Annual Report Content

2014

1 General Information 30 Information on Associates 67 Other Matters and Financial Statements 2 Corporate Profile 30 Repurchased Own Shares by the Company 67 Report on the Audit of Board of Directors’ 3 Our Vision, Our Mission, Our Corporate 30 Disclosures Concerning Special Audit and Annual Report Based on Standards Values Public Audit on Auditing which is a Component of 4 Message from the Chairman 30 Lawsuits Filed Against the Company and the Turkish Auditing Standards 6 Message from the CEO Potential Results Published by the Public Oversight 12 The Organization, Capital and Shareholder 30 Disclosure of Administrative or Judicial Accounting and Auditing Standards Structure of the Company Sanctions Against the Company and/or Authority (“POA”) 12 Organization Chart Board of Directors Members 70 An Assessment of the Board Directors by 13 Capital and Shareholder Structure 30 Assessment of Prior Period Targets and the Corporate Governance Committee 13 Disclosures on Preferred Shares General Assembly Decisions 72 Corporate Governance Principles 14 Governing Body, Executives and 30 Expenses Incurred in Relation to Compliance Report the Number of Employees Donations and Grants and 85 Committees Operating Within Anadolu 14 Board of Directors Social Responsibility Projects Sigorta and an Assessment by the Board 16 Declarations of Independence by 31 Commitment to Social Responsibility of Directors Independent Members of the Board of 33 The Company’s Transactions with the 89 An Assessment of the Operation of the Directors Risk Group Independent Audit Firm in 2014 Activity 18 Executive Committee 36 Financial Status Period via the Audit Committee 20 Heads of Units Under the Internal Systems 36 Summary Report by the Board of Directors 90 Human Resources Practices at Anadolu 20 Average Number of Employees by 38 Financial Information and Indicators Sigorta Categories During the Reporting Period 40 2014 Economic Overview 92 Agenda of the Annual General Assembly 21 Financial Affairs and Actuarial Unit 44 An Overview of the World Insurance Meeting Managers Industry 93 Dividend Distribution Proposal 21 Financial Rights Provided to the Members 47 Developments and Changes in Legislation 94 2014 Profit Distribution Table of the Governing Body and Executives 50 An Assessment of Anadolu Sigorta in 2014 95 2014 Annual Report Compliance 21 Financial Rights 58 Assessment of the Company Capital and Statement 21 Other Means Comments 96 Detailed Income Statement 24 Research and Development Activities of the 59 Profit Distribution Policy 98 31 December 2014 Unconsolidated Company 62 Risks and an Assessment by the Governing Financial Statements Together with 24 Research and Development Pertaining to Body Independent Auditors’ Report Thereon New Services and Business Activities 62 Risk Management Policies Adhered to by 179 31 December 2014 Consolidated 26 Company Activities and Major Developments Types of Risks Financial Statements Together with in Activities 65 Activities of the Committee of Early Independent Auditors’ Report Thereon 26 2014-2015 Primary Goals, Policies Determination of Risk 180 Information on Consolidated Subsidiaries 27 Information on the Company’s Investments Profitability and Solvency 28 Internal Control System and Internal 263 262 Information An Assessment on ofFinancial Financıal Structure Standing, Audit Activities 264 Summary Financial Information for the 28 An Assessment of 2014 by the Board of Last 5 Years Including the Reporting Inspectors Period 29 Internal Control System and an Assessment by the Governing Body

General Information

Anadolu Anonim Türk Sigorta Şirketi Directory Middle Black Sea Regional Branch Address: 2014 Annual Report. Head Office Address: Corporate Title Tel: +90 850 Kale 744 Mah. 0 744 Ziya Paşa Sok. No: 4 Fax:Kat: 7+90 55030 850 İlkadım/SAMSUN744 0 750 Tel: +90 850 Rüzgarlıbahçe 744 0 744 Mah. Kavak Sok. E-mail: [email protected] Fax:No: 31 +90 34805 850 744Kavacık/İSTANBUL 0 745 AnadoluWebsite Anonim Türk Sigorta Şirketi E-mail: [email protected] Southern Anatolia Regional Branch www.anadolusigorta.com.tr Address: Corporate Insurance Department 01120 Seyhan/ADANA Anadolu Sigorta Trade Registration No: Address: Tel: +90 850 Reşatbey 744 0 744 Mah. 62029. Sok. 16/A Fax: +90 850 744 0 746 4593/557 Tel: +90 850 Rüzgarlıbahçe 744 0 744 Mah. Kavak Sok. E-mail: [email protected] Fax:No: 31 +90 34805 850 744Kavacık/İSTANBUL 0 745 E-mail: [email protected] Central Anatolia Regional Branch Address: Cinnah Cad. Farabi Sok. No: 43 Motor Claims Department Address: Tel: +90 850 744 0 744 Fax:06690 +90 Kavaklıdere/ANKARA 850 744 0 749 Tel: +90 850Rüzgarlıbahçe 744 0 744 Mah. Kavak Sok. E-mail: [email protected] Fax:No: 31 +90 34805 850 744Kavacık/İSTANBUL 0 182 E-mail: [email protected] Black Sea Regional Branch Address: İstanbul Regional Branch Address: Beytem Plaza Büyükdere Cad. 20/B Tel: +90 850Karşıyaka 744 0 744 Mah. 4 Nolu Sok. No: 479 Fax:61040 +90 TRABZON 850 744 0 751 Tel: +90 850 744 0 744 E-mail: [email protected] Fax:34394 +90 Şişli/İSTANBUL 850 744 0 753 E-mail: [email protected] Marmara Regional Branch Address: Kadıköy Regional Branch Address: 16110 BURSA Odunluk Mah., Akademi Cad., Zeno İş Tel:Merkezi, +90 850A Blok 744 No10/5 0 744 Kat: 1 Daire: No: 6-10 Tel: +90 850K2 744Plaza 0 744Sarıkanarya Sok. No: 14 Fax: +90 850 744 0 748 Fax:34742 +90 Kozyatağı/İSTANBUL 850 744 0 754 E-mail: [email protected] E-mail: [email protected] Turkish Republic of Northern Cyprus Branch Mediterranean Regional Branch Address: Memduh Asaf Sok. 8 Address: 07050 ANTALYA Tel: +90 392 227 95 95 Tel: +90 850Konyaaltı 744 0 744 Cad. No: 78 Fax:Köşklüçiftlik +90 392 Lefkoşa/TRNC227 95 96 Fax: +90 850 744 0 752 E-mail: [email protected] E-mail: [email protected] Western Anatolia Regional Branch Address: Atatürk Cad. No: 92

Tel: +90 850 744 0 744 Fax:Anadolu +90 Sigorta850 744 Binası 0 747 2 35210 İZMİR E-mail: [email protected] 2 / Anadolu Sigorta Annual Report 2014 Tanzimat (Reform) Era-1925 First Examples 1935-1950 of Insurance The birth of insurance business in Turkey… System Settles + The period of non-regulated operation for • foreign capital… Grows Strong • In the Ottoman State before Tanzimat (Reform) Era, legislation or rulings about insurance were non-existent. Having turned Increasing number of national insurance companies… westward with the Tanzimat Era, the Ottoman State began introducing reforms in various fields. While religious scholars The public institution portfolio handled by Anadolu Sigorta defined insurance as a special covenant separate from sharia, • almost in its entirety… it was first addressed in a regulation published in 1860 as • an addendum to the Statute of Commerce. Regarded as a The establishment of Anadolu Sigorta served as an encouragement for other foreigner’s activity because of the capitulations that dominated insurance companies that were to be founded. With the establishment of Güven the Ottoman territory since the 1500s, insurance remained Türk Sigorta company and with Anadolu Sigorta completely severing its ties with beyond governmental supervision. In 1889, foreign insurance companies wishing to operate in Ottoman territory were required the portfolio was shared among national, semi-national and foreign companies to be registered by getting a license. In 1916, when insurance İttihadıin 1939. Milli One Şirketi, of the most an insurance important company developments that was in part the insuranceof the Union industry Group, companies were formally registering, syndicates were illegal; between 1936 and the start of World War II was the founding of Ankara Türk so the name of the Syndicate was changed to the Association of Insurance Companies Operating in Turkey. In those days, the word their toll on the insurance industry as well, and the Turkish insurance business ‘syndicate’ was objectionable, as it was usually understood to mean Sigortahad to coverŞirketi the by perilsAnadolu of the Sigorta. war after The negativeits onset. developments However, no reinsurers during WWII in took ‘labor union’. Following the 1908 strikes that shook the country, Europe extended support against these perils under wartime circumstances, and syndication was forbidden by the Law of Corporations. At the time, sufficient coverage could not be obtained. Since London and Paris markets were the Association had 81 members, all of them foreign insurance out of reach during the war years, Anadolu Sigorta turned to the Italian market for reinsurance. This distressed period that lasted until the end of the war had tackled the insurance issue after the proclamation of the Republic. been replaced with economic comfort toward late 1940s. Anadolu Sigorta had companies. The Association phase lasted until 1925, when İşbank provided one third of the cargo insurance for the aid materials shipped from the U.S.A. under the Marshall Plan.

1925-1935 National Capital + Action and Motivation Inception of investments, laying the foundations of the national insurance industry... Incorporation of Anadolu Sigorta, early Republic era… • It had been just one year since the establishment of the Republic. Having emerged as a modern Republic from a 13-year • war period it had entered as a dissolving empire, Turkey was about to undertake heavy-duty industry initiatives, although

lacking the capability to manufacture so much as a needle until then. The construction of the first shipyard unit in Gölcük was followedengine of by the the nation’s establishment economic of development.the State Railways, That completedand then by the the first first phase passenger of the aircraftpursuit tripof a betweennational identityİstanbul in and banking Ankara. Theand sameinsurance. year saw Mainly the conductedincorporation through of “Türkiye marine İş transportation, Bankası” (İşbank), foreign the trade first national was carried bank, out what under would the supervisionbe the driving of insurance companies dominated by foreign capital, which set an obstacle to the incorporation of national insurance business. Exporters joined in the desire for the nationalization of the insurance business, since they had the prevailing opinion that, otherwise, profits would not be achievable in view of the monies paid to foreign insurance companies. In the light of these

developments, one year after the foundation of İşbank, “Anadolu Anonim Türk Sigorta Şirketi”, the first national insurance company of the Republic of Turkey, was incorporated at the initiative of Mustafa Kemal Atatürk. 1935-1950 1960-1980 System Settles + Raising Awareness + Growth Expectations Grows Strong A planned phase Attempts at urbanization, lack of future awareness, non-realization of growth • Anadolu Sigorta strives to increase productivity and achieve growth. • Political developments of 1960, the new constitution and social movements added momentum to urbanization moves and migration, and • increased urban population, the insurance industry was hopeful that the society would gain increased insurance and future awareness. populationsHowever, despite of big allcities efforts, began total increasing premiums gradually. collected 1.8 by million the middle in 1960, of the İstanbul’s 1970s had population barely amounted had surpassed to 2 billion 3 million liras. in Apparently, 1970. With theit would take longer than expected for the creation of future awareness; with periodic economic issues added, the anticipated growth did not materialize. On the other hand, premiums collected by insurers in other parts of the world reached large sums, and as such, constituted one of the largest funds for countries’ investment programs. Come the ‘70s, and the industry was substantially dominated by domestic companies as a result of the “import substitution” policy pursued. The funds collected under the insurance were scarce, and investments were not crucial. In this period, Anadolu Sigorta employed methods aimed at increasing productivity and saving labor, and succeeded in maintaining its stable growth in spite of everything. From the first half of the 1960s, Anadolu Sigorta began actively using the facilities offered by technology thanks to a cooperation with the International Business Machines (IBM) company. Anadolu Sigorta made an especially dramatic leap forward between 1965 and 1974: total net premiums of approximately 40 million liras in 1965 went up to 225 million liras in 1974. In other words, the company grew to six times its size in 10 years.

1950-1960 New Era + Restructuring 1925-1935 The supervision issue of the industry, multi-party era, arbitrary donation and lending policies… The stability policy of Anadolu Sigorta… • National Capital • Politics started to affect all segments of the population when Turkey entered the multi- party period in 1946. From the 1950s, there was a rapid rise in the number of insurance policies. Since there was no regulation about the state funding of political parties, they entered the elections by their own means, and obtained funds by asking for support mainly from banks and insurance companies. The donation Anadolu Sigorta made to political parties during election time had become customary. However, these donations incorporated the risk of pulling corporations + Action and Motivation into politics. As a matter of fact, Anadolu Sigorta had difficulties over this during the 1950s. After the military coup of 27 May 1960, the Board of Directors was discharged. The National Unity Committee, the group of military officers that ruled Turkey following the coup, appointed a new Board of Directors. In this period when the industry dealt with supervision and placement issues, certain regulations aligned with contemporary norms were introduced in the area of insurance. The first law concerning the supervision of insurance companies was enacted

afterdiscontinued the ratification acting ofas thean agentCommercial of Anadolu Code. Sigorta Another from highlight the beginning of that periodof 1960. was Başak insurance company, which was established by Ziraat Bank, one of the two main shareholders of the company and to which Anadolu Sigorta had long been providing insurance service. Ziraat Bank 1980-2000 Competition + Technological Advancements and Global Initiatives A period characterized by neoliberal economic policies, technical progress, new products, foreign capital domination of the industry… • Anadolu Sigorta sharpens its competitive strength, places emphasis on technical profit and sustains its leadership. • The decrees of 24 January 1980 and the military coup on the following 12 September marked the onset of social and financial restructuring in Turkey. Political and social movements, acts of anarchy, and continuously rising inflation caused industrial risks to multiply during 1980, especially in the first three quarters. At the same time, despite the absence of training or advertising activities, the public’s insurance awareness was growing, especially in the motor vehicle, household goods, and building fire branches, again due to anarchy. Meanwhile, some companies were unable to pay their debts, and some others were having difficulty finding collateral abroad. Some foreign reinsurers, especially the renowned ones, were withdrawing from the Turkish market because they could not collect their premium receivables, and even when they could, they actually collected less due to the devaluation of the Turkish lira. Despite these problems, Anadolu Sigorta’s premium production reached TL 2,208 million in 1980, which represented 85% growth over the previous year. The free market economy that had been flourishing in Turkey by the middle of the ‘80s had brought about higher premiums. The 1990s saw the transition from compulsory insurance tariff rates to autonomous rates. Competition in the insurance market was at its fiercest ever when Anadolu Sigorta inaugurated a series of moves. In 1993, it became the first Turkish insurance company to set up an international operation with Günay Anadolu Sigorta in Azerbaijan. In the same year, Anadolu Sigorta confirmed its market leadership by becoming the first company to top TL 1 trillion in premium production. The company achieved another national first in 1993, when its shares were quoted on the Istanbul Stock Exchange. From the first half of the 1990s, computers began to be used widely in the insurance business, as in the banking industry; in 1997, all agencies were able to connect to the central data processing system on-line and in real-time, and offer instant service to customers, thus making optimum use of the information processing technology. The vitality of the system was manifested in the massive earthquake of 17 August 1999. In the aftermath of this disaster of epic proportions, the losses of the insured were compensated quickly as a result of 24/7 uninterrupted service offered by Anadolu Sigorta employees and agents.

2000-2014 Future Investments + Global Trends Monitored World standards captured, constant transformation Anadolu Sigorta’s planned future investments intended to secure modern norms, • the goal of having an Anadolu Sigorta policy in each household on the company’s • centenary...

One year into the millennium, Anadolu Sigorta booked TL 21 trillion in net profit. In the insurance sector that was the scene to price competition rather than contention on the basis of service and service quality, Anadolu Sigorta’s shareholders’ equity had expanded by 111.6%. Including the profits, the company’s equity value was approximately USD 80 million. Although the industry was adversely affected by the economic crises of 2001 and 2008, Anadolu Sigorta, being a modern insurance company boasting world standards and undergoing constant transformation, had always been in a better position than its competition, owing to its investments into profitability. Continuously observing change through new projects and new structures so as to preserve its advantageous position, Anadolu Sigorta, in this period of returned foreign dominance, formulated important strategies in order to reach a financially stronger position and to avoid international dependence. Having allocated millions of dollars for its C2C (Closer to Customer) project for this purpose, Anadolu Sigorta sustained its leadership within national borders, while it constantly endeavored to further improve its international standards. The first insurance company of the Republic of Turkey, Anadolu Sigorta successfully carries on in its voyage that it has set out on with the objective of instilling the concept of insurance security instead of fatalism in the Turkish public, and pursues the goal of having an Anadolu Sigorta policy in every household in Turkey by 2025 that marks its centenary.

1 / Anadolu Sigorta Annual Report 2014 General Information / Corporate Profile

Corporate Profile

In 2014, Anadolu Sigorta expanded Anadolu Sigorta registered its highest Turkey’s first national insurance its total premium production by 9.3% premium production in the motor company and the pioneer in the sector year-on-year to TL 3,005 million and vehicles branch with TL 824million, that will celebrate its 90th anniversary controlled a 13.2% share of the overall followed by motor vehicle liability with in 2015, Anadolu Sigorta will keep market among non‑life companies. TL 780 million in 2014. Trailing these contributing to the advancement of the Anadolu Sigorta pursues its operations two branches, in order, were fire and insurance business in Turkey in the via nine regional branches across the natural disasters with TL 503 million, light of its mission and vision. Anadolu nation and one branch in the Turkish illness/health with TL 280 million, Sigorta will remain the insurance Republic of Northern Cyprus. The general losses with TL 239 million and company taken as benchmark in the company had 1,050 employees on its general liability with TL 105 million. sector and further build on its solid payroll as at 31 December 2014. position.

2 / Anadolu Sigorta Annual Report 2014 General Information / Our Vision, Our Mission, Our Corporate Values

Our Vision, Our Mission, Our Corporate Values

Our Vision Our Mission

To make Anadolu Sigorta the In keeping with the deeply-rooted, insurance brand preferred by pioneering, honest, and solid corporate • everyone who needs insurance. values of Anadolu Sigorta to:

To achieve a strength that makes it Lead the sector, a reference point in the worldwide • insurance industry as well. • Help create a broad public awareness of insurance in Turkey, • Implement a customer-focused approach to service, • Increase our financial strength to international standards, • Enhance the value of our company.

•

Our Corporate Values

A Company Entrenched In History: Pioneership: Integrity: It was founded in accordance with Pioneer in creating product; It has ethical merits; the instructions given by Mustafa • • Pioneer in service; • It fulfills its promises definitely;

ItKemal is Turkey’s Atatürk. first national insurance • Pioneer in technology; • It inheres in transparency as company. principle; • • With its self-renewing ability • It has a powerful corporate structure preserves its pioneering position; It never abandons human values. • built on its knowledge of insurance It plays a pioneering role in social • • accumulated through the years. responsibility. Powerful Structure: • It has a stable financial power;

• It has an extended and efficient service network; • It has a sophisticated and high qualified human source; • It gains power from the synergy

• created by İşbank.

3 / Anadolu Sigorta Annual Report 2014 General Information / Message from the Chairman

Message from the Chairman

Anadolu Sigorta has been carrying on with its strong growth since 1925, always remaining loyal to the deep-rooted corporate values and ethical code of conduct that it has embraced.

The low growth performance of the Turkey, despite decelerated growth by a stagnant atmosphere throughout world economy passed on to 2015. rate, maintains steadfast growth. the year. Decelerated domestic Loss of pace sustained by developing The negative impact Turkey’s demand and increased exchange rates economies such as China and India, international risk perception allowed net exports to lend a positive combined with the growth issues in suffered due to the developments in contribution to growth after a long developed economies, escalated the geopolitically problematic regions time, and the current deficit to decline concerns about the world economy in coupled with the outcomes of the Fed’s significantly. However, inflation 2014. Although the global economy is tapering on capital movements, and surged, as unemployment climbed once anticipated to pick-up, even if slightly, our country found herself amid rapid again to two-digit numbers. in the second half of 2014 and early hot money outflow at the onset of 2014. 2015, international institutions make With the picture further aggravated In the Turkey Regular Economic Note the observation that the damage the by the fluctuating exchange rates released in December 2014, the World global crisis did to economies reduced and the depreciated Turkish lira, Bank revised 2014 growth estimate potential growth, and the world the Central Bank of the Republic of downwards from 3.5% to 3.1%, embarked upon a period of lower Turkey’s (CBRT) rate hike decisions, whereas 2015 projection was kept growth rates. and the ensuing narrowing of credit unchanged at 3.5%. The Note reports and credit card installment facilities in that Turkey’s growth prospects in the an effort to reduce the current deficit, medium term depend on the recovery the national economy was dominated of private investment and a resumption

4 / Anadolu Sigorta Annual Report 2014 General Information / Message from the Chairman

of productivity growth, which relies associated sectors throughout 2014, We touch our customers at 5,000 on the implementation of structural which was driven by domestic events, points across 81 provinces of reforms. increased interest rates, higher special consumption tax rates and agencies. We are striving to present It is common knowledge that the the restrictions the BRSA imposed on ourTurkey policyholders via İşbank withbranches the best, and our Turkish economy is unable to attain credit transactions, began slowing innovative services. In addition, we growth without producing current down late in the year. are targeting to produce added value deficit, and is fragile in the face of from alternative delivery channels, interrupted capital inflows due to its With her dynamic economy, making maximum use of the facilities inherent imbalances. In a conjuncture young population and expanding technology has to offer. of decreased global risk appetite, the middle class, Turkey presents very financing of growth will constitute attractive opportunities for the Anadolu Sigorta employees, who are a highly critical agenda item for the insurance industry. united in the deep-seated and solid Turkish economy, and it will only be Looking at a remarkable window of enabled with the implementation of opportunity, the Turkish insurance to providing a better and safer future structural reforms in a number of industry will be able to claim its toİşbank our people culture based and who on the are faith committed they aspects starting with the economy deserved position in the world have in the job they are doing, will and ranging from education to justice. insurance business, provided that keep working to win together with our Within this context, it is crucial to rapid steps are taken. The positive country. capitalize on the opportunity offered developments that have been going by the oil prices that are projected to on for a rather long time both in We would like to thank our continue at low levels with respect terms of applicable legislation and policyholders, all our employees and to the enforcement of the “Priority implementation are appreciated, shareholders, with whom we are Transformation Programs” prescribed as they facilitate more powerful hoping to share many more and better in the tenth development plan. performance of the Turkish insurance days. industry and the attainment of 2023 Sincerely, The Fed’s decisions, geopolitical targets. developments, the course of oil prices, and domestic political The pioneer and grande école of the agenda may lead to volatile periods industry in economy in 2015. Anadolu Sigorta is the first national The conjuncture described above insurance company in Turkey and indicates at potential significant it is the pioneer of the industry. Our deviations during the year in various company has been carrying on with economic parameters, including its strong growth since 1925, always credit rates, loan utilization, housing remaining loyal to the deep-rooted and car sales, which are interrelated corporate values and ethical code of Caner Çimenbiçer with the production performance conduct that it has embraced. Chairman of the Board of Directors of the insurance industry. Yet, in general, the insurance sector is In a fashion befitting our position in expected to perform more positively the sector and the role we have taken in 2015 than it did in 2014. Indeed, on, we have been, and are, working the contraction that inflicted the to inculcate broad populations with automotive, construction and other the notion that insurance is a major necessity and also a part of life.

5 / Anadolu Sigorta Annual Report 2014 General Information / Message from the CEO

Message from the CEO

At Anadolu Sigorta, we are committed to making optimum use of technology on the axes of customer access, and easy, high-quality and swift service delivery.

Our sector experienced the slowest The primary factor that led to the Fire and natural disasters branch growth of the past five years. limited growth in the insurance ranked third with a production figure According to data published by the industry was the 11.6% decline in of TL 3.8 billion, followed by health and Insurance Association of Turkey, automotive sales, which resulted general losses with respective figures premium production of all insurance from the restriction the economy of TL 2.9 billion and TL 2.4 billion. companies combined rose by 7.3% administration imposed upon from TL 24.2 billion in 2013 to TL consumer loans in an attempt to On the basis of sales channels of 25.9 billion in 2014. Of this amount, increase savings rate. This, of course, insurance products, agencies take the TL 22.7 billion was generated on negatively reflected on premium highest share with 58.9% in premium non-life insurance and TL 3.3 billion production in the motor own damage production. The agency network was on life insurance. On the basis of real and motor third party liability followed, in order, by banks with 22.6% growth that is calculated net of annual branches, which are the driving share, brokers with 10.9%, head office inflation, however, the sector narrowed engines of the industry. with 6.2%, and other sales channels down by 0.8%. with 1.4%. The insurance industry generated Having succeeded in attaining two- the highest premium production on While there were three companies digit growth rates since 2009 and motor third party liability branch with a premium production of above having captured a high level in 2013 last year, booking TL 5.5 billion. The TL 3 billion in 2014, the companies with a nominal growth of 22.2% and production in the motor own damage that went over TL 1 billion in premium a real growth of 13.8%, the industry branch amounted to TL 5.1 billion. production numbered four. experienced the slowest growth of Together, motor own damage and the past five years in 2014. The rise motor third party liability branches in premium production in non-life were accountable for 41% of premium insurance was 9.1% in nominal terms production. and 0.9% in real terms.

6 / Anadolu Sigorta Annual Report 2014 General Information / Message from the CEO

Looking at 2014, we observe that the Anadolu Sigorta attained 9.3% With our teams that analyze customer extreme price competition of previous growth in premium production in needs and expectations, develop new years is starting to change in favor of 2014 products accordingly, and reformulate a more profit-driven understanding. Anadolu Sigorta ranked third in the the existing products so as to best Furthermore, the negative impact of sector with a premium production of respond to identified needs, we operating costs that cannot be reduced TL 3 billion that it has generated based undertake many activities ranging upon profit margins is also better on 9.3% production growth it has from intelligible and plain policy understood. achieved in 2014. contents to offering the right product packages to the right customers and The key to preserving profitability With its 2014 production performance, organizing advantageous campaigns and increasing productivity is, Anadolu Sigorta preserves its 13.2% for our customers. Furthermore, we undoubtedly, control over claims market share. Motor vehicles branch continue with our publicity and social processes. The focal point of strategy continued to claim the biggest share media activities at full speed, whereby plans devised for controlling claims of the total portfolio at 27.4%. This is we underline not only our products, but processes is the prevention of fake followed, in order, by motor vehicle also the importance of insurance. claims and ensuring customer liability with 26%, and fire and natural satisfaction. Playing a major role disasters branch with 16.7%. Technology investment is a strategic at this point are the companies the necessity industry collaborates with and We maintain our customer focus At Anadolu Sigorta, we are committed outsourced loss services. Primary We believe that customer management to making optimum use of technology important considerations include the processes need to be given priority so on the axes of customer access, and adjustment of supplier firms to the that the insurance industry can get its easy, high-quality and swift service processes of insurance companies, deserved share out of Turkey’s existing delivery. In this framework, we reflect their maximization of the speed and economic growth. Accurate reading our innovative approach also in our quality of their services, and pursuance of insurance customers’ attitudes and products and services. of customer satisfaction. We can talk their incorporation in strategies are about ideal profitability levels only to critical for customer satisfaction. In We continuously carry on with our the extent that all of these are secured a bid to strengthen the processes for innovative investments aimed at and the expected improvements in the customers and sales channels, Anadolu further upgrading the customer coming period materialize. Sigorta uninterruptedly continues with experience. With the “Claims Services its investments in project, research and Hotline and Interactive Voice Response development activities. System” and the “Online Claims File Query Service” launched in 2014, we have targeted to maximize customer satisfaction.

