valuation differences related available for sale financial assets and associates are presented below: December 31, 2020 December 31, 2019 Available for Available for sale financial sale financial assets Associates Total assets Associates Total Valuation difference at the beginning of the period 100.415.657 493.768.132 594.183.789 (36.713.955) 425.828.132 389.114.177 Change in the fair value 274.371.120 215.960.000 490.331.120 158.843.212 93.940.000 252.783.212 Net gains transferred to the statement of income (79.745.401) (56.000.000) (135.745.401) 5.577.018 (26.000.000) (20.422.982) Deferred tax effect (27.507.190) - (27.507.190) (27.290.618) - (27.290.618) Valuation difference at the end of the period 267.534.186 653.728.132 921.262.318 100.415.657 493.768.132 594.183.789

Other profit reserves In accordance with the July 4, 2007 dated and 2007/3 numbered Compliance Circular issued by the T.C. Ministry of Treasury and Finance, it was stated that the companies would not further provide earthquake provision for the year 2007. However, it was also stated that earthquake provisions provided in previous periods (earthquake provision in the financial statements as of December 31, 2006) should be transferred to the reserve accounts under equity in accordance with the 5th Temporary Article of the Insurance Law. The companies had to transfer total amount of provisions, including earthquake provisions reserved as of December 31, 2006 and related gains obtained from investment of these amounts, to the account called as “549.01 - transferred earthquake provisions” which would be opened as of September 1, 2007 within Uniform Chart of Account and the reserves amount should not be subject to dividend distribution or should not be transferred to other accounts. Accordingly, the Company initially transferred total provisions amounting to TL 96.036.157 including earthquake provisions reserved as of December 31, 2006 and related gains obtained from investment of this amount, to the reserve accounts under equity, TL 51.846.111 of this amount is used for capital increase in 2010. As of December 31, 2020, accordance with IAS 19, to add the amount of actuarial loss and net profit of TL (6.488.067) defined remeasure net profit debt, the amount of new balance is TL 37.701.979. Profit on assets sale that will be transferred to capital In accordance with tax legislation, 75% of profits from sales of participation shares and 50% of real estates included in the assets of

Anadolu Sigorta 2020 Annual Report companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years. 16 Other reserves and equity component of discretionary participation feature As of December 31, 2020, and 2019, change in fair values of available-for-sale financial assets which is presented as “valuation of financial assets” and earthquake provisions provided in the previous years presented under “other profit reserves” are explained in detail in Note 15 - Equity above. As of December 31, 2020, and 2019, the Company does not hold any insurance or investment contracts which contain a discretionary participation feature.

194 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

17 Insurance contract liabilities and reinsurance assets Estimation of the ultimate payment for the outstanding claims is one of the most important accounting assumptions of the Company. Estimation of the insurance contract liabilities contains several ambiguities by nature. The Company makes calculation of the related insurance technical provisions accordance with the Insurance Legislation and reflects them into financial statements as mentioned in Note 2 - Summary of significant accounting policy. As of December 31, 2020 and 2019, technical reserves of the Company are as follows: December 31, 2020 December 31, 2019

Reserve for unearned premiums, gross 3.976.446.193 3.217.033.929 Reserve for unearned premiums, ceded (1.164.283.370) (908.427.528) Reserve for unearned premiums, SSI share (94.034.855) (74.462.603) Reserves for unearned premiums, net 2.718.127.968 2.234.143.798

Provision for outstanding claims, gross 7.008.542.208 5.264.263.434 Provision for outstanding claims, ceded (2.278.005.427) (1.561.947.712) Provision for outstanding claims, net 4.730.536.781 3.702.315.722

Gross of reserve for unexpired risk 127.320.793 68.089.542 Reinsurer’s share of the reserve for unexpired risk (68.861.780) (17.904.259) Provision unexpired risk reserve, net 58.459.013 50.185.283

Provision for bonus and discounts, gross 4.000.000 - Provision for bonus and discounts, ceded - - Provision for bonus and discounts, net 4.000.000 -

Equalization provision, net 255.601.084 218.075.088 General provision, net (*) 7.702.760 7.702.760 Other technical provisions, net 263.303.844 225.777.848

Total technical provisions, net 7.774.427.606 6.212.422.651

Short-term 7.509.203.444 5.984.640.844 Medium and long-term 265.224.162 227.781.807 Total technical provisions, net 7.774.427.606 6.212.422.651

(*) It contains a provision which has been reflected in the prior financial statements amounting TL 7.702.760 due to the possible impact of adverse developments that may occur by company’s management. Anadolu Sigorta 2020 Annual Report

195 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

As of December 31, 2020 and 2019, the movements of the insurance liabilities and related reinsurance assets are presented below: December 31, 2020 Reserve for unearned premiums Gross Ceded SSI share Net

Reserve for unearned premiums at the beginning of the period 3.217.033.929 (908.427.528) (74.462.603) 2.234.143.798 Premiums written during the period 8.015.704.097 (2.410.127.788) (170.100.697) 5.435.475.612 Premiums earned during the period (7.256.291.833) 2.154.271.946 150.528.445 (4.951.491.442) Reserve for unearned premiums at the end of the period 3.976.446.193 (1.164.283.370) (94.034.855) 2.718.127.968

December 31, 2019 Reserve for unearned premiums Gross Ceded SSI share Net

Reserve for unearned premiums at the beginning of the period 2.741.583.431 (794.433.893) (63.611.724) 1.883.537.814 Premiums written during the period 6.606.856.218 (1.946.409.476) (136.068.059) 4.524.378.683 Premiums earned during the period (6.131.405.720) 1.832.415.841 125.217.180 (4.173.772.699) Reserve for unearned premiums at the end of the period 3.217.033.929 (908.427.528) (74.462.603) 2.234.143.798

December 31, 2020 Provision for outstanding claims Gross Ceded Net

Provision for outstanding claims at the beginning of the period 5.264.263.434 (1.561.947.712) 3.702.315.722 Claims reported during the period and changes in the estimations of provisions for outstanding claims provided at the beginning of the period 5.596.334.813 (1.532.609.716) 4.063.725.097 Claims paid during the period (3.852.056.039) 816.552.001 (3.035.504.038) Provision for outstanding claims at the end of the period 7.008.542.208 (2.278.005.427) 4.730.536.781

December 31, 2019 Provision for outstanding claims Gross Ceded Net

Provision for outstanding claims at the beginning of the period 4.339.333.162 (1.281.930.794) 3.057.402.368 Claims reported during the period and changes in the estimations of provisions for outstanding claims provided at the beginning of the period 4.763.499.334 (1.263.735.257) 3.499.764.077 Claims paid during the period (3.838.569.062) 983.718.339 (2.854.850.723) Provision for outstanding claims at the end of the period 5.264.263.434 (1.561.947.712) 3.702.315.722

December 31, 2020 Reserve for unexpired risk Gross Ceded Net

Anadolu Sigorta 2020 Annual Report Reserve for unexpired risk at the beginning of the period 68.089.542 (17.904.259) 50.185.283 Change in the reserve during the current period 59.231.251 (50.957.521) 8.273.730 Reserve for unexpired risk at the end of the period 127.320.793 (68.861.780) 58.459.013

December 31, 2019 Reserve for unexpired risk Gross Ceded Net

Reserve for unexpired risk at the beginning of the period 101.782.328 (41.591.188) 60.191.140 Change in the reserve during the current period (33.692.786) 23.686.929 (10.005.857) Reserve for unexpired risk at the end of the period 68.089.542 (17.904.259) 50.185.283

196 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

December 31, 2020 Provision for bonus and discounts Gross Ceded Net

Provision for bonus and discounts at the beginning of the period - - - Change in the reserve during the current period 4.000.000 - 4.000.000 Provision for bonus and discounts at the end of the period 4.000.000 - 4.000.000

Equalization provision December 31, 2020 December 31, 2019

Equalization provision at the beginning of the period 218.075.088 175.746.540 Provision used during the period (16.121.804) - Provision added during the period 53.647.800 42.328.548 Equalization provision at the end of the period 255.601.084 218.075.088

Claim development tables The basic assumption used in the estimation of provisions for outstanding claims is the Company’s past experience on claim developments. Judgment is used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates. The sensitivity of certain assumptions like legislative change, uncertainty in the estimation process, etc., is not possible to quantify. Furthermore, because of delays that arise between occurrence of a claim and its subsequent notification and eventual settlement, the outstanding claim provisions are not known with certainty at the reporting date. Consequently, the ultimate liabilities will vary as a result of subsequent developments. Differences resulting from reassessment of the ultimate liabilities are recognized in subsequent financial statements. Development of insurance liabilities enables to measure the performance of the Company in estimation of its ultimate claim losses. The amounts presented on the top of the below tables show the changes in estimations of the Company for the claims in subsequent years after claim years. The amounts presented on the below of the below tables give the reconciliation of total liabilities with provision for outstanding claims presented in the accompanying financial statements Anadolu Sigorta 2020 Annual Report

197 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

December 31, 2020 Claim year 2016 2017 2018 2019 2020 Total Claim year 2.204.760.769 2.761.723.672 3.370.738.174 3.446.963.393 4.810.169.071 16.594.355.079 1 year later 2.372.306.648 3.066.876.216 3.750.287.044 3.647.223.771 - 12.836.693.679 2 years later 2.485.285.017 3.146.095.509 3.836.321.518 - - 9.467.702.044 3 years later 2.540.923.971 3.222.498.877 - - - 5.763.422.848 4 years later 2.591.135.070 - - - - 2.591.135.070 Current estimate of cumulative claims 2.591.135.070 3.222.498.877 3.836.321.518 3.647.223.771 4.810.169.071 18.107.348.307 Cumulative payments to date 2.062.732.242 2.643.967.322 3.048.303.038 2.691.538.095 2.309.219.086 12.755.759.783 Provision recognized in the financial statements 528.402.828 578.531.555 788.018.480 955.685.676 2.500.949.985 5.351.588.524 Provision recognized in the financial statements before 2014 1.656.953.684 Total gross outstanding claims presented in the financial statements at the end of the period 7.008.542.208

December 31, 2019 Claim year 2015 2016 2017 2018 2019 Total Claim year 2.074.639.627 2.190.661.361 2.750.410.067 3.383.175.807 3.892.438.164 14.291.325.026 1 year later 2.325.365.256 2.357.205.516 3.054.330.021 3.764.177.307 - 11.501.078.100 2 years later 2.422.260.481 2.469.668.480 3.133.158.819 - - 8.025.087.780 3 years later 2.519.204.686 2.524.846.751 - - - 5.044.051.437 4 years later 2.558.811.915 - - - - 2.558.811.915 Current estimate of cumulative claims 2.558.811.915 2.524.846.751 3.133.158.819 3.764.177.307 3.892.438.164 15.873.432.956 Cumulative payments to date 2.162.219.278 2.007.606.902 2.585.031.316 2.897.637.513 2.124.976.433 11.777.471.442 Provision recognized in the financial statements 396.592.637 517.239.849 548.127.503 866.539.793 1.767.461.732 4.095.961.514 Provision recognized in the financial statements before 2013 1.168.301.920 Total gross outstanding claims presented in the financial statements at the end of the period 5.264.263.434 Anadolu Sigorta 2020 Annual Report

198 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Total amount of guarantee that should be provided by the Company for life and non-life branches and guarantees placed for the life and non-life branches in respect of related assets December 31, 2020 Amount be provided (**) Provided Net book value Non-life: Bank deposits (Note 14) 591.659.902 836.221.106 836.221.106 Total 591.659.902 836.221.106 836.221.106

December 31, 2019 Amount be provided (**) Provided Net book value Non-life: Bank deposits (Note 14) 494.545.433 447.110.868 447.225.909 Total 494.545.433 447.110.868 447.225.909

(**) According to the 7th article of the “Circular Related to the Financial Structure of Insurance, Reinsurance, and Private Pension Companies” which regulates necessary guarantee amount, minimum guarantee fund for capital adequacy calculation period will be provided as a guarantee in two months following the calculation period. According to “Regulations Regarding to Capital Adequacy Measurement and Assessment of Insurance, Reinsurance, and Private Pension Companies”, companies must prepare their capital adequacy tables twice in a financial year at June and December periods and must sent capital adequacy tables to the T.C. Ministry of Treasury and Finance Department within two months. Since the amounts that to be provided as of December 31, 2020 (December 31, 2019) will be through the calculated amounts as of June 30, 2020 (June 30, 2019), the settled amounts as of June 30, 2020 (June 30, 2019)is presented as “to be provided” amounts. Company’s number of life insurance policies, additions, disposals during the period and the related mathematical reserves None. Distribution of new life insurance policyholders in terms of numbers and gross and net premiums as individual or group during the period None. Distribution of mathematical reserves for life insurance policyholders who left the Company’s portfolio as individual or group during the period None. Deferred commission expenses The Company capitalizes commissions paid to the intermediaries related to policy production under short-term and long-term prepaid expenses. As of December 31, 2020, short-term prepaid expenses amounting to TL 553.402.984 (December 31, 2019: TL 434.608.716) consist of deferred commission expenses amounting to TL 477.877.702 (December 31, 2019: TL 383.770.675) and other prepaid expenses amounting to TL 75.525.282 (December 31, 2019: TL 50.838.041). Long-term prepaid expenses amounting TL 2.167.444 (December 31, 2019: TL 1.444.448) are composed of other prepaid expenses. December 31, 2020 December 31, 2019

Deferred commission expenses at the beginning of the period 383.770.675 327.682.017 Commissions accrued during the period (Note:32) 1.086.502.742 896.149.737 Commissions expensed during the period (992.395.715) (840.061.079) Anadolu Sigorta 2020 Annual Report Deferred commission expenses at the end of the period(*) 477.877.702 383.770.675

(*) Commission expenses that accounted in reinsurance commissions are included Individual pension funds None. 18 Investment contract liabilities None.

199 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

19 Trade and other payables and deferred income December 31, 2020 December 31, 2019 Financial liabilities 58.754.871 116.256.462 Payables arising from main operations 933.510.705 754.579.442 Other payables 135.195.913 131.300.458 Deferred commission income (Note 10) 152.701.193 127.057.883 Taxes and funds payable and other similar obligations 75.788.171 134.326.972 Trade payables to related parties 88.233 227.287 Total 1.356.038.395 1.263.748.504 Short-term liabilities 1.300.313.295 1.209.193.268 Medium and long-term liabilities 55.725.100 54.555.236 Total 1.356.038.395 1.263.748.504

As of December 31, 2020, other payables amounting to TL 135.195.913 (December 31, 2019: TL 131.300.458) consist of treatment cost payables to SSI amounting to TL 45.849.660 (December 31, 2019: TL 40.724.732) payables to Tarsim and DASK and outsourced benefits and services amounting to TL 79.323.782 (December 31, 2019: TL 81.769.605 and deposits and guarantees received amounting to TL 11.377.402 (December 31, 2019: TL 9.550.921). The detail of payables arising from main operations of the Company as of December 31, 2020 and 2019 are as follows: December 31, 2020 December 31, 2019 Payables to reinsurance companies (Note 10) 571.338.979 457.793.749 Payables to agencies, brokers and intermediaries 91.095.216 72.191.799 Total payables arising from insurance operations 662.434.195 529.985.548

Payables arising from reinsurance activities to reinsurance companies 5.376.465 3.914.287

Payables arising from other operating activities 260.241.984 215.807.844 Cash deposited by insurance and reinsurance companies (Note 10) 5.458.061 4.871.763 Payables arising from main operations 933.510.705 754.579.442

Corporate tax liabilities and prepaid taxes are disclosed below: December 31, 2020 December 31, 2019 Prepaid taxes 133.280.924 93.543.259 Provision of calculated corporate tax (100.034.752) (164.686.276) Corporate tax assets/(liabilities), net 33.246.172 (71.143.017)

There are no investment incentives which will be benefited in current and future periods. 20 Financial liabilities December 31, 2020 December 31, 2019 Expense accruals arising from derivative contracts (Note 13) (*) - 59.472.753 Anadolu Sigorta 2020 Annual Report Payables from leases (Note 34) (**) 58.754.871 56.783.709 Short term 3.029.771 2.228.473 Medium and long term 55.725.100 54.555.236 Total 58.754.871 116.256.462

200 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

21 Deferred tax As of December 31, 2020 and 2019, deferred tax assets and liabilities are attributable to the following: December 31, 2020 December 31, 2019 Deferred tax Deferred tax assets/(liabilities) assets/(liabilities) Valuation differences in financial assets (65.284.586) (1.219.004) Equalization provision 40.607.492 35.230.923 Other provision 18.819.226 16.038.309 Provisions for unexpired risk 11.691.803 11.040.762 Provisions for employee termination benefits and unused vacations 7.467.799 6.098.839 Provision for subrogation receivables 4.948.889 6.198.312 Discount of receivables and payables 14.525 (357.268) TAS adjustment differences in depreciation (13.191.004) (10.344.068) Subrogation receivables recognized as income from third parties (5.783.669) (6.931.925) Real estate valuation (8.830.207) (7.499.023) Deferred tax assets/(liabilities), net (9.539.732) 48.255.857

As of December 31, 2020, the Company has not deductible tax losses (December 31, 2019: None). The movement of deferred tax assets table: December 31, 2020 December 31, 2019 Opening balance at 1 January 48.255.857 30.913.525 Recognised in profit or loss (Note 35) (14.573.998) 58.806.353 Recognised in equity (27.483.113) (27.375.820) Cancellation corporate tax provision* (15.738.478) (14.088.201) Deferred tax asset (9.539.732) 48.255.857

* Cancellatiton of corporate tax provision is included in deferred tax income. 22 Retirement benefit obligations Employees of the Company are the members of “Anadolu Anonim Pension Fund” which is established in accordance with the temporary Article 20 of the Social Security Act No: 506. As per the temporary sub article No: 20 of the Article 73 of the Social Security Law, pension funds should be transferred to the Social Security Institution within three years after the publication of the a aforementioned Law published in the Official Gazette numbered 26870 and dated May 8, 2008. The related three-year transfer period has been prolonged for two years by the Cabinet decision, the three-year period was extended to the May 8, 2015. April 23, 2015 dated Official Gazette is changed as following; insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or which constitutes their union personnel and associates of funds “The Council is authorized to determine the date of transfer within the scope of article 20th of the law, 506 banks, insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or which constitutes their union personnel and associates of funds to the social security institution. The date of the transfer of the first paragraph of Article 4 of this law pension fund contributors as are considered insured.

According to this arrangement the bank within the scope of Act 506, article No.20, insurance and reinsurance companies, chambers Anadolu Sigorta 2020 Annual Report of commerce, industry chambers, stock exchanges or associations which constitute their union personnel and associates of funds are required to be transferred until May 8, 2015 to Social Security Administration, authority to determine the date of transfer is given the Council of Ministers thus the transfer of the funds has been postponed to an unknown date.