7 / Anadolu Sigorta Annual Report 2014 General Information / Message from the CEO

Message from the CEO

Signing our name under an ambitious We have an active presence also on Within the framework of application in mobile insurance, we digital media through our corporate bancassurance, Anadolu Sigorta works have introduced the new “Sigortam social media accounts opened with in coordination with all bank branches Cepte” (“Insurance on My Mobile”) the name Anadolu Sigorta. Our project and its sales force in the field. Thanks mobile application that is compatible “Bir Usta Bin Usta” (One Master, to increased awareness of insurance with IOS and Android telephones. Thousand Masters) has a dedicated and their growing experience, bank This service gives Anadolu Sigorta website and an Instagram account. We employees are able to present new policyholders access to dozens of are using social media specifically to solution proposals to diverse customer services from a single screen, including increase brand awareness and enhance groups that are aligned with their tracking their policy and claims data communication with our target expectations, and are instrumental and locating the nearest agency. audience. in achieving higher production and Intended to offer an interactive profitability in this field through correct experience, our “Sigortam Cepte” We have also begun making more risk selections. application draws the attention also frequent use of the digital media for with its customizable content and advertising and publicity purposes. Our high brand equity is an important enriched user-friendly design. With our viral films developed factor that contributes towards our specifically for online media company’s strong agency organization. We are consolidating our as opposed to the conventional Our agencies, which make up a technological and innovative advertising instruments, we are substantial portion of our sales character with digital channel use receiving admiration, while keeping channels and are vital components Our company boasts an award-winning the interest in our products and of the Anadolu Sigorta family, have corporate website, which gives users services alive. internalized our corporate values, easy access to information and acts as a mission and vision. Our strong synergy benchmark in the industry with its rich We enjoy distinctive competitive is underpinned by the capability to act content. In addition to our corporate strengths in bancassurance and with shared wisdom with our agencies. website, we also have risk analysis agencies channels service and different online facilities In view of the bancassurance dynamics such as the leaflet center for our across the world, Turkey, undeniably, agencies. At present, we are in the final has a long way to travel. However, stages of revamping these websites. enjoying an increasing efficiency in the insurance industry, bancassurance has lately been serving to grow the customer group that it is addressing in retail and commercial fields, and in turn, premium production. In parallel with the expanding customer group, types of products offered by the banks are increasing at an equal pace in line with the customer needs.

8 / Anadolu Sigorta Annual Report 2014 General Information / Message from the CEO

Our award-winning social Anadolu Sigorta: Dynamic and Our company continues to attach responsibility project leaves its fifth forward-looking drawing on the importance to fundamental branches, year behind experience of 90 years specifically motor own damage, health Our project “Bir Usta Bin Usta” (One In setting its course, Anadolu Sigorta and fire insurance. In addition to those, Master, Thousand Masters) was named is guided by service quality, product we are targeting to increase our focus the “Best CSR Social Solution 2014” at diversity, and securing the balance on package products for the SMEs, the Corporate Social Responsibility between premium production and primarily professional and personal awards distributed within the scope technical profitability on the basis liability policies, while building on our of the CSR Turkey Marketplace event, of fair price competition. In a bid to strength in branches such as marine co-organized for the sixth time in 2014 increase the brand equity of Anadolu and general liability insurance. by the Corporate Social Responsibility Sigorta that has become synonymous Association of Turkey (CSR Turkey) and with trust owing to its character as a Backed by an experienced and pioneer for nine decades that has been professional team, strong technological carrying the sector forward, we will and financial infrastructure, extensive LaunchedKadir Has inUniversity. 2010 by Anadolu Sigorta, continue with our committed work, service platform, and an understanding the project “Bir Usta Bin Usta” carried hand in hand with all our employees, to constantly develop and upgrade its successful mission over to the new towards our goal of improving quality products and services, Anadolu fiscal year, while the courses held in our market share while attaining Sigorta is focused on the future. 2014 were ‘Tile Working’ in Çanakkale, sustainable profitability in the year ‘Oltu Stone Working’ in Erzurum, ahead. I would like to extend my thanks and ‘Art of Leather-Made Accessories’ in my best wishes to our policyholders for Isparta, ‘Art of Felt-Made Accessories’ The young population of Turkey, their unyielding trust, and to our team constantly increasing qualified human and distribution/service organization resource potential and the new for their commitment and hard work, in İzmir and ‘Amber Working’ in regulatory arrangements governing who altogether make our company’s UnderŞanlıurfa. the project “Bir Usta Bin Usta” the insurance industry add to the consistently successful performance that has been honored with a number possibility that the interest of the possible. of national and international awards, investors in Asia and Europe that numerous masters-to-be were trained present decelerated consumption will Sincerely, to date. While participants receive be directed towards Turkey. These course completion certificates that developments support our prediction verify qualification as a master trainer that the insurance industry will be in endorsed by the Ministry of National leading and telling position in its own Education upon graduation, the geography in the future. courses are instrumental in keeping local vocations alive on one hand, In this competitive environment, and in creating new employment risk-based pricing, formation of a opportunities, on the other hand. balanced portfolio, technology-backed risk follow-up and management, and Musa Ülken the support to be lent by regulatory CEO arrangements will be key for profitable and healthy growth of the market players.

9 / Anadolu Sigorta Annual Report 2014 10 / Anadolu Sigorta Annual Report 2014 1975

Being the leader of national insurance since the onset of the Turkish Republic, Anadolu Sigorta 1925 celebrated its 50th anniversary. Anadolu Sigorta was founded on April 1 at the initiative of Atatürk and under the

leadership of İşbank, Turkey’s first national bank.

1983

“Blue Insurance” policies marking the introduction of 1961 comprehensive insurance system in Turkey and offering 17 types of cover were put on system was set up. The first data processing sale for the first time.

11 / Anadolu Sigorta Annual Report 2014 The Organization, Capital and Shareholder Structure of the Company / Organization Chart

Organization Chart

Board of Directors

Coordination Department to the Board of Directors

Corporate Governance Committee

Audit Committee

Board of Auditors

Early Determination of Risk Committee

Musa Ülken Chief Executive Officer

Risk Management and Internal Control Department

1st Deputy Chief Executive Deputy Chief Executive Deputy Chief Executive Deputy Chief Executive Deputy Chief Executive Deputy Chief Executive

Filiz Tiryakioğlu M. Metin Oğuz M. Levent Sönmez Erdinç Gökalp Fatih Gören Mehmet Abacı Agency and Legal Individual and Information Channel Motor Insurance Affairs & Commercial Insurance Actuarial Department Technologies Labor Law Management Department Subrogation Department Department Adviser Department Department Ömer

Information and Ekmekçi Bank Enterprise Accounting Corporate Insurance Communication Insurance Health Insurance Architecture and Finance Department Technologies Software Department Department Department Department Development Legal Department Consultant Samim Ünan Human Non-Motor Resources Marine Reinsurance Board of Project and Claims and Training Insurance Department Department Change Management Department Department SouthernRegional Anatolia Offices Headquarters Western Anatolia Consultant Marmara Ahmet Hamdi Central Anatolia Corporate Motor Middle Black Sea Risk Engineering Procurement Communication Başar Claims Black Sea Department Department Department Mediterranean Department

İstanbul TRNCKadıköy Branch Liability, Aviation and Management Reporting Special Risks Insurance Department Department

Fire and Engineering Insurance Department

12 / Anadolu Sigorta Annual Report 2014 The Organization, Capital and Shareholder Structure of the Company / Capital and Shareholder Structure Disclosures on Preferred Shares

Capital and Shareholder Structure

Shareholder Structure (%)

Other 42.7

57.3 Milli Reasürans T.A.Ş.

Disclosures on Preferred Shares No more preferred shares remained following the amendment to the Articles of Incorporation registered by the company on 11 April 2013.

Capital Increases and Their Sources There were no capital increases in 2014.

Changes in the Articles of Association during 2014 At the Annual General Assembly Meeting held on 25 March 2014 based on the permission letters of the Republic of Turkey Prime Ministry Capital Markets Board dated 27 February 2014, no. 29833736-110.03.02-412-2049, and of the Republic of Turkey Ministry of Customs and Trade Directorate General of Domestic Trade dated 18 March 2014, no. 67300147- 431-02-2-413677-2725-1643, it has been agreed to amend “Article 4 – The Company’s Headquarters and Branches” of the company’s Articles of Association; the said amendment was registered on 10 April 2014 and promulgated in the Turkish Trade Registry Gazette issue 8551, dated 16 April 2014.

13 / Anadolu Sigorta Annual Report 2014 Governing Body, Executives and the Number of Employees / Board of Directors

Board of Directors

1 2 3

4 5 6

7 8 9

10 11 Information on Board of Directors Meetings: During 2014, Board of Directors of Anadolu Sigorta met 12 times and held its 1190th meeting at the end of the year. One member each was absent in two of these meetings due to their justified excuses. Topics discussed in the meetings generally consist of the reports by the Board of Directors Committees and by the Board of Inspectors, executive reports, proposals laid down for approval, informative memos, status reports on the restructuring project, and working study reports that deal with the bank insurance activities. Ayşen Ayan The meeting documents are distributed to the Board of Directors members approximately five days in advance of Reporter the meeting date.

14 / Anadolu Sigorta Annual Report 2014 Governing Body, Executives and the Number of Employees / Board of Directors

1- Caner Çimenbiçer 5- Kubilay Aykol 9- Prof. Savaş Taşkent Chairman Director Director (Independent) graduated from the Business Administration from Middle East Technical University (Faculty DepartmentBorn in 1952 of in the Bursa, Faculty Caner of ÇimenbiçerAdministrative ofBorn Economics in Bolu in and 1974, Administrative Kubilay Aykol Sciences) graduated University.Born in İstanbul Having in started1943, Prof. his academicSavaş Taşkent career Sciences at the Middle East Technical University department of Business Administration. He asgraduated an assistant from in the 1971 Faculty in the of Department Law, İstanbul of an assistant inspector on the Board of Inspectors. as assistant inspector at Bank’s Board Member of Technical University (ITU), he received his inAfter 1973. holding He began various his careerpositions in İşbank in the Bank, in 1974 he as Inspectors.began his career He was in appointed1997 at Türkiye as Merter İş Bankası, branch Law of the Faculty of Basic Sciences, İstanbul was elected as Board of Directors member from manager. He became an assistant manager in University, became assistant professor at ITU, 2005 to 2008 and the Chairman of the Board from Retail Banking Marketing Department in 2007. He FacultyPh.D. degree of Management from the Faculty and associate of Law of professor İstanbul 2008 to 2011. He also served as the Chairman promoted as group manager in the Retail Banking in the Department of Labor and Social Security of the Board of Milli Re in 2008 and 2009. Mr. Marketing, unit of Micro Individual Segment in Law and professor in the same Department in 2009. Since 2011, he has been serving as Retail 1990. He served as the vice-dean and the vice- Managing Director of Anadolu Sigorta on 1 April Banking Products Department Manager. 2011Çimenbiçer and was was elected appointed as the as Chairman the Chairman of the and pursued research studies abroad, at Erlangen Board on 25 March 2014. 6- Faruk Karpuz rectorand Heidelberg at the same universities university. in Savaş 1982 Taşkentand 1987. He Director has numerous books and articles on labor law, as 2- Ahmet Doğan Arıkan well as many translations into Turkish from the Deputy Chairman German law. Having assumed the position of the Born in 1961 in Kahramanmaraş, Faruk Karpuz head of the Department of Law at ITU, Faculty of graduated from Middle East Technical University began his career as an officer in Diyarbakır Branch inBorn 1971. in 1949 He began in Ankara, his career Ahmet as aDoğan systems Arıkan analyst (1988-1991),of İşbank in 1983. as section He later head worked at Erdemli as assistant Branch 2010 due to age limit. He currently teaches “Labor Management, Mr. Taşkent retired on 12 January at the General Directorate for the Turkish State to section head at İslahiye Branch in Gaziantep Law” and “Management Law” courses at the same Branch (1995-1996), as manager at Cizre, Yenihal, in Mersin (1991-1995), as submanager at Elazığ been assigned as advisor to the Rector related faculty. On 19 November 2013, Savaş Taşkent has didMeteorological his military Serviceservice andas a hesystems joined analyst İşbank andin to legal affairs by the ITU Rector. He also served 1973. In 1974-1975 Ahmet Doğan Arıkan also RegionalAkşehir, Fethiye Directorate and Afyonkarahisar(2007-2012), and branches as manager as an advisor to the Minister of Labor and Social (1996-2007), as regional manager at Konya Security from 1991 until 2000, and attended programming officer. Returning to İşbank upon serves as manager in the SME and Commercial ILO Conferences held in Geneva from 1991 to bothcompletion in Turkey of his and military abroad service,for about Ahmet ten years, Doğan Bankingof Samsun Sales Branch Division, (2012). a position Faruk Karpuz he holds currently since 2003 as the advisor to the Government. Having Arıkan continued to serve in various capacities August 2013. been elected as a Board of Directors member of becoming General Manager of an İşbank-owned 7- R. Semih Nabioğlu been appointed, in tandem, as a member of the İşbank in 2005, 2008 and 2011, Prof. Taşkent has Generalforeign trading Manager company, positions Mepa at two Dış other Ticaret bank- Director Audit Committee in March 2008, TRNC Internal Sermaye Şirketi, in 1987. This was followed by Systems Committee in June 2009, and Corporate Governance Committee in February 2013. He graduated from the Business Administration owned companies: İzmir Demir Çelik Sanayi A.Ş. departmentBorn in 1967 of in Gazi Isparta, Üniversitesi. Semih Nabioğlu He has gothas a in 1991 and Türkiye Şişe ve Cam Fabrikaları A.Ş. in position on 16 September 2009. In the course of master’s degree in Accounting and Finance field 10- Hasan Hulki Yalçın 2000. Ahmet Doğan Arıkan retired from the latter resigned from İşbank effective March 2014. at the same university. In 1990, he started his Director Member or Chairman of the Boards of Directors his career, Ahmet Doğan Arıkan has served as a of firms in the textiles, automotives, maritime he still works as Unit Manager at the Equity shipping, lodging, tourism, manufacturing, and career as Assistant Specialist at İşbank, where holds a degree in Economics from the Middle Born in 1964 in Ankara, Hasan Hulki Yalçın banking industries. served as Board Member and Member of Board of East Technical University and a Master’s Degree in International Banking and Finance from the 3- Musa Ülken Participations Department. Semih Nabioğlu has General Manager and Director Auditors at various İşbank’s affiliates during his University of Birmingham (UK). After serving Born in 1953 in Tarsus, Musa Ülken graduated Hayatcareer. Emeklilik Semih Nabioğlu and Milli is currentlyReasürans. Board Member for fourteen years, he joined Milli Re in 2003 and at Anadolu Anonim Türk Sigorta Şirketi, Anadolu subsequentlyin various positions took part and in capacities a number with of professional İşbank Commercial Sciences, Department of Economics 8- Fahri Kayhan Söyler training programs abroad. He has been appointed andfrom Public the İstanbul Finance. Academy He began of hisEconomic career atand Director as a member of Board of Directors and General Anadolu Sigorta Claims Department as a Clerk on 01 November 1978 and subsequently rose is also serving as a member of Board of Directors graduated from Marmara University, Faculty inManager the Insurance on January Association 16, 2009. of Hasan Turkey. Hulki Yalçın to the positions of Assistant Superintendent on ofBorn Economics in 1954 inand Kadirli, Administrative Fahri Kayhan Sciences, Söyler 01 January 1984, Superintendent on 01 January Department of Economics. He started his career 11- Assoc. Prof. Atakan Yalçın 1988, Accident Department Superintendent on Director (Independent) 07 February 1990, Chief Superintendent on 01 he subsequently worked as a Service Officer and January 1991, Assistant Manager on 01 August II.as Manager.a Clerk at Heİşbank functioned Galata Branchas Assistant in 1976, Manager where of 1992, Manager on 01 May 1993, Marmara Regional Born in 1971 in İstanbul, Associate Professor of Yenibosna Branch in 1991, Dudullu Sanayi Economics and Administrative Sciences at Manager on 01 June 2002. Having served in the Beşiktaş Branch in 1990, and as Branch Manager Atakan Yalçın is on the faculty of School of lastManager position on 06 until June 31 1997 July 2004,and Kadıköy Musa Ülken Regional Özyeğin University. He previously was on the became a Deputy Chief Executive Officer on 01 Branch2002. He in served 1992, Cağaloğluas a Deputy Branch CEO from in 1996, 2003 Rıhtım until positions at Brandeis University and Boston faculty of Koç University and has held visiting August 2004, I. Deputy Chief Executive Officer on Kadıköy2010. Having Branch voluntarily in 1998, andretired Yenicami on 31 BranchJanuary in 01 February 2008 and General Manager on May Cox School of Business at Southern Methodist College. Dr. Yalçın received an MBA degree from 2012. of Auditors at Anadolu Sigorta, Executive Board University in 1996, and a Ph.D. degree in finance from Carroll School of Management at Boston 4- Hakan Aran 2010, Söyler also held memberships on the Board Director at Hizmet İşleri Ltd. Şti., Board of Directors at İş Investment Management, Derivatives Securities College in 2002. Dr. Yalçın has taught courses in Born in 1968 in Antakya, Hakan Aran graduated Finansal Kiralama A.Ş. and was the Chairman of İş and Financial Management. His research interest from the Middle East Technical University, Girişim Sermayesi A.Ş. during his career. is in empirical asset pricing and empirical Department of Computer Engineering in 1990. aspects of financial economics. His work has been published in such journals as the Journal Specialist Trainee the same year, where he was of Empirical Finance, Journal of Banking and appointedHe started ashis an career Assistant at İşbank Manager as a inSoftware 1999, and Finance, Journal of Financial Research, Quarterly promoted to Group Manager position in 2002. Review of Economics and Finance, and the He became Software Development Manager in 2005 and was finally appointed as Deputy CEO American Finance Association, Western Finance Journal of Marketing. Dr. Yalçın is a member of the on July 2008. Having completed his MBA on Association, Financial Management Association and the CFA Institute. of Social Sciences in 2002, Hakan Aran has a master’sscholarship dissertation from Başkent on process University, management Institute and a model on Information Technologies supporting customer-centric approach to banking. Hakan Aran is currently Chairman of Boards at SoftTech

A.Ş., İş Net A.Ş., and Erişim Müşteri Hizmetleri.

15 / Anadolu Sigorta Annual Report 2014 Governing Body, Executives and the Number of Employees / Declarations of Independence by Independent Members of the Board of Directors

Declarations of Independence by Independent Members of the Board of Directors

15 April 2014

ITo: hereby Anadolu declare Anonim that TürkI satisfy Sigorta the criteria Şirketi Corporateof independence Governance pursuant Committee 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. Savaş Taşkent

03 March 2014

Anadolu Anonim Türk Sigorta Şirketi to be convened on 25 March 2014.

Yours sincerely,

Assoc. Prof. Atakan Yalçın

16 / Anadolu Sigorta Annual Report 2014 Governing Body, Executives and the Number of Employees / Declarations of Independence by Independent Members of the Board of Directors

03 March 2014

Anadolu Anonim Türk Sigorta Şirketi to be convened on 25 March 2014.

Yours sincerely,

Prof. Turkay Berksoy

17 / Anadolu Sigorta Annual Report 2014 Governing Body, Executives and the Number of Employees / Executive Committee

Executive Committee

1 2 3

4 5 6

18 / Anadolu Sigorta Annual Report 2014 Governing Body, Executives and the Number of Employees / Executive Committee

1- Musa Ülken 4- M. Levent Sönmez 6- Fatih Gören General Manager Deputy Chief Executive Deputy Chief Executive Individual and Commercial Insurance Department Legal Affairs & Subrogation Department Born in 1953 in Tarsus, Musa Ülken graduated Corporate Insurance Department Accounting and Finance Department Marine Insurance Department Motor Claims Department Commercial Sciences, Department of Economics Risk Engineering Insurance Department Non-Motor Claims Department fromand Public the İstanbul Finance. Academy He began of hisEconomic career atand Liability Aviation and Special Risks Insurance Anadolu Sigorta Claims Department as a Clerk Department on 01 November 1978 and subsequently rose Fire and Engineering Insurance Department from Ankara University, Faculty of Political to the positions of Assistant Superintendent on Sciences,Born in 1969 Department in Ankara, of FatihInternational Gören graduated Relations. 01 January 1984, Superintendent on 01 January He worked as a Specialist at Retail Banking and 1988, Accident Department Superintendent on 07 February 1990, Chief Superintendent on 01 FacultyBorn in 1962of Maritime in Ankara, Studies, M. Levent Department Sönmez of Marine between 1991 and 1994. Having joined Anadolu January 1991, Assistant Manager on 01 August Engineeringgraduated from in 1985, İstanbul got hisTechnical master’s University, degree in AgriculturalSigorta as an LoansAssistant Departments Inspector aton Ziraat the Board Bank 1992, Manager on 01 May 1993, Marmara Regional “Contemporary Management Techniques” from Marmara University & Maine University and rose to Senior Inspector on 01 November 1997 and Manager on 01 June 2002. Having served in the completed the “SITC (Swiss Re) Marine Insurance” ofgrade Inspectors 3 Inspector on 01 on November 01 November 1994, 1998. Fatih He Gören was lastManager position on 06 until June 31 1997 July 2004,and Kadıköy Musa Ülken Regional program. Having participated in various training appointed as Assistant Manager to the Accounting became a Deputy Chief Executive Officer on 01 and Finance Department on 01 June 2000, where August 2004, 1st Deputy Chief Executive Officer also holds “Chartered Insurance Institute/London he was promoted to Manager position on 01 on 01 February 2008 and General Manager on May Dip.programs CII” degree. in Turkey He started and abroad, his career M. Levent at Anadolu Sönmez 2012. Sigorta as a Specialist at the Marine Department Deputy Chief Executive Officer on 01 February on 01 May 1991 and continued working with 2008.August 2004. Fatih Gören has been appointed as 2- Filiz Tiryakioğlu same title till 30 April 1996. He subsequently 1st Deputy Chief Executive rose to Specialist position on 01 March 1994, 7- Mehmet Abacı Agency and Channel Management Department Chief Superintendent position on 01 May 1996, Deputy Chief Executive Bank Insurance Department Assistant Manager on 01 October 1997, and Information and Communication Technologies Human Resources and Traning Department Informations Technologies Department Corporate Communications Department Software Development Department Manager on 01 May 1999. M. Levent Sönmez has Board of Project and Change Management become Bakırköy Regional Manager on 01 June graduated from Anadolu University, Faculty 2004. He has been appointed as Deputy Chief 2002 and Kadıköy Regional Manager on 01 August ofBorn Business in 1967 Administration, in İstanbul, Filiz Department Tiryakioğlu of Executive Officer on 01 February 2008. from the Department of Metallurgical and Business Administration. She started her career at 5- Erdinç Gökalp MaterialsBorn in 1967 Engineering, in Ankara. Faculty Mehmet of Abacı, Engineering graduated at Anadolu Sigorta as a Clerk at the Fire Department Deputy Chief Executive Middle East Technical University in 1991. Starting on 16 September 1985. She rose to Assistant Actuarial Department Superintendent position at the same department Enterprise Architecture Department on 01 January 1990. She was appointed to the Reinsurance Department washis professional appointed as career Assistant at İşbank Manager IT Department in 1999, and as Claims Department on 01 February 1993 as Procurement Department Unita Software Manager Specialist in 2004. the He samewas promoted year, Mehmet as Deputy Abacı Superintendent, then rose to Chief Superintendent Management Reporting Department Chief Executive Officer at SoftTech in 2008, and on 01 May 1996, and Assistant Manager on became Solution Development Manager and 01 March 1998 at the same department. She became a Manager at the Training Department on 01 June 2000 and was then appointed as the asProject Deputy & Change Chief Executive Manager Officer at İşbank of SoftTechin 2010 and for Human Resources and Training Manager on 01 ain second 2011 respectively. term, on 1 January Mehmet 2011. Abacı As was of June appointed 2012, August 2004. She was appointed as Deputy Chief MilitaryBorn in 1967 Academy, in Ankara, Department Erdinç Gökalpof Business graduated he took office at Anadolu Sigorta as Deputy Chief Executive Officer on 01 February 2008 and 1st Administration.from Kuleli Military He then High got School his master’s and Turkish Executive Officer. Deputy Chief Executive on 25 December 2013. degree in insurance from Marmara University, Institute of Banking and Insurance. During his 3- Mehmet Metin Oğuz employment with Anadolu Sigorta, he earned the Deputy Chief Executive Atatürk scholarship granted by TSB (Insurance Regional Offices Association of Turkey) and pursued his studies TRNC Branch abroad. Having started his career at Anadolu Motor Insurance Department Sigorta as Specialist at the Marketing Department Health Insurance Department the Reinsurance Department on 23 September 1991,on 01 Mayrose 1991,to senior Erdinç specialist Gökalp position was appointed and to graduated from Middle East Technical University, continued working till 30 April 1996 with the FacultyBorn in 1959of Arts in and Çanakkale, Sciences, M. Department Metin Oğuz of same title. He promoted to Chief Superintendent Physics and Mathematics, and holds a master’s position on 01 May 1996 and to Assistant Manager degree from Marmara University Institute of position on 01 October 1997, he was appointed Banking and Insurance, Department of Insurance. was appointed to the Accident Department on Sigorta as a Clerk in the Accident Department 26to theDecember Marketing 1997 Department. with the same Erdinç title. Gökalp He rose onM. Metin16 October Oğuz 1985began and his subsequently career at Anadolu rose to to the position of Manager and was assigned to Assistant Superintendent on 01 February 1989, the Reinsurance Department on 01 July 2001. Superintendent on 01 February 1992, Chief Superintendent on 01 February 1995, Assistant Executive Officer on 01 February 2008. Manager on 01 May 1997, Manager on 01 March Erdinç Gökalp has been appointed as Deputy Chief 1998, and Motor Insurance Manager on 01 June 2002. Having served in the last position until 31

Executive Officer on 01 August 2004. July 2004, M. Metin Oğuz became a Deputy Chief

19 / Anadolu Sigorta Annual Report 2014 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 Ömer Altun Chairman of the Board of Inspectors Risk Management and Internal Control Manager Born in 1970 in Malatya. Ömer Altun graduated from Hacettepe University, Faculty of Science, ofBorn Political in 1969 Sciences, in İstanbul. Department İbrahim of Erdem Public Esenkaya Department of Statistics. He began his career Administration.graduated from İstanbulHe then completedUniversity, a Faculty master’s at Anadolu Sigorta as a Clerk at the Accounting degree without dissertation in the graduate and Finance Department on 01 May 1997, where program for the management of financial he subsequently rose to Specialist position on 01 February 1998 and continued working with Business Administration, Institute of Business same title till 30 November 2005 and then he rose Administration.institutions at İstanbul He earned University, his master’s Faculty degree of to Assistant Manager position on 01 December in business management and organization, and 2005. On 01 February 2008, Ömer Altun has been his doctorate degree in accounting and auditing appointed as a Manager to the Risk Management from the Institute of Social Sciences at the same and Actuarial Department, which was renamed university. He started his career at Anadolu to Risk Management and Internal Control Sigorta as an Assistant Inspector at the Board of Department within the scope of the restructuring Inspectors on 01 May 1995 till 31 May 2001. He of internal systems organization. He serves as the was appointed to the Accounting and Finance Chairman of Anti-Money Laundering/Combating Department on 01 June 2001 as an Assistant the Financing of Terrorism (AFL/CFT) Committee Manager and to Internal Audit Department on under the Insurance Association of Turkey.

Esenkaya has been appointed as the Chairman of the01 January Board of 2005 Inspectors as a Manager. on 01 June İbrahim 2007. Erdem

Average Number of Employees by Categories During the Reporting Period 2014 Senior level managers 7 Managers 37 Consultants 3 Middle level managers 142 799 Total 988 Specialists/Officers/Other employees

20 / Anadolu Sigorta Annual Report 2014 Financial Affairs and Actuarial Unit Managers Financial Rights Provided to the Members of the Governing Body and Executives / Financial Rights, Other Means

Financial Affairs and Actuarial Unit Managers

Murat Tetik Taylan Matkap Accounting and Financial Affairs Manager Appointed Actuary/Manager Actuarial Department Born in 1978 in Antakya, Taylan Matkap BornDepartment in 1968 (English) in Eskişehir, and Muratstarted Tetik his careergraduated in graduated from Ankara University, Department ourfrom company İstanbul on University, 01 May 1997 Business as an AdministrationAssistant of Statistics and completed his master’s degree in Inspector on the Board of Inspectors. He was the Department of Actuarial Science and Finance promoted to Senior Assistant Inspector on 01 at Boston University. He is currently pursuing May 2000, to Class III Inspector on 01 June 2001, to Class II Inspector on 01 June 2003, and to Department of Labor Economics and Industrial Vice Chairman of the Board of Inspectors on 01 Relations.his doctorate He startedstudies athis İstanbul career at University, Anadolu Sigorta August 2004. He was appointed as an Assistant on 01 December 2008 in appointed actuary/ Manager to the Accounting and Financial Affairs manager position at the Actuarial Consultancy Department on 01 January 2005, where he rose Unit, and he has been transferred to the Actuarial to the position of Manager on 01 February 2008. Department with the same title on 28 February He is a member in the Insurance Association 2011. In tandem with his post as the Secretary of Turkey Financial Accounting Inspection and General of the Actuarial Society of Turkey, Taylan Research Committee. Matkap is responsible for improving the relations with the Actuarial Association of Europe (AAE) and the International Actuarial Association (IAA) on behalf of the Society.

Financial Rights Provided to the Members of the Governing Body and Executives Financial Rights

In the fiscal year ended on 31 December 2014, TL 4,949 in total has been provided in remunerations and similar benefits to the governing body and senior executives such as the Chief Executive Officer and Deputy Chief Executive Officers. Further details are Otherpresented Means in the relevant section of financial notes. The expenses incurred for the members of the company’s governing body and senior executives under other means such as business related entertainment and travels amounted to TL 197 thousand.

21 / Anadolu Sigorta Annual Report 2014 22 / Anadolu Sigorta Annual Report 2014 1984 1987

Highly acclaimed by the public Activities commenced in the and the sector, “Insurance agricultural insurance branch. of the Future”, the most comprehensive life policy ever offered in Turkey until then, was introduced.

1991

The life branch was transferred to Anadolu Hayat Sigorta, a newly-formed life insurer as required by law. 1986

Representing a new branch in the Turkish insurance business, “Electronic Equipment

Insurance” was first started by Anadolu Sigorta.

23 / Anadolu Sigorta Annual Report 2014 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

transactions of Istanbul Regional Office was relocated to the office Management System certification • InBranches 2012, bookkeeping and Health Insurance and collection • Situated in Merter, İstanbul Regional • Holdingsince 2004, ISO Anadolu 9001 Quality Sigorta executes Department were centralized a central location, which has been processes with an eye on constant under the Accounting and Finance renovatedin Şişli Beytem in the Plaza same that concept enjoys with improvement and development Department (AFD) in keeping the Head Office. within the frame of quality standards. with the targeted centralization Work was carried out to launch a of bookkeeping and collection callers to easily access the required web-based, more flexible and more transactions. Forming the next step • Underservice the by initiativedialing a singleaimed number, at enabling user-friendly application to replace under the initiative, bookkeeping the switchboard numbers for the the existing Electronic Quality and collection transactions of Middle Head Office and regional branches Management System application, Black Sea and Mediterranean Regional were eliminated, and Anadolu Sigorta which performs a significant function Branches were also centralized under contact number at 0850 744 0 744 for ensuring the continuity of the the AFD in 2013. With the migration was introduced incorporating the Quality Management System at the of the bookkeeping and accounting new announcement structure. In this company, as a result of which the transactions of the Central Anatolia, way, “Single Number – Single Menu” relevant application was introduced. West Anatolia, Marmara, Southern implementation went live for non- Anatolia and Black Sea Regional claims topics. external audit conducted within Branches to the AFD, centralization • Nothe irregularitiesscope of ISO 9001 were 2008found Quality in the has been completed for all regional entailed provision of a single point Management System, resulting in an branches of Anadolu Sigorta in 2014. • Throughof contact improvements for customer demandsthat for extension of the quality certification. replacement vehicles, the process was the Legal Affairs and Subrogation accelerated and customer satisfaction creating a closer, one-to-one and • LegalDepartment affairs (LASD)were centralized in order to under was enhanced. • Asconstantly a result interactingof joint efforts working aimed at increase the efficiency and speed of legal processes in regional branches. Anadolu Sigorta and at enriching the bancassuranceenvironment between transactions, İşbank Anadolu and Sigorta Bank Sales Leaders have been assigned who will work out of

İşbank’s regional sales offices.

24 / Anadolu Sigorta Annual Report 2014 Research and Development Activities of the Company / Research and Development Pertaining to New Services and Business Activities

the Anadolu Sigorta Corporate of different locations now brought collection platform, was introduced • WithinInformation the frame Portal, of theefforts section to improve of • Withtogether units under previously the Head operating Office roof out • ASOS,with the the personal new production health product. and In the existing Portal designed for addition, it was decided to centralize agencies has been rearranged, and and management of policy printing medical assessment and operational put into service as an Extranet Portal. andin Kavacık, correspondence the coordination, tasks, which control used transactions involved in personal In addition, the legislation and to be executed individually, are now health insurance proposal and policy publications section on the Intranet handled centrally by the Procurement, production transactions under the has been revised. Support and Construction Health Insurance Department. The Department. The move was intended purpose is to furnish faster service put into use for giving easier access to centralize these functions and allow to all sales channels and customers, • Agenciesto contact Telephone numbers ofDirectory the agencies was swifter and uniform action in cases eliminate the potentially varying and their employees by incorporating affecting these tasks. approaches in medical assessments, the agencies in the company phone and ensure a more effective operation directory. documents have been revised, in terms of workforce with the central • Archivedresulting autoin improved and non-auto archiving claims team. carried out, which is required to processes and reduced number of • Thebe performed annual desk within exercise the scope was of documents to be archived. Business Continuity Management System activities. In the exercise, two different scenarios were applied, assessing the Incident Response Team, which is formed by senior management, and the departments supporting this team, with respect to their preparedness in case of an incident causing interruption to business processes.

25 / Anadolu Sigorta Annual Report 2014 Company Activities and Major Developments in Activities / 2014-2015 Primary Goals, Policies

2014-2015 Primary Goals, Policies

For all countries, developed or when compared with other parts of regulation prepared in relation to developing, the level of economic the world, the share of the premium private health insurance by the T.R. development and the development production of the Turkish insurance Prime Ministry Undersecretariat level of insurance industry move industry to GDP increased at a growing of Treasury, policyholders who in parallel to a significant extent. pace in 2012, 2013 and 2014. In 2014, have qualified for lifelong renewal Particularly in developed countries, banks maintained their dominance guarantee will not lose this entitlement the insurance industry is considered in the financial services sector by from now on. They will neither be as an important funding source for preserving their share of 87.4% (as at exposed to increased risk premiums the economy. Insurance and private June 2013) within the industry’s total nor restricted scope in the event of an pension sector, which is an important assets, and the share of the relatively illness. The regulation about online actor of the financial services market, smaller insurance industry (inclusive comparison of premiums for motor lends significant contributions to of private pension) remained flat at TPL policies introduced some positive the national economy, as it provides 4.6%. changes of practice for the sector; efficient use of sources and also accordingly, companies are required serves to increase savings. Fulfilling The hike in exchange rates at the onset to make available a premium querying the functions of providing coverage of 2014 bore a short-lived impact on screen on their official websites for and enabling savings in our national the insurance industry, as it did on all motor TPL insurance, and they are economy, insurance and private other sectors. This impact reflected free to set basic insurance premiums pension sector keeps growing on the balance sheets of businesses by provinces a on the basis of vehicle consistently every year. In addition as higher loss items. In addition, types. Meanwhile, acquisitions and to these developments, the global policies issued in a foreign currency mergers continued. The official merger economic and political risks that automatically resulted in increased have been growing in recent years, premiums in this period. The recovery Sigorta Group as of October 2014 is an combined with natural disasters, in exchange rates allowed this effect to importantof Allianz Sigorta event that group will and affect Yapı the Kredi obligate people to take measures be transient. balances in the industry. against these risks. Insurance, by The industry attained growth also in nature, comes at the top of the ways Looking at 2014, it is observed that the the reporting period, on the back of to handle these risks. The altered extreme price competition of previous the motor own damage product that perception of the society, along with years is starting to change in favor of was diversified as compared with the the urge to be protected against risks, a more profit-driven understanding. previous years as a result of revised caused insurance activities to increase Furthermore, the negative impact of general conditions for this product. in Turkey. Although it is observed that operating costs that cannot be reduced New product development activities the insurance industry in our country upon profit margins is also better gained speed in 2014. Under the new is not in the desired magnitudes understood.

26 / Anadolu Sigorta Annual Report 2014 Company Activities and Major Developments in Activities / 2014-2015 Primary Goals, Policies, Information on the Company’s Investments

Moreover, Consumer Protection agencies made some revisions to the Technology investments aimed at Law no. 6502 was published in the qualifications of people who will work supporting the growth and improving Official Gazette issue 28835 dated as insurance agents, their authorities risk management will become a 28 November 2013 to be enforced and responsibilities, and principles strategic necessity for the insurance 6 months later. The key change the and procedures in relation to their industry. In terms of technical new law introduces with respect to activities, while the former Insurance profitability, on the other hand, efforts insurance companies is the expanded Agencies Regulation was superseded. will gain speed for risk-based pricing scope of consumer transaction so as and well-balanced portfolios. to incorporate insurance transactions, In the period ahead, it is projected thus making insurance transactions that the insurance industry will be a consumer transaction. The compelled to adopt diverse decisions requirements in the New Consumer regarding pricing and operational Law went into force on 28 May 2014. approaches due to weak investment The new regulation on insurance returns and low interest rates.

Information on the Company’s Investments

The company’s outlays in 2014 amounted to TL 5.5 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”.

27 / Anadolu Sigorta Annual Report 2014 Internal Control System and Internal Audit Activities / An Assessment of 2014 by the Board of Inspectors

An Assessment of 2014 by the Board of Inspectors

Pursuant to the Regulation on the Reinsurance and Pension Companies, in Turkey and abroad have been Internal Systems of Insurance and audits were conducted at all of the facilitated. In this frame, efforts were Reinsurance and Pension Companies, agencies that remain after eliminating carried on also in 2014 so that the the internal audit activity at our those that were dissolved during members of the Board of Inspectors company is carried out by the Board of the reporting period from the 2,791 obtain nationally and internationally Inspectors reporting to our company’s agencies that were listed in the audit recognized professional certificates. Board of Directors. The Board of programs approved by the Board of Directors reviewed and acquainted Directors and planned to be audited in Within the scope of the work aimed at itself with the 2014 Activity Report of the 2012-2014 period. enhancing the level of standard and the Board of Inspectors. quality of audits conducted, “Regional In line with the experiences derived Branches Performance” initiative was In 2014, 25 headquarters units, 9 from agency audits, agencies were brought to a certain point, and then regional branches and 1 branch adding continued to be assessed through to completion with the support of up to 35 units in total were audited scoring based on the financial data relevant Head Office units. The same and the resulting determinations and for the past three years, within the started to be used in the 2014 Regional assessments were reported. frame of efforts to further expand Branch Audit Reports. and strengthen the central auditing of Initiated in order to monitor the extent agencies and to create early warning Developments are carefully monitored at which the audited units fulfill the systems that correctly identify and to ensure that the audits conducted and requirements of the reports resulting reveal the risk elements in advance. the reports subsequently issued take from the audits conducted, follow-up account of the “International Standards audits continued to be carried out in In 2014, 24 studies were completed: 10 for Internal Audit”, are risk-based, 2014. A total of 31 follow-up audits investigations, 6 examinations and 8 provide assurance for risk management were conducted during 2014, 19 of other studies. and contribute added value to our which resulted from 2013 audits. company and necessary revisions and As of year-end 2014, the Board of changes are made accordingly. Auditing of agencies persisted Inspectors was staffed by 20 board pursuant to the Regulation on the members consisting of inspectors, The Board of Inspectors will keep Internal Systems of Insurance and senior assistant inspectors, and carrying out the activities within the Reinsurance and Pension Companies assistant inspectors. With the aim to context of the internal audit program during 2014, and 1,108 agencies were support professional development of prepared, as well as other activities audited, and the results were reported. the Board members and to expand outside of this scope, based on the their professional knowledge, their fundamental approach for maximizing On the other hand, based on Articles participation in various seminars, the benefits expected from internal 16/1 and 17/2 of the Regulation on meetings and training programs auditing. the Internal Systems of Insurance and

28 / Anadolu Sigorta Annual Report 2014 Internal Control System and Internal Audit Activities / Internal Control System and an Assessment by the Governing Body

Internal Control System and an Assessment by the Governing Body

Pursuant to the provisions of the the company’s operations; duly and Information and Related Technology) “Regulation on the Internal Systems efficiently managing, mitigating and in the execution of information of Insurance, Reinsurance and controlling the risks involved in the systems processes and functions, and Pension Companies” enforced upon company’s operations; and employing the relevant project launched was its publication in the Official Gazette a risk-focused approach to the finalized as at year-end 2012. The issue 26913 dated 21 June 2008, the conduct and management of review, following headings were addressed Risk Management and Internal Control control, monitoring, assessment and under the COBIT Alignment Project for Department was set up in a structure reporting activities concerning the Information Technology Governance so as to be conducted and administered activities of the company’s units, all and Information Technology Processes: directly by the CEO, and vested in the of the company’s key processes were powers and responsibilities that will schematized, and risk-control matrixes (IT) Governance Model allow the Department to assess the detailing the control points were • Devising the Information Technology risk exposure and internal control prepared, thus completing the system environment in an independent/ documentation. • CreatingDevelopment the Governance Processes Processes impartial and effective fashion. • Formulating the IT Service A Contingency Action and Funding Plan The Board Director responsible for and Operation Processes Internal Systems is also responsible has been designed, which specifies • Developing the IT Service Delivery toward the Board of Directors for the actions to be taken in the event the formation of the Department and of a liquidity crisis sustained by the • Creating the IT Support Processes company due to negative market ensuring, monitoring and coordinating Accordingly,• IT Audit Management. the Information Systems movements beyond its control, its operability, adequacy and Management Committee was set unexpected macroeconomic events, effectiveness. up, which will report directly to catastrophic or big-ticket claims the Executive Board and will be The duties, powers and responsibilities payments and other reasons. responsible for IT strategy and of the individuals charged with the steering activities. The Information operation and activities of the Internal With the aim to prevent the company’s Systems Management Committee Control system, and for conducting the exposure to various perils of differing was established with the purpose activities are defined in the relevant scales (machinery breakdown, human of managing information systems in Operating Guidelines released. The errors, theft, fire, explosion, state alignment with the company’s strategic internal control system is set up as a of war, sabotage, natural disasters, goals, establishing the policies, separate mechanism independent from terrorist acts, power outages, etc.) procedures and processes for ensuring the internal audit system, based on and the losses resulting therefrom, information security, and efficiently applicable legislation and numerous the Business Continuity Management managing the risks arising from the references available in national and System has been set up to recover use of information systems. Basically international literature. as quickly as possible from the interruption caused by such perils the Committee will define, asses and Centralized internal control activities and to enable resumption of key report on the risks arising from the do not eliminate or modify, in part activities. Within the scope of the use of information systems; create the or in whole, the relevant operational Business Continuity Management guidelines for the management of these and supervisory responsibilities of System, Headquarters Emergency risks, establish and monitor relevant the employees who are in charge of Response Plan, IT Continuity Plan, controls. conducting and/or managing these Business Continuity Management It has been considered that the internal activities. The Board of Inspectors System Guidelines, Business Continuity control policies and procedures separately oversees the effectiveness Plan and Incident Management Plan introduced and the internal control and adequacy of the internal control were drawn up and published on the activities carried out are aligned with system. Electronic Document Management the company’s nature, the complexity System. The operability of the said of its operations and risk structure, Within the scope of establishing an plans is tested at certain intervals. effective internal control system and possesses the minimum elements that is aligned with the nature, It was targeted to secure alignment of an efficient internal control system. complexity and risk structure of with COBIT (Control Objectives for

29 / Anadolu Sigorta Annual Report 2014 Information on Associates up pension funds in this framework; creating fund bylaws for the funds to be set up; executing pension contracts, annuity contracts,The de facto portfolio scope of management Anadolu Hayat contracts, Emeklilik custody A.Ş. covers agreements engaging with in theindividual custodian or group for safekeeping private pension of fund activities; assets; and setting 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.

The31 Decembercompany has 2014 20% stakeholding in AnadoluBook Hayat Value Emeklilik (TL) A.Ş. Shareholding (%) 391,400,000 20.0 RepurchasedAnadolu Hayat Emeklilik A.Ş. Own Shares by the Company None. Disclosures Concerning Special Audit and Public Audit

The company undergoes independent audits conducted by the independent audit firm, Akis Bağımsız Denetim ve Serbest quartersMuhasebeci of the Mali year. Müşavirlik Due to being Anonim an associateŞirketi (KPMG) of the Bank,on its semi-annualthe company financial is also subject statements to the atannual six-month information intervals systems and on auditsits annual banks financial conduct statements at their consolidated annually, as entities. well as consolidationIn 2014, T.R. Ministry audits performed of Finance by Tax İşbank Inspection at the endBoard of firstconducted and third an examination on scrap sales collections resulting from the claims paid by our company for total loss or theft incidents. 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 2014, 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 Assembly Decisions All decisions adopted in the Annual General Assembly meeting held on 25 March 2014 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 acts in awareness of its social responsibility and spent TL 628 thousand during the reporting period. The activities carried out within the frame of social responsibility are detailed under the heading “Commitment to Social Responsibility”.

30 / Anadolu Sigorta Annual Report 2014 Expenses Incurred in Relation to Donations and Grants and Social Responsibility Projects/ Commitment to Social Responsibility

Commitment to Social Responsibility

Within the frame of its commitment to Aspiring to crown its 85th anniversary The project is conducted under the social responsibility, Anadolu Sigorta with an extensive project in 2010, technical advisory of the Ministry extends support to education, academic Anadolu Sigorta designed a social of Culture, Research and Training activities, sports organizations, and responsibility project aligned with Directorate. During the course of cultural and artistic events. the corporate strategy and the the project, the Ministry of Culture expectations of the target audiences. proposes cities and city-specific crafts Anadolu Sigorta’s approach to social The project was named “Bir Usta Bin that are about to vanish, identifies responsibility projects can be summed Usta” (One Master, Thousand Masters), the NGOs, and guides Provincial up as one that encompasses not only perfectly corresponding to its scope Directorates of Culture. customers or agencies but the whole of and content. Turkey as a social stakeholder, and one Under the project, five cities and that seeks to contribute to the entire The objective of the project “Bir Usta callings are selected from among those society on this axis. Bin Usta” (One Master, Thousand proposed by the Ministry of Culture Masters) is to focus the public attention every year, and 15 to 20 trainees Anadolu Sigorta believes that on vanishing crafts and local values, receive training for each vocation. The organizations that grow stronger to revive these crafts, and to be company aims to extend support to 50 thanks to the society should give instrumental in letting professional vocations and a total of 1,000 masters- back to the same society. Therefore, craftsmen and artisans pass on their to-be over the course of 10 years. to Anadolu Sigorta, it is crucial to experiences to the future. construct its social responsibility projects in a human-oriented and sustainable format.

31 / Anadolu Sigorta Annual Report 2014 Expenses Incurred in Relation to Donations and Grants and Social Responsibility Projects/ Commitment to Social Responsibility

Through “Bir Usta Bin Usta” (One Master, Thousand Masters) project, it is targeted to extend support to 50 crafts and a total of 1,000 masters-to- 1,000 be over the course of 10 years.

Selected cities and crafts within the 2013 In 2011, Anadolu Sigorta carried scope of the “Bir Usta, Bin Usta” (One Master, Thousand Masters) project are concerning microloans. Accordingly, presented below: • Wood Carving/Kahramanmaraş “Birout a Usta, special Bin initiative Usta” (One with Master, İşbank • Traditional Carpet Weaving of Thousand Masters) trainees, who shall 2010 Gördes/Manisa have acquired the necessary technical • Needlepoint Art of Namrun/Mersin know-how during the training, will Figuration/Bursa • Basketry/Rize be able to utilize the loan entailing • Karagöz (Turkish shadow play) • Hand Weaving of Karacakılavuz/ 2014Tekirdağ by presenting the participation • Meerschaum Carving/Eskişehir and varnishing of wood or leather)/ certificatesspecial conditions given at designed the end byof theİşbank, • Edirnekâri Art (traditional painting Edirne training. In this way, Anadolu Sigorta • Tile Working/Çanakkale will be lending support not only to • Oltu Stone Working/Erzurum Weaving/Gaziantep Isparta vocational training, but also to efforts • Kutnu (traditional silk-based cloth) • Art of Leather-Made Accessories/ aimed at helping the crafts survive. with threads of gold or silver)/ • KazaziyeTrabzon (traditional jewelry made • Art of Felt-Made Accessories/İzmir Anadolu Sigorta collaborates • The Amber courses Working/Şanlıurfa that will be launched in with TURMEPA (Turkish Marine 2011 2015 within the scope of the project are Environment Protection Association) Local Damal Doll Making of Ardahan, to prevent marine pollution and to Traditional Accordion Boot Making contribute to the combat against • Kargı Cloth Weaving/Çorum pollution. Based on the protocol • Silk Weaving/Hatay with TURMEPA, the Association that • Stone Working/Mardin of Söke, Aydın, Traditional Silver spends efforts to clean the marine • Bone Combs/Sivas Threading of Bartın, Puppet Making of environment in Turkey receives a • 2012 Savatlı Silver Work/Van İstanbul, and Wooden Walking Cane share from the revenues generated MakingUnder the of project,Devrek, anZonguldak. exclusive by the insurance coverage sold to any initiative is being carried in • Mother of Pearl Inlaying/Ankara type of vessel. The protocol for this cooperation has been in force since • Rug and Carpetbag Weaving/Kars documentary channel, under which 2011. • Glassblowing/Muğla thecollaboration documentaries with İzof TV,the acourses national are • Earthenwaresilk)/Tokat Pottery/Nevşehir produced. • Woodblock Printing (on cotton or

32 / Anadolu Sigorta Annual Report 2014 The Company’s Transactions with the Risk Group

The Company’s Transactions with the Risk Group

Within the framework of the applicable carried out on an arm’s length basis. In Details of the company’s transactions provisions of the Turkish Commercial all of the transactions the company with the risk group during 2014 and Code (TCC), our company is a realized in 2014 fiscal year with the related disclosures are presented in controlling company and its affiliates, Note no. 45 under the notes to the 2014 fiscal year]. Pursuant to Article any and all legal acts carried out in financial statements in the present 199subsidiary of the TCC, of İşbank the company’s Group [during Board of favor of the controlling company or its report. Directors presented the declaration affiliate with guidance from the below in the conclusion of the controlling company, and any and all affiliation report issued in relation to actions taken or avoided in favor of the its relations with the controlling controlling company or its affiliates in company or an affiliate thereof: 2014 have been reviewed according to the conditions and circumstances Commercial transactions the company known to us. We hereby declare that realized with its controlling our company did not sustain any such shareholder and other Group loss on account of any transaction Companies during 2014, which are arising according to conditions and detailed in the report, fall within the circumstances known in relation to company’s field of activity and were 2014 fiscal year.

33 / Anadolu Sigorta Annual Report 2014 1997

Aiming to make the most 1993 of the possibilities offered by IT, a “Recon Project” was Extending administrative and launched. Services were made technical assistance to Günay Anadolu Sigorta, founded with the inclusion of all and started to operate in moreservices efficient and agencies and productive in the Azerbaijan, Anadolu Sigorta data processing network with online and real‑time systems. insurance company to set up becamean international the first Turkish operation.

1996

Policies in legal protection insurance branch,

another first in our country, were written.

34 / Anadolu Sigorta Annual Report 2014 1999

In order to provide the fastest and most comprehensive service to its policyholders in the aftermath of the disastrous earthquake of 17 August, the company worked round the clock to provide uninterrupted service.

35 / Anadolu Sigorta Annual Report 2014 Financial Status / Summary Report by the Board of Directors

Summary Report by the Board of Directors

Dear Shareholders, The US economy unexpectedly shrank In the report published in November, in the first quarter of 2014, but the the IMF estimated the Turkish Before presenting the 2014 financial recovery in the ensuing periods economy’s growth rate at the end of statement figures covering the showed that the weakness was 2014 at 3%. The report also made company’s 89th year of operation for transient. The Eurozone economy, the determinations that the rapid your approval and comments, we deem on another front, came to a point of growth of the Turkish economy came it useful to recap the changes and standstill in the second quarter of at the expense of large external developments in economic life and the the year in line with the weak course deficits, making the economy sensitive insurance sector. of investments and negative export to changes in external financing performance, and the risks in relation conditions, and that macroeconomic In 2014, global economic recovery lost to decelerated growth still persist. The policies were adjusted to maintain the some pace. While the issues caused anticipated subsided global demand current situation rather than fixing by the global crisis in developed for oil due to weak economic activity economic imbalances. The report noted countries continued to repress their in the Eurozone resulted in declined that the financial system preserved growth performances, growth in oil prices. While geopolitical problems its strong structure and the main risk developing countries remained low as gained the foreground as downside for Turkey remains a capital flows compared both to the pre- and post- risks on global growth in the second reversal. The IMF report of January crisis recovery periods. Accordingly, half of the year, the turmoils in the 2015, on the other hand, projected a economic growth in 2014 is estimated Middle East, in particular, along with growth rate of 3.4% for Turkey in 2015 to be in parallel with that of the the tension between Russia and and 2016. previous year and stand at 3.3%. In its Ukraine, have been the key factors to report published in January, the IMF put pressure on global economy. The decline in the growth of premium estimates growth rates of 1.8% and production in the worldwide insurance 2.4% for developed countries in 2014 On the side of the Turkish economy, industry in 2013 persisted in the first and 2015, respectively. Growth rates prudential measures introduced by late half of 2014 in line with low economic of developing economies for the same 2013 and early 2014 in an effort to take growth rates. However, premium years are forecasted as 4.4% and 4.3%, under control private consumption production growth is expected to respectively. and to curb current deficit resulted in increase progressively from the second weakened domestic demand. Having half of 2014, and to reach 2.5% at the grown 4.1% in 2013, the Turkish end of the year, and 2.8% in 2015. economy expanded by 2.8% in the first three quarters of 2014 as a result of the With low losses and new capital local elections, monetary tightening that joined the reinsurance market, and macro-prudential measures. reinsurance costs showed a descending trend in all branches in 2014. Positive results in catastrophe and non-catastrophe losses gave rise to improved renewal conditions. In 2014, catastrophes around the world caused insured losses of USD 22 billion, which is below the ten-year average.