201 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

23 Other liabilities and provisions As of December 31, 2020 and 2019; the details of the provisions for other risks are as follows: December 31, 2020 December 31, 2019 Provision for employee termination benefits 33.341.951 27.298.621 Provision for unused vacation pay liability 3.997.046 2.905.069 Total provision for other risks 37.338.997 30.203.690

December 31, 2020 December 31, 2019 Provision for agency award Provision for guarantee account 22.419.283 20.614.334 Provision for guarantee account 17.405.421 13.754.273 Provision for employee bonus 30.000.000 32.000.000 Provision for sliding scale commission (Note 10) - 10.626.863 Provision for traffic and TKU pool 14.226.499 15.650.860 Provision for excess of claim contract substitution premium 2.526 2.315.586 Provision for bank expense 500.000 1.000.000 Provision for reinsurance activities 3.477.453 3.244.937 Provision for tax assessment - 4.360.015 Other provisions - 1.976.066 Prepaid income and expense accruals 88.031.182 105.542.934

The movements of provision for employee termination benefits during the period are presented below: December 31, 2020 December 31, 2019 Provision for employee termination benefits at the beginning of the period 27.298.621 25.856.080 Interest cost (Note 47) 3.385.029 3.025.161 Service cost (Note 47) 3.285.977 1.797.332 Payments made during the period (Note 47) (2.302.066) (3.453.585) Actuarial difference 1.674.390 73.633 Provision for employee termination benefits at the end of the period 33.341.951 27.298.621

24 Net insurance premium Net insurance premium revenue is presented in detailed in the accompanying unconsolidated statement of income. 25 Fee revenue None. 26 Investment income Investment income is presented in “Note 4.2 - Financial Risk Management”. 27 Net income accrual on financial assets Net realized gains on financial assets are presented in “Note 4.2 - Financial Risk Management. Anadolu Sigorta 2020 Annual Report 28 Assets held at fair value through profit or loss Presented in “Note 4.2 - Financial Risk Management”.

202 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

29 Insurance rights and claims January 1 - January 1 - December 31, 2020 December 31, 2019 Claims paid, net off reinsurers’ share 3.035.504.038 2.854.850.723 Changes in provision for unearned premiums, net off reinsurers’ share 483.984.170 350.605.984 Changes in provision for outstanding claims, net off reinsurers’ share 1.028.221.059 644.913.354 Changes in provision for bonus and discounts, net off reinsurers’ share 4.000.000 - Change in equalization provisions 37.525.996 42.328.548 Changes in reserve for unexpired risks, net off reinsurers’ share 8.273.730 (10.005.857) Total 4.597.508.993 3.882.692.752

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 As of December 31, 2020 and 2019 the operating expenses are disclosed as follows: January 1 - January 1 - December 31, 2020 December 31, 2019

Commission expenses (Note 17) 797.467.005 675.891.862 Commissions to intermediaries accrued during the period (Note 17) 883.688.121 725.306.700 Change in deferred commission expenses (Note 17) (86.221.116) (49.414.838) Employee benefit expenses (Note 33) 261.442.860 232.072.375 Administration expenses 130.625.376 125.408.496 Advertising and marketing expenses 15.465.393 28.727.445 Outsourced benefits and services 22.147.114 21.987.021 Commission income from reinsurers (Note 10) (295.700.275) (244.974.308) Commission income from reinsurers accrued during the period (Note 10) (321.343.585) (254.192.161) Change in deferred commission income (Note 10) 25.643.310 9.217.853 Commission expense from reinsurance activities (Note 10) 194.928.710 164.169.217 Commission expense from reinsurance activities (Note 10, 17) 202.814.621 170.843.037 Change in deferred commission expense (Note 10) (7.885.911) (6.673.820) Total 1.126.376.183 1.003.282.108

33 Employee benefits expenses January 1 - January 1 -

December 31, 2020 December 31, 2019 Anadolu Sigorta 2020 Annual Report

Wages and salaries 185.541.440 167.626.492 Insurance payments 56.801.672 45.410.871 Other 19.099.748 19.035.012 Total 261.442.860 232.072.375

203 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

34 Financial costs As of December 31, 2020 TL 12.837.424 interest expense and TL 6.278.174 amortisation expense arising from leases which are the subject to TFRS 16 Leases, have recognised as “Investment Management Expenses - Inc. Interest” and “Depreciation and Amortisation Expenses” respectively in the accompanying financial statements (January 1 - December 31, 2019: TL 12.218.006 and TL 5.732.984). As of December 31, 2020, discounted reimbursement plan for operating leases of the Company’s are as follows (December 31, 2019: 56.783.709): Operating leases reimbursements -TL

Up to 1 year 3.029.771 1 to 2 years 3.769.641 2 to 3 years 4.690.188 3 to 4 years 5.802.213 4 to 5 years 7.252.433 Over 5 years 34.210.625 Total 58.754.871

35 Income tax Income tax expense items in the accompanying unconsolidated financial statements are as follows: January 1 - January 1 - December 31, 2020 December 31, 2019

Corporate tax expense provision: Corporate tax provision (100.034.752) (164.686.276) Previous period corporation tax closure(*) 15.738.478 14.088.201 Deferred taxes: Origination and reversal of temporary differences (30.312.476) 44.718.152 Total income tax expense recognised in profit or loss (114.608.750) (105.879.923)

(*) The Corporate Tax Provision Closure is presented in the “Provisions Account”. For the period then ended as of December 31, 2020 and 2019, a reconciliation of tax expense applicable to profit from operating activities before income tax at the statutory income tax rate to income tax expense at the Company’s effective income tax rate are as follows: December 31, 2020 December 31, 2019 Profit before tax 575.246.462 Tax rate (%) 508.942.295 Tax rate (%) Taxes on income per statutory tax rate 126.554.222 22,00 111.967.305 22,00 Tax exempt income (11.973.359) (2,08) (5.987.992) (1,18) Non-deductible expenses 27.887 (0,00) (99.390) (0,02) Total tax income recognized in profit Anadolu Sigorta 2020 Annual Report or loss 114.608.750 19,92 105.879.923 20,80

204 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

36 Net foreign Exchange gains Net foreign exchange gains are presented in “Note 4.2 - Financial Risk Management” above. 37 Earnings per share Earnings per share are calculated by dividing net profit of the period to the weighted average number of shares. January 1 - January 1 - December 31, 2020 December 31, 2019

Net profit/(loss) for the period 460.637.712 403.062.372 Weighted average number of shares 50.000.000.000 50.000.000.000 Earnings/loss per share (TL) 0,0092 0,0081

38 Dividends per share Cash dividends amounting to 135.000.000 TL were paid to shareholders during the year of 2020 (December 31, 2019: TL 100.000.000). 39 Cash generated from operations The cash flows from operating activities are presented in the accompanying unconsolidated statement of cash flows 40 Convertible bonds None. 41 Redeemable preference shares None. 42 Risks In the normal course of its operations, the Company 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 Company are provided under provision for outstanding claims in the accompanying unconsolidated financial statements. As of December 31, 2020, total amount of the claims that the Company face is TL 1.976.464.629 in gross (December 31, 2019: TL 1.716.620.953). The Company provided provision for outstanding claims in the unconsolidated financial statements by considering collateral amounts. As of December 31, 2020, ongoing law suits prosecuted by the Company against the third parties amounting TL 521.063.482 (December 31, 2019: TL 409.892.582). 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. As of December 31, 2020, the cases has been timed out. Anadolu Sigorta 2020 Annual Report 43 Commitments The details of the guarantees that are given by the Company for the operations in non-life branches are presented in Note 17. 44 Business comibanitons None.

205 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

45 Related party transactions The ultimate controlling party of the Company is İş Bankası Group and the groups having direct control over İş Bankası Group and the affiliates and associates of İş Bankası Group are defined as related parties of the Company. The related party balances as of December 31, 2020 and 2019 are as follows: December 31, 2020 December 31, 2019

İş Bankası - cash at banks 175.236.370 360.497.560 Türkiye Sınai Kalkınma Bankası - cash at banks 135 103 Banks 175.236.505 360.497.663

Investment funds issued by Türkiye İş Bankası A.Ş. (Note 11) 258.961.473 70.083.546 Investment funds issued by İş Faktöring A.Ş. (Note 11) 14.816.394 - Investment funds issued by İş Portföy Yönetimi A.Ş. (Note 11) 392.601.159 858.014.336 Investment funds issued by Türkiye Sınai ve Kalkınma Bankası A.Ş. (Note 11) 333.065.482 41.955.002 Investment funds issued by Yatırım Finansman Menkul Değerler A.Ş. (Note 11) 4.941.870 - Investment funds founded by İşbank GmbH (Note 11) 21.011.668 17.113.532 Financial assets 1.025.398.046 987.166.416

İş Gayrimenkul Yatırım Ortaklığı A.Ş. - TFRS 16 operating leases 1.813.908 1.956.528 Financial liabilities 1.813.908 1.956.528

İş Bankası - receivables stem from premiums written via the Bank 215.800.456 206.072.635 İş Bankası - credit card receivables 365.981.614 263.513.622 Maturities less than three months 274.670.833 206.792.875 Maturities more than three months 91.310.781 56.720.747 Receivables stems from premiums written via Şişecam Sigorta Aracılık Hiz. A.Ş. 6.421.163 5.181.827 Anadolu Hayat Emeklilik A.Ş. - premium receivables 9.039 28.815 Receivables from main operations 588.212.272 474.796.899

Milli Reasürans T.A.Ş.- payables from reinsurance operations 22.068.768 12.562.842 İş Bankası - commission payables 12.735.885 11.021.482 Şişecam Sigorta Aracılık Hizmetleri A.Ş. - commission payables 1.090.820 696.535 Payables from main operations 35.895.473 24.280.859

No guarantees have been taken against receivables from related parties. There are no doubtful receivables from shareholders, subsidiaries and joint ventures. No guarantees, commitments, guarantee letters, advances and endorsements given in favour of shareholders, associates and subsidiaries. Anadolu Sigorta 2020 Annual Report

206 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

The Company has accrued TL 128.228.418 premium (December 31, 2019: TL 101.029.104) for related party policies in 2020. The transactions with related parties during the period ended December 31, 2020 and 2019 are as follows: January 1 - January 1 - December 31, 2020 December 31, 2019

İş Bankası - premiums written via the Bank 987.292.140 845.874.415 Premiums written via Şişecam Sigorta Aracılık Hizmetleri A.Ş. 22.181.679 21.067.933 Anadolu Hayat Emeklilik A.Ş - premiums written 6.496.750 5.828.332 Milli Reasürans T.A.Ş. 547.087 494.419 Premiums written 1.016.517.656 873.265.099

Milli Reasürans T.A.Ş (181.002.233) (165.473.483) Premiums written, ceded (181.002.233) (165.473.483)

İş Bankası - interest income from deposits 16.639.268 40.134.724 İş Portföy Yönetimi - income from investment funds 33.125.703 56.912.901 İş Gayrimenkul Yatırım Ortaklığı - income from bonds - 4.105.806 Türkiye Sınai Kalkınma Bankası - income from bonds 14.776.441 4.464.880 Türkiye İş Bankası - income from bonds 14.283.806 3.157.654 İş Finansal Kiralama- income from bonds - 646.100 İş Faktöring A.Ş. income from bonds 570.080 - Yatırım Finansman Menkul Değerler A.Ş. income from bonds 116.841 - Yatırım Varlık Kiralama income from bonds 1.715.077 - Investment income 81.227.216 109.422.065

Türkiye İş Bankası A.Ş - commission expense (98.355.253) (82.199.913) Şişecam Sigorta Aracılık Hizmetleri A.Ş. - commission expense (4.595.495) (4.204.632) Milli Reasürans T.A.Ş- commission expense 40.557.074 37.063.327 Operating expenses, net (62.393.674) (49.341.218)

Anadolu Hayat ve Emeklilik A.Ş - rent income 148.129 256.789 Other income 148.129 256.789

İş Merkezleri Yönetim ve İşletim A.Ş. -service cost (8.142.498) (7.500.919) İş Gayrimenkul Yatırım Ortaklığı A.Ş. - TFRS 16 interest expense (628.033) (584.816) Anadolu Anonim Türk Sigorta Şirketi Memurları Emekli Sandığı ve Dayanışma Vakfı - TFRS 16 interest expense (8.284.392) (8.809.488) İş Portföy Yönetimi - management commision (452.471) (312.361) İş Portföy Yönetimi - performance commission (4.997.587) - Yatırım Finansman Menkul Değerler - management commision (142.120) (678.267)

Other expense (22.647.101) (17.885.851) Anadolu Sigorta 2020 Annual Report

46 Events after the reporting date Subsequent events are disclosed in Note 1.10 Events after the reporting date.

207 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 UNCONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

47 Other Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of the group to which they relate or 5% of the total assets in the balance sheet They are presented in the related notes above. “Payables to employees and receivables from employees presented under accounts, “other receivables” and “other short or long term payables”, and which have balance more than 1% of the total assets None. Subrogation recorded in “Off-Balance Sheet Accounts” None. Real rights on properties and their values None. Explanatory note for the amounts and nature of previous years’ income and losses None. Information on other technical expenses items in income statement The part of amounting to TL 159.108.114 (December 31, 2019: TL 149.972.158) of other technical expenses in the statement of income amounting to TL 146.566.440 (December 31, 2019: TL 140.222.386) comprised of assistance services and their other technical expenses and cost of postponed. For the periods ended December 31, 2020 and 2019, details of discount and provision expenses are as follows January 1 - January 1 - Provision expenses December 31, 2020 December 31, 2019

Provisions no longer required income/(expense) 4.404.549 252.776 Provision expense for unused vacation (Note 23) (1.091.977) (505.886) Provision expense for employee termination benefits (Note 23) (4.368.940) (1.368.908) Provision expense for doubtful receivables (Note4.2) (92.450.824) (64.246.078) Other provisions (Note 23) 1.017.484 (17.264) Provisions account (92.489.708) (65.885.360)

January 1 - January 1 - Rediscount expenses December 31, 2020 December 31, 2019

Rediscount income 37.208.316 45.206.652 Rediscount expense (35.020.790) (39.530.843) Total of rediscounts 2.187.526 5.675.809 Anadolu Sigorta 2020 Annual Report

208 INFORMATION ON CONSOLIDATED SUBSIDIARIES

ANADOLU HAYAT EMEKLİLİK A.Ş. Offering service in private pension and life insurance segments, Anadolu Hayat Emeklilik was founded in 1990 as “Turkey’s first life insurance company”. The first and only publicly-traded pension company in Turkey, Anadolu Hayat Emeklilik is the largest company among the privately-owned companies in the sector in terms of total funds attained in life insurance and private pension branches. A subsidiary of İşbank, Anadolu Hayat Emeklilik’s shares are quoted on the Borsa Istanbul (BIST) Star Market under the symbol (ANHYT). Headquartered in İstanbul, Anadolu Hayat Emeklilik brings its products to its customers via regional offices in İstanbul (3), Ankara (2), Adana, Antalya, Bursa, Trabzon, İzmir, Kocaeli and Diyarbakır, and a branch in the Turkish Republic of Northern Cyprus, direct sales force, and more than 260 agencies. Anadolu Hayat Emeklilik possesses the most extensive bank insurance network in Turkey. The company uses the branches in its bank insurance network, mainly the branches of İşbank, as a fundamental element of its service delivery. Premium production on life insurance grew by 37% year-over-year to TL 1,684 million, whereas life insurance customers’ assets under the company’s management expanded 39% and reached TL 3.1 billion. According to the Pension Monitoring Center (PMC) data dated 31 December 2020, Anadolu Hayat Emeklilik achieved 33% growth in total funds (excluding auto-enrollment, including state contribution) in the twelve months to year-end 2020. Having reached TL 29,357 million in total funds including state contribution funds and 1,091,440 people in the number of participants, Anadolu Hayat Emeklilik is a leading player in the sector with respective market shares of 18.5% and 15.8% in total funds including state contribution funds and number of participants. Total unconsolidated assets of Anadolu Hayat Emeklilik were up 33% year-to-year and reached TL 36,067 million at year-end 2020. Posting TL 648 million in net profit, the company successfully completed yet another year in terms of sustainable profitability. Anadolu Sigorta 2020 Annual Report

209 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 TOGETHER WITH THE INDEPENDENT AUDITOR’S REVIEW REPORT (Convenience Translation of Consolidated Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) Anadolu Sigorta 2020 Annual Report

210 INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Anadolu Anonim Türk Sigorta Şirketi A) Report on the Audit of the Consolidated Financial Statements 1) Opinion We have audited the consolidated financial statements of Anadolu Anonim Türk Sigorta Şirketi (the Company), which comprise the consolidated statement of financial position as at December 31, 2020, and the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and consolidated statement of profit distribution for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2020, and its consolidated financial performance, its consolidated cash flows and its consolidated profit distribution for the year then ended in accordance with the prevailing accounting principles and standards as per the insurance legislation and Turkish Financial Reporting Standards for the matters not regulated by insurance legislation; “Insurance Accounting and Financial Reporting Legislation”. 2) Basis for Opinion We conducted our audit in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and Independent Auditing Standards (InAS) which are part of the Turkish Auditing Standards as issued by the Public Oversight Accounting and Auditing Standards Authority of Turkey (POA). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Independent Auditors (Code of Ethics) as issued by the POA, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 3) Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Anadolu Sigorta 2020 Annual Report

211 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

INDEPENDENT AUDITOR’S REPORT

Key audit matter How our audit addressed the key audit matter Incurred but not reported outstanding claims reserve

As of December 31, 2020, the Company has insurance liabilities We have performed the audit procedures related the actuarial of TL 7.774.427.606 representing 67% of the Company’s total assumptions which disclosed in the Note 2 and 17 together with liabilities. The Company made net provision of TL 4.730.536.781 the actuary auditor who is part of our audit team. for the future outstanding claims for insurance contracts. These procedures are primarily intended to assess whether In the calculation of Incurred But Not Reported (IBNR) the estimates and methods that used in the calculation of the claims provisions (net amount of TL 3.080.574.309) which is outstanding claims reserve by the Company are appropriate. accounted under the outstanding claims reserves, the Company Management has used the actuarial assumptions and estimates In this context, we have performed the audit procedures related detailed in note 2 and 17. to the recording the Company’s incurred outstanding claims; performed the analytical review the incurred case files which The significance of the provision amount allocated for selected randomly; obtained the signed lawyer letter from compensations for incurred but not reported losses within the Company’s attorney for litigated case files; assessed the Company’s financial tables and also the calculations of such average claim amount and opening claim amounts determined provisions include significant actuarial judgements and forecast, by the Company’s actuary; have performed the audit IBNR calculations has been considered as a key audit matter. procedures related to the completeness of the data used in the correct calculation of insurance contract liabilities; assessed the properness of the IBNR calculation method used by the Company for each line of businesses both the relevant claim characteristics and the Company’s claim history; performed the recalculation procedure on the amount of IBNR calculated by the Company; reviewed the claim analyzes made by the Company’s actuary and questioned these analyzes in terms of suitability and consistency of both legislation and Company past experience; assessed whether the disclosures in the notes of the financial statements are sufficient.

4) Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Insurance Accounting and Financial Reporting Legislation and designing, implementing and maintaining internal systems relevant to the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. 5) Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from Anadolu Sigorta 2020 Annual Report material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and InAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with InAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: -- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 212 -- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. -- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. -- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. -- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. -- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. B) Report on Other Legal and Regulatory Requirements 1) Auditors’ report on Risk Management System and Committee prepared in accordance with paragraph 4 of Article 398 of Turkish Commercial Code (“TCC”) 6102 is submitted to the Board of Directors of the Company on January 29, 2021. 2) In accordance with paragraph 4 of Article 402 of the TCC, no significant matter has come to our attention that causes us to believe that the Company’s bookkeeping activities for the period 1 January - 31 December 2020 and financial statements are not in compliance with laws and provisions of the Company’s articles of association in relation to financial reporting. 3) In accordance with paragraph 4 of Article 402 of the TCC, the Board of Directors submitted to us the necessary explanations and provided required documents within the context of audit. The name of the engagement partner who supervised and concluded this audit is Seda Akkuş Tecer. Anadolu Sigorta 2020 Annual Report

213 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED FINANCIAL STATEMENTS PREPARED AS OF DECEMBER 31, 2020

We confirm that the consolidated financial statements and related disclosures and notes for the as of December 31, 2020 which were prepared in accordance with the accounting principles and standards in force as per the regulations of Republic of Turkey Ministry of Treasury and Finance are in compliance with the “Code Related to the Financial Reporting of Insurance, Reinsurance and Private Pension Companies” and the financial records of our Company. İstanbul, January 29, 2021

Mehmet ŞENCAN Fatih GÖREN Chief Executive Officer Executive Vice President of Finance

Murat Tetik Taylan MATKAP Accounting Reporting Manager Actuary Anadolu Sigorta 2020 Annual Report

214 CONTENTS

BALANCE SHEET 216 STATEMENT OF INCOME 221 STATEMENT OF CHANGES IN EQUITY 224 STATEMENT OF CASH FLOW 226 STATEMENT OF PROFIT DISTRIBUTION 227 NOTES TO THE FINANCIAL STATEMENTS 228-291 NOTE 1 General information 228 NOTE 2 Summary of significant accounting policies 230 NOTE 3 Critical accounting estimates and judgments in applying accounting policies 249 NOTE 4 Management of insurance and financial risk 251 NOTE 5 Segment reporting 263 NOTE 6 Tangible assets 266 NOTE 7 Investment properties 268 NOTE 8 Intangible assets 268 NOTE 9 Investments in associates 269 NOTE 10 Reinsurance assets and liabilities 269 NOTE 11 Financial assets 270 NOTE 12 Loans and receivables 274 NOTE 13 Derivative financial instruments 275 NOTE 14 Cash and cash equivalents 276 NOTE 15 Equity 276 NOTE 16 Other reserves and equity component of discretionary participation feature 278 NOTE 17 Insurance contract liabilities and reinsurance assets 279 NOTE 18 Investment contract liabilities 283 NOTE 19 Trade and other payables and deferred income 283 NOTE 20 Financial liabilities 284 NOTE 21 Deferred tax 284 NOTE 22 Retirement benefit obligations 284 NOTE 23 Other liabilities and provisions 285 NOTE 24 Net insurance premium 285 NOTE 25 Fee revenue 285 NOTE 26 Investment income 285 NOTE 27 Net income accrual on financial assets 285 NOTE 28 Assets held at fair value through profit or loss 286 NOTE 29 Insurance rights and claims 286 NOTE 30 Investment contract benefits 286 NOTE 31 Other expenses 286 NOTE 32 Operating expenses 286 NOTE 33 Employee benefits expenses 287 NOTE 34 Financial costs 287 NOTE 35 Income tax 287

NOTE 36 Net foreign Exchange gains 288 Anadolu Sigorta 2020 Annual Report NOTE 37 Earnings per share 288 NOTE 38 Dividends per share 288 NOTE 39 Cash generated from operations 288 NOTE 40 Convertible bonds 288 NOTE 41 Redeemable preference shares 288 NOTE 42 Risks 288 NOTE 43 Commitments 289 NOTE 44 Business comibanitons 289 NOTE 45 Related party transactions 289 NOTE 46 Events after the reporting date 291 NOTE 47 Other 291 215 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

The accompanying notes are an integral part of these consolidated financial statements. 216 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

ASSETS Audited Audited Current Period Prior Period II- Non-Current Assets Note December 31, 2020 December 31, 2019 A- Receivables from Main Operations - - 1- Receivables from Insurance Operations - - 2- Provision for Receivables from Insurance Operations - - 3- Receivables from Reinsurance Operations - - 4- Provision for Receivables from Reinsurance Operations - - 5- Cash Deposited for Insurance and Reinsurance Companies - - 6- Loans to the Policyholders - - 7- Provision for Loans to the Policyholders - - 8- Receivables from Individual Pension Business - - 9- Doubtful Receivables from Main Operations - - 10- Provision for Doubtful Receivables from Main Operations - - B- Due from Related Parties - - 1- Due from Shareholders - - 2- Due from Associates - - 3- Due from Subsidiaries - - 4- Due from Joint Ventures - - 5- Due from Personnel - - 6- Due from Other Related Parties - - 7- Rediscount on Receivables from Related Parties - - 8- Doubtful Receivables from Related Parties - - 9- Provision for Doubtful Receivables from Related Parties - - C- Other Receivables 12 326.932 326.932 1- Finance Lease Receivables - - 2- Unearned Finance Lease Interest Income - - 3- Deposits and Guarantees Given 12 326.932 326.932 4- Other Miscellaneous Receivables - - 5- Rediscount on Other Miscellaneous Receivables - - 6- Other Doubtful Receivables - - 7- Provision for Other Doubtful Receivables - - D- Financial Assets 9 320.378.673 257.177.864 1- Investments in Equity Shares - - 2- Investments in Associates 9 320.378.673 257.177.864 3- Capital Commitments to Associates - - 4- Investments in Subsidiaries - - 5- Capital Commitments to Subsidiaries - - 6- Investments in Joint Ventures - - 7- Capital Commitments to Joint Ventures - - 8- Financial Assets and Financial Investments with Risks on Policyholders - - 9- Other Financial Assets - - 10- Impairment in Value of Financial Assets - - E- Tangible Assets 6 180.976.858 180.203.693 1- Investment Properties 6,7 74.097.500 66.885.000 2- Impairment for Investment Properties - - 3- Owner Occupied Property 6 18.262.500 15.672.000 4- Machinery and Equipment 6 92.149.319 91.841.231 5- Furniture and Fixtures 6 17.505.041 14.899.853 6- Motor Vehicles 6 4.593.622 4.593.622 7- Other Tangible Assets (Including Leasehold Improvements) 6 30.451.919 28.826.269 8- Tangible Assets Acquired Through Finance Leases 6 66.761.644 62.419.133 9- Accumulated Depreciation 6 (122.844.687) (104.933.415) 10- Advances Paid for Tangible Assets (Including Construction in Progress) - - F- Intangible Assets 8 126.054.434 100.241.244 1- Rights - - 2- Goodwill 8 16.250.000 16.250.000 3- Pre-operating Expenses - - 4- Research and Development Costs - - 5- Other Intangible Assets 8 277.556.554 217.145.084 6- Accumulated Amortization 8 (176.873.429) (137.838.791) 7- Advances Paid for Intangible Assets 8 9.121.309 4.684.951 Anadolu Sigorta 2020 Annual Report G- Prepaid Expenses and Income Accruals 17 2.167.444 1.444.448 1- Prepaid Expenses 17 2.167.444 1.444.448 2- Income Accruals - - 3- Other Prepaid Expenses and Income Accruals - - H- Other Non-Current Assets 21 - 48.255.857 1- Effective Foreign Currency Accounts - - 2- Foreign Currency Accounts - - 3- Stocks to be Used in the Following Years - - 4- Prepaid Taxes and Funds - - 5- Deferred Tax Assets 21 - 48.255.857 6- Other Miscellaneous Non-Current Assets - - 7- Amortization on Other Non-Current Assets - - 8- Provision for Other Non-Current Assets - - II- Total Non-Current Assets 629.904.341 587.650.038 TOTAL ASSETS 11.651.496.402 9.439.606.053 The accompanying notes are an integral part of these consolidated financial statements. 217 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

The accompanying notes are an integral part of these consolidated financial statements. 218 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

The accompanying notes are an integral part of these consolidated financial statements. 219 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

EQUITY Audited Audited Current Period Prior Period V- Equity Note December 31, 2020 December 31, 2019 A- Paid in Capital 500.000.000 500.000.000 1- (Nominal) Capital 2.13,15 500.000.000 500.000.000 2- Unpaid Capital - - 3- Positive Capital Restatement Differences - - 4- Negative Capital Restatement Differences - - 5- Register in Progress Capital - - B- Capital Reserves 15 38.833.622 35.290.304 1- Share Premiums - - 2- Cancellation Profits of Equity Shares - - 3- Profit on Asset Sales That Will Be Transferred to Capital 1.136.153 838.049 4- Currency Translation Adjustments - - 5- Other Capital Reserves 15 37.697.469 34.452.255 C- Profit Reserves 1.233.920.659 770.723.618 1- Legal Reserves 15 152.083.853 114.278.982 2- Statutory Reserves 15 100.114.475 65.330.876 3- Extraordinary Reserves 15 624.570.914 442.672.379 4- Special Funds 15 29.130.000 - 5- Revaluation of Financial Assets 15 292.082.808 110.742.905 6- Other Profit Reserves 15 35.938.609 37.698.476 D- Retained Earnings 103.217.084 72.459.667 1- Retained Earnings 103.217.084 72.459.667 E- Accumulated Losses - - 1- Accumulated Losses - - F-Net Profit/(Loss) for the Period 510.025.565 449.200.726 1- Net Profit for the Period 509.014.241 444.126.158 2- Net Loss for the Period - - 3- Net Profit not Subject to Distribution 15 1.011.324 5.074.568 V- Total Equity 2.385.996.930 1.827.674.315 TOTAL EQUITY AND LIABILITIES 11.651.496.402 9.439.606.053 Anadolu Sigorta 2020 Annual Report

The accompanying notes are an integral part of these consolidated financial statements. 220 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period Prior Period I- TECHNICAL SECTION Note January 1 - December 31, 2020 January 1 -December 31, 2019 A- Non-Life Technical Income 6.125.640.534 5.338.665.066 1- Earned Premiums (Net of Reinsurer Share) 4.943.217.712 4.183.778.556 1.1- Written Premiums (Net of Reinsurer Share) 17 5.435.475.612 4.524.378.683 1.1.1- Written Premiums, gross 17 8.015.704.097 6.606.856.218 1.1.2- Written Premiums, ceded 10,17 (2.410.127.788) (1.946.409.476) 1.1.3- Premiums Transferred to Social Security Institutions 17 (170.100.697) (136.068.059) 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) 17,29 (483.984.170) (350.605.984) 1.2.1- Reserve for Unearned Premiums, gross 17 (759.412.264) (475.450.498) 1.2.2- Reserve for Unearned Premiums, ceded 17 255.855.842 113.993.635 1.2.3 - Reserve for Unearned Premiums, Social Security Institution Share 19.572.252 10.850.879 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) 17,29 (8.273.730) 10.005.857 1.3.1- Reserve for Unexpired Risks, gross 17 (59.231.251) 33.692.786 1.3.2- Reserve for Unexpired Risks, ceded 17 50.957.521 (23.686.929) 2- Investment Income - Transferred from Non-Technical Section 1.053.155.056 1.095.657.559 3- Other Technical Income (Net of Reinsurer Share) 5.832.012 7.750.539 3.1- Other Technical Income, gross 5.832.012 7.750.539 3.2- Other Technical Income, ceded - - 4- Accrued Salvage and Subrogation Income 123.435.754 51.478.412 B - Non-Life Technical Expense (5.390.735.390) (4.695.346.892) 1- Incurred Losses (Net of Reinsurer Share) 17 (4.063.725.097) (3.499.764.077) 1.1- Claims Paid (Net of Reinsurer Share) 17,29 (3.035.504.038) (2.854.850.723) 1.1.1- Claims Paid, gross 17 (3.852.056.039) (3.838.569.062) 1.1.2- Claims Paid, ceded 10,17 816.552.001 983.718.339 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) 17,29 (1.028.221.059) (644.913.354) 1.2.1- Change in Provisions for Outstanding Claims, gross 17 (1.744.278.774) (924.930.272) 1.2.2- Change in Provisions for Outstanding Claims, ceded 17 716.057.715 280.016.918 2- Change in Provision for Bonus and Discounts (Net of Reinsurer Share and Less the Amounts Carried Forward) 17 (4.000.000) - 2.1- Provision for Bonus and Discounts, gross 17 (4.000.000) - 2.2- Provision for Bonus and Discounts, ceded - - 3- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) 17,29 (37.525.996) (42.328.548) 4- Operating Expenses 32 (1.126.376.183) (1.003.282.108) 5- Change in Mathematical Provisions (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 5.1- Change in Mathematical Provisions, gross - - 5.2 - Change in Mathematical Provisions, ceded - - 6- Change in Other Technical Provisions (Net of Reinsurer and Less the Amounts Carried Forward) 47 (159.108.114) (149.972.159) 6.1- Change in Other Technical Provisions, gross (166.236.852) (155.791.797) 6.2- Change in Other Technical Provisions, ceded 7.128.738 5.819.638 C- Net Technical Income-Non-Life (A - B) 734.905.144 643.318.174 D- Life Technical Income - - 1- Earned Premiums (Net of Reinsurer Share) - - 1.1- Written Premiums (Net of Reinsurer Share) - - 1.1.1- Written Premiums, gross - - 1.1.2- Written Premiums, ceded - - 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Share and Less the Amounts Carried Forward) - - Anadolu Sigorta 2020 Annual Report 1.2.1- Reserve for Unearned Premiums, gross - - 1.2.2- Reserve for Unearned Premiums, ceded - - 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) - - 1.3.1- Reserve for Unexpired Risks, gross - - 1.3.2- Reserve for Unexpired Risks, ceded - - 2- Investment Income - - 3- Unrealized Gains on Investments - - 4- Other Technical Income (Net of Reinsurer Share) - - 4.1- Other Technical Income. gross - - 4.2- Other Technical Income. ceded - - 5- Accrued Salvage Income - - The accompanying notes are an integral part of these consolidated financial statements. 221 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

The accompanying notes are an integral part of these consolidated financial statements. 222 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period Prior Period January 1 - January 1 - II-NON-TECHNICAL SECTION Note December 31, 2020 December 31, 2019 C- Net Technical Income - Non-Life (A-B) 734.905.144 643.318.174 F- Net Technical Income - Life (D-E) - - I - Net Technical Income - Pension Business (G-H) - - J- Total Net Technical Income (C+F+I) 734.905.144 643.318.174 K- Investment Income 2.537.228.739 1.419.545.287 1- Income from Financial Assets 4.2 331.403.221 289.470.340 2- Income from Disposal of Financial Assets 4.2 157.832.503 85.209.297 3- Valuation of Financial Assets 4.2 127.963.463 41.087.922 4- Foreign Exchange Gains 4.2 1.017.311.373 427.938.663 5- Income from Associates 4.2,9 105.387.853 72.138.354 6- Income from Subsidiaries and Joint Ventures - - 7- Income from Property, Plant and Equipment 10.032.805 6.127.900 8- Income from Derivative Transactions 4.2 787.297.521 497.572.811 9- Other Investments - - 10- Income Transferred from Life Section - - L- Investment Expense (2.558.783.717) (1.450.966.839) 1- Investment Management Expenses (incl. interest) 4.2 (19.156.686) (38.231.786) 2- Impairment in Value of Investments 4.2 (3.920.793) (4.981.343) 3- Loss from Disposal of Financial Assets 4.2 (55.684.845) (62.299.358) 4- Investment Income Transferred to Non-Life Technical Section (1.053.155.056) (1.095.657.559) 5- Loss from Derivative Transactions 4.2 (776.356.453) (30.741.125) 6- Foreign Exchange Losses 4.2 (588.690.933) (173.599.648) 7- Depreciation and Amortization Expenses 6,8 (61.818.951) (45.456.020) 8- Other Investment Expenses - - M- Income and Expenses From Other and Extraordinary Operations (103.289.849) 1.990.380 1- Provisions 47 (92.489.708) (65.885.360) 2- Rediscounts 47 2.187.526 5.675.809 3- Specified Insurance Accounts - - 4- Monetary Gains and Losses - - 5- Deferred Taxation (Deferred Tax Assets) 35 - 58.806.353 6- Deferred Taxation (Deferred Tax Liabilities) 35 (14.573.998) - 7- Other Income 3.090.608 4.048.054 8- Other Expenses and Losses (1.504.277) (654.476) 9- Prior Year’s Income - - 10- Prior Year’s Expenses and Losses - -

N- Net Profit for the Period 510.025.565 449.200.726 Anadolu Sigorta 2020 Annual Report 1- Profit for the Period 610.060.317 613.887.002 2- Corporate Tax Provision and Other Fiscal Liabilities 35 (100.034.752) (164.686.276) 3- Net Profit for the Period 510.025.565 449.200.726 4- Inflation Adjustment Account - -

The accompanying notes are an integral part of these consolidated financial statements. 223 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Consolidated Statement of Changes in Equity - December 31, 2019 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2018 500.000.000 - (48.003.535) - - 87.080.174 40.734.515 334.524.620 324.506.976 80.319.522 1.319.162.272 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2019) 500.000.000 - (48.003.535) - - 87.080.174 40.734.515 334.524.620 324.506.976 80.319.522 1.319.162.272 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------840.444 6.500.000 - 7.340.444 D - Change in the value of financial assets 11,15 - - 158.746.440 ------158.746.440 E- Currency translation adjustments ------F- Other gains or losses ------(393.536) - (393.536) G- Inflation adjustment differences ------H- Net profit for the period ------449.200.726 - 449.200.726 I - Dividends paid 2.23 ------(106.382.031) - (106.382.031) J - Transfers to reserves 15 - - - - - 27.198.808 24.596.361 180.296.095 (224.231.409) (7.859.855) - IV - Balance at the end of the period - December 31, 2019 500.000.000 - 110.742.905 - - 114.278.982 65.330.876 515.661.159 449.200.726 72.459.667 1.827.674.315

Audited Consolidated Statement of Changes in Equity - December 31, 2020 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2019 500.000.000 - 110.742.905 - - 114.278.982 65.330.876 515.661.159 449.200.726 72.459.667 1.827.674.315 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2020) 500.000.000 - 110.742.905 - - 114.278.982 65.330.876 515.661.159 449.200.726 72.459.667 1.827.674.315 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------1.457.705 10.000.000 - 11.457.705 D - Change in the value of financial assets 11,15 - - 181.339.903 ------181.339.903 E- Currency translation adjustments ------Anadolu Sigorta 2020 Annual Report F- Other gains or losses ------(408.418) - (408.418) G- Inflation adjustment differences ------H- Net profit for the period ------510.025.565 - 510.025.565 I - Dividends paid 2.23 ------(144.092.140) - (144.092.140) J - Transfers to reserves 15 - - - - - 37.804.871 34.783.599 211.354.281 (314.700.168) 30.757.417 - IV - Balance at the end of the period - December 31, 2020 500.000.000 - 292.082.808 - - 152.083.853 100.114.475 728.473.145 510.025.565 103.217.084 2.385.996.930

The accompanying notes are an integral part of these consolidated financial statements. 224 Audited Consolidated Statement of Changes in Equity - December 31, 2019 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2018 500.000.000 - (48.003.535) - - 87.080.174 40.734.515 334.524.620 324.506.976 80.319.522 1.319.162.272 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2019) 500.000.000 - (48.003.535) - - 87.080.174 40.734.515 334.524.620 324.506.976 80.319.522 1.319.162.272 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------840.444 6.500.000 - 7.340.444 D - Change in the value of financial assets 11,15 - - 158.746.440 ------158.746.440 E- Currency translation adjustments ------F- Other gains or losses ------(393.536) - (393.536) G- Inflation adjustment differences ------H- Net profit for the period ------449.200.726 - 449.200.726 I - Dividends paid 2.23 ------(106.382.031) - (106.382.031) J - Transfers to reserves 15 - - - - - 27.198.808 24.596.361 180.296.095 (224.231.409) (7.859.855) - IV - Balance at the end of the period - December 31, 2019 500.000.000 - 110.742.905 - - 114.278.982 65.330.876 515.661.159 449.200.726 72.459.667 1.827.674.315

Audited Consolidated Statement of Changes in Equity - December 31, 2020 Own Shares Revaluation Currency Other Reserves Paid-in of the of Financial Inflation Translation Legal Statutory and Retained Net Profit for Retained Note Capital Company Assets Adjustments Adjustment Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - December 31,2019 500.000.000 - 110.742.905 - - 114.278.982 65.330.876 515.661.159 449.200.726 72.459.667 1.827.674.315 II - Change in Accounting Standards ------III - Restated balances (I+II) - (January 1, 2020) 500.000.000 - 110.742.905 - - 114.278.982 65.330.876 515.661.159 449.200.726 72.459.667 1.827.674.315 A - Capital increase(A1+A2) ------1 - In cash ------2 - From reserves ------B - Purchase of own shares ------C - Gains or losses that are not included in the statement of incomes ------1.457.705 10.000.000 - 11.457.705 D - Change in the value of financial assets 11,15 - - 181.339.903 ------181.339.903 E- Currency translation adjustments ------F- Other gains or losses ------(408.418) - (408.418) Anadolu Sigorta 2020 Annual Report G- Inflation adjustment differences ------H- Net profit for the period ------510.025.565 - 510.025.565 I - Dividends paid 2.23 ------(144.092.140) - (144.092.140) J - Transfers to reserves 15 - - - - - 37.804.871 34.783.599 211.354.281 (314.700.168) 30.757.417 - IV - Balance at the end of the period - December 31, 2020 500.000.000 - 292.082.808 - - 152.083.853 100.114.475 728.473.145 510.025.565 103.217.084 2.385.996.930

225 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

The accompanying notes are an integral part of these consolidated financial statements. 226 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONSOLIDATED STATEMENT OF PROFIT DISTRIBUTION FOR YEAR ENDED DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Audited Audited Current Period(**) Prior Period(***) Note December 31, 2020 December 31, 2019 I. PROFIT DISTRIBUTION 1.1. CURRENT YEAR PROFIT(*) 619.119.819 618.812.434 1.2. TAX AND FUNDS PAYABLE (100.034.752) (164.686.276) 1.2.1. Corporate Income Tax(Income Tax) 35 (100.034.752) (164.686.276) 1.2.2. Income tax deduction - - 1.2.3. Other taxes and Duties - - A NET PROFIT(1.1 - 1.2) 519.085.067 454.126.158 1.3. PREVIOUS PERIOD LOSSES (-) - - 1.4. FIRST LEGAL RESERVE - 20.620.349 1.5. STATUTORY FUND (-) - - B NET PROFIT DISTRIBUTION [(A-(1.3 + 1.4 + 1.5)] 519.085.067 433.505.809 1.6. FIRST DIVIDEND TO SHAREHOLDERS (-) - - 1.6.1. Holders of shares - - 1.6.2. Holders of Preferred shares - - 1.6.3 Holders of Redeemed shares - - 1.6.4 Holders of Participation Bond - - 1.6.5 Holders of Profıt and Loss sharing certificate - - 1.7. DIVIDEND TO PERSONNEL (-) - - 1.8. DIVIDENDS TO BOARD OF DIRECTORS (-) - - 1.9. SECOND DIVIDEND TO SHAREHOLDERS (-) - - 1.9.1. Holders of shares - - 1.9.2. Holders of Preferred shares - - 1.9.3. Holders of Redeemed shares - - 1.9.4. Holders of Participation Bond - - 1.9.5. Holders of Profıt and Loss sharing certificate - - 1.10. SECOND LEGAL RESERVE (-) - - 1.11. STATUTORY RESERVES (-) - - 1.12. EXTRAORDINARY RESERVES - - 1.13. OTHER RESERVES - - 1.14. SPECIAL FUNDS - - II. DISTRIBUTION OF RESERVES - - 2.1. DISTRIBUTION OF RESERVES - - 2.2. SECOND LEGAL RESERVES (-) - - 2.3. COMMON SHARES (-) - - 2.3.1. Holders of shares - - 2.3.2 Holders of Preferred shares - - 2.3.3. Holders of Redeemed shares - - 2.3.4 Holders of Participation Bond - - 2.3.5 Holders of Profıt and Loss sharing certificate - - 2.4. DIVIDENDS TO PERSONNEL (-) - - 2.5. DIVIDENDS TO BOARD OF DIRECTORS (-) - - III. PROFIT PER SHARE (****) - - 3.1. HOLDERS OF SHARES 0,00921 0,00806 3.2. HOLDERS OF SHARES (%) 0,921 0,806 3.3. HOLDERS OF PREFERRED SHARES - - 3.4. HOLDERS OF PREFERRED SHARES (%) - - Anadolu Sigorta 2020 Annual Report IV. DIVIDEND PER SHARE - - 4.1. HOLDERS OF SHARES - - 4.2. HOLDERS OF SHARES (%) - - 4.3. HOLDERS OF PREFERRED SHARES - - 4.4. HOLDERS OF PREFERRED SHARES (%) - - (*) According to the Law no. 13 of the Profit Share Annunciation which was announced in Capital Markets Board of Turkey’s weekly bulletin numbered 2014/2, which was then published in the official gazette on January 23, 2014, the profit shares have been distributed based on consolidated profit. As of December 31, 2020, dividend to be paid to the personnel amounting to TL 10.000.000, which has made provision in accordance with TAS 19, has been added to the period profit. (**) Statement of profit distribution has not been filled yet due to the Board of Directors Meeting has not made as of preparation date of the financial statements. (***) The Figures of 2019 was filled by using the data which is located in “According to CMB” of the Profit Distribution. (****) Dividends per share is calculated over the unconsolidated net profit for the period. The accompanying notes are an integral part of these consolidated financial statements. 227 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Milli Reasürans T.A.Ş. 286.550.106 57,31 286.550.106 57,31 Other* 213.449.894 42,69 213.449.894 42,69 Paid in Capital 500.000.000 100,00 500.000.000 100,00

Total 1.361 1.317

228 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

1.6 Wages and similar benefits provided to the senior management For the period ended December 31, 2020, wages and similar benefits provided to the members of the board of directors is amounting to TL 1.861.834 (December 31, 2019: TL 1.705.896), chairman TL 8.678.111 (December 31, 2019: TL 8.798.466). 1.7 Keys used in the distribution of investment income and operating expenses (personnel, administrative, research and development, marketing and selling, services rendered from third parties and other operating expenses) in the financial statements Procedures and principles related to keys used in the financial statements of the companies are determined in accordance with the 4 January 2008 dated and 2008/1 numbered “Communiqué Related to the Procedures and Principles for the Keys Used in the Financial Statements Being Prepared In Accordance With Insurance Accounting Plan” issued by the T.C. Ministry of Treasury and Finance . In accordance with the above mentioned Communiqué, insurance companies are allowed to transfer technical section operating expense to insurance section through methods determined by T.C. Ministry of Treasury and Finance or by the Company itself. Methods determined by the Company should be approved by the T.C. Ministry of Treasury and Finance, Known and exactly distinguishable operating expenses are distributed to related branches directly, while operating expenses are distributed to the sub-branches in accordance with the average of 3 ratios calculated by dividing “number of the policies produced within the last three years”, “gross premium written within the last three years”, and “number of the claims reported within the last three years” to the “total number of the policies”, “total gross written premiums” and the “total number of the claims reported”, respectively. Income from the assets invested against non-life technical provisions is transferred to technical section from non-technical section; remaining income is transferred to the non-technical section. 1.8 Information on the financial statements as to whether they comprise an individual company or a group of companies The accompanying financial statements comprise consolidated financial information of the Company and basis of the consolidation is detailed in note 2.2 - Consolidation. The Company owns 20% of Anadolu Hayat Emeklilik Anonim Şirketi (“Anadolu Hayat”) and this associate have been consolidated in the accompanying consolidated financial statements by using the equity method of accounting. The activities of Anadolu Hayat involve providing individual and group insurance and reinsurance services relating to group life, individual life, retirement and related personal accident branches, establishing, retirement funds, developing internal rules and regulations related to these funds, carrying out retirement, annual income insurance, portfolio management and custody contracts for the assets of the funds held in custody. 1.9 Name or other identity information about the reporting entity and the changes in this information after previous reporting date Trade name of the Company: Anadolu Anonim Türk Sigorta Şirketi Registered address of the head office: Rüzgarlıbahçe Mahallesi, Kavak Sokak, No:3 34805 Kavacık/İstanbul The web page of the Company: www.anadolusigorta.com.tr

The information presented above has not any change since the end of the previous reporting period. 1.10 Events after the reporting date After the balance sheet date, there has been no change in the Company’s activities, the registration of these activities, the document structure and Company policies. Anadolu Sigorta 2020 Annual Report As of December 31, 2020, the consolidated financial statements prepared has been approved by the Board of Directors of the Company on January 29, 2021.

229 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

2 Summary of significant accounting policies 2.1 Basis of preparation 2.1.1 Information about the principles and the specific accounting policies used in the preparation of the financial statements In accordance with Article 136(5) in Section VIII of the Capital Markets Law, numbered 6362 insurance companies have to comply with their own specific laws and regulations in matters of establishment, auditing, supervision/oversight, accounting and financial reporting. Therefore, the Company maintains its books of account and prepares its financial statements in accordance with the Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”), and other accounting and financial reporting principles, statements and guidance (collectively “the Reporting Standards”) in accordance with the “Communiqué Related to the Financial Reporting of Insurance, Reinsurance, and Individual Pension Companies” as promulgated by the T.C. Ministry of Treasury and Finance based on Article 18 of the Insurance Law and Article 11 of the 4632 numbered Individual Pension Savings and Investment System Law (‘‘Individual Retirement Law’’). According to numbered 4th related law Accounting for subsidiaries, associates, joint ventures is, consolidated financial statements, financial statements which disclosed public regulated by the T.C. Ministry of Treasury and Finance. The Company prepare their financial statements are regulated in terms of form and content ın order to compare the financial statements of prior period and with other companies according to “Communiqué on Presentation of Financial Statements “ which is published in the Official Gazette dated April 18, 2008 and numbered 26851. The financial statements are prepared in accordance with the accounting and financial reporting regulations in force in accordance with the insurance legislation and the provisions of Turkish Accounting Standards on matters not regulated by them. Additional paragraph for convenience translation to English The differences between the accounting principles, as described in the preceding paragraphs, and the accounting principles generally accepted in countries, in which the accompanying consolidated financial statements are to be distributed, and International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying consolidated financial statements. Accordingly, the accompanying consolidated financial statements are not intended to present the financial position and results of operations in accordance with the accounting principles generally accepted in such countries other than Turkey and IFRS. 2.1.2 Other accounting policies appropriate for the understanding of the financial statements Accounting in hyperinflationary countries Financial statements of the Turkish entities have been restated for the changes in the general purchasing power of the Turkish Lira based on “TAS 29 - Financial Reporting in Hyperinflationary Economies” as of December 31, 2004. TAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the reporting date, and that corresponding figures for previous years be restated in the same terms. With respect to the declaration of the T.C. Ministry of Treasury and Finance with the article dated April 4, 2005 and numbered 19387, financial statements as of December 31, 2004 are adjusted for the opening balances of 2005 in accordance with the section with respect to inflation accounting of the Capital Markets Board (“CMB”) Communiqué No: 25 of Series XI, “Communiqué on Accounting Standards in Capital Market” published in the Official Gazette dated January 15, 2003 and numbered 25290. Inflation accounting is no longer applied starting from January 1, 2005, in accordance with the same declaration of the T.C. Ministry of Treasury and Finance. Accordingly, as of June 30, 2017, non-monetary assets and liabilities and items included in shareholders’ equity including paid-in capital recognized or recorded before December 31, 2004 in order to reflect inflation adjustments. Non-monetary assets and liabilities and Anadolu Sigorta 2020 Annual Report items included in shareholders’ equity including paid-in capital recognized or recorded after December 31, 2004 are measured at their nominal values. Other accounting policies Information regarding other accounting polices is disclosed above in “Note 2.1.1 - Information about the principles and the specific accounting policies used in the preparation of the financial statements” and each under its own caption in the following sections of this report. 2.1.3 Valid and presentation currency The accompanying consolidated financial statements are presented in TL, which is the Company’s functional currency.

230 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.1.4 Rounding scale of the amounts presented in the financial statements Financial information presented in TL, has been rounded to the nearest TL values. 2.1.5 Basis of measurement used in the preparation of the financial statements The accompanying financial statements are prepared on the historical cost basis as adjusted for the effects of inflation that lasted until December 31, 2004, except for the financial assets at fair value through profit or loss, available-for-sale financial assets, derivative financial instruments and associates which are measured at their fair values unless reliable measures are available. 2.1.6 Accounting policies, changes in accounting estimates and errors No changes or errors have occured in the accounting policies for the current period. Explanations on accounting estimates are given in the “Note 3” which is critical accounting estimates and judgments. 2.2 Consolidation “Circular Related to the Preparation of the Consolidated Financial Statements of Insurance, Reinsurance, and Individual Pension Companies” issued by the T.C. Ministry of Treasury and Finance in the December 31, 2008 dated and 27097 numbered Official Gazette, has been in force since March 31, 2009. Accordingly, consolidated financial statements are also prepared using the equity method of accounting to consolidate the Company’s associate; Anadolu Hayat Emeklilik A.Ş. (“Anadolu Hayat”). Accordingly, consolidated financial statements are prepared using the equity method of accounting to consolidate the Company’s associate; Anadolu Hayat 2.3 Segment reporting An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components, whose operating results are reviewed regularly by the Board of Directors (being chief operating decision maker) to make decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is available. Since the main economic environment, where the Company operates, is Turkey, a geographical segment reporting has not been presented. A business segment reporting of the Company is presented in Note 5 in accordance with TFRS 8- Operating Segments standard. 2.4 Foreign currency transactions Transactions are recorded in TL, which is the Company’s functional currency. Transactions in foreign currencies are recorded at the rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates ruling at the reporting date and foreign currency exchange differences are offset and all exchange differences are recognized in the statement of income. Foreign currency exchange differences of unrecognized gains or losses arising from the difference between their fair value and the discounted values calculated per effective interest rate method of foreign currency available-for-sale financial assets are recorded in “Revaluation of financial assets” under equity and the realized gain or losses are recognized directly in the statement of income. 2.5 Tangible assets Tangible assets of the Company are recorded at their historical costs that have been adjusted for the effects of inflation until the end of December 31, 2004. There have been no other inflationary adjustments for these tangible assets for the following years and therefore they have been recorded at their costs restated for the effects of inflation until December 31, 2004. Tangible assets that have been purchased after January 1, 2005 have been recorded at their costs after deducting any exchange rate differences and finance expenses. Anadolu Sigorta 2020 Annual Report The Company has started to show based on the revaluation model by measuring over fair value as of the third quarter of the 2015 year by making changes in the use of the property which is measuring the cost model in the consolidated financial statements before. Buildings for own use is recognized by fair value that determined in valuations made by independent valuation experts who have professional competency by reducing their following accumulated depreciation. Accumulated depreciation which is at the date of revaluation net of gross book value and net amount brought to values after revaluation. Increase of revaluation results in the carrying value of use of land and building account in equity in the balance sheet under “Other Capital Account” as the net of tax effects. As a result of the evaluation of real estate an increase on the corresponding impairments are deducted from the fund; all other decrease are reflected the profit/loss account. Gains/losses arising from the disposal of the tangible assets are calculated as the difference between the net carrying value and the proceeds from the disposal of related tangible assets and reflected to the statement of income of the related period. 231 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Land is not depreciated to have indefinite life. Depreciation are allocated based on the useful life of tangible assets at cost or revalued amounts of tangible assets by using the straight-line method basis. Maintenance and repair costs incurred in the ordinary course of the business are recorded as expense. There are no pledges, mortgages and other encumbrances on tangible fixed assets. There are no changes in accounting estimates that have significant effect on the current period or that are expected to have significant effect on the following periods. Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of tangible assets since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Depreciation rates and estimated useful lives are as follows: Estimated useful lives Depreciation rates Tangible Assets (years) (%) Buildings for own use 50 2,0 Machinery and equipment 3 - 16 6,3 - 33,3 Furniture and fixtures 4 - 16 6,3 - 25,0 Vehicles 5 20,0 Other tangible assets (including leasehold improvements) 5 - 10 10,0 - 20,0 Leased tangible assets 10 10,0

2.6 Investment properties Investment properties are held either to earn rentals and/or for capital appreciation or for both. In the event of investment property of first registration is measured on fair value including transaction costs after measured at cost. The changes which result of fair value valuation recognised in the income statement. Any gains or losses on the retirement or disposal of an investment property are recognized in profit or loss in the period of retirement or disposal. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The fair value on the date of change in the usage is considered as cost in the reclassification recognition when investment property that measured with fair value is reclassified as a tangible asset. 2.7 Intangible assets The Company’s intangible assets consist of computer software, goodwill and advances paid for tangible assets. Intangible assets are recorded at cost in compliance with “TAS 38 - Accounting for intangible assets”. The cost of the intangible assets purchased before December 31, 2004 are restated from the purchasing dates to December 31, 2004, the date the hyperinflationary period is considered to be ended. The intangible assets purchased after this date are recorded at their historical costs. Amortization is charged on a straight-line basis over their estimated useful lives over the cost of the asset. The period of redemption of intangible assets is 3 to 15 years. Anadolu Sigorta 2020 Annual Report Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of the acquired subsidiary/associate at the date of the acquisition. Goodwill on acquisitions of associates is included in ‘investments in associates’ and is tested for impairment as part of the overall balance. Separately recognized goodwill is tested annually for impairment and carried at cost less accumulated impairment losses, Impairment losses on goodwill are not reversed. Gain or losses on the disposal of an entity includes the carrying amount of goodwill relating to the entity disposed of. For the purpose of impairment testing, goodwill is allocated to cash-generating units. The allocations made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arises. The Company has acquired the health portfolio of Anadolu Hayat Emeklilik A.Ş. at August 31, 2004 with all of its rights and liabilities. The value at acquisition of the portfolio amounting to TL 16.250.000 is capitalized as goodwill by the Company.

232 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.8 Financial assets A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset from another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity. Financial assets are classified in four categories; as financial assets held for trading, available-for-sale financial assets, held to maturity financial assets, and loans and receivables. Financial assets at fair value through profit or loss are presented as financial assets held for trading in the accompanying consolidated financial statements and trading securities and derivatives are included in this category. Financial assets at fair value through profit or loss measured at their fair values and gain/loss arising due to changes in the fair values of related financial assets is recorded in profit/ loss. Interest income earned on trading purpose financial assets and the difference between their fair values and acquisition costs are recorded as interest income in the statement of income. In case of disposal of such financial assets before their maturities, the gains/losses on such disposal are recorded under trading income/losses. Accounting policies of derivatives are detailed in note 2.10 - Derivative financial instruments. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables those are not interest earning are measured by discounting of future cash flows less impairment losses, and interest earning loans and receivables are measured at amortized cost less impairment losses. Held to maturity financial assets are the financial assets with fixed maturities and fixed or pre-determined payment schedules that the Company has the intent and ability to hold until maturity, excluding loans and receivables. Subsequent to initial recognition, held to maturity financial assets and loans and receivables are measured at amortized cost using effective interest rate method less impairment losses, if any. The Company has no financial assets that are not allowed to be classified as held to maturity financial assets for two years due to the tainting rules applied for the breach of classification rules. Available-for-sale financial assets are the financial assets other than assets held for trading purposes, held-to-maturity financial assets and loans and receivables. Available-for-sale financial assets are initially recorded at cost and subsequently measured at their fair values. Unrecognized gains or losses derived from the difference between their fair value and the discounted values calculated per effective interest rate method are recorded in “Revaluation of financial assets” under shareholders’ equity. Upon disposal, the realized gain or losses are recognized directly in the statement of income. The determination of fair values of financial instruments not traded in an active market is determined by using valuation techniques. Observable market prices of the quoted financial instruments which are similar in terms of interest, maturity and other conditions are used in determining the fair value. The Company has accounted equity shares classified as available-for-sale according to quoted market prices or dealer price quotations for financial instruments traded in active markets or according to cost less impairment losses for financial instruments not traded in active markets. Securities are recognized and derecognized at the date of settlement. Associates; Anadolu Hayat has been consolidated in the accompanying consolidated financial statements by using the equity method of accounting. Anadolu Sigorta 2020 Annual Report A financial asset is derecognized when the control over the contractual rights that comprise that asset is lost. This occurs when the rights are realized, expire or are surrendered. Impairment on financial asset Financial assets or group of financial assets are reviewed at each reporting date to determine whether there is objective evidence of impairment. If any such indication exists, the Company estimates the amount of impairment. A financial asset is impaired if, and only if, there is objective evidence that the expected future cash flows of financial asset or group of financial assets are adversely affected by an event(s) (“loss event(s)”) incurred subsequent to recognition. The losses expected to incur due to future events are not recognized even if the probability of loss is high.