36 / Anadolu Sigorta Annual Report 2014 Financial Status / Summary Report by the Board of Directors

Increased insurance capital and scarce Although the financial statements of Looking at our company’s financial catastrophe losses kept the demand the non-life sector showed generally standing and operating results, our for the reinsurance market flat, positive results in 2014, the technical assets grew by 16% year-to-year and the insurance capital available losses that arose particularly in to TL 3,773 million, while premium globally expanded by 6% in the second liability branches were noteworthy. production went up by 9.3% in the quarter of 2014. Besides falling prices, Based on the data for the first nine same period to TL 3,005 million. Our improvements were witnessed in the months of 2014, motor vehicle liability company also increased its market reinsurance renewal terms of certain branch that represents the largest share to 13.2% on the back of the insurance companies. portion of the market share posted a premium growth it has achieved. Motor technical loss of TL 429 million. Motor vehicles branch claimed the biggest The Turkish insurance industry’s vehicles (own damage) branch, i.e. the share of our total premium production growth trend in real terms that had other motor vehicle insurance branch, with 27.4%. This was followed, in been going on since 2008 could not registered a technical profit of TL 569 order, by motor vehicle liability with be sustained in 2014 as a result of the million. Following motor own damage, 26%, fire and natural disasters branch economy administration’s measures the highest profit generators in the with 16.7%, and health branches with intended to take private consumption industry were, in order, fire with TL 9.3%. Based on the positive results under control. As at end-December, 255 million and personal accident with attained particularly in fire, motor the insurance industry narrowed TL 213 million. Technical profit figure vehicles and accident branches in 2014, down by 0.8% in real terms. A review for all branches combined was TL 813 technical results performed positively of industry data reveals that the real million, whereas net profit after tax and the company booked a profit of TL reason for the broken trend is the life was TL 569 million. 92.6 million gross and TL 71.6 million branch that shrank by 10.7% in real net at the end of the year. terms, whereas the non-life branch captured a real growth of 0.8% in the Our company’s goal in 2015 will be same period. The non-life segment, to improve the concepts of quality in which our company belongs, is service, leadership, innovation and projected to attain nominal growth customer-focus, and to sustainably also in 2015. increase the success captured in profitability.

37 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators

Financial Information and Indicators

Total Assets Shareholders’ Equity Financial Highlights (TL thousand) 2014 2013 (TL thousand) (TL thousand) Total Premium Production 3,004,830 2,749,704 Total Assets 3,773,391 3,252,770 Claims Paid 1,553,197 1,249,199 1,019,833 3,773,391 Paid‑in Capital 500,000 500,000 913,016 Shareholders’ Equity 1,019,833 913,016 3,252,770 92,642 67,462 71,560 67,462 Pretax Profit/Loss

Net Profit/Loss 13 14 13 14 Capital Adequacy Ratios Premiums Received/Shareholders’ Equity 2.95 3.01 Shareholders’ Equity/Total Assets 0.27 0.28 Claims Paid Net Profit/Loss Shareholders’ Equity/Technical Provisions 0.45 0.49 (TL thousand) (TL thousand)

Asset Quality and Liquidity Ratios 71,560

Liquid Assets/Total Assets 0.60 0.55 67,462 1,553,197 Current Ratio 1.22 1.22

Liquidity Ratio 1.53 1.53 1,249,199 Premium and Reinsurance Receivables/Total Assets 0.21 0.24 Receivables from Agencies/Shareholders’ Equity 0.62 0.66

13 14 13 14 Operational Ratios Retention Ratio (*) 0.77 0.75 Claims Payment Ratio 0.56 0.60

Profitability Ratios Loss-Premium Ratio 0.78 0.74 Cost Ratio 0.25 0.27 Combined Ratio (Loss-Premium Ratio+Cost Ratio) 1.03 1.01 0.03 0.02 0.05 0.03 Pretax Profit/Premiums Received 0.04 0.04 Financial Profit (Gross)(**)/Premiums Received (*) Technical(*) Including Profit/Premiums premiums transferred Received to the Social Security Institution non-technical division to the technical division was excluded. (**) In the calculation of the financial profit, investment income that has been transferred from the

38 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators

Premium Production (TL thousand) 2014 2013 Change (%) Accident 79,755 50,494 57.9 Illness/Health 279,983 229,008 22.3 Motor Vehicles 824,143 811,525 1.6 Aircraft 12,563 10,099 24.4 Watercraft 67,021 63,534 5.5 Marine 66,019 49,343 33.8 Fire and Natural Disasters 503,259 463,414 8.6 General Losses 239,216 249,689 -4.2 Motor Vehicles Liability 780,421 703,489 10.9 Aircraft Liability 30,205 21,181 42.6 General Liability 105,013 80,846 29.9 Credit 1,127 710 58.7 Financial Losses 8,500 9,510 -10.6 Legal Protection 7,606 6,860 10.9 Total 3,004,830 2,749,704 9.3

Premium Growth Rate Total Premium Production (%) (TL thousand)

Accident 57.9

Illness/Health 22.3

Motor Vehicles 1.6 3,004,830 2,749,704 Aircraft 24.4

Watercraft 5.5

Marine 33.8 13 14 Fire and Natural Disasters 8.6

-4.2 General Losses

Motor Vehicles Liability 10.9

Aircraft Liability 42.6

General Liability 29.9

Credit 58.7

-10.6 Financial Losses

Legal Protection 10.9

Total 9.3

39 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / 2014 Economic Overview

2014 Economic Overview

The World Economy

2013 2014 (E) 2015 (P) Growth (%) Global 3.3 3.3 3.5 Developed Countries 1.3 1.8 2.4 USA 2.2 2.4 3.6 Eurozone -0.5 0.8 1.2 Japan 1.6 0.1 0.6 Developing Countries 4.7 4.4 4.3 China 7.8 7.4 6.8 Brazil 2.5 0.1 0.3 Turkey 4.0 3.0 3.0 Inflation (%) Developed Countries 1.4 1.4 1.0 Developing Countries 5.9 5.4 5.7

IMF World Economic Outlook, January 2015 (E): Estimated, (P): Projected In 2014, global economic recovery lost In the said report, the IMF noted that Suggesting that these policies that give some pace. While the issues caused by global economy displayed a recovery substantial support to economic the global crisis in developed countries that differentiated on the basis of recovery increase the tendency to take continued to repress their growth countries, rather than an overall financial risks, it is underlined that performances, growth in developing recuperation. The US economy they have also given rise to higher countries remained low as compared unexpectedly shrank in the first market and liquidity risks lately. The both to the pre- and post-crisis quarter of the year, but the recovery in IMF also reported that global risk recovery periods. Accordingly, the IMF the ensuing periods showed that the appetite increased, as compared to its revised its growth projection for the weakness was temporary. The April report, and credit risk alleviated world economy downwards in the Eurozone economy, on another front, in conjunction with the positive course World Economic Outlook released in came to a point of standstill in the of financing terms within the frame of October, as it has been doing for the second quarter of the year in line with the pursuit for high yields. last three years. Decreasing global the weak course of investments and economic growth estimate for 2014 negative export performance, and the According to the US Department of from 3.4% to 3.3%, the IMF also risks in relation to decelerated growth Commerce data announced in the last revised its growth projection for 2014 still persist. While geopolitical week of October, seasonally adjusted from 4% to 3.8%. The World Economic problems gained the foreground as GDP grew beyond expectations and Outlook update published in January downside risks on global growth in the registered 3.5% in the third quarter. 2015, on the other hand, revised the second half of the year, the turmoils in While the estimate that resulted from 2015 figure once again, this time at the Middle East, along with the the Wall Street Journal survey was 3.5%. The IMF estimates that the tensions between Russia and Ukraine, 3.1%, the US economy displayed the growth rates to be registered by put pressure on global economy. best half-year performance in more developed countries and developing than a decade when the figure for the economies in 2014 will be 1.8% and Nevertheless, in its Global Financial third quarter is evaluated in 4.4%, respectively. Stability Report, the IMF stated that, conjunction with 4.6% growth six years after the global crisis, recorded in the second quarter. While worldwide economic recovery still the positive outlook of the growth data relies on supportive monetary policies was driven especially by improved net implemented by developed countries. exports, household expenditures,

40 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / 2014 Economic Overview

Decreasing global economic growth estimate for 2014 from 3.4% to 3.3%, the IMF also revised its growth projection for 2014 from 4% to 3.8%.

although slower than the first quarter, Having expanded by 7.5% in the second further loosened monetary policy by supported growth. The US employment quarter of the year, the Chinese the European Central Bank (ECB). data also exhibited a positive outlook. economy grew 7.3% in the third EUR/USD parity dropped to 1.2499 as Having started to decline from the first quarter, surpassing the market of early October. Thereafter, the quarter of 2014, the unemployment estimate of 7.2%. Despite beyond- lessened worries about faster and rate retreated to the pre-crisis level projected growth, the data that was earlier action to be taken by the Fed during the year, and was 5.6% at indicative of the Chinese economy’s with respect to its monetary policy year-end 2014, even below the worst growth performance in the caused some depreciation of the US expectations. post-global crisis period was deemed dollar. However, the US currency as a negative development. readopted an appreciating trend as the The economic activity in the Eurozone recuperation of the economic outlook remains weak. Data announced in the In its guidance that followed the FOMC in the US was more strongly underlined Eurozone point that the zone economy meeting of 17 December, the US Fed in the Fed meeting ended on 29 continues to be under pressure. With underlined that they would be patient October. Within this framework, EUR/ the effect of declined energy prices, on deciding when to raise rates, instead USD parity was in the order of 1.2163 annual inflation was -0.2% in of their previous remark that interest at the end of December. December. On the other hand, rates would be kept low for a industrial production fell by 1.8%, “considerable time”. The Fed noted that Besides the global economic growth above projections, on a monthly basis this change of language is not a change projections that were revised in August, and showed that the of guidance away from the downwards, the anticipated subsided negative course of production activities “considerable time” characterization. global demand for oil due to the weak economic activity in the Eurozone that shows investors’ sentiments about Based on the expectation that the Fed resulted in declined oil prices. In this thecontinued. economic On future another of wing,Germany ZEW index will take a step toward rate hike by framework, crude oil price per barrel dropped to -3.6 in October, acquiring a mid 2015 the latest, developing that dropped to its lowest since negative value for the first time since economies are anticipated to suffer November 2010 lost value by 46% in November 2012. The Federal Ministry from fund issues as a result of shrank the aggregate in 2014, and closed at for Economic Affairs in Germany liquidity, and funding costs are USD 57 as at the end of December. This revised growth estimations predicted to increase. In the event that situation will supposedly affect net downwards from 1.8% to 1.2% for rates are raised, it is considered that energy importing countries including 2014, and from 2% to 1.3% for 2015. the course of liquidity in the world will Turkey positively. Following a Acting as the driver of the Eurozone change and funds in search of a safe downward course in parallel with the since the global crisis, the German haven will head toward the USA. strengthened US dollar, gold prices fell economy’s slowdown comes to the fore rapidly in the last week of October, and EUR/USD parity went up somewhat in as a factor that aggravates the concerns stood at 1,188 USD/ounce as at 31 the first half of October. The about the Eurozone. On the other hand, December. expectation that the Fed might start GDP growth for the first quarter of rate hikes sooner than projected in line 2014 in the Eurozone, previously with the positive course of the US announced as 0.2%, was revised as economy led the US dollar to grow 0.3%, while the second quarter growth, stronger in international markets from which was announced to be flat, was July. Another contributor was the revised as 0.1%.

41 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / 2014 Economic Overview

The annual rate of increase of CPI was 8.17% 8.17% in 2014.

The Turkish Economy Medium Term Program 2015-2017 Data As a result of the prudential measures Years Growth GDP (%) Inflation Rate (%) introduced by late 2013 and early 2014 3.3 9.4 2014 in an effort to take private 2015 4.0 6.3 consumption under control and to curb current deficit in the Turkish economy, 2016 5.0 5.0 domestic demand adopted a weakening 2017 5.0 5.0 trend. Having grown 4.1% in 2013, the Turkish economy’s growth was 2.8% in growth in 2015 will be driven The negative state that resulted from in the first three quarters of 2014 as a mainly by recovered global economy, increased volatilities in the financial result of the local elections, monetary expected economic recuperation in markets drove inflation outlook and tightening and macro-prudential the EU, increased growth in Turkey’s expectations away from the medium measures. trading partners, and revived domestic term target in 2014. Moreover, the Geopolitical repercussions of the demand. effects of the declining oil prices developments that take place in throughout the year have become The IMF, on the other hand, our neighboring countries upon the visible as of December. Consequently, painted a more pessimistic picture national economy, coupled with the CPI cumulative increase rate went up regarding Turkey’s economic growth anticipated recovery in the European by 0.7%, below the projections, in the expectations and anticipated 3% Union that kept failing to match twelve months to December 2014, and growth rate for 2014 and 2015 for projections, put pressure on growth stood at 8.17%. Plummeted oil prices our national economy in its World and acted as significant factors that that decreased the Transportation Economic Outlook published in resulted in restricted economic group prices, combined with the October. In the Article 4 Consultation growth. seasonal decline in the clothing and with Turkey Report published footwear group, have been influential Remaining below the potential and in November, the IMF made the on the restricted cumulative growth growing in the 2-4% interval since determinations that the rapid growth rate of CPI. Hence, the annual rate of 2012, the Turkish economy is projected of the Turkish economy came at the increase of CPI was 8.17% in 2014. The to perform similarly also in 2015, expense of large external deficits, economy administration projects the although the rate is expected to be making the economy sensitive 2015 inflation at 6.3%, slightly below closer to the upper cap. This can be to changes in external financing the market. considered as a more acceptable level conditions; and that macroeconomic amid the new global equilibrium, policies were adjusted to maintain the Most certainly, inflation will be a although it will be below the potential current situation rather than fixing critical factor of balance in 2015. While level. The Medium Term Program 2015- economic imbalances. The report noted it is not anticipated to be widespread, 2017 announced by the Government on that the financial system preserved double-digit annual inflation figures 8 October 2014 estimated the annual its strong structure and the main risk may be in question at certain periods growth at the end of 2014 as 3.3%, for Turkey remains a capital flows during 2015. Although inflation is while projecting a growth rate of 4% reversal. expected to decline with significant for 2015. It is stated that the increase

42 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / 2014 Economic Overview

Having grown 4.1% in 2013, the Turkish economy’s growth was 2.8% in the first three quarters of 2014 as a result of the local elections, monetary tightening and macro-prudential measures.

contribution from the base effect domestic demand, lower energy prices USD 160.5 billion. The same report advantage in the first half of 2015, the and slackened gold imports, as well as projects export and import figures at important point is whether this decline the effect of the Turkish lira that lost USD 173 billion and USD 244 billion, can be preserved until the end of the value. respectively, for 2015. year. The key dynamic at this point will surely be the trend to be adopted by Although the recovery in the European Unemployment rate data, which have food prices, which have a significant Union economies failed to capture the been displaying an upward trend share in the rise of inflation. desired level and despite the weak since the middle of 2012, continued to demand conditions, Turkey’s export to rise throughout 2014. Having gained Increased uncertainties in global the Eurozone in December went up by momentum particularly in the second economy resulted in fluctuations in 1.8% year-to-year. In the same period, quarter of 2014 and having reached capital flows towards developing EU’s share in Turkey’s total exports 9.9% at the end of the first half of countries and Turkey. When these was up from 40.0% in December 2013 the year, the rate of unemployment global uncertainties combined with the to 40.2% in December 2014. maintained its climb in the November political tensions in our country, the US data published by TurkSTAT and was dollar saw sharp upturns particularly Overall, foreign trade data indicate registered as 10.7%. early in the year. In an effort to counter that the expansion in exports is the resulting hike in the US dollar rate, maintained to a large extent despite The anticipated policy rate hike the CBRT increased the one-week repo the ongoing issues plaguing Turkey’s of the US Fed in keeping with the rate, i.e. the lead policy rate, by 550 export markets. The revival that can be economic improvement, the ECB’s basis points in the first month of the observed in domestic demand in line decision to continue with quantitative year, which was followed by a decrease with the lagging effects of the rate cuts easing for the purpose of supporting of 175 basis points in the aggregate the CBRT realized in earlier months, on economic recovery, and geopolitical in May-July period after the US dollar the other hand, may lead to an upturn developments take the forefront among slackened. From August, the CBRT in imports in the period ahead. the global headlines that will bear an chose to keep this critical policy rate impact on national economy in 2015. Nevertheless, the recent plummet in indicator stable at 8.25%. oil prices is noteworthy. The price of on the other hand, include the CBRT’s Behind the improved foreign trade Brent oil, which averaged USD 109 per commitmentKey issues within to fight national inflation, borders, the balance in 2014 were stronger exports barrel in 2013, plunged to USD 55 as performance of the current deficit, combined with the slowed down at 31 December 2014 in connection steps to be taken with respect to imports. As at year-end 2014, exports with the increased worries about structural reforms, and the ongoing expanded by 3.9% on an annual basis global economic growth in 2014. If they election process. while imports declined by 3.7%, which persist at this level in the period ahead, resulted in a significant downfall of oil prices will certainly contribute 15.4% in foreign trade deficit. towards keeping the foreign trade deficit at its present level despite the It can be suggested that the increased anticipated expansion in domestic export was triggered by the demand. depreciated Turkish lira during the reporting period, improvement in the The Medium Term Program issued by Eurozone although it incorporated the government estimates imports to downside risks, and increased gold decrease to USD 244 billion at year- exports. The primary drivers behind end 2014, while exports will preserve decelerated imports included slow its uptrend and finish the year at

43 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / Overview of the Turkish Insurance Industry and Future Outlook

Worldwide premium production growth is estimated to reach 2.5% 2.5% at the end of the year.

An Overview of the World Insurance Industry

Non-Life Insurance Worldwide Premium Production Premium Production (USD million) Inflation-Adjusted Change (%) 2014 2013 2012 2014* 2013 2012 World 2,083,671 2,032,850 1,968,677 2.5 2.3 2.7 Developed countries 1,681,120 1,653,018 1,623,616 1.7 1.1 1.5 Developing countries 400,723 379,832 345,060 5.5 8.3 9.3 Turkey 9,793 9,762 9,556 0.8 13.3 9.0

*2014 figures are estimated Worldwide decline in the non-life downward trends in prices both in the cause of the biggest-ticket losses insurance premium production in 2013 hull and cargo insurances. Owing to for the insurance industry, 2014 saw persisted in the first half of 2014 in major passenger aircraft crashes that no hurricanes that made a significant line with low economic growth rates. occurred last year, insurance prices impact on the US coastline. In this However, premium production growth applied to airline companies showed respect, the world insurance business progressively increased around the some rises depending on losses. had yet another lucky year. A major globe from the second half of 2014; it However, in line with the trend in earthquake did not take place in the is estimated to reach 2.5% at the end other lines of business, the prices in reporting period either, and the highest of the year, and projected to be 2.8% in the general aviation insurance exhibit cat losses arose once again from 2015 and 3.2% in 2016. a downturn due to abundance of meteorological phenomena. However, capacity. The overall downward trend these events were far from affecting Owing to economic growth, increased in prices manifested itself at a ratio of reinsurance prices. According to penetration and population, developing 0.6% in liability insurance and 2.3% projections by Aon Benfield brokerage, markets are anticipated to claim in financial risks insurance in the first it will take a cat loss worth USD 100 higher shares out of the total written half of the year. billion for reversing global prices premiums by 2023. The table above upwards. shows that this was also the case in the With low losses and new capital 2012-2014 period. that joined the reinsurance market, The size of the classic reinsurance reinsurance costs showed a descending market expanded by USD 15 billion in As at the year-end 2014, the rate of trend in all lines of business in 2014. the second quarter of 2014 over the premium growth is expected to gain Positive results in catastrophe and first quarter figure and reached USD speed in developed countries, whereas non-catastrophe losses gave rise 570 billion. This magnitude translates the same is anticipated to fall in to improved renewal conditions. In into a 6% rise as compared with developing countries. 2013, catastrophes around the world year-end 2013. The drivers behind caused insured losses of USD 45 billion, this increase were low cat losses, Increased capital available to the which is below the ten-year average unrealized financial returns, and the global insurance industry and the low of USD 58 billion. This tendency contribution of unconventional capital level of catastrophe losses paved the persisted through the first half of to the reinsurance market. The share of way for lower insurance prices in 2014. 2014, and insured losses amounted to unconventional capital to reinsurance The decline in fire and engineering USD 22 billion. While meteorological capital allocated for catastrophes insurance was 4.6% as at the second forecasts reported intensive North reached 14%. Unconventional capital quarter. Decreased freights caused Atlantic hurricanes, which make up resources include capital market actors

44 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / Overview of the Turkish Insurance Industry and Future Outlook

The Turkish insurance industry’s growth trend in real terms that had been going on since 2008 came to an end in 2014 as a result of the economy administration’s measures intended to take private consumption under control.

managing large sums such as hedge date set as 1 January 2016. One of the Overview of the Turkish Insurance funds, pension funds and the like. most crucial regulatory arrangements Industry and Future Outlook Their contribution to the reinsurance of 2014, C-ROSS (China Risk Oriented market continues at an increasing Solvency System) targets to develop The Turkish insurance industry’s growth trend in real terms that had rate. In the first half of 2014, cat bonds a risk assessment that is more been going on since 2008 came to an worth USD 9.4 billion were redeemed, comprehensive than Solvency II. end in 2014 as a result of the economy representing 41% rise year-to-year. With this implementation, non-life administration’s measures intended Total amount of cat bonds traded on companies are expected to optimize to take private consumption under the market in the second half of 2013 their portfolios, and to arrange their control. On the basis of year-end and in the first half of 2014 reached a investment portfolios and reinsurers premium production figures, the record USD 22.4 billion. in China, which charges ahead toward insurance industry narrowed down becoming one of the world’s largest by 0.8% in real terms in the reporting Alternative capital was up by 18% to insurance markets. period. In 2015, the sector is projected USD 58.6 billion as compared with to attain a nominal growth in non- year-end 2013. Increased insurance Rating agencies including A.M. Best, life branches in the range of 10-15% capital and scarce catastrophe losses Standard and Poors and Moody’s depending on economic developments, kept the demand for the reinsurance revised the outlook for reinsurance and thus, to recapture real increase. market flat and the insurance capital companies from stable to negative available globally expanded by 6% in during the reporting period, on Looking at the current situation of the second quarter of 2014. Besides account of increased competition the sector, it can be suggested that falling prices, improvements were and decreased demand, combined the shrinkage resulted from the life segment. While the non-life segment witnessed in the reinsurance renewal with macroeconomic conditions. registered 9.0% nominal growth at the terms of certain insurance companies, If this tendency continues in 2015, end of December, the same has grown such as an increased number of then it can be anticipated for the by 0.8% when the CPI rate of 8.17% replacements, expanded coverage conventional reinsurance industry announced for the same period is taken scope etc. to opt for downsizing, and in return, into consideration. Impacted by the the insurance industry to reduce shrank bank loans, the life segment’s The bill in relation to Solvency II cessions on one hand, while making downsizing of 3.4% in nominal and that sets out the capital adequacy more frequent use of alternative risk 10.7% in real terms resulted in a real requirements for the European management instruments on the other. contraction of 0.8% for the overall insurance industry was ratified in insurance industry. the European Union Parliament on 11 March 2014, with its enforcement According to December 2014 data, non-life branches were accountable for 87.4% of total production, corresponding to a premium production of TL 22,710 million. Premiums written on life insurance reached TL 3,280 million in 2014, translating into 12.6% of total production.

Based on the data for the first nine months of 2014 for the non-life segment, motor vehicle liability branch that represents the largest portion of the market share posted a

45 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / Dünya ve Türkiye Sigortacılığının Genel Durumu ve Beklentiler

The non-life segment registered 9.0% nominal growth at the end of 9.0% December 2014.

31.12.2014 31.12.2013 Premium Market Premium Market Share Branch Change (%) Production (TL) Share% Production (TL) % Accident 1,035,675,457 4.56% 887,277,513 4.26% 16.73% Illness/Health 2,930,346,787 12.90% 2,473,114,765 11.87% 18.49% Motor Vehicles 5,085,067,734 22.39% 5,025,804,558 24.12% 1.18% Motor Own Damage 5,085,067,734 22.39% 5,025,804,558 24.12% 1.18% Rail Vehicles 10,586 0.00% 5,286 0.00% 100.27% Aircraft 58,724,204 0.26% 41,755,849 0.20% 40.64% Watercraft 140,455,545 0.62% 139,916,316 0.67% 0.39% Marine 488,871,753 2.15% 415,936,425 2.00% 17.54% Fire and Natural Disasters 3,844,573,725 16.93% 3,324,489,251 15.96% 15.64% General Losses 2,429,292,744 10.70% 2,186,115,158 10.49% 11.12% Motor Vehicle Liability 5,528,325,411 24.34% 5,382,930,772 25.84% 2.70% Motor Vehicle TPL 5,070,820,284 22.33% 4,963,838,584 23.83% 2.16% Aircraft Liability 92,765,288 0.41% 69,721,106 0.33% 33.05% Watercraft Liability 9,409,070 0.04% 1,675,496 0.01% 461.57% General Liability 634,407,542 2.79% 508,124,765 2.44% 24.85% Credit 138,958,449 0.61% 106,601,433 0.51% 30.35% Fidelity 26,554,285 0.12% 24,702,020 0.12% 7.50% Financial Losses 178,765,763 0.79% 171,417,053 0.82% 4.29% Legal Protection 84,360,711 0.37% 67,218,062 0.32% 25.50% Support 2,984,038 0.01% 7,482,251 0.04% -60.12% Total Non-Life 22,709,549,092 87.38% 20,834,288,079 85.99% 9.00% Total Life 3,280,003,588 12.62% 3,395,327,656 14.01% -3.40% Grand Total 25,989,552,680 100.00% 24,229,615,735 100.00% 7.26% technicalKaynak: TSB loss of TL 429 million. In the At the bottom line, non-life segment motor TPL segment that makes up a booked a profit of TL 717 million gross, it would carry out a public offering substantial portion of this branch, on and TL 569 million net in its financial forSabancı 19.66% Holding, of the whichshares disclosed in AvivaSA that the other hand, the loss figure goes statements for the period ended 30 up to as high as TL 567 million. Motor September 2014. book building having taken place vehicles (own damage) branch, i.e. the inEmeklilik the first ve week Hayat of November,A.Ş. With the the other motor vehicle insurance branch, Having languished since 2012, the price for the AvivaSA Emeklilik ve registered a technical profit of TL 569 acquisitions in the industry picked million. Following motor own damage, up one again with Halk Bank’s this development, the number of life the highest profit generators in the announcement on the Public Disclosure Hayat A.Ş. IPO was set at TL 47. With industry were, in order, fire with TL went up to two, including our associate 255 million and personal accident with its disclosure, Halk Bank informed that Anadolucompanies Hayat traded Emeklilik. on Borsa İstanbul Platform (in Turkish: KAP) in July. In TL 213 million. Technical profit figure they have authorized the Head Office for all branches combined was TL 813 The merger process that was initiated million. Nonetheless, the effect of the in July 2013 with the acquisition of for the disposal of Halk Sigorta A.Ş. amount of TL 919 million needs to be capitals of which Halk Bank controls and Halk Hayat ve Emeklilik A.Ş., in the taken into account, which has been the majority share. concluded on 1 October 2014 when the Yapı Kredi Sigorta by Allianz was transferred from financial accounts two companies began pursuing their Another piece of information to the industry’s financial statement. activities as a single entity under the concerning the industry came from name Allianz.