233 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Receivables are presented net of specific allowances for uncollectibility. Specific allowances are made against the carrying amounts of loans and receivables that are identified as being impaired based on regular reviews of outstanding balances to reduce these loans and receivable to their recoverable amounts. The recoverable amount of an equity instrument is its fair value. The recoverable amount of debt instruments and purchased loans measured to fair value is calculated as the present value of the expected future cash flows discounted at the current market rate of interest. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in the statement of operations. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in equity. 2.9 Impairment on assets Impairment on tangible assets On each reporting date, the Company evaluates whether there is an indication of impairment of tangible and intangible assets. If there is an objective evidence of impairment, the asset’s recoverable amount is estimated in accordance with the “TAS 36 - Impairment of Assets” and if the recoverable amount is less than the carrying value of the related asset, a provision for impairment loss is made. Rediscount and provision expenses of the period are detailed in Note 47. 2.10 Derivative financial instruments As of December 31, 2020, the Company has a derivative financial instruments recognized in the financial assets held for trading amounting to TL 63.599.896 (December 31, 2019: TL 11.471.123). As of December 31, 2020, the Company has accounted in income accruals amounting to TL 183.754.467 (December 31, 2019: TL 24.850.393) that is increase in value and there is no other financial liabities due to forward foreign currency agreement (December 31, 2019: TL 59.472.753). Derivative instruments are treated as held for trading financial assets in compliance with the standard TAS 39 - Financial Instruments: Recognition and measurement. The Company offseted foreign forward currency agreements income/expense accruals in the income statement. Derivative financial instruments are initially recognized at their fair value. Collateral amounts and valuations that are necessary for derivative transactions are included in trading financial assets. The receivables and liabilities arising from the derivative transactions are recognized under the off-balance sheet accounts through the contract amounts. Derivative financial instruments are subsequently remeasured at fair value and positive fair value differences are presented either as “financial assets held for trading” and negative fair value differences are presented as “other financial liabilities” in the accompanying financial statements. All unrealized gains and losses on these instruments are included in the statement of income. 2.11 Offsetting of financial assets Financial assets and liabilities are offset and the net amount is presented in the balance sheet when, and only when, the Company has a Anadolu Sigorta 2020 Annual Report legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the Reporting Standards, or for gains and losses arising from a group of transactions resulting from the Company’s similar activities like trading transactions. 2.12 Cash and cash equivalents Cash and cash equivalents, which is the basis for the preparation of the statement of cash flows includes cash on hand, cheques received, other cash and cash equivalents, demand deposits and time deposits at banks having an original maturity less than 3 months which are ready to be used by the Company or not blocked for any other purpose.

234 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Milli Reasürans T.A.Ş. 286.550.106 57,31 286.550.106 57,31 Other* 213.449.894 42,69 213.449.894 42,69 Paid in capital 500.000.000 100,00 500.000.000 100,00

Discretionary participation feature within insurance contracts and investment contracts is the right to have following benefits in Anadolu Sigorta 2020 Annual Report addition to the guaranteed benefits. (i) that are likely to comprise a significant portion of the total contractual benefits; (ii) whose amount or timing is contractually at the discretion of the Issuer; and (iii) that are contractually based on: (1) the performance of a specified pool of contracts or a specified type of contract; (2) realized and/or unrealized investments returns on a specified pool of assets held by the Issuer; or (3) the profit or loss of the Company, Fund or other entity that issues the contract. As of the reporting date, the Company does not have any insurance or investment contracts that contain a discretionary participation feature. 235 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Anadolu Sigorta 2020 Annual Report are recognized as an item under equity, then the related current and/or deferred tax effects are also recognized directly in the equity. As of January 1, 2021, the corporate tax rate is 20%, the tax rate has been used for the temporary differences. Transfer pricing In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated November 18, 2007 sets details about implementation. If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for corporate income tax purposes. 236 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

237 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

238 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

239 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

240 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.23 Dividend distribution Based on the guidelines and principals issued by the CMB dated January 27, 2010 for the distribution of dividends from the profit generated from operating activities in 2009, there is no requirement of minimum profit distribution for joint stock companies that are traded in the stock market and in this context, it has decided that dividend distribution will be performed in accordance with principles in Dividend Decleration numbered II-19.1 of the Board, clauses contained in the articles of association of the partnership and dividend policies which are disclosed the public of companies. Additionally, as stated within the aforementioned decision of CMB, for entities required to prepare consolidated financial statements, it has been agreed upon to require the net distributed profit calculations to be performed on the net profit for the period as stated on the consolidated financial statements, so long that the distribution can be funded through statutory resources. Board of Directors proposal which is related with distribution of the profits gained from the operations of the 2019 was approved unanimously in the framework of the General Assembly dated March 24 2020. Consequently, TL 20.504.411 of the distributable net profit of the period that is amounting to TL 391.902.577 which is remaining amount after deducting the legal reserve amounting to TL 135.000.000, distributed to shareholders as cash dividend since March 26, 2020. The Company distributed dividend amounting to TL 9.092.140 to its employee and reserved second legal reserve and statutory reserve amounting to TL 29.394.879 and TL 25.000.000 respectively. The remaining of the distributable net profit of the period which is amounting to TL 181.506.344 was transferred to extraordinary reserves (2019:TL 100.000.000 distributed to shareholders). 2.24 Reserve for unearned premiums In accordance with the “Communiqué on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves” (“Communiqué on Technical Reserves”) which was issued in 26606 numbered and August 7, 2007 dated Official Gazette and put into effect starting from January 1, 2008, the reserve for unearned premiums represents the proportions of the gross premiums written without deductions of commission or any other allowance, in a period that relate to the period of risk subsequent to the reporting date for all short-term insurance policies. For commodity marine policies with indefinite expiration dates, 50% of the remaining portion of the premiums accrued in the last three months, less any commissions is also provided as unearned premium reserves. Anadolu Sigorta 2020 Annual Report Reserve for unearned premiums is calculated for all insurance contracts except for the contracts for which the mathematical reserve is provided. Reserve for unearned premiums is also calculated for the annual premiums of the annually renewed long term insurance contracts. Since the Communiqué on Technical Reserves was effective from January 1, 2008, the T.C. Ministry of Treasury and Finance issued July 4, 2007 dated and 2007/3 numbered “Circular to Assure the Compliance of the Technical Reserves of Insurance, Reinsurance and Pension Companies With the Insurance Law No, 5684” (“Compliance Circular”) to regulate the technical provisions between the issuance date and enactment date of the Communiqué on Technical Reserves. In accordance with the Compliance Circular, it is stated that companies should consider earthquake premiums written after June 14, 2007 in the calculation of the reserve for unearned premiums while earthquake premiums were deducted in the calculation of the reserve for unearned premiums before. Accordingly, the Company has started to calculate reserve for unearned premiums for the earthquake premiums written after June 14, 2007, while the Company had not calculated reserve for unearned premiums for the earthquake premiums written before June 14, 2007. 241 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

According to the 2009/9 Numbered Circular Related to Application of Technical Reserves issued on March 27, 2009 which published by Undersecretariat of Treasury reserve for unearned premiums is calculated by taking into account that all polices become active at 12:00 at noon and end at 12:00 at noon. According to the Communiqué on Technical Reserves, for the calculation of unearned premium reserves of foreign currency indexed insurance agreements, foreign currency selling exchange rates announced by Turkish Central Bank will be considered, unless there is a specified exchange rate in the agreement. The Company has reclassified TL 1.920.318 of provision for long-term health and personal accident policies to long-term liabilities (December 31, 2019: 2.003.959). As of the reporting date, the Company has provided reserve for unearned premiums amounting to TL 3.976.446.193 (December 31, 2019 : TL 3.217.033.929) and reinsurer share in reserve for unearned premiums amounting TL 1.164.283.370 (December 31,2019: TL 908.427.528). Furthermore, reserve for unearned premiums includes Social Security Institution (“SSI”) share amounting to TL 94.034.855 (December 31, 2019: TL 74.462.603). 2.25 Provision for outstanding claims Claims are recorded in the year in which they occur, based on reported claims or on the basis of estimates when not reported. Provision for outstanding claims represents the estimate of the total reported costs of notified claims on an individual case basis at the reporting date as well as the corresponding handling costs. Incurred but not reported claims (“IBNR”) are also provided. In accordance with December 5, 2014 dated and 2014/16 numbered “Circular for Provision for Outstanding Claims” of T.C. Ministry of Treasury and Finance, by the Undersecretariat of Treasury the compensation which occured but not was not reported since January 1, 2015 is being calculated with the best of ability of the Company’s actuary. The best estimate assumption is calculating the damages which will be paid in the future according to a model and assumption, and by utilizing the risk free return curves to calculate today’s value. The methods, corrections, the suitable data and the growth factor choice and the intervention is being decided by the Company’s actuary using actuarial methods. According to Actuaries Regulations Law no. 11, an actuarial report has been sent the Undersecretariat of Treasury and these calculations are detailed there. Company’s actuary tests damage growth factors with some methods by using software tools and then making some choices for actuarial analysis. As of December 31, 2020 and 2019, IBNR amounts calculated by the Company actuary’s on the basis of branches are as follows: December 31, 2020* December 31, 2019 Gross additional Net additional Gross additional Net additional Branch provision provision provision provision Third party liability for motor vehicles (mtpl) 2.845.738.486 1.838.343.569 2.271.825.844 1.632.944.856 General liability 862.295.402 628.204.336 599.574.013 434.293.863 Voluntary financial liability 386.495.829 386.395.266 251.354.255 251.063.514 Fire and natural disasters 119.033.698 84.079.070 89.122.290 61.942.941 Accident 22.396.290 17.465.093 21.233.726 16.243.421 General losses 44.990.913 32.017.121 43.215.995 27.320.876 Air crafts liability 8.578.958 4.071.666 12.839.952 4.504.520 Air crafts 13.835.451 5.558.120 22.125.336 7.038.288 Water vehicles 25.313.189 14.287.654 24.542.847 15.113.771 Health 49.269.085 45.971.283 4.300.945 3.779.594 Anadolu Sigorta 2020 Annual Report Financial losses 12.698.933 4.976.501 16.481.372 2.700.585 Credit 15.936.781 11.345.437 2.228.405 69.983 Legal protection 767.351 767.351 532.644 532.644 Marine 18.013.883 9.162.731 9.466.975 5.303.723 Breach of trust 6.605.319 4.876.443 3.631.172 3.270.792 Motor vehicles (7.066.569) (6.947.332) (49.424.754) (49.248.069) Total 4.424.902.999 3.080.574.309 3.323.051.017 2.416.875.302

(*) Provisions regarding to Risky Insured Pool and TKU (Medical Malpractice) Pool and provision allocated for treaties received has been included in the provision amount allocated for the related period.

242 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

In the health branch, it is observed that the frequency of claims for 2020, due to insurers have avoided going to the hospital and postponed their treatment to future dates. As a result of the examination of inpatient and outpatient treatment data, the Company has added 40.098.588 TL provision for treatments postponed by the insured to future dates due to COVID-19. The Constitutional Court has cancelled “general conditions” in the articles of the Highway Traffic Law No. 2918, which are subject to branch of third party liability for motor vehicles, due to unconstitutional. As of December 31, 2020, effect of the cancellation decision has been analysed and reflected in the amount of incurred but not reported claims.. The Company has made the Net IBNR calculation on the basis of branches and current reinsurance shares to reflect the effect of reinsurance agreements in force. Amounts transferred to the Risky Insured and TKU (Medical Malpractice) Pool have also been included in the Net IBNR account. In the compulsory traffic branch the physical and bodily damages, and in the General Responsibility branch the Employer Third Party Liability, Compulsory Medical Malpractice, Professional Liability, Compulsory Third Party Liability for Dangerous Materials and Hazardous Waste and other liability branches are being analysed separately. As of December 31, 2020, the Company’s actuary has used 9% which is the latest statutory rate of interest in the Official Gazette for the discount process in accordance with “General Instructions Regarding The Cash Flow From Provision for Outstanding Claim And Their Discounts” which was published in June 10th, 2016 numbered 2016/22 which regulates the processes involving the discount of cash flow from provision for outstanding claim. As of December 31, 2020, Company has made a net discount of TL 1.189.385.664 (December 31, 2019: TL 950.450.472). The Company has used the gradual transition curve which was published by the Undersecretariat of Treasury’s “General Instructions Regarding to the Changes in the General Instructions Regarding Provision for Outstanding Claim (2014/16)” which was published in February 29th, 2016 with the number 2016/11. The Company has used these gradual transition curve with 100% accuracy and has reflected the calculations on the official statements as well as possible as of December 31, 2016 and the Company has continued the method exact same at this period. According to Provisional Article 12 of the Regulation on the Amendment of the Regulation on Tariff Implementation Principles in the Compulsory Motor Insurance for Compulsory Liability for Motor Vehicles, published in the Official Gazette dated July 11, 2017 and numbered 30121, the frequency of damage for high staged and/or vehicle groups the “Risk Insured Pool” has been announced. In this context, it began to be shared between insurance companies in the pool covered by premium and claims amounts related to disposed traffic insurance policy Turkey Motor Vehicle Bureau by the Undersecretariat determined by conformity to start since April 12, 2017. The Company, after changes in legislation, Turkey Motor Vehicle Bureau (TMTB) by the accounting records are created on the basis of the premiums, claims and commission amounts transferred to the pool within the scope of the monthly receipts that have been finalized and taken over from the pool within the scope of the share, and the financial statements are reflected by working on the amounts not yet transmitted by the deed TMTB. For the transferred and received pool portfolio within the scope of the aforementioned pool practice, IBNR calculation has been made based on “The Summary of Actuarial Estimations Report Regarding the Risky Insured Pool Final Damage/Premium Rate Range Estimation” which was shared by TMTB on December. In accordance with the Communiqué on the Amendment of the Communiqué on the Procedures and Principles of the Contribution of the Institution in the Compulsory Financial Liability Insurance for Medical Malpractice Law, published in the Official Gazette dated October 7, 2017 and numbered 30203, the Compulsory Financial Liability Insurance for Medical Malpractice the rules for premium and Anadolu Sigorta 2020 Annual Report damage sharing have been established. The transactions related to the sharing are in the General Liability executed by Güneş Sigorta A.Ş. T.C. Private Pension Regulation and Supervision Agency Board dated September 1, 2020 according to the board decision, Türk Reasürans Anonim Şirketi has been appointed of such transactions has been indefinitely. In this context, premiums and claims related to the policies issued as of October 1, 2017 have been started to be allocated among the insurance companies within the framework of the principles determined by the Undersecretariat. After the change in legislation, Güneş Sigorta A.Ş., the accounting records are created on the basis of the premiums, claims and commission amounts transferred from the pool within the scope of the share transferred within the scope of the monthly declarations which are finalized by the Ministry of Finance and also the financial statements are reflected by the works related to the turnover not yet delivered.

243 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

As of December 31, 2020, the Company has outstanding claims provision amounting to TL 7.008.542.208 (December 31, 2019: TL 5.264.263.435) and TL 2.278.005.427 outstanding claims provision reinsurer share (December 31, 2019: TL 1.561.947.712) in the consolidated financial statements. According to the “Circular on the Explanation of the Notification of the Undersecretariat of Treasury on the Calculation of the Realized But Unreported Compensation (IBNR)” dated November 26, 2011 and numbered 2011/23, the companies are opened against the Company in sub-branches according to the last five years’ (15% in the branches where there is no new five-year data and started the new activity) by calculating a win rate over the amounts of the cases by not exceeding 25% of the outstanding files accrued for the files in the trial period. As of December 31, 2020, the Company did not any discount against provisions for litigious file claims. (December 31, 2019: net TL 240.658.639) 2.26 Reserve for unexpired risks In accordance with the Communiqué on Technical Reserves, while providing reserve for unearned premiums, in each accounting period, the companies should perform adequacy test covering the preceding 12 months due to the probability that future claims and compensations of the outstanding policies may be in excess of the reserve for unearned premiums already provided. In performing this test, it is required to multiply the reserve for unearned premiums, net with the expected claim/premium ratio. Expected claim/ premium ratio is calculated by dividing incurred losses (provision for outstanding claims, net at the end of the period + claims paid, net - provision for outstanding claims, net at the beginning of the period) to earned premiums (written premiums, net + reserve for unearned premiums, net at the beginning of the period - reserve for unearned premiums, net at the end of the period). In the calculation of earned premiums; deferred commission expenses paid to the agencies and deferred commission income received from the reinsurance firms which were netted off from reserve for unearned premiums both at the beginning of the period and at the end of the period are not taken into consideration. In accordance with T.C. Ministry of Treasury and Finance circular numbered 2012/15, unexpired risk reserve started to be calculated over main branches as of December 31, 2012. The test is performed on branch basis and in case where the expected claim/premium ratio is higher than 95%, reserve calculated by multiplying the exceeding portion of the expected claim/premium ratio with the reserve for unearned premiums of that specific branch is added to the reserves of that branch. In accordance with T.C. Ministry of Treasury and Finance circular numbered 2015/30, the amount of the opening provision for outstanding claims which is determined unexpired risk reserve redefined in a manner consistent with the current period as of December 31, 2017. According to the Circular numbered 2011/18 of the In accordance with T.C. Ministry of Treasury and Finance, the Company excluded both the premiums transferred to SSI and claims related to treatment costs from calculation of reserve for unexpired risks in Motor Third Party Liability, Compulsory Third Party Liability Insurance for Road Passenger Transportation and Compulsory Road Passenger Transportation Personal Accident branches. According to Undersecretariat of Treasury’s 2019/5 numbered general instructions has remarked that the method below can be used to calculate the reserve for unexpired risks in all branches. T.C. Ministry of Treasury and Finance allows insurance companies with the circular 2019/5 to calculate their unexpired risks reserve on all branches by considering only the last 4 accident quarters’ loss ratios. According to this new method, loss ratios exceeding 85% will be multiplied by unearned premiums reserve for the calculation of unexpired risk reserve. In accordance with amendment made with the circular numbered 2020/1 issued by Republic of Turkey Ministry of Treasury and Finance, in case of making separate calculation for the activities which are 100% of the production is transferred to pools established

Anadolu Sigorta 2020 Annual Report in Turkey, unexpired risk reserve is calculated if the gross loss premium rate is above 100%, and for other activities the provision is calculated if the gross loss premium rate is above 85%. The results of the calculations of unexpired risk reserves of the Company for Risky Insureds’ Pool and TKU (Medical Malpractice) Pool are presented below. December 31, 2020 December 31, 2019 Gross URR Net URR Gross URR Net URR RSH - Received 25.571.927 25.571.927 29.193.639 29.193.639 TKU Pool - Received 10.497.890 10.497.890 10.603.298 10.603.298 General Liability - Non pool 24.470.753 13.343.728 - - Toplam 60.540.570 49.413.545 39.796.937 39.796.937

244 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Accordingly, as of the reporting date, the Company has accounted for reserve for unexpired risk amounting to TL 127.320.793 (December 31,2019: TL 68.089.542) and reinsurance share of reserve for unexpired risk amounting to TL 68.861.780 (December 31, 2019: TL 17.904.259). 2.27 Equalization provision In accordance with the Communiqué on Technical Reserves put into effect starting from January 1, 2008, the companies should provide equalization provision in credit insurance and earthquake branches to equalize the fluctuations in future possible claims and for catastrophic risks. Equalization provision, started to be provided in 2008, is calculated as 12% of net premiums written in credit insurance and earthquake branches. In the calculation of net premiums, fees paid for un-proportional reinsurance agreements are considered as premiums ceded to the reinsurance firms. The companies should provide equalization provision up to reaching 150% of the highest premium amount written in a year within the last five years. In case where claims incurred, the amounts below exemption limits as stated in the contracts and the share of the reinsurance firms cannot be deducted from equalization provisions. Claims payments are deducted from first year’s equalization provisions by first in first out method. Equalization provisions are presented under “other technical reserves” in the accompanying financial statements. As of the reporting date, the Company provided equalization provision amounting to TL 255.601.084 in the accompanying consolidated financial statements (December 31, 2019: TL 218.075.088). 2.28 Related parties Parties are considered related to the Company if; (a) directly, or indirectly through one or more intermediaries, the party: --controls, is controlled by, or is under common control with the Company (this includes parent, subsidiaries and fellow subsidiaries); --has an interest in the Company that gives it significant influence over the Company; or --has joint control over the Company; (b) the party is an associate of the Company; (c) the party is a joint venture in which the Company is a venturer; (d) the party is member of the key management personnel of the Company and its parent; (e) the party is a close member of the family of any individual referred to in (a) or (d); (f) the party is an entity that is controlled or significantly influenced by, or for which significant voting power in such entity resides with directly or indirectly, any individual referred to in (d) or (g) the party is a post-employment benefit plan for the benefit of employees of the Company, or of any entity that is a related party of the Company. A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. A number of transactions are entered into with related parties in the normal course of business. 2.29 Earnings per share Earnings per share are determined by dividing the net income by the weighted average number of shares outstanding during the year attributable to the shareholders of the Company. In Turkey, companies can increase their share capital by making a pro- Anadolu Sigorta 2020 Annual Report rata distribution of shares (“Bonus Shares”) to existing shareholders from retained earnings. For the purpose of earnings per share computations, such bonus shares issued are regarded as issued shares. Accordingly, the weighted average number of shares used in these calculations has been determined taking into account the retrospective effects of such stock distributions. 2.30 Events after the reporting date Events after the reporting date that provide additional information about the Company’s position at the reporting dates (adjusting events) are reflected in the financial statements. Events after the reporting date that are not adjusting events are disclosed in the notes when material.

245 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

2.31 The new standards, amendments and interpretations The accounting policies adopted in preparation of the consolidated financial statements as at December 31, 2020 are consistent with those of the previous financial year, except for the adoption of new and amended IFRS and IFRIC interpretations effective as of January 1, 2020. The effects of these standards and interpretations on the Company’s financial position and performance have been disclosed in the related paragraphs. i) The new standards, amendments and interpretations which are effective as of January 1, 2020 are as follows: Definition of a Business (Amendments to TFRS 3) In May 2019, the POA issued amendments to the definition of a business in TFRS 3 Business Combinations standards. The amendments are intended to assist entities to remove the assessment regarding the definition of business. The amendments: -- clarify the minimum requirements for a business; -- remove the assessment of whether market participants are capable of replacing any missing elements; -- add guidance to help entities assess whether an acquired process is substantive; -- narrow the definitions of a business and of outputs; and -- introduce an optional fair value concentration test. The amendments to TFRS 3 are effective for annual reporting periods beginning on or after January 1, 2020 and apply prospectively. The amendments issued to TFRS 9 and TAS 39 which are effective for periods beginning on or after January 1, 2020 provide reliefs which enable hedge accounting to continue. For these reliefs, it is assumed that the benchmark on which the cash flows of hedged risk or item are based and/or, the benchmark on which the cash flows of the hedging instrument are based, are not altered as a result of IBOR reform. in connection with interest rate benchmark reform. Reliefs used as a result of amendments in TFRS 9 and TAS 39 is aimed to be disclosed in financial statements based on the amendments made in TFRS 7. Amendments to TFRS 9, TAS 39 and TFRS 7- Interest Rate Benchmark Reform The amendments issued to TFRS 9 and TAS 39 which are effective for periods beginning on or after January 1, 2020 provide reliefs which enable hedge accounting to continue. For these reliefs, it is assumed that the benchmark on which the cash flows of hedged risk or item are based and/or, the benchmark on which the cash flows of the hedging instrument are based, are not altered as a result of IBOR reform. in connection with interest rate benchmark reform. Reliefs used as a result of amendments in TFRS 9 and TAS 39 is aimed to be disclosed in financial statements based on the amendments made in TFRS 7. The amendments did not have a significant impact on the financial position or performance of the Company. Definition of Material (Amendments to TAS 1 and TAS 8) In June 2019, the POA issued amendments to TAS 1 Presentation of Financial Statements and TAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The new definition states that, ’Information is material if omitting, misstating or obscuring it could reasonably be expected to influence

246 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Amendments to TFRS 16 - Covid-19 Rent Related Concessions In June 5, 2020, the POA issued amendments to TFRS 16 Leases to provide relief to lessees from applying TFRS 16 guidance on lease modifications to rent concessions arising a direct consequence of the Covid-19 pandemic. A lessee that makes this election accounts for any change in lease payments related rent concession the same way it would account for the change under the standard, if the change were not a lease modification. The practical expedient applies only to rent concessions occurring as a direct consequence of the Covid-19 pandemic and only if all of the following conditions are met: -- The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change. -- Any reduction in lease payments affects only payments originally due on or before June 30, 2021 -- There is no substantive change to other terms and conditions of the lease. A lessee will apply the amendment for annual reporting periods beginning on or after June 1, 2020. Early application of the amendments is permitted. The amendments did not have a significant impact on the financial position or performance of the Company. ii) Standards issued but not yet effective and not early adopted Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the consolidated financial statements are as follows. The Company will make the necessary changes if not indicated otherwise, which will be affecting the consolidated financial statements and disclosures, when the new standards and interpretations become effective. TFRS 10 and TAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments) In December 2017, POA postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. Early application of the amendments is still permitted. The Company will wait until the final amendment to assess the impacts of the changes. TFRS 17 - The new Standard for insurance contracts The POA issued TFRS 17 in February 2019, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. TFRS 17 model combines a current balance sheet measurement of insurance contract liabilities with the recognition of profit over the period that services are provided. Certain changes in the estimates of future cash flows and the risk adjustment are also recognised over the period that services are provided. Entities will have an option to present the effect of changes in discount rates either in profit and loss or in OCI. The standard includes specific guidance on measurement and presentation for insurance contracts with participation features. TFRS 17 will become effective for annual reporting periods beginning on or after January 1, 2023; early application is permitted. The Company is in the process of assessing the impact of the standard on financial position and performance of the Company. Amendments to TAS 1- Classification of Liabilities as Current and Non-Current Liabilities On March 12, 2020, the POA issued amendments to TAS 1 Presentation of Financial Statements. The amendments issued to TAS 1 which are effective for periods beginning on or after January 1, 2023, clarify the criteria for the classification of a liability as either current or non-current. Amendments must be applied retrospectively in accordance with TAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Early application is permitted. The Company is in the process of assessing the impact of the

amendments on financial position and performance of the Company. Anadolu Sigorta 2020 Annual Report Amendments to TFRS 3 - Reference to the Conceptual Framework In July 2020, the POA issued amendments to TFRS 3 Business combinations. The amendments are intended to replace to a reference to a previous version of the Conceptual Framework (the 1989 Framework) with a reference to the current version issued in March 2018 (the Conceptual Framework) without significantly changing requirements of TFRS 3. At the same time, the amendments add a new paragraph to TFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date. The amendments issued to TFRS 3 which are effective for periods beginning on or after January 1, 2022 and must be applied prospectively. Earlier application is permitted if, at the same time or earlier, an entity also applies all of the amendments contained in the Amendments to References to the Conceptual Framework in TFRS standards (March 2018).

247 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

The Company is in the process of assessing the impact of the amendments on financial position and performance of the Company. Amendments to TAS 16 - Proceeds before intended use In July 2020, the POA issued amendments to TAS 16 Property, plant and equipment. The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment (PP&E), any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and costs of producing those items, in profit or loss. The amendments issued to TAS 16 which are effective for periods beginning on or after January 1, 2022. Amendments must be applied retrospectively only to items of PP&E made available for use on or after beginning of the earliest period presented when the entity first applies the amendment. There is no transition relief for the first time adopters. The Company is in the process of assessing the impact of the amendments on financial position and performance of the Company. Amendments to TAS 37 - Onerous contracts - Costs of Fulfilling a Contract In July 2020, the POA issued amendments to TAS 37 Provisions, Contingent Liabilities and Contingent assets. The amendments issued to TAS 37 which are effective for periods beginning on or after January 1, 2022, to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making and also apply a “directly related cost approach”. Amendments must be applied retrospectively to contracts for which an entity has not fulfilled all of its obligations at the beginning of the annual reporting period in which it first applies the amendments (the date of initial application). Earlier application is permitted. The Company is in the process of assessing the impact of the amendments on financial position and performance of the Company. Interest Rate Benchmark Reform - Phase 2 - Amendments to TFRS 9, TAS 39, TFRS 7, TFRS 4 and TFRS 16 In December 2020, the POA issued Interest Rate Benchmark Reform - Phase 2, Amendments to TFRS 9, TAS 39, TFRS 7, TFRS 4 and TFRS 16 to provide temporary reliefs which address the financial reporting effects when an interbank offering rate (IBOR) is replaced with an alternative nearly risk-free rate (RFR, amending the followings. The amendments are effective for periods beginning on or after January 1, 2021. Earlier application is permitted. Practical expedient for changes in the basis for determining the contractual cash flows as a result of IBOR reform The amendments include a practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest. Under this practical expedient, if the interest rates applicable to financial instruments change as a result of the IBOR reform, the situation is not considered as a derecognition or contract modification; instead, this would be determined by recalculating the carrying amount of the financial instrument using the original effective interest rate to discount the revised contractual cash flows. The practical expedient is required for entities applying TFRS 4 Insurance Contracts that are using the exemption from TFRS 9 Financial Instruments (and, therefore, apply TAS 39 Financial Instruments: Classification and Measurement) and for TFRS 16 Leases, to lease modifications required by IBOR reform. Relief from discontinuing hedging relationships -- The amendments permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued. -- Amounts accumulated in the cash flow hedge reserve are deemed to be based on the RFR. -- For the TAS 39 assessment of retrospective hedge effectiveness, on transition to an RFR, entities may elect on a hedge-by-hedge Anadolu Sigorta 2020 Annual Report basis, to reset the cumulative fair value changes to zero. -- The amendments provide relief for items within a designated group of items (such as those forming part of a macro cash flow hedging strategy) that are amended for modifications directly required by IBOR reform. The reliefs allow the hedging strategy to remain and not be discontinued. -- As instruments transition to RFRs, a hedging relationship may need to be modified more than once. The phase two reliefs apply each time a hedging relationship is modified as a direct result of IBOR reform.

248 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

249 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

250 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

251 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Anadolu Sigorta 2020 Annual Report Total 5.264.263.434 (1.561.947.712) 3.702.315.722

(*) Total claims liability includes outstanding claims reserve (excluding contingent amounts deducted from claims reserve determined by winning probability) and incurred but not reported claims.

252 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Total claims liability (*) Gross total Reinsurance share of Net total December 31, 2020 claims liability total claims liability claims liability

253 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Total claims liability (*) Gross total claims Reinsurance share of Net total December 31, 2019 liability total claims liability claims liability

(*) Net amount which deducted share of reinsurance and social security Anadolu Sigorta 2020 Annual Report

254 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

4.2 Management of financial risk Introduction and overview This note presents information about the Company’s exposure to each of the below risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. The Company has exposure to the following risks from its use of financial instruments: -- credit risk -- liquidity risk -- market risk The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. Duties and responsibilities of the Risk Management and Internal Control Department include design and implementation of risk management system and identification and implementation of risk management policies. It is also responsible for ensuring that the Company implements all necessary risk management techniques. Activities of the Risk Management and Internal Control Department are managed directly by General Manager. The Board of Directors monitors the effectiveness of the risk management system through the internal audit department. Risk management policies and guidelines are set by the Board of Directors and applied by the top management. These policies include organisation and scope of the risk management function, risk measurement and assessment methods, duties and responsibilities of the Board of Directors, top management and all of the employees, procedures followed in the case of limit extension and compulsory approval and confirmation processes for certain situations.. Credit risk Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The balance sheet items that the Company is exposed to credit risks are as follows: -- Cash at banks -- Other cash and cash equivalents -- Available for sale financial assets (except equity-shares) -- Financial assets held for trading (except equity-shares) -- Held to maturity financial asset -- Premium receivables from policyholders -- Receivables from intermediaries (agencies) -- Receivables from reinsurance companies related to commissions and claims paid -- Reinsurance shares of insurance liability -- Receivables from related parties -- Other receivables Reinsurance contracts are the most common method to manage insurance risk. The contract does not, however, discharge the Company’s liability as the primary insurer. If a reinsurer fails to pay a claim for any reason, the Company remains liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an annual basis by reviewing their financial strength prior to finalization of the reinsurance contract. Anadolu Sigorta 2020 Annual Report

255 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Net book value of the assets that is exposed to credit risk is shown in the table below. December 31, 2020 December 31, 2019

(*) As per the February 3, 2005 dated and B.02.1.HM.O.SGM.0.3.1/01/05 numbered Circular issued by the T.C. Ministry of Treasury and Finance, in case where subrogation is subject to claim/legal action, related subrogation amount is recognized as doubtful receivables and allowance for doubtful receivables is provided by the same amount in the financial statements. Related amounts are presented in “More than 90 days” line in the above table. The movements of the allowances for receivables from main operations during the period are as follows: December 31, 2020 December 31, 2019

Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet cash commitments associated with financial instruments. Anadolu Sigorta 2020 Annual Report Management of the liquidity risk The Company considers the maturity match between asset and liabilities for the purpose of avoiding liquidity risk and ensure that it will always have sufficient liquidity to meet its liabilities when due.

256 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Maturity distribution of monetary assets and liabilities: Up to 1 6 to 12 December 31, 2020 Net book value month 1 to 3 months 3 to 6 months months Over 1 year Unallocated

(*) Provision for outstanding claims is presented as short term liabilities in the accompanying consolidated financial statements whereas maturity distribution is presented according to projected payment dated in the above table. Up to 1 6 to 12 December 31, 2019 Net book value month 1 to 3 months 3 to 6 months months Over 1 year Unallocated

Provisions for taxes and other Anadolu Sigorta 2020 Annual Report similar obligations 134.326.972 63.183.955 71.143.017 - - - - Provisions for other risks and expense accruals 135.746.624 4.360.015 19.661.118 - 78.276.864 - 33.448.627 Total monetary liabilities 4.974.525.680 647.396.844 717.782.719 456.317.920 744.738.806 2.374.840.764 33.448.627

257 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Market risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and credit spreads will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk. Currency risk The Company is exposed to currency risk through insurance and reinsurance transactions in foreign currencies. Foreign exchange gains and losses arising from foreign currency transactions are recorded at transaction dates. At the end of the periods, foreign currency assets and liabilities evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates and the differences arising from foreign currency rates are recorded as foreign exchange gain or loss in the statement of income. The Company’s exposure to foreign currency risk is as follows: December 31, 2020 US Dollar Euro Other currencies Total

Net financial position 294.098.890 (5.560.856) 23.204.770 311.742.804

December 31, 2019 US Dollar Euro Other currencies Total

Net financial position 198.861.035 34.445.794 24.774.357 258.081.186

TL equivalents of the related monetary amounts denominated in foreign currencies are presented in the above table. Anadolu Sigorta 2020 Annual Report If technical provision denominated in any currency not specified, it is evaluated are evaluated by the Central Bank of the Republic of Turkey’s spot sales rates as of December 31, 2020 and Foreign currency transactions are recorded at the foreign exchange rates ruling at the dates of the transactions and foreign currency denominated monetary items are evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates as of December 31, 2020.

258 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Exposure to currency risk Foreign currency rates used for the translation of foreign currency denominated assets and liabilities as of December 31, 2020 and 2019 are as follows: US Dollar Euro

December 31, 2020 7,3405 9,0079 December 31, 2019 5,9402 6,6506

US Dollar 29.409.889 29.409.889 19.886.103 19.886.103 Euro (556.086) (556.086) 3.444.579 3.444.579 Other 2.320.477 2.320.477 2.477.436 2.477.436 Total, net 31.174.280 31.174.280 25.808.118 25.808.118

Financial assets with variable interest rates: Anadolu Sigorta 2020 Annual Report Available for sale financial assets - Government bonds (Note 11) 23.496.468 25.339.522 Available for sale financial assets - Private debt securities (Note 11) 252.784.521 77.024.018

(*) Demand deposits amounting to TL 52.817.017 are not included. (December 31, 2019: TL 17.967.948).

259 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Financial assets held for trading - - - - Available for sale financial assets - - (12.643.815) 13.126.972 Total, net - - (12.643.815) 13.126.972

(*) Equity effect also includes profit or loss effect of assumed change in interest rates. Fair value information The estimated fair values of financial instruments have been determined using available market information, and where they exist, appropriate valuation methodologies. The Company has classified its financial assets as held for trading, available for sale or held to maturity. As of the reporting date, available for sale financial assets and financial assets held for trading are measured at their fair values based on their quoted prices or fair value information obtained from brokers in the accompanying consolidated financial statements. Equity shares not traded in active markets are measured at cost less impairment losses if any. The Company has no held to maturity investment measured at amortised cost calculating the effective interest method. Management estimates that the fair value of other financial assets and liabilities are not materially different than their net book value Fair value sensitivity of the equity shares Equity share price risk is the risk that the fair values of equity shares decrease as a result of the changes in the levels of equity shares indices and the value of equity shares. The effect on income as a result of 10% change in the fair value of equity share instruments held as held for trading financial assets (traded at İstanbul Stock Exchange) due to a reasonably possible change in equity share indices, with all other variables held constant, is as follows (excluding tax effect): December 31, 2020 December 31, 2019 Profit or loss Equity (*) Profit or loss Equity (*) Anadolu Sigorta 2020 Annual Report Financial assets held for trading (2.975.447) (2.975.447) (2.735.839) (2.735.839) Available for sale financial assets - (31.444.165) - (16.250.363) Total, net (2.975.447) (34.419.612) (2.735.839) (18.986.202)

(*) Equity effect also includes profit or loss effect of assumed change in interest rates.