46 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators / Developments and Changes in Legislation

Developments and Changes in Legislation

Summary information about the key and Procedures for Insurance and conveyance of draft legislation for changes in the legislation published Private Pension Sectors, which seeking the feedback of the concerned during the fiscal year, which concern went into force upon its publication institutions/companies thereupon, the company’s operations and operating in the Official Gazette issue 28054 and electronic announcement of the results, are presented below. dated 14 September 2011, stipulates legislation drawn up. public disclosure of such portions Consumer Protection Law Regulation on Unfair Terms in of the audit guides drawn up by the Consumer Contracts Consumer Protection Law no. 6502 Undersecretariat of Treasury, the was published in the Official Gazette minimum content of the documents The regulation, which went into force issue 28835 dated 28 November 2013, and information to be required from upon its publication in the Official to be enforced six months later. The companies within the scope of the audit, Gazette issue 29033 dated 17 June 2014, key change the new law introduced and audit norms. sets out the principles and procedures with respect to insurance companies for establishing and overseeing the Circular on the Implementation was the expanded scope of consumer unfair terms incorporated in contracts Principles of Private Health transaction definition so as to made with consumers. Insurance Regulation incorporate insurance transactions, Regulation on Activities to be thus making insurance transactions Private Health Insurance Regulation Considered Under Insurance a consumer transaction. The governing the implementation Business, Insurance Contracts Made requirements in the New Consumer Law principles and procedures for private in Favor of Consumers and Distance went into force on 28 May 2014. health insurance practices has been Insurance Contracts revised by being published in the General Conditions for Suretyship Official Gazette issue 28800 dated 23 Insurance The Regulation, which went into force October 2013. The Regulation, which upon its publication in the Official Scope, terms and other general went into force six months after the Gazette issue 28982 dated 25 April 2014 conditions of implementation for the date of its promulgation, incorporates by the Undersecretariat of Treasury, Suretyship Insurance was enacted important new rules about information establishes the boundaries of insurance by the Undersecretariat of Treasury and proposals, and specifically about activity and of the businesses that do effective 01 February 2014. While they lifetime renewal guarantee, which is not fall thereunder, and sets out the have not been implemented in Turkey as a frequent topic of conflict between principles and procedures in relation at the enforcement date of the general insurance companies and policyholders. to insurance contracts made in favor conditions, suretyship insurance calls of consumers and insurance contracts Insurance Agencies Regulation for a new perspective and expertise. that the parties make without getting The suretyship insurance is expected to The new regulation that went into together. serve as an alternative to bank letters of force upon its publication in the Official Draft Regulation on Distance guarantee and contribute significantly Gazette issue 28980 dated 22 April Contracts for Financial Services to the solution of suretyship and 2014 made some revisions to the guarantee problems domestic qualifications of people who will work Draft Regulation was drawn up companies are faced with. as insurance agents, their authorities based on Articles 49 and 84 of the and responsibilities, and principles and Circular on the Newspaper Consumer Protection Law no. 6502 procedures in relation to their activities. Announcements to be Placed for dated 28 November 2013, for setting Article 25 of the new regulation out the implementation principles Unclaimed Monies by Right Holders repealed the former Insurance Agencies and procedures in relation to distance The Regulation on Unclaimed Monies by Regulation that went into force upon its contracts for financial services. The Right Holders under Insurance Policies publication in the Official Gazette issue draft regulation sets forth the obligation Governed by the Provisions of Private 26847 (duplicate) dated 14 April 2008. to provide advance information, Law, which was published in the Official exercise of the right of withdrawal, Circular on the E-Announcement and Gazette issue 28789 dated 08 October and obligations of parties, as well as E-Legislation Feedback System of the 2013, sets forth the principles and termination of the contract and burden Directorate General of Insurance procedures for lapsed monies such as of proof under the heading various premiums and compensations that need For the purpose of more efficient provisions. to be paid or returned to right holders. performance of regulatory work, the Undersecretariat of Treasury launched Draft Audit Guides the E-Announcement and E-Legislation Article 23 of the Regulation on the Feedback System as of 01 May 2014. Supervision and Audit Principles The system will enable electronic

47 / Anadolu Sigorta Annual Report 2014 2002

A brand-new era began with the “Maximum Service in Insurance” concept. The 2001 company introduced the After providing service service philosophy under one title that it has possessed company was relocated from since its foundation, and once for over five decades, the again became the author of a

its building in Karaköy to first in the sector. İşsubsidiaries. Towers, where it would be together with İşbank

2004

Voted as “the most satisfactory insurance company with its products and services”, Anadolu Sigorta received the Active Academy Private Customer Satisfaction Award in Insurance. The company expanded its service range by taking over the health branch from Anadolu Hayat Emeklilik, which the company was required by law to give up. Anadolu Sigorta was awarded its ISO 9001: 2000

endorsement proving that the company’s quality Qualitymanagement Management system Systemcomplies certification, with international an standards.

48 / Anadolu Sigorta Annual Report 2014 2006

The company maintained its sectoral leadership in premium production for

and realized a premium theproduction fifth consecutive in excess year of TL 1 billion, undersigning yet another historic result in the history of the Turkish insurance industry.

49 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

An Assessment of Anadolu Sigorta in 2014

2014 - Breakdown of Premium Production by Branches (%)

Branch Share (%) Accident 2.7 Illness/Health 9.3 Motor Vehicles 27.4 Aircraft 0.4 Watercraft 2.2 Marine 2.2 Fire and Natural Disasters 16.7 General Losses 8.0 Motor Vehicles Liability 26.0 Aircraft Liability 1.0 General Liability 3.5 Credit 0.0 Financial Losses 0.3 Legal Protection 0.3

Anadolu Sigorta is an insurer active Premium Production and Technical With 27.4%, motor vehicles branch in non-life branches, which include Results commands the biggest share of the accident, illness/health, motor vehicles, total portfolio. This is followed by aircraft, watercraft, marine, fire and Anadolu Sigorta’s direct premium motor vehicle liability, fire and natural natural disasters, general losses, production reached TL 2,880 million disasters, and illness/health branches. motor vehicle liability, aircraft liability, in 2014. With the addition of TL 125 general liability, credit, financial losses million in reinsurance premiums, the and legal protection. company’s total premium production amounted to TL 3,005 million last year.

50 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

Premium Production 2013-2014 (TL thousand) 2013 2014

50,494 Accident 79,755

Illness/ 229,008 Health 279,983

Motor 811,525 Vehicles 824,143

10,099 Aircraft 12,563

63,534 Watercraft 67,021

49,343 Marine 66,019

Fire and Natural 463,414 Disasters 503,259

General 249,689 Losses 239,216

Motor Vehicles 703,489 Liability 780,421

Aircraft 21,181 Liability 30,205

General 80,846 Liability 105,013

710 Credit 1,127

Financial 9,510 Losses 8,500

Legal 6,860 Protection 7,606

51 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

Accident: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) Premium production in the accident branch was up 57.9% year-on-year and amounted to TL 42.1 48.2 13,517

79,755 thousand in 2014. Claims 79,755 paid in this branch totaled TL 11,243 thousand. The accident 11,243 branch booked a technical profit

of TL 38,407 thousand in 2014, 50,494

translating into a year-on rise by 22.5 238,5%. 15.2

13 14 13 14 13 14 13 14

Illness/Health: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) In 2014, premium production on illness/health branch grew 22.3% year-on-year and amounted to TL 3.1 82.2

279,983 thousand, while claims 78.7 279,983 paid totaled TL 211,843 thousand. 211,843 Technical accounts showed a profit 229,008 of TL 3,581 thousand in illness/ 168,735 health branch in 2014. 1.3

13 14 13 14 13 14 13 14

Motor Vehicles: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) Premium production on motor vehicles insurance, which has the highest share in the 11.1 70.6

premium production of Anadolu 66.5 10.4 824,143 531,227 Sigorta, went up by 1.6 % year- 811,525 on, amounting to TL 824,143 491,961 thousand. Claims paid in this branch in the same period went up by 8.0% to TL 531,227 thousand. After posting a technical profit of TL 90,430 thousand in 2013, the branch registered a technical profit of TL 85,313 thousand in 13 14 13 14 13 14 13 14 2014.

52 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

Premium Production Claims Paid Claims Paid Technical Profitability Aircraft: (TL thousand) (TL thousand) (%) (%) While premium production on aircraft insurance was worth

33.7 TL 12,563 thousand, claims paid 61.9 14,212 12,563 -661.3 dwindled by 66.2% as compared to 2013 and amounted to TL 4,798 10,099 -203.6 thousand. The technical accounts showed a loss of TL 7,781 thousand in 2014. 4,798

13 14 13 14 13 14 13 14

Premium Production Claims Paid Claims Paid Technical Profitability Watercraft: (TL thousand) (TL thousand) (%) (%) In 2014, watercraft insurance premium production grew by 5.3

107.3 5.5% year-on-year and reached 67,021 57,560

63,534 TL 67,021 thousand. While claims

80.2 paid in this branch were worth TL 57,560 thousand in the reporting

-5.2 period, technical loss was TL 3,506

28,458 thousand.

13 14 13 14 13 14 13 14

Premium Production Claims Paid Claims Paid Technical Profitability Marine: (TL thousand) (TL thousand) (%) (%) During 2014, premium production on marine branch rose by 33.8% 41.6 34.5 to TL 66,019 thousand while 20,452 66,019

19,025 claims paid amounted to TL 20,452

26.2 thousand. Technical profitability

49,343 was TL 22,796 thousand in 2014. 25.6

13 14 13 14 13 14 13 14

53 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

Fire and Natural Disasters: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) Premium production on fire and natural disasters insurance policies was up 8.6% in 2014 and 51.5 12.6 reached TL 503,259 thousand 49.0 129,415 while claims paid amounted 503,259 to TL 129,415 thousand. Up 463,414 by a remarkable 111.0% in 2014, technical profitability of 86,786 6.5 the branch reached TL 63,464 thousand.

13 14 13 14 13 14 13 14

General Losses: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) During 2014, premium production on general losses branch was down

by 4.2% to TL 239,216 thousand, 8.0 68.8 while claims paid amounted to 67.9 249,689 TL 110,220 thousand. The branch 110,220

posted TL 19,131 thousand in 239,216 94,356 technical profit in 2014, up by 4.7 62.6% year-on-year.

13 14 13 14 13 14 13 14

Motor Vehicle Liability: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) Anadolu Sigorta’s premium production on motor vehicle 86.9

liability insurance went up by 0.4 82.3 -5.0 780,421 10.9% in 2014 to TL 780,421 442,934 thousand, while claims paid 703,489 amounted to TL 442,934 thousand.

The technical loss of TL 35,212 296,757 thousand booked by motor vehicle liability branch in 2013 was reversed to a profit figure of TL 2,885 thousand at the end of 2014. 13 14 13 14 13 14 13 14

54 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

Premium Production Claims Paid Claims Paid Technical Profitability Aircraft Liability: (TL thousand) (TL thousand) (%) (%) Premium production on aircraft liability branch was TL 30,205 7.6

92.0 thousand in 2014, up by 42.6%. 1,532 30,205 The technical profit in this branch amounted to TL 515 thousand

57.6 corresponding to a technical 21,181 profitability of 1.7%. 1.7 296 13 14 13 14 13 14 13 14

Premium Production Claims Paid Claims Paid Technical Profitability General Liability: (TL thousand) (TL thousand) (%) (%) During 2014, general liability insurance premium production

-20.2 grew 29.9% and amounted to TL 426.8 -120.6 32,243

105,013 105,013 thousand. While claims paid rose from TL 23,187 thousand 80,846

23,187 to TL 32,243 thousand, a technical loss of TL 126.639 thousand was registered. 120.6

13 14 13 14 13 14 13 14

Premium Production Claims Paid Claims Paid Technical Profitability Credit: (TL thousand) (TL thousand) (%) (%) Premium production in the credit insurance branch was worth TL 1,127 thousand in 2014, while 1,127 385.0 6,301 -119.6 -450.6 claims paid amounted to TL 778 thousand. The technical accounts

710 showed a loss of TL -1,348 thousand on 2014 operations of the branch. 778 91.0

13 14 13 14 13 14 13 14

55 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

Financial Losses: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) Premium production on financial losses branch totaled TL 8,500 thousand in 2014 and claims 49.9 30.2 9,510 paid were worth TL 26 thousand. 4,245

The financial losses branch 8,500 posted a technical profit of TL 2,570 thousand at the end of the reporting period. 10.6 26 -9.2 13 14 13 14 13 14 13 14

Legal Protection: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) Premium production in the legal protection branch stood at TL 9.0

7,606 thousand in 2014. The 162 94.3 branch attained a profitability 7,606 of 83.0 % in 2014 for a technical 83.0 6,860 profit of TL 6,310 thousand. 129 4.8

13 14 13 14 13 14 13 14

Total: Premium Production Claims Paid Claims Paid Technical Profitability (TL thousand) (TL thousand) (%) (%) Anadolu Sigorta’s total premium production in 2014 was up 4.0 77.7

9.3% and reached TL 3,004,830 3.7 73.7 thousand, while claims paid 1,553,197 grew by 24.3% to TL 1,553,197 3,004,830 2,749,704 thousand. Despite the 4.0-point 1,249,199 rise in loss premium ratio, the technical profit figure went up by 20.2% to TL 121,260 thousand owing to the positive contribution from the increased financial 13 14 13 14 13 14 13 14 profitability.

56 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014

Investment Income A total of TL 31,151 thousand was The “financial investments valuation booked as income on sales of financial account”, which consists of valuation Investment income grew by 39.0 % to investments during the reporting income derived from all equities, bills reach TL 258,928thousand in 2014. period. TL 13,409 thousand of this was and bonds, mutual fund shares, repo from the sale of bills and bonds, while trading, and fixed-term deposits, The company, in 2014, derived TL TL 2,408 thousand was from the sale showed TL 19,421thousand. 94,307 thousand as interest income of equities, and TL 12,225 thousand on time deposits, TL 27,749 thousand was from the sale of mutual funds. The company booked currency from the sale of government securities The portion of TL 3,109 thousand translation gains in the amount of TL and private sector bonds, and TL 8,119 remaining outside these amounts 59,971 thousand in 2014. Income from thousand in dividend income from consists of income generated by the Anadolu Sigorta’s equity participations equities. sale of financial assets subject to repo amounted to TL 16,000 thousand. trading.

Investment Income (TL thousand) 2014 2013 Change (%) Income from Financial Investments 130,175 85,749 51,8 Revenues from the Sales of Financial 31,151 16,004 94,6 Investments Valuation of Financial Investments 19,421 10,576 83,6 FX Gains 59,971 52,709 13,8 16,000 18,000 -11,1 Income from Real Estate 1,815 2,848 -36,3 Dividend from Affiliates Income from Derivatives 206 213 -3,4 Other Investments 189 113 67,5 Total 258,928 186,213 39,0

Investment Expenses

Anadolu Sigorta’s investment expenses increased 47.3 % to TL 275,810 thousand in 2013. The biggest component of this figure consisted of TL 1190,509 thousand in investment income that was transferred to the technical division. As required by into effect on 1 January 2008, investment income on assets covering technical reserves has been transferred to the technical division.the Undersecretariat The investment of Treasury income transferred Circular on tothe the Procedures technical anddivision Principles in line of with Keys the Used relevant in Financial transfer Statements method was that up went by 54.6% year-to-year and reached TL 190,509 thousand.

Investments Expenses (TL thousand) 2014 2013 Change (%) Investment Management Expenses (incl. -137 - - interests) Devaluation of Investments -3,510 -4,678 -25.0 Loss from the Sales of Financial -7,713 -13,582 -43.2 Investments Investment Expenses Transferred to the -190,509 -123,220 54.6 Technical Division Loss from Derivative Products -185 -100 85.3 FX Losses -49,954 -28,805 73.4 Depreciation Expenses -23,802 -16,832 41.4 Total -275,810 -187,216 47.3

57 / Anadolu Sigorta Annual Report 2014 Financial Status / Financial Information and Indicators/ An Assessment of Anadolu Sigorta in 2014 Financial Status / Assessment of the Company Capital and Comments

Revenues, Income, Expenses and Losses from Other Operations The “revenues, income, expenses and losses from other operations” account stood at TL 11,736 thousand at year-end 2014. A major contributor to this account balance stems from a TL 20,361 thousand charge against the reserves account, while the deferred tax assets account created an income effect of TL 7,396 thousand.

Revenues, Income, Expenses and Losses from Other Operations (TL thousand) 2014 2013 Change (%) Provisions -20,361 -23,893 -14.8 Rediscounts -3,360 2,354 -242.8 Deferred Tax Income 7,396 - - Deferred Tax Liability Expense - -11,655 -100.0 Other Revenues and Income 5,142 3,469 48.2 Other Expenses and Losses -554 -2,689 -79.4 Total -11,736 -32,414 -63.8

Operating Results comparison. Key ratios concerning the company’s performance are shown in the chart to the right along with prior-year results for 2014 2013 4.0% 3.7% Net Loss-Premium Ratio 77.7% 73.7% ReturnTechnical on Profitability Equity Ratio 7.0% 7.4% Return on Assets 1.9% 2.1%

2014 2013 Change (%) Technical Division Balance 121,260 100,878 20.2 Investment Income 258,928 186,213 39.0 Investment Expenses -275,810 -187,216 47.3 Revenues, Income, Expenses and Losses -11,736 -32,414 -63.8 from Other Operations Total 92,642 67,462 37.3 Income/Loss (Gross) 92,642 67,462 37.3 Tax Provisions -21,082 - - Income/Loss (Net) 71,560 67,462 6.1 The insurance sector is expected to sustain its growth in 2015 while the goal of Anadolu Sigorta will be to secure increased production in real terms and attain a sustainable profit, by further leveraging the concepts of quality service, leadership, innovation and customer focus. Technical results will be monitored closely, targeting to increase technical profitability through improving loss premium ratios particularly in unprofitable branches. In striving to achieve its strategic goals, the company aims to further increase its brand equity while continuing to offer its services to the policyholders with strict adherence to its quality service concept as it has always done.

Assessment of the Company Capital and Comments The key considerations that the companies in the insurance sector will face in the years ahead will be the satisfaction of potential capital requirements that might arise in line with growth, and due management of the capital.

When planning for growth and profitability targets, Anadolu Sigorta observes capital needs as well. Attention is paid to ensure that the company capital is at adequate level, taking into consideration the regulatory requirements. Information on capital adequacy is presented in the relevant section of the notes to the financial statements.

58 / Anadolu Sigorta Annual Report 2014 Financial Status / Profit Distribution Policy

Profit Distribution Policy

principles for shareholders and espoused by the Board of Directors is of Incorporation, our employees • Theother company’s people participating profit distribution in the • Thebased profit on the distribution principle of policy proposing • Pursuantare paid dividends to the company’s up to three Articles profit are governed by the applicable to the General Assembly the times of their salaries, which, in the requirements of the Turkish distribution of at least 30% of the net aggregate, must not be in excess of Commercial Code, Capital Market distributable profit for the period as 3% of the amount remaining after legislation and our Articles of bonus shares and/or in cash. the first dividend is set aside. Incorporation.

profit for the period calculated based advances on dividends in accordance presented by the Board of Directors • Inon thethe eventlegal recordsthat the remainsnet distributable below • Thewith company the principles may distribute and procedures • Thefor the dividend approval distribution of the General proposals 5% of the company’s paid-in capital, set forth in the Capital Market Assembly are prepared in a manner the Board of Directors may propose legislation. to preserve the delicate balance to the General Assembly that no between the expectations of our dividends be distributed. shareholders and the company’s company. need to grow, and taking into • There are no preference shares in the consideration future expectations processes are carried out so as to be given, nor are dividends paid to the regarding the company’s operations, • Dividendcompleted distribution by no later thanformalities the end and of • Nomembers founder’s of the bonus Board certificates Directors. are capital adequacy targets and the the fiscal year in which the General conditions prevailing in capital Assembly Meeting is convened. markets, as well as the profitability of the company.

59 / Anadolu Sigorta Annual Report 2014 60 / Anadolu Sigorta Annual Report 2014 2008

Anadolu Sigorta launched the C2C (Closer to Customer) change program whereby all business processes are reviewed and revised. While 2007 the company increased The sector’s unrelenting sustainable growth strategy, it champion in premium itsalso profitability received Active through Academy production for the last six Private Customer Satisfaction years, Anadolu Sigorta Award in Insurance for the company in Turkey to exceed became the first insurance the USD 1 billion threshold in fifth consecutive time. total premium production.

2010

The company celebrated its 85th anniversary.

Planned within the frame of the C2C change

life. The company launched its new social program,responsibility the first project, set of “Bir changes Usta Binwas Usta” put into (From One Master to One Thousand), thus contributing to revitalize vanishing professions in Anatolia.

61 / Anadolu Sigorta Annual Report 2014 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 returns to be derived and general related implementation procedures company’s activity in the money economic expectations, sets the include written standards devised and • Theand capitalbasic objective markets of is the to generate company’s risk tolerance, which is enforced by the Board of Directors and maximum possible return at a then expressed in terms of risk limits. implemented by senior management. specified risk level. The priorities In line with the procedures set in the Determined and enforced by the in asset investments are, in order Policies and in view of the market Board of Directors in parallel with of precedence, safe investment, conditions in the relevant period, the international practices on the basis of liquidity and return. Risk Management and Internal Control insurance underwriting risk, credit Department reports violations of limits risk, market risk, operational risk submitted to the CEO and the Board of and the risk of use of the company’s company takes into account market Directors. • When investing assets, the services for laundering proceeds from and liquidity risks, portfolio crime and for financing terrorism, concentration risk, payables in Senior Management is responsible for these are general standards that high amounts such as known or implementation of Risk Management define the organization and scope of foreseeable advance taxes, corporate Policies. For purposes of ensuring the risk management function, risk taxes, reinsurer payments and claims compliance with policies, Senior measurement procedures, the duties payments, as well as receivables Management means the CEO, Deputy and responsibilities of the company’s from insurance activity. Chief Executive Officers, and relevant Risk Management Committee, as well Unit Managers and Regional Managers. as the procedures for determining risk On the other hand, all authorized stress tests, the assets portfolio limits, actions to be taken in possible employees performing the transactions • Throughis exposed scenario to various analyses shocks and and limit violations, and the compulsory regarded as a part of risk management tested with respect to interest rates, approvals and confirmations that are processes are individually responsible exchange rates and share certificate required to be given in various cases for the accuracy and reliability of all prices. These tests are conducted at and circumstances. kinds of data and information they quarterly intervals at a minimum. provide in relation to their respective Besides insurance underwriting, jobs within the process, which form the credit, market and operational basis of the making of decisions. maintaining a cash position in risks, other risks can result from the • Utmostforeign currencyattention foris paid potential to reciprocal and successive interaction catastrophic risks equivalent to of these risks. Therefore, an integrated the lower limit of excess of loss consideration should be adopted agreements, as well as known for all risk elements stemming from liabilities for any given period. assets and liabilities positions. The company’s basic strategy with respect to the distribution of long-term assets and liabilities is to ensure consistency between assets and liabilities at optimum liquidity risk level so as to support the objective of maximizing returns. Accordingly, utmost importance is given to the following points:

62 / Anadolu Sigorta Annual Report 2014 Risks and an Assessment by the Governing Body / Risk Management Policies Adhered to by Types of Risks

1- Insurance Underwriting Risk 2-Credit Risk Policy from the counterparty at any time, Policy but also on the risk underwritten. The Credit risk means the possibility risks of counterparties are regularly Insurance underwriting risk is defined of the company’s sustaining reported by the Risk Management as a risk that might arise from failure loss due to failure on the part of and Internal Control Department to to correctly and effectively implement policyholders, agents, reinsurers, the CEO and the Board of Directors. the insurance technique within the fronting companies, coinsurers, and The Risk Management and Internal process of turning coverage provision other parties to partially or totally Control Department is also responsible for natural risks which are not known fulfill their obligations towards the for undertaking daily follow-up of certainly if they will occur and for company. It also indicates to the loss regional, sectoral and market trends risks which are known for sure to of market capitalization caused by the that have an actual or possible impact occur but are unknown time-wise into deterioration in the financial standing on the company’s credit risk, and for sustainable commercial earnings. The of companies with which there are reporting the results to the CEO and scope of Insurance Underwriting Risk subsidiary or affiliate relationships. the Board of Directors. Policies consists of the conditions and The Credit Risk Policy sets out the price of the coverage to be provided procedures and responsibilities 3-Market Risk Policy for the risk; the principles applied in related to the management, control determining which of the coverages and monitoring of credit risk, as well as Market Risk means the risk of loss in provided will be ceded up to what matters in relation to credit risk limits. the value of the company’s placements amounts and to whom in the case in financial borrowing instruments of risks decided to be transferred; Early identification and definition of whose return is linked to interest rate; conducting effective monitoring of risk issues are of the essence for effective stock, other investment securities, all portfolio loss frequency so as to allow management of credit risk. For this FX or FX-indexed assets and liabilities formulation of fitting reinsurance purpose early warning signals are in or off the balance sheet, derivative strategies at sufficient frequency, determined; these are indicators agreements based on the said and related monitoring and reporting pointing at cases that will adversely instruments, which loss might result system. influence the credit risk and lead to a from the volatilities in interest rates, credit risk that is above the company’s stock prices and exchange rates. Management of insurance risk tolerance. For insurance brokers, underwriting risk is based on the these are declined collection ratios, The basic and ultimate purpose of the principle of forming the risk portfolio reduced production performances, company’s activities in money and with risks that represent a low slackened discipline in conforming to capital markets is to generate returns. potential to cause loss. In order to company guidelines, and other data The basis of Market Risk policies is avoid poor risk selection and incorrect from intelligence. For Reinsurance to measure, report and keep under pricing of insurance policies and to companies and counterparties, these control the risk that the company is create accurate reinsurance policies, cover all kinds of data and information exposed to by reason of such activity. effective monitoring is carried out obtained in relation to negative ratings The top priority is to ensure that the on loss frequency and loss severity of and developments. It is the duty and company’s Market Risk exposure the risk portfolio. The risk portfolio responsibility of executive units to is within the limits stipulated by is separately overseen on the basis of obtain data and information in relation applicable legislation and is compliant agents, industry, branches, regions, to credit risk. All kinds of information with the company’s risk appetite.In brands, models, tariffs, products, obtained are urgently considered market risk management, risk appetite customers and other parameters. within the frame of decision-making, is expressed in terms of market risk monitoring, reporting and auditing limits assigned to the executive fund A comprehensive insurance processes. management unit and the contracted underwriting risk reporting system asset management companies. Market is used to ensure measurement of loss A credit risk scoring system used, risk limits are categorized into two performance, oversee compliance which has the capability to be made use groups: limits set employing the value with applicable legislation and ensure of in the management of credit risk and at risk method, and limits determined reporting on the effectiveness of decision-making, to enable monitoring based on the ratio of each group of insurance underwriting risk controls. risk on the basis of counterparties, to investment securities to the total The risk of the portfolio is regularly take notice of expected and unexpected portfolio and shareholders’ equity. reported by executive departments losses, and to allow for making the The Risk Management and Internal and the Risk Management and Internal decisions based not only on the return Control Department and executive Control Department to the CEO and the derived or anticipated to be derived fund management unit closely and Board of Directors.