260 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Financial assets: Financial assets held for trading (Note 11) 182.206.776 47.692.962 - 229.899.738 Available for sale financial assets (*) (Note 11) 2.853.898.997 512.127.114 - 3.366.026.111 Held to maturity investments (Note 11) 1.038.057.085 - - 1.038.057.085 Total financial assets 4.074.162.858 559.820.076 - 4.633.982.934

December 31, 2019 Level 1 Level 2 Level 3 Total

Financial assets: Financial assets held for trading (Note 11) 135.592.200 23.858.516 - 159.450.716 Available for sale financial assets (*) (Note 11) 978.066.040 740.295.183 - 1.718.361.223 Total financial assets 1.113.658.240 764.153.699 - 1.877.811.939

261 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Gains and losses from financial assets Gains and losses recognized in the consolidated statement of income: December 31, 2020 December 31, 2019

Interest income from bank deposits 227.366.056 241.228.664 Foreign exchange gains 1.017.311.373 427.938.663 Income from investments in associates 105.387.853 72.138.354 Income from debt securities classified as available-for-sale financial assets 158.075.430 71.974.640 Income from debt securities classified as trading financial assets - - Income from debt securities classified as held to maturity financial investments 56.474.517 - Income from equity shares classified as available-for-sale financial assets 34.236.406 5.826.619 Income from equity shares classified as trading financial assets 33.099.883 10.167.315 Income from investment funds as available for sale financial assets 80.367.752 45.937.127 Income from investment funds as trading financial assets 21.988.483 30.033.219 Income from derivative transactions 787.297.521 497.572.811 Other 5.590.660 10.599.975 Investment income 2.527.195.934 1.413.417.387

Financial gains and losses recognized in the consolidated statement of income, net 1.083.386.224 1.103.564.127

Financial gains and losses recognized in consolidated equity: December 31, 2020 December 31, 2019

Fair value changes in investments in associates (Note 15) 14.221.374 21.616.828 Net gains transferred from statement of equity to the statement of income on disposal of available for sale financial assets (Note 15) (79.745.401) 5.577.018 Fair value changes in available-for-sale financial assets (Note 15) 246.863.930 131.552.594 Gains and losses recognized in consolidated equity, net 181.339.903 158.746.440 Anadolu Sigorta 2020 Annual Report

262 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Capital management The Company’s capital management policies include the following: -- To comply with the insurance capital requirements determined by the T.C. Ministry of Treasury and Finance -- To ensure the continuity of the Company’s activities within the framework of the Company’s continuity principle In accordance with the “Communiqué on Measurement and Assessment of Capital Adequacy for Insurance, Reinsurance and Individual Pension Companies” issued by T.C. Ministry of Treasury and Finance on January 19, 2008 dated and 26761 numbered; capital adequacy calculations are carried out twice a year in June and December, within the following two months. As of the reporting date, the Company measured its minimum capital requirement as TL 2.083.507.686 in the calculation of the Company’s last reporting period June 30, 2020. As of June 30, 2020, the capital amount of the Company presented in the consolidated financial statements is TL 462.284.037 above the minimum capital requirement amounts calculated according to the communiqué. 5 Segment reporting A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Business segment A business segment reporting of the Company is presented in accordance with TFRS 8 - Operating Segments standard in this section. Insurance on Fire and Natural Disaster Insurance on fire and natural disasters covers material damages occurred due to fire, lightening, explosion or smoke, steam and temperature resulted from fire, lightning and explosion up to insurance policy limits. Insurance on Motor Third Party Liability According to the Motorway Traffic Code numbered 2918, Motor Third Party Liability Insurance is covers vehicle owner’s legal liability for all bodily damages to third persons and financial damages to other vehicles. Damages caused by the trailer or semi-trailers (included light trailers) or the vehicles pulled is covered by the insurance of the trailer. However, the trailers used for transportation of people should be included in an additional liability insurance in order to obtain coverage. In order to reduce and prevent the damage in the accident happened, reasonable and necessary expenses of the policyholder is compensated by the Company. This insurance also covers unfair claims against the policyholders. Insurance on Motor Vehicles Insurance on motor vehicles covers the following dangers related with vehicles. It is possible to widen policy scope for accessories or audio, display and communication devices which are not included in standard version of the vehicle by specifying on the insurance policy. -- Accident with the motorized or non-motorized vehicles which used in high-ways, -- Crash with fixed or moving items without desire of the driver or accidents due to crash, capsize, fall or tumble, -- The actions of third parties resulted from bad intention or mischief,

-- Burn, Anadolu Sigorta 2020 Annual Report -- Theft or attempted theft. Insurance on Health Insurance on health compensates treatment costs of illnesses or accidental injuries during the period of insurance and, if any, daily allowances in this general framework with special conditions up to the amount written in the policy. Geographical limits of the insurance are stated in the policy.

263 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Investment Income 2.537.228.739 2.537.228.739 Investment Expense (*) (1.505.628.661) (1.505.628.661) Other (**) (88.715.851) (88.715.851) Net income before tax 624.634.315

Income tax (114.608.750) (114.608.750)

Net income 510.025.565

264 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Fire and Motor third Motor natural party liability Health vehicles disasters Other Unallocated Total

Investment Income 1.419.545.287 1.419.545.287 Investment Expense (*) (355.309.280) (355.309.280) Other (**) (56.815.973) (56.815.973) Net income before tax 555.080.649

Income tax (105.879.923) (105.879.923)

Net income 449.200.726

265 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

6 Tangible assets Movements in tangible assets in the period of January 1 - December 31, 2020 are presented below: Valuation January 1, 2020 Additions Disposal Differences December 31, 2020

Net book value 180.203.693 180.976.858

The Company’s property for own use is valuated over fair value as of 2020 and 2019 year-end and subjected to valuation in this context. Expertise reports regarding this property are prepared by CMB licenced Property Valuation Company in December 2020. There is no any pledge over Company’s property for own use. As of December 31, 2020 and 2019, property for own use’s fair value (except VAT) and net book value is as following: Net Book Value Net Book Value Landings and buildings for own use Expertise date Expertise value (December 31, 2020) (December 31, 2019) Anadolu Sigorta 2020 Annual Report

İzmir Regional Office December 2020 9.510.000 9.494.289 8.081.870 Adana Regional Office December 2020 2.945.000 2.942.774 1.958.237 Lefkoşe Kıbrıs Branch December 2020 4.350.000 4.346.962 4.215.177 Adana Office December 2020 592.500 591.972 319.486 Others December 2020 865.000 863.417 1.069.697

Total 18.262.500 18.239.414 15.644.467

266 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Fair value measurement Fair value of landings and buildings for own use is determined by equivalence value method. Fair value measurement of landings and buildings for own use those fair value is determined by equivalence value method is reclassified as Level 2. Movements in tangible assets in the period of January 1 - December 31, 2019 are presented below: Valuation January 1, 2019 Additions Disposal Transfers Differences December 31, 2019

Net book value 119.925.667 180.203.693

There is not any mortgage over tangible assets of the Company as of December 31, 2020 and 2019. Anadolu Sigorta 2020 Annual Report

267 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

7 Investment properties Additions and disposals for investment properties is given “6- Tangible Assets” note in table of current period movement of tangible assets. Investment property is presented by fair value method as of December 31, 2020 and 2019 on balance sheet. The Company’s investment property expertise reports are prepared by independent professional valuation specialists authorized by Capital Markets Board. As of December 31, 2020, the Company has gained the rent income from investment properties amounting to TL 2.820.305 (December 31, 2019: TL 2.837.900). The expertise (excluding VAT) and net book values of investment properties are as follows on the basis of real estate. Expertise reports regarding these properties are prepared by independent professional valuation specialists authorized by CMB in December 2020. There is no pledge on the real estates. Net book value Net book value Investment land and buildings Expertise date Expertise value December 31, 2020 December 31, 2019

Accumulated amortization: Other intangible Anadolu Sigorta 2020 Annual Report assets 137.838.791 39.034.638 - - 176.873.429 Total 137.838.791 39.034.638 - - 176.873.429

Net book value 100.241.244 126.054.434

268 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Movements in tangible assets in the period of January 1 - December 31, 2019 are presented below: January 1, 2019 Additions Transfers Disposal December 31, 2019

Accumulated amortization: Other intangible assets 113.739.685 24.099.106 - - 137.838.791 Total 113.739.685 24.099.106 - - 137.838.791

Net book value 72.803.483 100.241.244

9 Investments in associates December 31, 2020 December 31, 2019 Net book value Participation rate Net book value Participation rate Anadolu Hayat Emeklilik A.Ş. 320.378.673 20,0% 257.177.864 20,0% Investments in associates, net 320.378.673 257.177.864

Total financial assets (Note 4.2) 320.378.673 257.177.864

As of December 31, 2020, the Company has obtained income amounting to TL 105.387.853 from associates through equity accounted consolidation method (December 31, 2019: TL 72.138.354). 10 Reinsurance assets and liabilities As of December 31, 2020 and 2019, reinsurance assets and liabilities of the Company in accordance with existing reinsurance contracts are as follows: Reinsurance assets December 31, 2020 December 31, 2019

Provision for outstanding claims, ceded (Note 4.2), (Note 17) 2.278.005.427 1.561.947.712 Reserve for unearned premiums, ceded (Note 17) 1.164.283.370 908.427.528 Reserve for unexpired risks, ceded 68.861.780 17.904.259 Cash deposited to reinsurance companies (Note 12) 192.665.786 144.027.452 Anadolu Sigorta 2020 Annual Report Reinsurers share in the provision for subrogation and salvage receivables 2.522.147 1.807.570 Total 3.706.338.510 2.634.114.521

There is no impairment losses recognised for reinsurance assets.

269 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Reinsurance liabilities December 31, 2020 December 31, 2019

Gains and losses recognized in the statement of income in accordance with existing reinsurance contracts are as follows: December 31, 2020 December 31, 2019

Commission debt accrued to reinsurers - 10.626.863 Total, net (2.410.127.788) (313.079.413)

11 Financial assets As of December 31, 2020 and 2019, financial assets of the Company are as follows: December 31, 2020 December 31, 2019

Anadolu Sigorta 2020 Annual Report Available for sale financial assets 3.366.966.567 1.719.898.375 Financial assets held for trading 1.038.057.085 - Available for sale financial assets 229.899.738 159.450.716 Total 4.634.923.390 1.879.349.091

270 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Total available for sale financial assets (Note 4.2) 2.803.090.458 2.985.243.766 3.366.966.567 3.366.966.567 Anadolu Sigorta 2020 Annual Report

271 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Other non-fixed income financial assets: Investment funds 4.933.855.530 899.941.844 931.848.598 931.848.598 Issued by İş Portföy Yönetimi A.Ş (Note 45) 599.732.419 750.056.764 773.646.692 773.646.692 Others 4.334.123.111 149.885.080 158.201.906 158.201.906 Equity shares 80.142.129 102.962.094 162.503.632 162.503.632 Total 5.013.997.659 1.002.903.938 1.094.352.230 1.094.352.230

Total available for sale financial assets (Note 4.2) 5.620.114.847 1.583.795.305 1.719.898.375 1.719.898.375

As of December 31, 2020, and 2019, financial assets held for trading of the Company are as follows: December 31, 2020 Nominal Fair Net book value Cost value value

Debt instruments: Reverse repurchases 54.089.810 54.114.245 54.114.245 Total 54.089.810 54.114.245 54.114.245

Total financial assets held for trading (Note 4.2) 49.440.422 176.066.729 229.899.738 229.899.738 Anadolu Sigorta 2020 Annual Report

272 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

December 31, 2019 Nominal Fair Net book value Cost value value

Debt instruments: Reverse repurchases 13.310.217 13.313.760 13.313.760 Total 13.310.217 13.313.760 13.313.760

Total financial assets held for trading (Note 4.2) 214.764.606 130.184.494 159.450.716 159.450.716

As of December 31, 2020, the Company has no marketable securities presented above held to maturity (December 31, 2019: None). December 31, 2020 Nominal Fair Net book value Cost value value

Year increase/(decrease) increase/(decrease) Anadolu Sigorta 2020 Annual Report

2020 181.339.903 292.082.808 2019 158.746.440 110.742.905 2018 (80.331.929) (48.003.535)

273 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

(*) The amount of other in financial assets held for trading to TL 54.114.245 (December 31, 2019: TL 13.313.760) are excluded. December 31, 2019 Available Held to Trading(*) for sale maturity Total Balance at the beginning of the period 171.752.320 848.053.222 - 1.019.805.542 Acquisitions during the period 1.911.737.578 2.658.437.778 - 4.570.175.356 Disposals (sale and redemption) (1.972.103.440) (2.073.233.675) - (4.045.337.115) Change in the fair value of financial assets (Note 15) 34.750.498 286.641.050 - 321.391.548 Balance at the end of the period 146.136.956 1.719.898.375 - 1.866.035.331

(*) The amount of other in financial assets held for trading to TL 13.313.760 (December 31, 2018: TL 7.800.426) are excluded. 12 Loans and receivables December 31, 2020 December 31, 2019

Short-term receivables 2.521.646.918 1.900.587.563 Long and medium-term receivables 326.932 326.932 Total 2.521.973.850 1.900.914.495

274 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

As of December 31, 2020 and 2019, the details of the receivables from main operations are as follows: December 31, 2020 December 31, 2019

As of December 31, 2020 and 2019, the details of mortgages and other guarantees for the Company’s receivables are presented below: December 31, 2020 December 31, 2019

As of December 31, 2020, the Company has a derivative financial instruments recognized in the financial assets held for trading Anadolu Sigorta 2020 Annual Report amounting to TL 63.599.896 (December 31, 2019: TL 11.471.123). As of December 31, 2019, the Company has accounted in income accruals amounting to TL 183.754.467 (December 31, 2019: TL 24.850.393) that is increase in value and there is no other financial liabities due to forward foreign currency agreement (December 31, 2019: TL 59.472.753).

275 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Foreign currency denominated bank deposits - time deposits 922.848.657 3.019.474.146 - demand deposits 41.324.543 12.656.422

Bank deposits in Turkish Lira - time deposits 1.530.116.255 1.011.593.319 - demand deposits 11.492.474 5.311.526 Bank deposits 2.505.781.929 4.049.035.413

15 Equity Paid in capital The shareholder having direct or indirect control over the shares of the Company is İş Bankası Group. Anadolu Sigorta 2020 Annual Report The Company does not increase its share capital in the current period. As of December 31, 2020, the issued share capital of the Company is TL 500.000.000 (December 31, 2019: TL 500.000.000) and the Company unregistered Group 150 A shares which each of value is TL 1,5 as of April 11, 2013 in which approved in Main Article of the Company dated in April 11, 2013. The share capital of the Company consists of 50.000.000.000 (December 31, 2019: 50.000.000.000 shares) issued shares with TL 1 nominal value each.

276 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Other capital reserves In accordance with tax legislation, 75% of profits from sales of participation shares and 50% real estates included in the assets of companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years. As of December 31, 2020, the tax exempt which obtained thanks to sale of participation shares and real estate in 2010, 2011, 2013, 2014, 2015, 2026 and 2017 years respectively, amounting to TL 8.081.516, TL 80.025, TL 647.763, TL 920.272, TL 2.541.500, TL 15.094 and TL 1.136.153 and real estate revaluation funds of 2018, 2019 and 2020 and the profit not subject to distribution for 2018, 2019 and 2020 are classified as other capital reserves. December 31, 2020 December 31, 2019

Other capital reserves at the beginning of the period 35.290.304 31.686.857 Transfer from profit 655.384 2.704.097 Use property revaluation fund (Note 6) 2.887.934 899.350 Other capital reserves at the end of the period 38.833.622 35.290.304

Legal reserves at the beginning of the period 114.278.982 87.080.174 Transfer from profit 37.804.871 27.198.808 Legal reserves at the end of the period 152.083.853 114.278.982

Extraordinary reserves The movement of extraordinary reserves are presented below: December 31, 2020 December 31, 2019

Extraordinary reserves at the beginning of the period 442.672.379 264.671.937 Transfer from profit 181.898.535 178.000.442 Extraordinary reserves at the end of the period 624.570.914 442.672.379

Statutory reserves The movement of statutory reserves are presented below:

December 31, 2020 December 31, 2019 Anadolu Sigorta 2020 Annual Report

Statutory reserves at the beginning of the period 65.330.876 40.734.515 Transfer from profit 34.783.599 24.596.361 Statutory reserves at the end of the period 100.114.475 65.330.876

277 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Special reserves The movement of special funds are presented below: December 31, 2020 December 31, 2019

Special reserves at the beginning of the period - - Venutre capital investment fund 29.130.000 - Special funds at the end of the period 29.130.000 -

Valuation of financial assets The movements of valuation differences related available for sale financial assets and associates are presented below: December 31, 2020 December 31, 2019 Valuation difference at the beginning of the period 110.742.905 (48.003.535) Change in the fair value 274.371.120 158.843.212 Subsidiaries consolidated according to the equity method 14.221.374 21.616.828 Net gains transferred to the statement of income (79.745.401) 5.577.018 Deferred tax effect (27.507.190) (27.290.618) Valuation difference at the end of the period 292.082.808 110.742.905

Other profit reserves In accordance with the July 4, 2007 dated and 2007/3 numbered Compliance Circular issued by the T.C. Ministry of Treasury and Finance, it was stated that the companies would not further provide earthquake provision for the year 2007. However, it was also stated that earthquake provisions provided in previous periods (earthquake provision in the financial statements as of December 31, 2006) should be transferred to the reserve accounts under equity in accordance with the 5th Temporary Article of the Insurance Law. The companies had to transfer total amount of provisions, including earthquake provisions reserved as of December 31, 2006 and related gains obtained from investment of these amounts, to the account called as “549.01 - transferred earthquake provisions” which would be opened as of September 1, 2007 within Uniform Chart of Account and the reserves amount should not be subject to dividend distribution or should not be transferred to other accounts. Accordingly, the Company initially transferred total provisions amounting to TL 96.036.157 including earthquake provisions reserved as of December 31, 2006 and related gains obtained from investment of this amount, to the reserve accounts under equity, TL 51.846.111 of this amount is used for capital increase in 2010. As of December 31, 2020, accordance with IAS 19, to add the amount of actuarial loss and net profit of TL (6.488.067) defined remeasure net profit debt and TL (1.763.370) for consolidation process the amount of new balance is TL 37.701.979. Profit on assets sale that will be transferred to capital In accordance with tax legislation, 75% of profits from sales of participation shares and 50% of real estates included in the assets of companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years. 16 Other reserves and equity component of discretionary participation feature

Anadolu Sigorta 2020 Annual Report As of December 31, 2020, and 2019, change in fair values of available-for-sale financial assets which is presented as “valuation of financial assets” and earthquake provisions provided in the previous years presented under “other profit reserves” are explained in detail in Note 15 - Equity above. As of December 31, 2020, and 2019, the Company does not hold any insurance or investment contracts which contain a discretionary participation feature.