63 / Anadolu Sigorta Annual Report 2014 Risks and an Assessment by the Governing Body / Risk Management Policies Adhered to by Types of Risks

constantly monitor limit violations. In Limits are introduced for potential 5- Policy for Combating the case limits are exceeded, the amount operational risks that might arise Legalization (Laundering) of at which a limit is exceeded and its during the activities based on the Proceeds from Crime and Financing reasons are reported to the CEO and “Company Risk Catalogue,” which is the of Terrorism the Board of Directors, along with the basic document used in defining and assessments of the executive body. If classifying all risks that may be faced This policy is intended to define, limit violations are above the ratios or with. The Risk Catalogue is updated in rate, monitor, assess and mitigate the durations set by the Board of Directors, parallel with the changing conditions. risks the company is exposed to with necessary action is determined by the “Self-Assessment Methodology” is used respect to the use of the insurance Board of Directors. in the identification of operational service offered by the company in risks. In this method, the risks in laundering proceeds from crime or Market risk is calculated employing relation to activities conducted are financing of terrorism. The ultimate internationally accepted statistical exposed with the involvement of the goal can be achieved by effectively methods. Since these calculations personnel performing the job. monitoring and supervising customers cover risk prediction for the following and transactions in full compliance days, the accuracy of predictions are Qualitative and quantitative methods with the applicable legislation and compared subsequently with actual are used jointly in the measurement regulations. values and monitored on a daily basis. and evaluation of operational risk. On the other hand, the portfolio is The measurement process uses data The overall scope of the policy covers tested under different scenarios for obtained from “impact - likelihood the activities centrally executed for determining the effects of occurrences, analysis”, “control culture profile defining, measuring, monitoring, which pose a low probability in terms surveys” and internal and external controlling and reporting the risks that of occurrence, but big volume in terms “loss database.” When managing the company is exposed to for reasons of loss. The assessments, which include operational risk, efforts are spent of the use of the insurance service the possible mismatches among types to develop controls to eliminate or offered by the company in laundering and maturities of the company’s assets mitigate the possibility of sustaining proceeds from crime or in financing and liabilities, are regularly reported loss due to risks that the company of terrorism, or the company’s failure in detail to the CEO and the Board of may be exposed to in relation to its to fully comply with the liabilities Directors. activities. Effectiveness and adequacy imposed by the Law no 5549 on of existing or subsequently developed Prevention of Laundering Proceeds 4-Operational Risk Policy controls, and the implementation of from Crime and by related regulations action plans adopted in this regard and communiqués. Operational risk is defined as any are evaluated in coordination with risk other than absolute insurance The basic strategy of the company to the Risk Management and Internal underwriting, credit and market risks achieve the ultimate goal is to carefully Control Department and the Board of which might occur in the organization, plan, conduct and manage risk Inspectors. The Risk Management and business continuity, insufficient management activities independently, Internal Control Department monitors or inoperative business processes, impartially, purposefully, productively all operational risks that the company technology, human resource, and efficiently, employing a risk- may be exposed to during the course of underperformance by individuals, focused approach and in line its activities, and regularly reports on administrative mistakes, unfortunate with applicable legislation and the same to the CEO and the Board of events, misconduct, accident and internationally accepted principles Directors. fraud, systems or external factors, and standards. The basic principle in legislation, management and business achieving this goal is to employ the environment, and which might cause most advanced tools and methods physical or reputational loss to the that are available and possible to be company. used. Findings from risk management, monitoring and control activities are regularly reported to the Board of Directors by the Board Director who is delegated by the Board of Directors in respect of this matter.

64 / Anadolu Sigorta Annual Report 2014 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 RISK MANAGEMENT ACTIVITIES AND the sudden changes in risk perceptions Communiqué Serial: IV No: 56 on the RISK ASSESSMENT in conjunction with the weak global Determination and Implementation economic outlook and the extremely The company’s risk exposure is of Corporate Governance Principles volatile capital flows. The plummeted monitored, assessed and controlled enforced upon its publication in the commodity prices and particularly that individually under the categories of Official Gazette issue 28158 dated of oil and geopolitical tensions arose insurance underwriting risk, credit 30 December 2011, it has been as new sources of instability. In this risk, market risk and operational risk. decided to set up a Committee of respect, the risks and uncertainties The risk exposure arising out of the use Early Determination of Risk as of against the growth of all developing of the company’s insurance services 27 February 2012. The committee economies in general emerge as for laundering proceeds from crime will be responsible for carrying follows: or for financing terrorism, or out of out all relevant works and efforts failure to achieve full compliance with for the early determination of risks the obligations imposed by the Law that might endanger the existence, monetary policy and the potential no 5549 on Prevention of Laundering • The Fed’s normalization of its progress and survival of the company, effects thereof on developing Proceeds from Crime and by related implementation of measures and economies, regulations and communiqués is remedies against identified risks, and addressed independently from other management of the risk. types of risks as per the applicable • Sustained fragility in the Eurozone The committee makes an assessment of legislation. economic outlook worsened due to the situation in its bimonthly reports • Aggravated concerns that the global When the company’s risk exposure is the fact that the oil prices, which submitted to the Board of Directors; assessed with respect to the magnitude quickly slumped to their lowest the said report is also shared with the of potential impact of those risks, the levels of the past five years, affected statutory auditor. effects of developments in global and the economies of oil exporting national economy upon the technical countries, and financial performance, the

have regained vigor in various low technical profitability come to the • Geopolitical tensions that fore.potential earthquake in İstanbul, and geographies across the world.

It is well known that macroeconomic Although the Turkish economy has risks and financial stability received well-deserved credit for risks mostly result from global its growth performance in the past developments, as well as national decade, that same performance also developments, in outward-oriented brought along the current deficit economies with a broad current issue. It is common knowledge that the deficit such as Turkey. The key factors Turkish economy is unable to attain that fuelled macrofinancial risks growth without producing current particularly in recent years have been deficit, and is fragile in the face of interrupted capital inflows due to its

65 / Anadolu Sigorta Annual Report 2014 Risks and an Assessment by the Governing Body / Activities of the Committee of Early Determination of Risk

inherent imbalances. In a conjuncture It is considered that the total amount of decreased global risk appetite, of protection the company obtains the financing of growth constitutes for catastrophe risks is sufficient a highly critical agenda item for the for a 1000-year earthquake, which Turkish economy. is the minimum model according to the Reinsurance Strategy.Although it During 2015, the Fed’s decisions, is not deemed vital when a potential geopolitical developments, the course of oil prices and domestic individually, a Contingency Action and political agenda will obviously lead Fundingearthquake Plan in and İstanbul a Business is considered Continuity to volatile periods in economy. Such a Plan have been formulated for the conjuncture might easily pave the way management of potential market, for potentially significant deviations credit and operational risks that might in various economic parameters, be triggered simultaneously by such an including credit rates, loan utilization, earthquake. The operability of these housing and car sales, which are plans is tested at regular intervals. interrelated with the production performance of the insurance industry. Low operating profitability is at the Yet, in general, the insurance industry top of the risk elements that are critical is expected to perform more positively for the company, which is the case in 2015 than it did in 2014. also for all companies in the sector that are engaged in non-life branches. The compensation amounts that This predicament that results from might result from earthquakes and excessive price competition and other catastrophe risks that exceed prevents accumulation of capital is the upper limits of various existing anticipated to disappear gradually, agreements are of a nature that might in parallel with the future depth to lead the company to suffer losses of a be achieved by the Turkish Insurance magnitude that cannot be made up for Industry, which constantly grows in a typical operating year. Modeling other than in periods of crises. Another software is used to determine the expectation is that the problem of magnitude of an earthquake in technical profitability will be mitigated significantly by the contribution to that would arise therefrom, and the be lent to operational efficiency by İstanbul and the potential losses potential margin of error incorporated company-wide projects conducted in such software is also taken into within the frame of a comprehensive consideration when determining transformation program. the final protection level. Scenario analysis is employed to establish some uncertainties that cannot be calculated by modeling programs, such as personal injury, motor own damage claims, tsunami, post-earthquake fire, changes in our protection level due to volatile exchange rates, inflation, high level coverage in conjunction with loss of profit, and a portfolio that expands during the course of the year, whereas a certain safety margin is allowed for some other uncertainties.

66 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / Report on the Audit of Board of Directors’ Annual Report Based on Standards on Auditing which is a Component of the Turkish Auditing Standards Published by the Public Oversight Accounting and Auditing Standards Authority (“POA”)

Report on the Audit of Board of Directors’ Annual Report Based on Standards on Auditing which is a Component of the Turkish Auditing Standards Published by the Public Oversight Accounting and Auditing Standards Authority (“POA”) Convenience Translation into Englısh of the Independent Auditor’s Report Related to Annual Report Originally Issued in Turkish

ToReport Anadolu on the Anonim Audit Türk of Board Sigorta of ŞirketiDirectors’ General Annual Assembly, Report Based on Standards on Auditing which is a Component of The Turkish Auditing Standards Published by The Public Oversight Accounting and Auditing Standards Authority (“POA”)

31 December 2014. We have audited the accompanying annual report of Anadolu Anonim Türk Sigorta Şirketi (the “Company”), for the year ended Board of Directors’ Responsibility for the Annual Report Pursuant to the article 514 of the Turkish Commercial Code numbered 6102 (“TCC”) and Communiqué on Individual Retirement Saving and Investment System” (“Communiqué”) issued on 7 August 2007 dated and 26606 numbered, management is responsible for the preparation of the annual report fairly and consistent with the financial statements and for such internal control as management determines is necessary to enable the preparation of such annual report.

Auditor’s Responsibility Our responsibility is to express an opinion on the Company’s annual report based on our audit in accordance with article 397 of the TCC and Communiqué whether the financial information included in the accompanying annual report is consistent with the audited financial statements expressed in the auditor’s report of the Company dated 29 January 2015 and provides fair presentation.

Our audit has been conducted in accordance with the Standards on Auditing which is a component of the Turkish Auditing Standards (“TAS”) published by the POA and the insurance legislation. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial information included in the annual report is consistent with the financial statements and provide fair presentation. An audit also includes performing audit procedures in order to obtain audit evidence about the historical financial information. The procedures selected depend on the auditor’s judgment. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial information included in the annual report is consistent, in all material respects, with the audited financial statements and provides a fair presentation.

Report on Other Regulatory Requirements In accordance with the third clause of the article 402 of TCC, no material issue has come to our attention that shall be reported about the Company’s ability to continue as a going concern in accordance with TAS 570 Going Concern.

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. A member of KPMG International Cooperative

Partner 24Alper February Güvenç, 2015 SMMM

İstanbul, Turkey

67 / Anadolu Sigorta Annual Report 2014 2014

Total premium production surpassed TL 3 biillion. 2012

The company received four International award with its social responsibility project, and its 2011 Annual Report.

2013

Anadolu Sigorta relocated to

is new head office in Kavacık- İstanbul.

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An Assessment of the Board Directors by the Corporate Governance Committee

Apart from the CEO, the Board of Directors. set out in Article 375 of the Turkish Directors consists of non-executive Commercial Code and in other members. Utmost care is paid to ensure that the articles, the Board of Directors may information and documents about the delegate management, in part of in Chairman of the Board and CEO topics covered in the Board meeting whole, by way of an internal bylaws functions are carried out by different agenda are made available for the in accordance with Article 367 of the individuals. examination of the Directors at least Turkish Commercial Code. five days in advance, and when such Taking into consideration that there timing cannot be met, efforts are spent The Board of Directors fulfills its are no non-corporate ultimate to ensure equal flow of information to responsibilities remaining outside shareholders with a controlling the Board Directors. the scope of its basic functions taking interest in our company, it is thought into consideration the opinions and that the Board Directors naturally Each Director is entitled to one recommendations of executive bodies possess the advantage to act vote and none has weighted vote or and committees. Such responsibilities independently and therefore, to be affirmative/negative vetoing rights. include, but are not limited to the impartial in their decisions, upholding following: the interests of our company and Pursuant to the Articles of stakeholders above everything else. Incorporation, the Board of Directors Approving the company’s annual convenes on the basis of absolute budget and business plans, The Board of Directors meets regularly majority and makes decisions with the • Preparing the company’s annual and at least monthly as pre-scheduled, absolute majority of Directors present reports and finalizing the same to be and at any time as and when deemed in the meeting. • presented to the General Assembly, necessary. The Board of Directors met Ensuring that the General Assemblies Pursuant to the company’s Articles of 12 times in 2014. The Board Directors, are held in compliance with the Incorporation; in principle, attend every meeting. • legislation and the company’s Articles of Incorporation, Care is paid to determine the Board The Board of Directors is authorized Taking necessary action in relation meeting date during the immediately to pass decisions on any and all acts to General Assembly decisions, preceding meeting, followed by and transactions that are necessary • Approving the executives’ career written invitation. It is intended to for the achievement of the company’s plans and rewarding provided to set the meeting date so as to allow operating scope, save for those • them, all Directors to participate, and save for which the General Assembly is Determining the company’s policies for unforeseeable exceptional events, authorized as per the law and the about Shareholders, stakeholders the Board meetings are held with the Articles of Incorporation. • and Public Relations, participation of all Directors. Without prejudice to the duties and Determining the company’s The Board meeting agenda is powers that cannot be delegated as disclosure policy, • determined by the Chairman of the Setting the codes of ethics for the Board of Directors in line with the company and its employees, • proposals of the CEO and the Board Establishing the operating principles of committees; ensuring their • efficient and productive functioning, Taking necessary action so as to ensure the company’s organizational • structure responds to current circumstances, Examining the activities of former boards of directors. •

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The Board of Directors consists of In the formation of the Board of mathematics, statistics or engineering eleven Directors, which number Directors, care is given to; fields. More than half of the Board enables efficient organization of Directors must have graduated from the activities of the Board. Two Ensure that the nominees are a four-year university minimum, and independent Directors serve on the present in the meeting at the time of have knowledge and experience in at • company’s Board of Directors. election to the seats on the Board of least one of the fields mentioned above. Directors, Although there are no set rules on non- Inform the Shareholders about the The Directors possess these independent Directors’ undertaking nominees, qualifications and have; other duties outside the company, the • Allow Shareholders to ask questions Directors do not have any other duties to the nominees, Satisfactory knowledge and skills in • Inform the Shareholders, during banking and insurance business, apart from their natural duties in the • entities they represent and from those the General Assemblies, on other The skill to read and analyze • companies on the boards of which financial statements and reports, in the establishments owned by the • entities they represent. Yet, Board Director nominees serve and on the Basic knowledge about the compliance or non-compliance to legal regulations governing our Directors devote sufficient amount of • time for company affairs, and exercise internal regulations set exclusively company, and about general market their powers prudently and within on this topic. circumstances, the frame of good faith, possessing all The will and the opportunity to Directors just starting to serve on regularly attend the Board meetings necessary knowledge to ensure full • performance of the duty. the Board are offered an orientation for the period of time for which they program covering the following at a are elected to serve. Past experiences, and outside positions minimum: held, if any, of the independent Board The Board of Directors adopted the Directors are disclosed in their Introduction with our executives and necessary measures for preventing résumés and presented on our website visits to the company’s units, undisclosed information and/or trade • and in our annual report. The CVs and performance secrets from being disseminated out of assessments of our executives, the company. When fulfilling its decision-making • Strategic goals, current status and function, the Board of Directors acts on issues of the company, the basic consideration of: • Market share, financial structure and performance indicators of the Maximizing the fair value of the • company. company, • Pursuing the company operations Pursuant to legislation, general so as to ensure long-term and stable managers of insurance companies • earnings for our Shareholders, must have graduated from a four-year Maintaining the delicate balance university minimum, and have at least between the Shareholders and the ten years experience in any one of • company’s need to grow. insurance, banking, economy, business management, accounting, law, finance,

Fatih Gören Hasan Hulki Yalçın Prof. Savaş Taşkent

Deputy Chief Executive and Board Director and Board Director and Member of the Corporate Member of the Corporat Head of the Corporate Governance Committee Governance Committee Governance Committee

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Corporate Governance Principles Compliance Report

PART I - STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES

principles into practice bears utmost importance both for the development of national and international capital markets and for theOur best company interests firmly of ourbelieves company. that Corporate Governance Principles are as critical as financial performance, and that putting these

Our company implements the principles that are set as compulsory principles by the Corporate Governance Communiqué Serial: II-17.1.

Within this context, the company’s Articles of Incorporation do not cover provisions stipulating;

· Stakeholder participation in the company’s management, · Expansion of the scope of minority rights beyond the provisions of applicable legislation.

Hence, minority rights are not represented on the Board of Directors.

Since the company’s Articles of Incorporation do not include a provision about making donations, the company does not have a donations policy.

Our company does not have a specific policy for the number of woman members on the Board of Directors. stakeholders to date. The principles that are not yet implemented, which are exceptional, have not led to any conflict of interest among the At the Annual General Assembly Meeting convened on 25 March 2014 in accordance with the provisions of the Turkish Commercial Code no. 6102, it has been agreed to amend Article 4 of the company’s Articles of Incorporation. The said amendment has been registered on 10 April 2014, and the announcement for such registration was promulgated in the Turkish Trade Registry Gazette issue 8551 dated 16 April 2014.

The assessment and determinations of the level of compliance achieved by our company to the corporate governance principles, and opinions regarding the scope of the compliance level and ideas on its qualitative improvement are presented below.

PART II - SHAREHOLDERS

2.1 Shareholder Relations Department

An Investor Relations Unit has been set up in the company in 2005. Messrs. Fatih Gören, Murat Tetik, Barış Hüseyin Şafak and Cem Çözer 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 ContactCommittee. information Mr. Gören for holds our employeesa Corporate working Governance in this Rating unit isLicense. as follows.

Name Title Phone No E-mail Address Deputy Chief Executive 0 850 744 00 55 [email protected] Mr. Murat Tetik Manager 0 850 744 02 55 [email protected] Mr. Fatih Gören Supervisor 0 850 744 02 54 [email protected] Specialist 0 850 744 01 64 [email protected] Mr. Barış H. Şafak Mr. Cem Çözer

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This unit plays an active part in the protection of shareholding rights and facilitates their exercise, mainly regarding the right to obtain and review information, and establishes the communication between the Board of Directors and shareholders. All of the employees serving in the Investor Relations Department possess the required licenses.

The Investor Relations Department reports its activities to the Board of Directors four times a year, on a quarterly basis.

In essence, the Investor Relations Department works to;

· Ensure maintenance of the records about Shareholders in a healthy, secure and up-to-date manner, · Respond to the Shareholders’ and potential investors’ written information requests about the company, apart from those that

· Make available to the shareholders such information and disclosures that may have an effect on the exercise of shareholding rightsare not on publicly the company disclosed, website are of in a an confidential up-to-date and/or manner commercial secret nature, · Ensure that the General Assembly Meetings are convened in accordance with the applicable legislation, the Articles of Incorporation and other internal regulations, · Prepare the documents the Shareholders could make use of in the General Assembly, · Ensure that the results of the voting are recorded and the reports thereon are communicated to the Shareholders, · relation to corporate governance and public disclosure, · EnsureObserve representation and monitor the of ourfulfillment company of allin investorliabilities relations arising from meetings the capital organized market in Turkey legislation, or abroad including by international all requirements in establishments through participation in such events, · Prepare the presentation materials to be used in meetings.

In 2014, all verbal and written information queries received from researchers and our investors in relation to our company and/ from national and international investment companies were accepted and necessary information was provided. In total, two teleconferencesor to publicly disclosed and 28 investorfinancial meetingsstatement were results held were in 2014, answered. 17 of themRequests with for foreign meetings investment received companies. during the In reporting these meetings, period presentations were made on our sector and our company, and the investors’ questions were answered.

2.2 Shareholders’ Exercise of Their Right to Obtain Information All information queries of our Shareholders are answered, apart from those that are trade secrets or undisclosed information. Information requests received from our shareholders are addressed by our employees in the shareholder relations unit, and are shall be protected. prudently responded to in a timely, accurate and complete manner, on condition that trade secrets and confidential information Information on the topics our Shareholders frequently need and developments that might affect the exercise of their rights are posted in English and Turkish languages on our website accessible at www.anadolusigorta.com.tr. Pursuant to applicable legislation, minority Shareholders are entitled to request the General Assembly to appoint a special auditor for examining certain events. In 2014, our Shareholders did not request appointment of a special auditor from the General Assembly of Shareholders.

Our Articles of Incorporation contain no provisions stipulating the request for appointment of a special auditor as an individual right. On the other hand, each shareholder’s request to have a special auditor appointed is reserved, provided that such

Itshareholder is believed satisfies that all information the requirements necessary under for Article healthy 438 exercise of the TCC.of Shareholders’ rights is made available to our Shareholders on our website, in our annual report and material event disclosures in general, and through individual queries, in particular.

The Shareholders’ queries in relation to the legal and commercial relationships between our company and the real persons or legal entities with which our company is directly or indirectly associated in terms of capital, management or auditing are also

Allfulfilled information to the extent that might permitted affect by the the Shareholders’ applicable legislation. exercise of their rights is made available to the same on our Internet site in an updated manner, with a view to expand their right of obtaining information.

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2.3 Information About General Assembly Meetings In 2014, one General Assembly meeting was convened which was the 2013 Annual General Assembly meeting held on 25 March 2014.

The said meeting was held with the participation of Shareholders representing 65.4% or a portion of TL 326.8 million of our paid-in capital of TL 500 million.

employeesWhile the company’s participated Board in the Directors, meeting, other other relevant stakeholders individuals, or media officials representatives and auditors did responsible not attend forthe drawingmeeting. up the financial statements, an official from the Independent Audit Company auditing the financial statements of the company and some The announcement on the meeting invitation including the meeting place, date, hour, agenda, and a specimen of a proxy statement was published at least three weeks prior to the meeting date in the Turkish Trade Registry Gazette, Posta and Radikal daily

Carenewspapers, is taken atthat www.anadolusigorta.com.tr, General Assembly announcements Central Registry cover: Agency (CRA) and Public Disclosure Platform (in Turkish: KAP).

· The meeting date and hour · The meeting place, · Agenda, · Necessary information about the agenda items, · Former and current versions of the amended article(s) as approved by the related authorities, if the agenda covers any amendments to the Articles of Incorporation, · The body making the invitation, · The reason for postponement of the original meeting and the meeting quorum for the current one, if the General Assembly is summoned to reconvene upon postponement of the original one for any reason, · related to the General Assembly can be examined. In ordinary meeting announcements, the address at which the annual report, financial statements, and other documents Financial statements and reports including the annual report; informative documents on the General Assembly meeting agenda items for which there was a need, and other documents underlying the agenda items; the latest version of the Articles of Incorporation and the amendment text, if applicable, and the grounds therefor, shall be made available at the company headquarters and branches for review by our shareholders from the date of the announcement summoning the General Assembly.

All information and documents related to the General Assembly meeting are also accessible on the company website at the the company’s shareholding structure and voting rights; grounds for the dismissal or substitution of Board Director(s) and informationaddress www.anadolusigorta.com.tr. on individuals to be nominated The following to the seats are also on theposted Board on of the Directors, company if website: the General total Assembly number ofmeeting shares agendareflecting contains such dismissal, substitution and/or election; additional items requested to be incorporated in the agenda by shareholders, Capital Markets Board (CMB) and/or other government authorities and agencies that govern the company; the relevant Board of Directors decision, if the agenda covers changes to the Articles of Incorporation and the former and new versions thereof.

During 2014, neither the shareholders possessing management control, nor Board Directors, nor senior executives, nor their spouses or relatives by blood or marriage unto the second degree engaged in any transactions, on their own or other’s behalf, that shall be sought and information shall be provided at the General Assembly meetings. might lead to a conflict of interest with the company and/or its subsidiaries. If such a transaction is planned, then prior approval the approval of which has been referred to the general assembly by reason of dissenting votes cast, information shall be provided onIn thethe eventGeneral that Assembly transactions, decision for whichregarding the affirmativethe actions votestaken of in the relation majority to such of independent transactions. Board During Directors 2014, there are required were no and transactions that had not been approved by the majority of impendent Board Directors.

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To facilitate participation in the General Assemblies, utmost attention is paid to fully comply with the points stipulated by the legislation, and it is believed that our shareholders are not faced with any difficulties with regard to participation in General TheAssemblies. shareholders To date, were no informednotifications that to the the company contrary did were not received make any from charitable our Shareholders, donations oreither. grants during the reporting period

Minutesunder a specificof the General agenda Assembly item at the meeting General are Assembly delivered Meeting. to the shareholders upon conclusion of the meeting, and are made available in Turkish and English languages for electronic access at our website at www.anadolusigorta.com.tr, in order to keep non-participating shareholders informed.

In the preparation of the General Assembly agenda, care is paid to include each proposal under a separate heading, to word the agenda headings clearly and in a manner to avoid different interpretations, and not to insert any agenda items like “others” or “various” as also prohibited by the applicable legislation.

For Shareholders who will have themselves represented in the General Assemblies in proxy, a specimen of a proxy statement is publicized along with the meeting announcements, and is also made available to Shareholders on the electronic medium.

Topics that are communicated by our shareholders to the company’s Investor Relations Unit, which they would like to be included in the agenda, are considered by the Board of Directors in the preparation of the agenda.