278 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

Gross of reserve for unexpired risk 127.320.793 68.089.542 Reinsurer’s share of the reserve for unexpired risk (68.861.780) (17.904.259) Provision unexpired risk reserve, net 58.459.013 50.185.283

Provision for bonus and discounts, gross 4.000.000 - Provision for bonus and discounts, ceded - - Provision for bonus and discounts, net 4.000.000 -

Equalization provision, net 255.601.084 218.075.088 General provision, net (*) 7.702.760 7.702.760 Other technical provisions, net 263.303.844 225.777.848

Total technical provisions, net 7.774.427.606 6.212.422.651

Short-term 7.509.203.444 5.984.640.844 Medium and long-term 265.224.162 227.781.807 Total technical provisions, net 7.774.427.606 6.212.422.651

279 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

December 31, 2019 Reserve for unearned premiums Gross Ceded SSI share Net

December 31, 2020 Provision for outstanding claims Gross Ceded Net

December 31, 2019 Provision for outstanding claims Gross Ceded Net

December 31, 2020 Anadolu Sigorta 2020 Annual Report Reserve for unexpired risk Gross Ceded Net

Reserve for unexpired risk at the beginning of the period 68.089.542 (17.904.259) 50.185.283 Change in the reserve during the current period 59.231.251 (50.957.521) 8.273.730 Reserve for unexpired risk at the end of the period 127.320.793 (68.861.780) 58.459.013

280 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

December 31, 2019 Reserve for unexpired risk Gross Ceded Net

December 31, 2020 Provision for bonus and discounts Gross Ceded Net

Equalization provision December 31, 2020 December 31, 2019

Current estimate of cumulative Anadolu Sigorta 2020 Annual Report claims 2.591.135.070 3.222.498.877 3.836.321.518 3.647.223.771 4.810.169.071 18.107.348.307 Cumulative payments to date 2.062.732.242 2.643.967.322 3.048.303.038 2.691.538.095 2.309.219.086 12.755.759.783 Provision recognized in the financial statements 528.402.828 578.531.555 788.018.480 955.685.676 2.500.949.985 5.351.588.524 Provision recognized in the financial statements before 2014 1.656.953.684 Total gross outstanding claims presented in the consolidated financial statements at the end of the period 7.008.542.208

281 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

December 31, 2019 Claim year 2015 2016 2017 2018 2019 Total Claim year 2.074.639.627 2.190.661.361 2.750.410.067 3.383.175.807 3.892.438.164 14.291.325.026 1 year later 2.325.365.256 2.357.205.516 3.054.330.021 3.764.177.307 - 11.501.078.100 2 years later 2.422.260.481 2.469.668.480 3.133.158.819 - - 8.025.087.780 3 years later 2.519.204.686 2.524.846.751 - - - 5.044.051.437 4 years later 2.558.811.915 - - - - 2.558.811.915 Current estimate of cumulative claims 2.558.811.915 2.524.846.751 3.133.158.819 3.764.177.307 3.892.438.164 15.873.432.956 Cumulative payments to date 2.162.219.278 2.007.606.902 2.585.031.316 2.897.637.513 2.124.976.433 11.777.471.442 Provision recognized in the financial statements 396.592.637 517.239.849 548.127.503 866.539.793 1.767.461.732 4.095.961.514 Provision recognized in the financial statements before 2013 1.168.301.920 Total gross outstanding claims presented in the consolidated financial statements at the end of the period 5.264.263.434

December 31, 2019 Amount be provided (**) Provided Net book value Non-life: Bank deposits (Note 14) 494.545.433 447.110.868 447.225.909 Total 494.545.433 447.110.868 447.225.909

(**) According to the 7th article of the “Circular Related to the Financial Structure of Insurance, Reinsurance, and Private Pension Companies” which regulates necessary guarantee amount, minimum guarantee fund for capital adequacy calculation period will be provided as a guarantee in two months following the calculation period. According to “Regulations Regarding to Capital Adequacy Measurement and Assessment of Insurance, Reinsurance, and Private Pension Companies”, companies must prepare their capital adequacy tables twice in a financial year at June and December periods and must sent capital adequacy tables to the T.C. Ministry of Treasury and Finance Department within two months. Since the amounts that to be provided as of December 31, 2020 (December 31, 2019) will be through the calculated amounts as of June 30, 2020 (June 30, 2019), the settled amounts as of June 30, 2020 (June 30, 2019)is presented as “to be provided” amounts. Company’s number of life insurance policies, additions, disposals during the period and the related mathematical reserves None. Distribution of new life insurance policyholders in terms of numbers and gross and net premiums as individual or group during the period None. Anadolu Sigorta 2020 Annual Report Distribution of mathematical reserves for life insurance policyholders who left the Company’s portfolio as individual or group during the period None. Deferred commission expenses The Company capitalizes commissions paid to the intermediaries related to policy production under short-term and long-term prepaid expenses. As of December 31, 2020, short-term prepaid expenses amounting to TL 553.402.984 (December 31, 2019: TL 434.608.716) consist of deferred commission expenses amounting to TL 477.877.702 (December 31, 2019: TL 383.770.675) and other prepaid expenses amounting to TL 75.525.282 (December 31, 2019: TL 50.838.041). Long-term prepaid expenses amounting TL 2.167.444 (December 31, 2019: TL 1.444.448) are composed of other prepaid expenses.

282 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

December 31, 2020 December 31, 2019

Deferred commission expenses at the beginning of the period 383.770.675 327.682.017 Commissions accrued during the period (Note:32) 1.086.502.742 896.149.737 Commissions expensed during the period (992.395.715) (840.061.079) Deferred commission expenses at the end of the period(*) 477.877.702 383.770.675

(*) Commission expenses that accounted in reinsurance commissions are included Individual pension funds None. 18 Investment contract liabilities None. 19 Trade and other payables and deferred income December 31, 2020 December 31, 2019 Financial liabilities 58.754.871 116.256.462 Payables arising from main operations 933.510.705 754.579.442 Other payables 135.195.913 131.300.458 Deferred commission income (Note 10) 152.701.193 127.057.883 Taxes and funds payable and other similar obligations 75.788.171 134.326.972 Trade payables to related parties 88.233 227.287 Total 1.356.038.395 1.263.748.504 Short-term liabilities 1.300.313.295 1.209.193.268 Medium and long-term liabilities 55.725.100 54.555.236 Total 1.356.038.395 1.263.748.504

Payables arising from reinsurance activities to reinsurance companies 5.376.465 3.914.287

Payables arising from other operating activities 260.241.984 215.807.844 Cash deposited by insurance and reinsurance companies (Note 10) 5.458.061 4.871.763 Anadolu Sigorta 2020 Annual Report Payables arising from main operations 933.510.705 754.579.442

There are no investment incentives which will be benefited in current and future periods.

283 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

20 Financial liabilities December 31, 2020 December 31, 2019 Expense accruals arising from derivative contracts (Note 13) (*) - 59.472.753 Payables from leases (Note 34) (**) 58.754.871 56.783.709 Short term 3.029.771 2.228.473 Medium and long term 55.725.100 54.555.236 Total 58.754.871 116.256.462

(*) There is no expense accrual arising from derivative contracts as of December 31, 2020 is disclosed in Note 13 (December 31, 2019: TL 59.472.753). (*) As of December 31, 2020, details of the Company’s operating leases are disclosed in the note 34 - Financial costs. 21 Deferred tax As of December 31, 2020 and 2019, deferred tax assets and liabilities are attributable to the following: December 31, 2020 December 31, 2019 Deferred tax Deferred tax assets/(liabilities) assets/(liabilities) Valuation differences in financial assets (65.284.586) (1.219.004) Equalization provision 40.607.492 35.230.923 Other provision 18.819.226 16.038.309 Provisions for unexpired risk 11.691.803 11.040.762 Provisions for employee termination benefits and unused vacations 7.467.799 6.098.839 Provision for subrogation receivables 4.948.889 6.198.312 Discount of receivables and payables 14.525 (357.268) TAS adjustment differences in depreciation (13.191.004) (10.344.068) Subrogation receivables recognized as income from third parties (5.783.669) (6.931.925) Real estate valuation (8.830.207) (7.499.023) Deferred tax assets/(liabilities), net (9.539.732) 48.255.857

* Cancellatiton of corporate tax provision is included in deferred tax income. 22 Retirement benefit obligations

Anadolu Sigorta 2020 Annual Report Employees of the Company are the members of “Anadolu Anonim Pension Fund” which is established in accordance with the temporary Article 20 of the Social Security Act No: 506. As per the temporary sub article No: 20 of the Article 73 of the Social Security Law, pension funds should be transferred to the Social Security Institution within three years after the publication of the a aforementioned Law published in the Official Gazette numbered 26870 and dated May 8, 2008. The related three-year transfer period has been prolonged for two years by the Cabinet decision, the three-year period was extended to the May 8, 2015.

284 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

April 23, 2015 dated Official Gazette is changed as following; insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or which constitutes their union personnel and associates of funds “The Council is authorized to determine the date of transfer within the scope of article 20th of the law, 506 banks, insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or which constitutes their union personnel and associates of funds to the social security institution. The date of the transfer of the first paragraph of Article 4 of this law pension fund contributors as are considered insured. According to this arrangement the bank within the scope of Act 506, article No.20, insurance and reinsurance companies, chambers of commerce, industry chambers, stock exchanges or associations which constitute their union personnel and associates of funds are required to be transferred until May 8, 2015 to Social Security Administration, authority to determine the date of transfer is given the Council of Ministers thus the transfer of the funds has been postponed to an unknown date. 23 Other liabilities and provisions As of December 31, 2020 and 2019; the details of the provisions for other risks are as follows: December 31, 2020 December 31, 2019 Provision for employee termination benefits 33.341.951 27.298.621 Provision for unused vacation pay liability 3.997.046 2.905.069 Total provision for other risks 37.338.997 30.203.690

24 Net insurance premium Anadolu Sigorta 2020 Annual Report Net insurance premium revenue is presented in detailed in the accompanying consolidated statement of income. 25 Fee revenue None. 26 Investment income Investment income is presented in “Note 4.2 - Financial Risk Management”. 27 Net income accrual on financial assets Net realized gains on financial assets are presented in “Note 4.2 - Financial Risk Management.

285 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

28 Assets held at fair value through profit or loss Presented in “Note 4.2 - Financial Risk Management”. 29 Insurance rights and claims January 1 - January 1 - December 31, 2020 December 31, 2019 Claims paid, net off reinsurers’ share 3.035.504.038 2.854.850.723 Changes in provision for unearned premiums, net off reinsurers’ share 483.984.170 350.605.984 Changes in provision for outstanding claims, net off reinsurers’ share 1.028.221.059 644.913.354 Changes in provision for bonus and discounts, net off reinsurers’ share 4.000.000 - Change in equalization provisions 37.525.996 42.328.548 Changes in reserve for unexpired risks, net off reinsurers’ share 8.273.730 (10.005.857) Total 4.597.508.993 3.882.692.752

286 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

33 Employee benefits expenses January 1 - January 1 - December 31, 2020 December 31, 2019

Wages and salaries 185.541.440 167.626.492 Insurance payments 56.801.672 45.410.871 Other 19.099.748 19.035.012 Total 261.442.860 232.072.375

Up to 1 year 3.029.771 1 to 2 years 3.769.641 2 to 3 years 4.690.188 3 to 4 years 5.802.213 4 to 5 years 7.252.433 Over 5 years 34.210.625 Total 58.754.871

35 Income tax Income tax expense items in the accompanying consolidated financial statements are as follows: January 1 - January 1 - December 31, 2020 December 31, 2019

(*) The Corporate Tax Provision Closure is presented in the “Provisions Account”. Anadolu Sigorta 2020 Annual Report

287 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

For the period then ended as of December 31, 2020 and 2019, a reconciliation of tax expense applicable to profit from operating activities before income tax at the statutory income tax rate to income tax expense at the Company’s effective income tax rate are as follows: December 31, 2020 December 31, 2019 Profit before tax 624.634.315 Tax rate (%) 555.080.649 Tax rate (%) Taxes on income per statutory tax rate 137.419.549 22,00 122.117.743 22,00 Tax exempt income (11.973.359) (1,92) (5.987.992) (1,08) Non-deductible expenses (10.837.440) (1,74) (10.249.828) (1,85) Total tax income recognized in profit or loss 114.608.750 18,35 105.879.923 19,07

Net profit/(loss) for the period 510.025.565 449.200.726 Weighted average number of shares 50.000.000.000 50.000.000.000 Earnings/loss per share (TL) 0,01020 0,00898

38 Dividends per share Cash dividends amounting to 135.000.000 TL were paid to shareholders during the year of 2020 (December 31, 2019: TL 100.000.000). 39 Cash generated from operations The cash flows from operating activities are presented in the accompanying c onsolidated statement of cash flows 40 Convertible bonds None. 41 Redeemable preference shares None. 42 Risks In the normal course of its operations, the Company 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 Company are provided under provision for outstanding claims in the accompanying consolidated financial statements. As of December 31, 2020, total amount of the claims that the Company face is TL 1.976.464.629 in gross (December 31, 2019: TL 1.716.620.953). The Company provided provision for outstanding claims in the consolidated financial statements by considering Anadolu Sigorta 2020 Annual Report collateral amounts. As of December 31, 2020, ongoing law suits prosecuted by the Company against the third parties amounting TL 521.063.482 (December 31, 2019: TL 409.892.582). 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. As of December 31, 2020, the cases has been timed out.

288 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

43 Commitments The details of the guarantees that are given by the Company for the operations in non-life branches are presented in Note 17. 44 Business comibanitons None. 45 Related party transactions The ultimate controlling party of the Company is İş Bankası Group and the groups having direct control over İş Bankası Group and the affiliates and associates of İş Bankası Group are defined as related parties of the Company. The related party balances as of December 31, 2020 and 2019 are as follows: December 31, 2020 December 31, 2019

İş Bankası - cash at banks 175.236.370 360.497.560 Türkiye Sınai Kalkınma Bankası - cash at banks 135 103 Banks 175.236.505 360.497.663

İş Gayrimenkul Yatırım Ortaklığı A.Ş. - TFRS 16 operating leases 1.813.908 1.956.528 Financial liabilities 1.813.908 1.956.528

289 OTHER MATTERS AND FINANCIAL STATEMENTS 31 DECEMBER 2020 CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THEREON

Milli Reasürans T.A.Ş (181.002.233) (165.473.483) Premiums written, ceded (181.002.233) (165.473.483)

Anadolu Hayat ve Emeklilik A.Ş - rent income 148.129 256.789 Other income 148.129 256.789

Anadolu Sigorta 2020 Annual Report Other expense (22.647.101) (17.885.851)

290 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ CONVENIENCE TRANSLATION OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

46 Events after the reporting date Subsequent events are disclosed in Note 1.10 Events after the reporting date. 47 Other Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of the group to which they relate or 5% of the total assets in the balance sheet They are presented in the related notes above. “Payables to employees and receivables from employees presented under accounts, “other receivables” and “other short or long term payables”, and which have balance more than 1% of the total assets None. Subrogation recorded in “Off-Balance Sheet Accounts” None. Real rights on properties and their values None. Explanatory note for the amounts and nature of previous years’ income and losses None. Information on other technical expenses items in income statement The part of amounting to TL 159.108.114 (December 31, 2019: TL 149.972.158) of other technical expenses in the statement of income amounting to TL 146.566.440 (December 31, 2019: TL 140.222.386) comprised of assistance services and their other technical expenses and cost of postponed. For the periods ended December 31, 2020 and 2019, details of discount and provision expenses are as follows January 1 - January 1 - Provision expenses December 31, 2020 December 31, 2019

January 1 - January 1 - Rediscount expenses December 31, 2020 December 31, 2019

Rediscount income 37.208.316 45.206.652

Rediscount expense (35.020.790) (39.530.843) Anadolu Sigorta 2020 Annual Report Total of rediscounts 2.187.526 5.675.809

291 OTHER MATTERS AND FINANCIAL STATEMENTS AN ASSESSMENT OF FINANCIAL STANDING, PROFITABILITY AND SOLVENCY

AN ASSESSMENT OF FINANCIAL STANDING, PROFITABILITY AND SOLVENCY

Premium production motor vehicles, fire and natural disasters, significantly reducing retained risk in and health branches. branches likely to present high claim Anadolu Sigorta registered TL 8,015,704 settlements in particular, such as fire, thousand in premium production in 2020. A portion in the amount of TL 2,4010,128 marine, watercraft and general losses. The greatest contributors to premium thousand of premiums were ceded production were motor vehicles liability, through reinsurance in 2020, thus

PREMIUM PRODUCTION (TL THOUSAND)

8,015,704

6,606,856 5,701,355

2018 2019 2020

Solvency and solvency performance ceded through reinsurance contracts made In 2020, claims paid amounted to in branches under which high-amount TL 3,852,056 thousand. A significant Having adopted it as a duty to make coverage is provided such as fire and portion of the claims paid arose, in order, claim payments fully and timely to its general losses, thus making it possible for from losses in motor vehicles liability, policyholders, Anadolu Sigorta attained the Company’s asset structure to remain motor vehicles, health, and fire and natural this goal once again in 2020 drawing unaffected by claims paid in big amounts. disasters. Combined loss/premium ratio on its solid asset structure and balanced was 82,2%, 3 points lower than its 2019 liquidity ratio. A big part of the risk was value.

CLAIMS PAID (TL THOUSAND) COMBINED CLAIMS RATIO (%)

Claims Paid, gross Claims Paid, net

3,838,569 3,852,056 89.6 86.8 83.7 3,373,959 Anadolu Sigorta 2020 Annual Report 3,035,504 2,854,851 2,651,723

2018 2019 2020 2018 2019 2020 292 Assessment of profitability

The company booked a profit of TL 560,672 thousand in 2020. Return on equity and return on assets stood at 16.4% and 3.8%, respectively.

GROSS PROFIT/LOSS GROSS PROFIT-LOSS/GROSS PREMIUM (TL THOUSAND) PRODUCTION (%)

567,748 560,672 8.6

6.8 7.0 386,888

2018 2019 2020 2018 2019 2020 Anadolu Sigorta 2020 Annual Report

293 OTHER MATTERS AND FINANCIAL STATEMENTS INFORMATION ON FINANCIAL STRUCTURE

INFORMATION ON FINANCIAL STRUCTURE

Assets performance Capital volume

As of year-end 2020, total assets reached TL 12,075,878 The nominal capital of Anadolu Sigorta was TL 500,000 thousand thousand, up 23.6% year-on. With a share of 65.5% representing as at year-end 2020. the largest item in total assets, total cash and cash equivalents, and financial assets grew 21.4% year-on to TL 7,912,231 thousand, giving confidence with respect to payment of possible losses to policyholders with this large volume.

TOTAL ASSETS (TL THOUSAND) NOMINAL CAPITAL (TL THOUSAND)

12,075,878 500,000 500,000 500,000

9,767,228

7,904,032

2018 2019 2020 2018 2019 2020 Anadolu Sigorta 2020 Annual Report

294 OTHER MATTERS AND FINANCIAL STATEMENTS SUMMARY FINANCIAL INFORMATION FOR THE LAST 5 YEARS INCLUDING THE REPORTING PERIOD

SUMMARY FINANCIAL INFORMATION FOR THE LAST 5 YEARS INCLUDING THE REPORTING PERIOD

(TL thousand) 2020 2019 2018 2017 2016 Gross Premiums 8,015,704 6,606,856 5,701,355 4,671,410 4,484,060 Technical Division Balance 734,905 643,318 502,067 292,629 157,564 Investment Income 2,487,841 1,373,407 1,508,905 859,808 487,727 Investment Expenses -2,558,784 -1,450,967 -1,537,912 -879,646 -505,094 Other Income and Expenses -103,290 1,990 -86,172 -35,958 -29,013 Period Gross Income (Loss) 560,672 567,748 386,888 236,833 111,184 Taxation -100,035 -164,686 -79,313 -52,637 -23,317 Period Net Income (Loss) 460,638 403,062 307,574 184,197 87,867 Shareholders’ Equity 2,810,378 2,155,296 1,646,206 1,639,021 1,223,180 Total Assets 12,075,878 9,767,228 7,904,032 7,032,315 5,974,173 Anadolu Sigorta 2020 Annual Report

295 OTHER MATTERS AND FINANCIAL STATEMENTS INFORMATION FOR INVESTORS

INFORMATION FOR INVESTORS

Capital Registered capital: TL 700,000,000 Paid-in capital: TL 500,000,000

The company’s capital is divided into 50,000,000,000 shares each with a value of TL 0.01 and entitling their holders to one vote. The company’s free float rate is 48%.

Stock Exchange The company’s shares are traded on Borsa İstanbul Stars Market under the ticker symbol ANSGR and are included in BIST Corporate Governance, BIST All, BIST Stars, BIST Dividend, BIST All -100, BIST Financial, BIST Dividend 25 and BIST Insurance indices.

Investor Relations Unit Rüzgarlıbahçe Mah. Çam Pınarı Sok. No: 6 34805 Beykoz / İstanbul Tel : +90 850 744 0 744 E-mail : [email protected] Website: https://www.anadolusigorta.com.tr/en/investor-relations Anadolu Sigorta 2020 Annual Report

296 HEADQUARTERS

Address: Rüzgarlıbahçe Mah. Çam Pınarı Sok. No: 6 34805 Beykoz / İstanbul Tel: +90 850 724 0850 Fax: +90 850 744 0 745 E-mail: [email protected]

Produced by Tayburn Tel: (90 212) 227 04 36 This report has been printed on recycled paper. www.tayburnkurumsal.com www.anadolusigorta.com.tr Anadolu Sigorta 2020 Annual Report