Pursuant to the applicable legislation and to the Articles of Incorporation, ordinary general assembly must be held within three

Inmonths line with following our Articles the end of of Incorporation, each fiscal year. General Assemblies are held in the place where our company headquarters is located and at a venue that will enable participation by all our Shareholders.

Shareholders at the beginning of the meeting by means of their insertion in the list of attendants. Total number of votes that may be cast during the General Assembly is classified on the basis of Shareholders and provided to the Questions posed by our Shareholders to the Board of Directors are answered, provided that such questions are essential for exercise of shareholder rights and are not trade secrets. rights. The General Assembly Chairman chairs the meeting efficiently and in a manner to ensure that Shareholders can exercise their Care is taken to answer every question raised during the General Assembly by the shareholders during the same meeting. If the question raised is not relevant to the agenda or is too comprehensive to be answered promptly, then the Investor Relations Department provides written answers within no later than 15 days. All questions raised during the General Assembly Meeting and the answers provided thereto are publicly disclosed on the company’s website within 30 days following the date of the General Assembly, the latest. to offer explanations on the agenda topics that are of specialty spend their best efforts to be present in the meeting. Directors, authorized employees responsible for the preparation of financial statements and auditors, and other relevant people In General Assemblies, each agenda item is voted individually, and for the avoidance of doubt in relation to voting results, the votes are counted and the results are announced to the Shareholders before the General Assembly is concluded.

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1.At Electionthe Annual of the General Presiding Assembly Board held and on authorization 25 March 2014, of the shareholders Presiding Board ratified to sign all of the the minutes agenda ofitems the Generalbelow by Assembly, majority of votes: 2. Foregoing the reading of the Board of Directors’ 2013 Activity Report as it had been made available beforehand for review by shareholders; reading the Statutory Auditors’ report and the opinion section of the Independent Auditor’s report for 2012; discussion on the said reports,

4. Approval of the membership of the individual elected, as per Article 363 of the Turkish Commercial Code, to the seat vacated on the3. Review Board andof Directors ratification during of 2013 the reporting financial statements,period, 5. Acquittal of the Board Directors, 6. Amending the company’s dividend distribution policy, 7. Approval of the dividend distribution proposal prepared by the Board of Directors within the framework of the dividend distribution policy, 8. Approval of the draft amendments to the company’s Articles of Incorporation, the9. Election Turkish of Commercial the Board Directors Code, and determination of their terms of office, 11.10. DeterminationApproval of the of permissions remuneration granted for the to Boardthe Board Directors, Directors to carry out the transactions specified in Articles 395 and 396 of

13. Presentation of information on the donations and grants made during the reporting period. 12. Designation of the independent audit firm, During the General Assembly, none of our shareholders exercised their right to pose questions.

No agenda items have been proposed by our shareholders during the meeting.

Minutes of the General Assemblies are accessible in electronic medium in Turkish and English languages at the website at www. anadolusigorta.com.tr or in written form.

2.4 Voting Rights and Minority Rights 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.

There are no cross-shareholding interests between any Shareholder and the company.

The company’s Articles of Incorporation do not set the minority rights to be less than one twentieth of the capital.

Minority shares are not represented in our Board of Directors, which is elected under the discretion of the General Assembly. There are no upper limits with regard to the number of votes that our Shareholders are allowed to cast in the General Assemblies.

No shares are privileged in terms of voting.

Voting right arises at the time the share is acquired and there are no provisions stipulating exercise of the voting right after lapse of a certain period of time after the date of acquisition.

Our Articles of Incorporation contain no provisions preventing non-Shareholders from casting votes in proxy in the capacity of representatives.

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Shareholders may exercise their voting rights personally in the General Assemblies or via a third party that may or may not be a Shareholder.

Each real person Shareholder is represented in the General Assemblies by one person only; in the case that legal entity Shareholders are represented by several people, only one may cast votes. The person empowered to vote is named in the

2.5certificate Entitlement of authority. to Dividends The important aspects covered in the company’s Dividend Distribution Policy are presented below. The said policy is presented in the General Assembly Meeting for the information of shareholders, and published in the company’s annual reports and posted on the corporate website. ratio to be set by the General Assembly in accordance with the Capital Markets Board requirements. The company’s Articles of Incorporation set forth it as a principle to distribute first dividends out of the distributable profit in the Dividend distribution proposals laid down for the approval of the General Assembly by the Board of Directors are formulated so as to preserve the delicate balance between the expectations of our Shareholders and the company’s need to grow, and paying due regard to the future expectations for the company’s operations, capital adequacy targets and the prevailing conditions in the capital markets, as well as the profitability of the company. information on the use of retained earnings shall be presented to the shareholders during the General Assembly. The same will alsoIn the be event included that inthe the Board annual of Directors report and proposes posted onagainst the corporate distributing website. profit to the General Assembly, the reasons therefor and

The dividend policy espoused by the Board of Directors is based on the principle of proposing to the General Assembly the distribution of at least 30% of the net distributable period profit as bonus shares or in cash.

No shares are privileged in terms of getting share from the profit.

PursuantNo founder’s to the bonus Articles certificates of Incorporation, are given, ournor employeesare dividends are paid paid to dividends the Board up Directors. to three times of their salaries maximum from the

Careamount is paid remaining to effect after the thedividend first dividend payments is asset soon aside. as possible, taking into consideration the time stipulated by the legislation.

No dividends were distributed in 2014 since the amount remaining after deducting the prior year loss that descended in our legal records and the General Legal Reserves from the net profit for the period was less than 5% of the paid-in capital that was 2.6specified Transfer in the of Dividend Shares Distribution Policy The company’s Articles of Incorporation contain no provisions restricting the transfer of shareholding interests.

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PART III – PUBLIC DISCLOSURE AND TRANSPARENCY

3.1 Company Internet Site and Its Content The company has an Internet site prepared in Turkish and English languages, accessible at the address www.anadolusigorta.com. tr. The company website is actively used in providing information and public disclosure.

The company website features the information and data stipulated by the Corporate Governance Principles and regulatory authorities.

Attention is paid to comments and suggestions received via our website and are taken into consideration at the company. Care is paid to keep the website up-to-date.

The company’s letterhead contains the website address.

3.2 Annual Report

Principles. The company’s annual reports are prepared in sufficient detail to cover the information listed in Corporate Governance

The annual activity report is prepared by the Board of Directors and incorporates the declaration that financial statements PARTpresent IV a –true STAKEHOLDERS and fair view of the company’s financial status and that the company achieved full compliance with the legislation.

4.1 Keeping Stakeholders Informed In matters concerning our Shareholders, employees, creditors, customers, suppliers, various NGOs, the Government and potential investors that might consider investing in our company, i.e. the stakeholders, care is taken to provide information in writing and to base the relations with such parties on written contracts as much as possible (through electronic mail, corporate website, Public Disclosure Platform).

In cases where the rights of stakeholders are not regulated by the legislation or contractually, the interests of the stakeholders are protected within the framework of the rules of good faith and to the extent permitted by the company’s facilities, observing the company’s credibility at the same time. The necessary structure is in place to enable stakeholders to report such transactions of the company that are contradictory to the legislation or are unethical.

4.2 Stakeholder Participation in Management While the Articles of Incorporation contain no provisions on stakeholder participation in the company’s management, the company’s internal regulations cover practices to this end. An employee proposal guideline has been formulated. Proposals that are innovative and aimed at improvement are assessed within the framework of this guideline and put into life across the company. suppliers, share their opinions. Agencies Meetings, İ̇şbank Branches Meetings and Managers Meetings are held, where the stakeholders, i.e. employees and 4.3 Human Resources Policy The basic principles of the company’s human resources policy are stated below.

Job descriptions and distributions, along with the performance criteria are set by the company management and announced to the employees.

Hiring activities are based on the principle of giving equal opportunities to people of equal qualities. Criteria for hiring are put into writing on the basis of titles and are followed in practice.

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Succession planning is made to identify the new managers to be appointed in cases where it is predicted that changes in a managerial position will cause hitches in the management of the company.

In decisions on training, transfer and promotion, objective data are used and the company’s interests are observed as much as possible.

Training plans are formulated aimed at developing our employees’ knowledge and skills.

Company employees are members of the Bank and Insurance Employees Union.

Safe working environment and conditions are provided for our employees; work is undertaken to improve these conditions depending on social and technological necessities.

Decisions made in relation to our employees or developments concerning them are shared with the employees.

Measures are adopted to prevent discrimination on the basis of race, religion, language and sex among the employees, to ensure human rights are respected and to protect the employees against internal physical, mental and emotional abuse.

The company does not appoint a representative to carry out the relations with our employees. Yet, there are union representatives who are designated by the Union of Banking and Insurance Workers organized at our company from amongst our headquarters and regional branch employees to handle the relations with employees.

No complaints have been received on account of discrimination among company employees.

4.4 Codes of Ethics and Social Responsibility Codes of ethics setting out the professional ethics that the company and its employees are required to abide by when performing their activities within the existing laws and regulations is posted on the corporate website.

Attention is paid that the projects offered with cover are in compliance with the applicable environmental safety and public health legislation.

Within the frame of its commitment to social responsibility, our company extends support to education, academic activities, sports organizations, and cultural and artistic events. Through the “One Master, Thousand Masters” social responsibility project launched in 2010 and currently in progress, it is intended to focus the public attention on vanishing vocations and local values, and to help revive them.

PART V – BOARD OF DIRECTORS

5.1 Structure and Formation of the Board of Directors

The company’s Board of Directors is composed of eleven members so as to enable our Board Directors to work efficiently and Résumésconstructively, of our make Board decisions Directors swiftly are published and rationally, on the and corporate organize website the formation and in our and annual activities report. of the committees efficiently.

Taking into consideration that there are no non-corporate ultimate Shareholders with a controlling interest in the company, it is thought that the Board Directors all naturally possess the advantage to act independently, and therefore, to be impartial in their decisions, upholding the interests of our company and the stakeholders above everything else.

There are two independent members on the Board of Directors. The independent Board Directors have not served as members

Thefor more Corporate than six Governance years in the Committee, past ten years. functioning Term of as office the Nomination for all Board Committee, Directors isnominated one year. two candidates as independent Board Directors on 3 March 2014, and a new candidate to substitute a Director who had resigned on 15 April 2014. The reports on whether all nominees possess the independence criteria have been presented to the Board of Directors on the said dates.

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independence have been duly received and incorporated in the annual report. No instances took place during the reporting period,Independent which Board would Directors compromise fulfill independence. the independence If an criteriainstance published compromising in the independence relevant legislation, arises, and then their the declarationsindependent ofBoard Director shall present such change immediately to the Board of Directors to be disclosed to the public. In such a case, the Board Director who loses his independence shall resign as a matter of principle.

Apart from the CEO, the Board of Directors consists of non-executive members. Chairman of the Board and CEO functions are carried out by different individuals.

Information about our Board Directors is presented below.

Executive / Title Held in the Professional Name Title Degree Entity Worked Non-Executive Entity Experience Bachelor’s Mr. Caner Faculty of Chairman Non-Executive - - 40 years Administrative Sciences Çimenbiçer Bachelor’s Mr. Ahmet Deputy Faculty of Non-Executive - - 41 years Chairman Administrative Doğan Sciences Arıkan Bachelor’s Mr. Musa Member& Faculty of Anadolu Anonim Türk Executive CEO 36 years Ülken CEO Administrative Sciences Bachelor’s Sigorta Şirketi Mr. Fahri Faculty of Economic Member Non-Executive - - 38 years & Administrative Kayhan Sciences Bachelor’s Mr.Söyler Hakan Deputy Chief Member Faculty of Non-Executive 24 years Aran /In-Group Engineering Türkiye İş Bankası A.Ş. Mr. Hasan Master’s Member Non-Executive CEOExecutive Officer 25 years Banking & Finance /In-Group Master’s Milli Reasürans T.A.Ş. Mr. Recai Hulki Yalçın Faculty of Economic Semih Member Non-Executive Unit Manager 24 years & Administrative /In-Group Sciences Türkiye İş Bankası A.Ş. Mr. Faruk Nabioğlu Member High School Non-Executive Section Manager 32 years /In-Group Master’s Türkiye İş Bankası A.Ş. Karpuz Faculty of Economic Member Non-Executive Section Manager 18 years Aykol & Administrative /In-Group Mr. Kubilay Sciences Türkiye İş Bankası A.Ş. Master’s Mr. Prof. Chair of the Independent Faculty of Economic Marmara University Non-Executive Finance 43 years Member & Administrative / Non-Group Department Savaş Sciences Faculty of Mr.Taşkent Assoc. Master’s Independent Economic & Prof. Atakan Faculty of Non-Executive 14 years Member / Non-Group Administrative Engineering Özyeğin University Sciences Yalçın

·When Maximizing fulfilling the its fairdecision-making value of the company, function, the Board of Directors acts on the basic considerations of; · Pursuing the company operations so as to ensure long-term and stable earnings for our Shareholders, · Maintaining the delicate balance between the Shareholders and the company’s need to grow.

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In the formation of the Board of Directors, care is given to;

· Ensure the attendance of nominees to the meeting during the election to the seats on the Board of Directors, · Inform the Shareholders about the nominees, · Allow Shareholders to ask questions to the nominees,

Our Board of Directors takes care to hold regular monthly meetings.

Approval of the majority of independent Board Directors is sought for the Board of Directors decisions pertaining to all kinds

Communiqué, and to furnishing guarantee, pledge and mortgage in favor of third parties. If majority of the independent Board Directorsof the company’s do not approve transactions the transaction, with related this parties is publicly of material disclosed, nature providing as specified adequate in the information Corporate Governance on the transaction Principles within the frame of public disclosure requirements, and the transaction is laid down for the approval of the General Assembly. The matter is decided in the said General Assembly meetings through voting where the parties to the transaction and their respective related parties may not cast votes, thus involving other shareholders in such decisions at the General Assembly. Meeting quorum shall the simple majority of those eligible to cast votes. Board of Directors and General Assembly decisions passed in violation of the principlesnot be sought herein for Generalshall be nullAssembly and void. meetings that will be held for circumstances specified in this article. Decisions are made with

There are no administrative or judicial sanctions imposed against the company or the members of the governing body.

There are no woman members on our Board of Directors, nor is there a policy on this matter.

Although there are no set rules on non-independent Directors’ undertaking other duties outside the company, the Directors do not have any other duties apart from their natural duties in the entities they work for and from those in the establishments powers prudently and within the frame of good faith, possessing all necessary knowledge to ensure full performance of the duty. owned by the entities they work for. Yet, Board Directors devote sufficient amount of time for company affairs, and exercise their Past experiences, and outside positions held, if any, of the independent Board Directors are disclosed in their résumés and presented on our website and in our annual report.

5.2 Operating Principles of the Board Of Directors The Board meeting agenda is determined by the Chairman of the Board of Directors in line with the proposals of the CEO and the Board Directors.

The Board of Directors met twelve times in 2014.

Care is paid to determine the meeting date so as to allow all Directors to participate. Save for unforeseeable exceptional events, the Board meetings are held with the participation of all Directors.

Attention is given to set the Board meeting date during the immediately preceding meeting, followed by written invitation.

The existing secretariat responsible for execution of the Board activities, keeping the Directors and auditors informed, and establishing communication with them was transformed into Board of Directors Reporting Unit in 2005.

The Board of Directors decisions passed in 2014 were adopted with the unanimous votes of the members present in those meetings.

The Board of Directors holds its first meeting preferably on the date the same is elected. distribution and establishment of committees. During the first meeting, the chairman and the deputy chairman of the board are elected, and decisions are made on the job

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Board Directors, in principle, attend every meeting.

The Board of Directors takes care to meet regularly and at least monthly as pre-scheduled, and at any time as and when deemed necessary.

Utmost care is paid to ensure that the information and documents about the topics covered in the Board meeting agenda are made available for the examination of the Directors at least five days in advance, and when such timing cannot be met, efforts are Thespent Board to ensure of Directors equal flow convenes of information on the basis to the of majorityBoard Directors. of its full membership and decisions are passed with the majority of DirectorsEach Director present is entitled in the meeting.to one vote and none has weighted vote or affirmative/negative vetoing rights.

The company’s Board Directors and executives are insured with a coverage of USD 75,000,000 “per claim and annual total” against the risk of loss they may cause to the company due to their fault in the performance of their duties, within the scope of the

5.3liability Numbers, insurance Structures policy that and names Independence Türkiye İş ofBankası Committees A.Ş. and within its subsidiaries the Board (İşbank of Directors Group) as the Insured. There is an Audit Committee, a Corporate Governance Committee and a Committee of Early Determination of Risk in our company.

Committee and Remuneration Committee. Owing to the structure of the Board of Directors, Corporate Governance Committee also fulfills the functions of Nomination There are two non-executive Board Directors in each one of the Committees.

As a matter of principle, Board Directors do not undertake roles in several committees. However, since all members of the Audit Committee and the chairman of the Corporate Governance Committee must be elected from amongst independent Board Directors, our independent Board Directors serve on two different committees.

The Corporate Governance Committee establishes whether the corporate governance principles are implemented in the company, comply with these principles, and presents proposals to the Board of Directors for the improvement of relevant practices. The as well as the grounds for non-implementation, if applicable; identifies conflicts of interest, if any, arising from failure to fully eligible for the Board of Directors, and to establish related policies and strategies. The Corporate Governance Committee develops proposalscommittee regarding also works the to numbers create a transparentof the members system of the regarding Board of identification, Directors and assessment, executives. trainingIt is also and charged rewarding with establishing of nominees and overseeing the approaches, principles and practices in relation to the performance evaluation, career planning and rewarding the activities of the Investor Relations Department. of Board Directors and executives. The committee performs the activities specified in the Compensation Policy and coordinates information, independent auditing, internal control and internal audit systems. The committee supervises the selection of the The Audit Committee oversees the operation and efficiency of the company’s accounting system, public disclosure of financial theindependent company auditwill procure firm, preparation services and of theindependent services to audit be supplied contracts therefrom, and initiation and submitsof independent the same audit for theprocess, approval and ofevery the Boardphase of Directors.the work carried out by the independent audit firm. The Audit Committee determines the independent audit firm from which accounting principles pursued by the company, as well as their accuracy and fairness, and reports its written assessments to the The Audit Committee assesses the conformity of annual and interim financial statements to be publicly disclosed to the

InBoard 2014, of theDirectors, Audit Committee by incorporating met four the times, opinions holding of the quarterly company’s meetings, responsible and recorded managers the and outcomes of the independent of the meetings audit in firm. minutes and submitted the decisions adopted to the Board of Directors. The said decisions reported that the financial statements were examined, and that they were deemed fit for public disclosure.

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The Committee of Early Determination of Risk is responsible for efforts aimed at early detection of risks that might endanger the managing the risks. The committee reviews the risk management systems at least once a year. existence, progress and survival of the company; ensuring adoption of necessary measures in relation to the identified risks, and

Committee is headed by Prof. Turkay Berksoy. Prof. Savaş Taşkent, Mr. Hasan Hulki Yalçın and Mr. Fatih Gören serve on the company’s Corporate Governance Committee. The

Prof. Savaş Taşkent functions as the head of the Audit Committee, and Assoc. Prof. Atakan Yalçın as its member.

AllThe members Committee of theof Early Audit Determination Committee and of theRisk heads is headed of other by Assoc.committees Prof. Atakanare elected Yalçın, from where amongst Hakan independent Aran serves Board as a member. Directors. The company’s CEO does not serve on any committee.

Structures and operating principles of committees have been put into writing and posted on our company website.

5.4 Risk Management and Internal Control Mechanism Set up in 2006 in order to restructure the risk management systems and processes, the Risk Management Department’s activities were expanded in scope to cover internal control activities within the frame of the provisions of the “Regulation on the Internal

Along the same line, the Department was renamed to Risk Management and Internal Control Department. TheSystems primary of Insurance, objectives Reinsurance of the Department’s and Pension activities Companies” are as follows:published in the Official Gazette issue 26913 dated 21 June 2008.

· Measure, assess and control risks independently from executive units, · Protect company assets, · guidelines, as well as customary insurance practices, · Ensure efficient and effective execution of activities in line with the Law and other applicable legislation, internal policies and

TheGuarantee basic strategy the reliability, directed integritytowards theand ultimate timely availability goal is to carefully of the accounting plan, conduct and financialand manage reporting risk management system. and internal within the frame of applicable legislation and internationally accepted principles and standards. The basic principle in achieving thiscontrol goal activities is to employ independently, the most advanced impartially, tools purposefully, and methods effectively that are availableand efficiently, and possible employing to use. a risk-focused approach and

The activities of the Department are administered directly by the CEO. The Board Director responsible for Internal Systems is also responsible toward the Board of Directors for the formation of the Department and ensuring, monitoring and coordinating its operability, adequacy and effectiveness.

All outcomes obtained by examining the risks independently from executive functions are regularly reported by the Department to the Board Director responsible for Internal Systems, to the CEO and the Board of Directors. of Inspectors. The Board of Directors oversees the efficiency of the risk management and internal control mechanism via the company’s Board

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5.5 Strategic Goals of the Company The company’s vision is set as:

”To make our company the insurance brand preferred by everyone who needs insurance, and to achieve a strength that makes it a reference point in the worldwide insurance industry as well.”

And its mission as:

“In keeping with the deeply-rooted, pioneering, honest and solid corporate values of Anadolu Sigorta, to lead the sector, to help create a broad public awareness of insurance in Turkey, to implement a customer-focused approach to service, to increase our

Ourfinancial company’s strength vision to international and mission standards,are publicly to disclosed enhance theon ourvalue website of our accessiblecompany.” at www.anadolusigorta.com.tr.

Our strategic goals are set by our executives with a keen eye on competitive conditions, general economic conjuncture, overall

Strategiesexpectations and in targets national proposed and international are negotiated financial comprehensively markets, and bythe the company’s Board of medium Directors and on long-terma broad perspective. targets.

Actualizations in relation to approved strategies and targets are reviewed during Board meetings and monthly within the scope of the assessment of company operations, financial structure and performance level. function. In principle, the Board of Directors meets monthly in order to efficiently and continuously fulfills its monitoring and supervision In the meetings, the basic topics of assessment are the company activities, approved annual budget and target realizations, the standards. company’s place in the sector, financial structure and performance level, reporting, and compliance of operations to international 5.6 Financial Rights

websiteAggregate and of publiclythe salaries disclosed. and similar benefits provided to the company’s Board Directors and senior executives are disclosed in the notes to the financial statements and thereby, incorporated in our annual report. They are also posted on the corporate With a view to giving the shareholders the chance to voice their comments, the remuneration principles for the Board Directors are presented as a separate item for the information of shareholders. The remuneration policy developed for the company’s managers and employees at any level is put into writing, presented to the General Assembly for information, and is published on the company website.

Stock options or payment plans based on the company’s performance are used in the remuneration of our Board Directors, including the independent Board Directors. Nonetheless, it is believed that the remuneration of independent Board Directors is at a level that will not prejudice their independence.

The Board Directors and senior executives have never utilized, directly or indirectly, cash or non-cash loans from the company, nor did the company lent money or gave suretyship or provided any similar guarantee to any Board Director or senior executive.

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Committees Operating Within Anadolu Sigorta and an Assessment by the Board of Directors

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

The Corporate Governance Committee Committee holds at least four the Board of Directors shall make was set up upon approval by the • Themeetings Corporate a year, Governance which must take • Asall thenecessary committee resources fulfils and its functions, support Board of Directors’ decision no. 5508 place at least on a quarterly basis. available. dated 10 March 2005. The provisions governing the formation, principles and procedures and activities of the

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The committee reviews that The committee’s duties and independent expert opinion upon the Disclosure Policy covers the responsibilities with respect to • Theapproval committee of the Boardmay seek of Directors on minimum content as stipulated by remuneration are presented below: matters that call for expertise and the legislation with respect to the the committee deems necessary in company’s communication with Setting and overseeing the relation to its activities. The cost of stakeholders, as well as the scope, principles, criteria and practices • the consultancy service needed by quality, consistency and accuracy applicable for the remuneration of the committee shall be borne by the of documents, presentations and Board directors and executives with company. explanations prepared by the administrative responsibility, taking company for informative purposes, into consideration the company’s and oversees that the same are long-term targets; the principles of independence and developed in accordance with the • Committee members shall observe impartiality when performing their Disclosure Policy; duties. the remuneration to be paid to • PresentingBoard directors its suggestions and executives regarding with Activities the corporate governance culture administrative responsibility, which • Carriesis established out activities within theto ensure company, that will be determined in view of the The committee carries out the and is espoused by managers and extent the remuneration criteria following activities with respect to employees working at any level. have been achieved; corporate governance: The committee follows up the developments related to corporate assessments for the formulation governance in and out of Turkey and governance principles are • Developingand revision suggestions of the company’s and • Establishes whether the corporate examines their possible implications implemented in the company, remuneration policy, which sets out for the company. as well as the grounds for non- the remuneration principles for the implementation, if applicable; The duties of the Nomination and Board directors and executives with identifies conflicts of interest, if any, Remuneration Committees shall be administrative responsibility, and arising from failure to fully comply fulfilled by the Corporate Governance presenting its opinions to the Board with these principles, and presents Committee, until these committees of Directors. proposals to the Board of Directors shall have been set up. for the improvement of corporate The Corporate Governance Committee governance practices; The committee’s duties and shall fulfill other duties and responsibilities with respect to responsibilities to be assigned to it by nomination are presented below: the Board of Directors in relation to its company’s Investor Relations field of activity. • OverseesDepartment. the Withinactivities this of context, the the committee sets and regularly system regarding identification, Audit Committee reviews the basic principles for the • Worksassessment, to create training a transparent and rewarding Head of Committee: company’s communication with of nominees eligible for the Board of investors; Directors and managerial positions Member: Prof. Savaş with administrative responsibility, Taşkent and establishes related policies and Investor Relations Department to ObjectiveAssoc. Prof. Atakan Yalçın strategies; • Workspresent in suggested cooperation improvements with the for Overseeing the operation and ensuring efficient communication efficiency of the company’s accounting between the company and investors, and efficiency of the Board system, public disclosure of financial and elimination and resolution of • Regularly evaluates the structure of Directors and presents its information, independent auditing potential conflicts to the Board of suggestions for possible revisions to of the company and internal control Directors; the Board of Directors; system.

Formation Governance Compliance Report performing the duties set out in • Reviews the company’s Corporate before it is published within the • Thethe legislation committee concerning is charged thewith The Audit Committee was set up upon company’s Annual Report, and nomination of independent members approval by the Board of Directors’ presents its comments to the Board to the Board of Directors, which are decision no. 5317 dated 26 June of Directors; announced every year by the Board 2003. The provisions governing and which are compulsory to be the principles and procedures and implemented by the group to which activities of the committee have been regarding the determination the company is affiliated. based on the Corporate Governance • Makesor revision proposals of the andcompany’s assessments disclosure policy, and presents the same to the Board of Directors.

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Communiqué issued by the Capital Activities Markets Board of Turkey (CMB) and put effect upon approval of the Board of into force with the Board of Directors • CommitteeDirectors. decisions shall take In essence, the Audit Committee; decision no. 06839 dated 26 June 2014. They are carried out by the Board of present its determinations, efficiency of the company’s Directors. • Oversees the operation and • Theassessments committee and shall suggestions forthwith in accounting system, public disclosure The committee consists of a minimum relation to its duties and scope of of financial information, independent of two members to be elected from responsibilities in writing to the auditing, internal control and among the Board of Directors Board of Directors. internal audit systems; members.

The members will elect the head of the meeting results shall be described independent audit firm, preparation • Supervises the selection of the committee from among themselves. • Thein the committee’s annual report. activities The annual and of independent audit contracts report shall also specify the number and initiation of independent audit All members of the committee are of written reports the committee process, and every phase of the work elected from among independent submitted to the Board of Directors carried out by the independent audit directors. during the fiscal year. firm; To the extent possible, at least one member of the Audit Committee should individuals it deems necessary to its firm from which the company will • Determines the independent audit preferably have minimum five years • Themeetings committee and seek may their invite opinions. the procure services and the services to of experience in audit/accounting and be supplied therefrom, and submits finance. the same for the approval of the Department shall determine the Board of Directors; A member’s term of office on the Audit • Boardmeeting of agendaInspectors/Audit of the committee, Committee is terminated when his/her make the invitations to the meeting, term of office on the Board of Directors establish communication with criteria for the handling and • Establishes the methods and expires or upon a decision to such committee members, keep the book resolution of complaints received effect by the Board of Directors. of resolutions, and handle other by the company in relation to the secretarial tasks for the committee. company’s accounting, internal Operating Procedures and control and internal audit systems Principles and its independent audit; and for the Board of Directors shall make addressing the company employees’ • Asall thenecessary committee resources fulfils and its functions, support notifications about the company’s meetings a year, which must take available. accounting and independent audit • Theplace committee at least on holds a quarterly at least basis. four within the frame of confidentiality principle; independent expert opinion upon the attendance of all its members • Theapproval committee of the Boardmay seek of Directors on • Committeeand decisions meetings are passed are heldwith with the matters that call for expertise and and interim financial statements votes of the majority of members in the committee deems necessary in • Assessesto be publicly the conformity disclosed to of the annual attendance. relation to its activities. The cost of accounting principles pursued the consultancy service needed by by the company, as well as their resolution book, in which the the committee shall be borne by the accuracy and fairness, and reports • Thedecisions, committee assigned shall a keepsequence a company. its written assessments to the number, will be entered. Board of Directors, by incorporating the opinions of the company’s the principles of independence and responsible managers and of the • Committee members shall observe conclusions reached in a meeting impartiality when performing their independent audit firm. • Thein the committee minutes, andshall submit enter thethe duties. assessments made and decisions The Audit Committee shall fulfill passed, along with the grounds other duties and responsibilities to be therefor, in a written report to assigned to it by the Board of Directors the Board of Directors within no in relation to its field of activity. later than one month following the relevant committee meeting.

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Committee of Early Determination A member’s term of office on the of Risk committee is terminated when his/her independent expert opinion upon term of office on the Board of Directors • Theapproval committee of the Boardmay seek of Directors on Head of Committee: Assoc. Prof. expires or upon a decision to such matters that call for expertise and effect by the Board of Directors. the committee deems necessary in Member: Hakan Aran relation to its activities. The cost of Atakan Yalçın Operating Procedures and the consultancy service needed by Objective Principles the committee shall be borne by the company. Managing the risks that might threaten the existence, progress and survival of meetings a year, which must take • The committee holds at least four the company. place at least on a quarterly basis. the principles of independence and • Committeeimpartiality members when performing shall observe their Formation duties. the attendance of all its members The Committee of Early Determination • Committee meetings are held with and decisions are passed with the Activities of Risk was set up as a result of the votes of the majority of members in discussion of the General Directorate attendance. The Committee of Early Determination proposal no. 3550 dated 24 February of Risk: 2012, pursuant to Article 4.5.1 of the Communiqué Serial:IV-56 on resolution book, in which the Determination and Implementation • Thedecisions, committee assigned shall a keepsequence a that might endanger the existence, of Corporate Governance Principles number, will be entered. • Worksprogress to andearly survival detect theof the risks enforced upon its publication in the company, to ensure necessary Official Gazette issue 28158, dated measures are adopted in relation to 30 December 2011. The provisions conclusions reached in a meeting the identified risks, and to manage • The committee shall enter the governing the formation, principles in the minutes, and submit the the risk; and procedures and activities of assessments made and decisions the committee have been based on passed, along with the grounds Article 378 of the Turkish Commercial therefor, in a written report to of its opinions and comments in • Informs the Board of Directors Code and the Corporate Governance the Board of Directors within no writing regarding the creation Communiqué issued by the Capital later than one month following the and development of the company’s Markets Board of Turkey (CMB) and put relevant committee meeting. risk management system which into force with the Board of Directors will be aimed at minimizing the decision no. 06840 dated 26 June 2014. impact of risks that might affect the effect upon approval of the Board of They are carried out by the Board of shareholders in particular and all • CommitteeDirectors. decisions shall take Directors. stakeholders in general;

The committee consists of a minimum present its determinations, of two members to be elected from management systems at least on an • Theassessments committee and shall suggestions forthwith in • Reviews the company’s risk among the Board directors. annual basis; relation to its duties and scope of The members shall elect the head of the responsibilities in writing to the committee from among themselves. Board of Directors. practices are carried out in • Oversees that risk management The head of the committee shall be accordance with the decisions of elected from among independent the Board of Directors and the individuals it deems necessary to its directors. Non-director individuals, committee; • Themeetings committee and seek may their invite opinions. the who have expertise in their respective fields, can be members of the assessments about risk management committee. shall determine the meeting • Reviewsthat will thebe incorporated determinations in the and • Riskagenda Management of the committee, Unit/Department make If the committee is formed of two company’s annual report. the invitations to the meeting, members, then both of them must establish communication with The Committee of Early Determination be non-executive directors; if such committee members, keep the book of Risk shall fulfill other duties and number is greater than two, then the of resolutions, and handle other responsibilities to be assigned to it by majority of the members must be non- secretarial tasks for the committee. the Board of Directors in relation to its executive directors. The CEO may not field of activity. serve on this committee. the Board of Directors shall make • Asall thenecessary committee resources fulfils and its functions, support available.

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An Assessment of the Operation of the Independent Audit Firm in 2014 Activity Period via the Audit Committee

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

Member of the Audit Committee Head of the Audit Committee Assoc. Prof. Atakan Yalçın Prof. Savaş Taşkent

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Human Resources Practices at Anadolu Sigorta

Human Resources Policy Career Development job families and positions, and thus undergo assessment of their Our company is proud to be the first Various career paths within the qualification for the technical know- national insurance company in Turkey, frame of job families are available at how and competence levels required by established in 1925 at the directives the company. Employees recruited the related position. into any job family and level have its establishment, our company has the opportunity to advance to senior Our employees in specialist position, continuouslyof Mustafa Kemal grown Atatürk. and developed Ever since and management positions in the company. which is the midpoint for all of our has been recognized and acknowledged positions, are offered dual career as the grande école of the Turkish Our company’s human resources paths, which give the option of insurance industry. strategy is defined as “Creating the advancing as a manager or a specialist organizational climate conducive to in the relevant field. Career paths at Utmost importance is given to our promoting creativity and innovation this level are shaped and supported employees as they are the ones to directed at ensuring customer within the scope of the company’s undertake the biggest duty in carrying satisfaction, and establishing a culture Development Center Initiative. The out our company’s key policies. For of superior performance supporting initiative that assesses managerial this reason, the primary goal of our employees’ development. In keeping and specialist competencies provides human resources policies and practices with this strategy, employees our employees with personalized is to identify our company’s needs for successfully completing the training development plans, while supporting personnel in line with its objectives and development plans designed for them with various resources, readying and strategies and assist the creation the relative job families can advance them for the next level. A number of of human resources that are open to to a higher level, if they display training opportunities are provided to change and are focused on continuous the performance and capabilities our employees at any level who join us success by recruiting high-quality required for the relevant level in the and become a member of our team in people, motivating them, evaluating predetermined time. line with the competencies they need their performance, and encouraging to acquire to further their careers, as When rising to the specialist position, interaction and communication among well as their existing skills. individuals and groups. employees take the promotion exam that differs according to the

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Performance Management Social Benefits Training

Our employees are evaluated Our company’s employees are entitled Competency-based training programs twice a year in line with specific to a variety of social rights and benefits and technical and professional performance criteria. The content in keeping with current conditions. trainings required by our employees’ of such evaluation varies depending The healthcare costs of our employees jobs are provided in line with their on the competence requirements on and their dependant family members career progression plans. the basis of job families. On the basis are covered by our company under its of the results of these performance Healthcare Assistance Regulations. Training has special importance at evaluations, an employee’s training All our personnel are able to fulfill all Anadolu Sigorta owing to the fact needs are identified and a career plan their healthcare needs free of charge that our company is an organization is developed. through the company’s outsourced that fills managerial positions healthcare system. Employees are from within. Therefore, orientation Job Guarantee: provided with free transportation program and professional training services to and from work and with provided to new-hires are followed Our employees enjoy a substantial lunches as well. by necessary planning for improving degree of job guarantee within the their managerial skills, thereby framework of unionization composed Retirement Benefits extending the necessary support to our by the Union and our company. employees. Our employees are covered by two Compensation Policy private pension funds that have been set up in accordance with the Our employees’ salaries are adjusted company’s special status. The pensions in accordance with the terms of a paid by these funds enable former collective bargaining agreement that employees to enjoy a good standard of is renewed every two years and with living during their retirement years. annual or semi-annual raises based on current conditions.

In addition to their salaries, employees receive extensive fringe benefits as well.

91 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / Agenda of the Annual General Assembly Meeting

Agenda of the Annual General Assembly Meeting

AGENDA OF THE ANNUAL GENERAL ASSEMBLY DATEDANADOLU 24 MARCHANONİM 2015 TÜRK SİGORTA ŞİRKETİ

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’ 2014 Activity Report, and presentation of the Independent Audit Report for 2014 fiscal year 3. Review, deliberation and ratification of 2014 financial statements 4. Approval of the membership of the individual elected, as per Article 363 of the Turkish Commercial Code, to the seat vacated on the Board of Directors during the reporting period 5. Individual acquittal of Board Directors 6. Information on dividend distribution policy and decision on profit distribution 7 Election of the Board Directors and determination of their terms of office 8. Authorizing the Board Directors to perform the transactions specified in Articles 395 and 396 of the Turkish Commercial Code 9. Determination of remuneration for the members of the Board of Directors 10. Designation of the independent audit firm 11. Presentation of information on the donations and grants made during the reporting period

92 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / Dividend Distribution Proposal

Dividend Distribution Proposal

The dividend distribution proposal prepared within the frame of the company’s Dividend Distribution Policy and submitted for the approval of the General Assembly is presented below:

Our company booked a net profit for the current period of TL 71,559,946 on its 2014 operations. The company’s legal records show TL 70,639,674 as profit for the period, which remains after deducting the undistributed amount of TL 920,272, which is the sales income on immovables and participation shares that is decided to be maintained in a special fund account under liabilities to benefit from the exemption provisions granted under Article 5 of the Corporate Tax Law no. 5520 and to be used in capital increases as and when necessary.

In the Capital Markets Board of Turkey (CMB) meeting of 27 January 2010, it has been resolved that companies obliged to draw up consolidated financial statements should compute the net distributable profit taking into account the net profit for the period descending in the consolidated financial statements that will be drawn up and publicly disclosed as per the Communiqué II-14.1 on Principles of Financial Reporting in the Capital Market, provided that the net distributable profit can deducting the undistributed sales income on immovables and participation share, a consolidated net profit of TL 73,197,477 arises.be covered from the sources reflected in their legal records. After consolidation of Anadolu Hayat Emeklilik A.Ş. and after

Accordingly, it is proposed as follows:

TL 3,531,984 TL, which is 5% of the net profit figure that arises according to legal records, be set aside as general legal reserves, • TL 21,000,000, which is 30.14% of TL 69,665,493 that is the amount remaining according to the CMB, be distributed as first dividend to shareholders • TL 1,459,965 be set aside as dividend to employees as per the Articles of Incorporation,

• TL 4,464,773 be set aside as statutory reserves as per the Articles of Incorporation,

• TL 40,182,952 that remains after the items mentioned above be allocated to extraordinary reserves, and sales• income on immovables and participation shares in the amount of TL 920,272 that is not available for distribution be transferred to relevant reserves so as to benefit from the exemption provisions set out in Article 5 of the Corporate Tax Law no. 5520.

93 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 2014 Profit Distribution Table

2014 Profit Distribution Table

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ 2014 Profit Distribution Proposal (TL) 1. Paid-in/Issued Capital 500,000,000 2. General Legal Reserves (according to legal records) 30,779,762 If there are privileges for distribution of profits according to the Articles of Incorpora- None tion, information on such privileges Based on CMB Based on Legal Records 3. Profit for the Period (*) 94,279,437 91,721,634 4. Taxes Payable (-) 21,081,960 21,081,960 5. Net Profit for the Period (=) 73,197,477 70,639,674 6. Losses in Prior Years (-) 0 0 7. General Legal Reserves (-) 3,531,984 3,531,984 8. NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=) 69,665,493 67,107,690 9. Donations during the Year (+) 0 10. Net Distributable Profit for the Period Including Donations 69,665,493 11. First Dividend to Shareholder - Cash 21,000,000 - Bonus Shares 0 - Total 21,000,000 12. Dividends Distributed to Owners of Privileged Shares 13. Other Dividends Distributed (to Board Members, Employees, etc.) 1,459,965 14. Dividends Distributed to Owners of Redeemed Shares 15. Second Dividend to Shareholders 0 16. General Legal Reserves 0 17. Statutory Reserves 4,464,773 4,464,773 18. Special Reserves 19. EXTRAORDINARY RESERVES 40,182,952 40,182,952 20. Other Resources to be Distributed

- Extraordinary Reserves - Prior Year Profit - Other Distributable Reserves Pursuant to the Law and the Articles of Incorporation (*)

AvailableIn the profit for for Distribution” the period underended shareholders’31 December equity,2014, the was amounts not taken of intoTL 920,272 account as as per per the Article legal 5 records of the Corporate and TL 1,394,625 Tax Law asno. per 5520. the CMB, which arises from 75% of the profit from sales of immovables and participation shares and which has been set aside to be followed up under the account item “Profit Not DIVIDEND RATIO CHART

TOTAL DIVIDENDS DISTRIBUTED / TOTAL DIVIDENDS DIVIDENDS PER SHARE WITH A NET DISTRIBUTABLE PROFIT FOR DISTRIBUTED NOMINAL VALUE OF TL 1 GROUP THE PERIOD BONUS CASH (TL) RATIO (%) AMOUNT (TL) RATIO (%) (TL) B 21,000,000 0 30.14% 0.042 4.20% TOTAL 21,000,000 0 30.14% 0.042 4.20%

94 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 2014 Annual Report Compliance Statement

2014 Annual Report Compliance Statement

Our company’s 2014 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.

Fatih GÖREN Accounting and Financial Deputy Chief Executive Chairman AffairsMurat TETİK Manager Musa ÜLKEN Caner ÇİMENBİÇER Chief Executive Officer Officer

95 / Anadolu Sigorta Annual Report 2014 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Detailed Income Statement

Fire and Natural General Motor Vehicles Aircraft General Financial Legal I-TECHNICAL PART Accident Illness-Health Motor Vehicles Aircrafts Watercrafts Marine Disasters Losses Liability Liability Liability Credit Losses Protection Total Explanation A- Non-Life Technical Income 64,954,732 253,945,062 844,775,207 13,325,739 27,059,708 45,543,157 216,863,052 137,016,707 774,667,390 5,047,411 48,798,440 -1,322,665 1,892,330 8,650,516 2,441,216,788 1- Earned Premiums (Net of Reinsurer Share) 54,362,002 242,507,645 786,541,563 13,181,748 26,199,568 39,714,367 190,560,310 126,142,312 704,976,162 4,300,100 38,439,929 31,085 1,587,757 7,214,790 2,235,759,340 1-1. Premiums (Net of Reinsurer Share) 62,537,257 256,547,252 790,728,883 5,542,081 29,096,322 40,340,630 213,840,185 135,732,901 698,476,272 4,105,767 78,975,999 0 1,580,171 7,606,342 2,325,110,061 1.2- Change in Unearned Premium Provisions (Net of Reinsurers Shares and Reserves Carried Forward) (+/-) -9,541,908 -14,039,607 -4,187,319 495,329 -1,683,491 -626,263 -23,279,875 -9,590,589 5,928,885 194,334 -7,344,021 31,085 7,586 -391,551 -64,027,405 1.3- Changes in Unexpired Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 1,366,653 0 0 0 0 0 0 0 571,005 0 0 0 0 0 1,937,657 1.4- Changes in Ongoing Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 0 0 0 7,144,338 -1,213,263 0 0 0 0 0 -33,192,048 0 0 0 -27,260,973 2- Investment Income Transfered from Non-Technical Divisions 10,584,962 11,117,403 50,396,109 143,991 929,731 4,902,828 25,291,052 10,652,104 64,109,747 747,307 9,893,884 0 304,573 1,435,720 190,509,410 3- Other Technical Income 3,810 320,015 2,276,330 0 1,090 8,961 93,174 16,190 65,238 4 3,989 2 1 6 2,788,809 4- Accrued Salvage and Subrogation Income 3,958 0 5,561,204 0 -70,681 917,002 918,516 206,101 5,516,244 0 460,638 -1,353,752 0 0 12,159,230 B- Non-Life Technical Expense (-) -26,547,592 -250,364,266 -759,462,075 -5,544,598 -30,566,164 -22,747,046 -153,398,996 -117,885,471 -771,782,556 -4,532,699 -175,437,543 -25,347 677,339 -2,340,244 -2,319,957,257 1- Realized Claims (Net of Reinsurer Share) -8,244,907 -199,455,063 -555,299,019 -4,440,034 -28,112,601 -10,150,613 -98,225,647 -85,643,583 -579,959,219 -3,957,501 -164,062,227 -28,288 146,455 -646,815 -1,738,079,062 1.1- Claims Paid (Net of Reinsurer Share) -10,402,605 -198,906,106 -529,436,786 -4,795,520 -24,275,881 -14,920,610 -82,711,965 -80,504,221 -437,438,283 -231,156 -27,857,034 -718,605 -1,033 -162,466 -1,412,362,273 1.2- Changes in Outstanding Claims Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 2,157,699 -548,957 -25,862,233 355,485 -3,836,719 4,769,997 -15,513,682 -5,139,362 -142,520,936 -3,726,345 -136,205,192 690,317 147,489 -484,349 -325,716,789 2- Changes in Bonus and Discount Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3- Changes in Other Technical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-) -1,013,436 0 -3,035,177 0 0 0 -10,577,300 -1,204,683 0 0 0 0 -139,439 0 -15,970,035 4- Operating Expenses (-) -17,159,414 -44,314,719 -186,178,682 -1,103,260 -2,181,869 -12,338,972 -38,744,510 -26,240,845 -181,604,847 -575,198 -11,224,043 2,941 670,501 -1,693,311 -522,686,229 5- Other Technical Expenses -129,835 -6,594,484 -14,949,198 -1,303 -271,694 -257,462 -5,851,538 -4,796,359 -10,218,490 0 -151,273 0 -178 -118 -43,221,932 C- Non Life Technical Profit (A-B) 38,407,140 3,580,797 85,313,132 7,781,141 -3,506,456 22,796,111 63,464,057 19,131,236 2,884,835 514,712 -126,639,103 -1,348,011 2,569,670 6,310,272 121,259,531 II- NON TECHNICAL PART C- Non Life Technical Profit (A-B) 121,259,531 J- Total Technical Profit (C) 121,259,531 K- Investment Income 258,928,065 1- Income from Financial Investments 130,174,857 2- Income from Sales of Financial Assets 31,151,423 3- Revaluation of Financial Assets 19,421,434 4- Foreign Exchange Gains 59,970,980 16,000,000 6- Income form Subsidiaries and Joint Ventures 0 7-5- RealDividend Estate Income Income from Affiliates 1,815,006 8- Income from Derivative Instruments 205,678 9- Other Investments 188,686 10- Investment Income transferred from Life Technical Division 0 L- Investment Expenses (-) -275,809,588 1- Investment Management Expenses (including interest) (-) -136,623 2- Valuation Allowance of Investments (-) -3,509,979 3- Losses On Sales of Investments (-) -7,713,065 4- Investment Income Transferred to Non - Life Technical Division (-) -190,509,410 5- Losses from Derivative Instruments (-) -184,509 6- Foreign Exchange Losses (-) -49,954,025 7- Depreciation Expenses (-) -23,801,977 8- Other Investment Expenses (-) 0 M- Income and Expenses (+/-) -11,736,101 1- Reserves (Provisions) Account (+/-) -20,360,660 2- Rediscount Account (+/-) -3,360,281 3- Mandatory Earthquake Insurance Account (+/-) 0 0 5- Deferred Tax Asset Accounts (+/-) 7,396,097 6-4- DeferredInflation AdjustmentTax Liability Account Expense (+/-) (+/-) 0 7- Other Income and Revenues 5,142,412 8- Other Expense and Losses (-) -553,670 9- Prior Period Income 0 10- Prior Period Losses (-) 0 N- Net Profit/(Loss) 71,559,946 92,641,906 2- Taxes Provisions (-) -21,081,960 1- Profit/(Loss) Before Tax 71,559,946 0 3- Net Profit (Loss) after Tax 4- Inflation Adjustment Account (+/-)

96 / Anadolu Sigorta Annual Report 2014 Fire and Natural General Motor Vehicles Aircraft General Financial Legal I-TECHNICAL PART Accident Illness-Health Motor Vehicles Aircrafts Watercrafts Marine Disasters Losses Liability Liability Liability Credit Losses Protection Total Explanation A- Non-Life Technical Income 64,954,732 253,945,062 844,775,207 13,325,739 27,059,708 45,543,157 216,863,052 137,016,707 774,667,390 5,047,411 48,798,440 -1,322,665 1,892,330 8,650,516 2,441,216,788 1- Earned Premiums (Net of Reinsurer Share) 54,362,002 242,507,645 786,541,563 13,181,748 26,199,568 39,714,367 190,560,310 126,142,312 704,976,162 4,300,100 38,439,929 31,085 1,587,757 7,214,790 2,235,759,340 1-1. Premiums (Net of Reinsurer Share) 62,537,257 256,547,252 790,728,883 5,542,081 29,096,322 40,340,630 213,840,185 135,732,901 698,476,272 4,105,767 78,975,999 0 1,580,171 7,606,342 2,325,110,061 1.2- Change in Unearned Premium Provisions (Net of Reinsurers Shares and Reserves Carried Forward) (+/-) -9,541,908 -14,039,607 -4,187,319 495,329 -1,683,491 -626,263 -23,279,875 -9,590,589 5,928,885 194,334 -7,344,021 31,085 7,586 -391,551 -64,027,405 1.3- Changes in Unexpired Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 1,366,653 0 0 0 0 0 0 0 571,005 0 0 0 0 0 1,937,657 1.4- Changes in Ongoing Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 0 0 0 7,144,338 -1,213,263 0 0 0 0 0 -33,192,048 0 0 0 -27,260,973 2- Investment Income Transfered from Non-Technical Divisions 10,584,962 11,117,403 50,396,109 143,991 929,731 4,902,828 25,291,052 10,652,104 64,109,747 747,307 9,893,884 0 304,573 1,435,720 190,509,410 3- Other Technical Income 3,810 320,015 2,276,330 0 1,090 8,961 93,174 16,190 65,238 4 3,989 2 1 6 2,788,809 4- Accrued Salvage and Subrogation Income 3,958 0 5,561,204 0 -70,681 917,002 918,516 206,101 5,516,244 0 460,638 -1,353,752 0 0 12,159,230 B- Non-Life Technical Expense (-) -26,547,592 -250,364,266 -759,462,075 -5,544,598 -30,566,164 -22,747,046 -153,398,996 -117,885,471 -771,782,556 -4,532,699 -175,437,543 -25,347 677,339 -2,340,244 -2,319,957,257 1- Realized Claims (Net of Reinsurer Share) -8,244,907 -199,455,063 -555,299,019 -4,440,034 -28,112,601 -10,150,613 -98,225,647 -85,643,583 -579,959,219 -3,957,501 -164,062,227 -28,288 146,455 -646,815 -1,738,079,062 1.1- Claims Paid (Net of Reinsurer Share) -10,402,605 -198,906,106 -529,436,786 -4,795,520 -24,275,881 -14,920,610 -82,711,965 -80,504,221 -437,438,283 -231,156 -27,857,034 -718,605 -1,033 -162,466 -1,412,362,273 1.2- Changes in Outstanding Claims Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 2,157,699 -548,957 -25,862,233 355,485 -3,836,719 4,769,997 -15,513,682 -5,139,362 -142,520,936 -3,726,345 -136,205,192 690,317 147,489 -484,349 -325,716,789 2- Changes in Bonus and Discount Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3- Changes in Other Technical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-) -1,013,436 0 -3,035,177 0 0 0 -10,577,300 -1,204,683 0 0 0 0 -139,439 0 -15,970,035 4- Operating Expenses (-) -17,159,414 -44,314,719 -186,178,682 -1,103,260 -2,181,869 -12,338,972 -38,744,510 -26,240,845 -181,604,847 -575,198 -11,224,043 2,941 670,501 -1,693,311 -522,686,229 5- Other Technical Expenses -129,835 -6,594,484 -14,949,198 -1,303 -271,694 -257,462 -5,851,538 -4,796,359 -10,218,490 0 -151,273 0 -178 -118 -43,221,932 C- Non Life Technical Profit (A-B) 38,407,140 3,580,797 85,313,132 7,781,141 -3,506,456 22,796,111 63,464,057 19,131,236 2,884,835 514,712 -126,639,103 -1,348,011 2,569,670 6,310,272 121,259,531 II- NON TECHNICAL PART C- Non Life Technical Profit (A-B) 121,259,531 J- Total Technical Profit (C) 121,259,531 K- Investment Income 258,928,065 1- Income from Financial Investments 130,174,857 2- Income from Sales of Financial Assets 31,151,423 3- Revaluation of Financial Assets 19,421,434 4- Foreign Exchange Gains 59,970,980 16,000,000 6- Income form Subsidiaries and Joint Ventures 0 7-5- RealDividend Estate Income Income from Affiliates 1,815,006 8- Income from Derivative Instruments 205,678 9- Other Investments 188,686 10- Investment Income transferred from Life Technical Division 0 L- Investment Expenses (-) -275,809,588 1- Investment Management Expenses (including interest) (-) -136,623 2- Valuation Allowance of Investments (-) -3,509,979 3- Losses On Sales of Investments (-) -7,713,065 4- Investment Income Transferred to Non - Life Technical Division (-) -190,509,410 5- Losses from Derivative Instruments (-) -184,509 6- Foreign Exchange Losses (-) -49,954,025 7- Depreciation Expenses (-) -23,801,977 8- Other Investment Expenses (-) 0 M- Income and Expenses (+/-) -11,736,101 1- Reserves (Provisions) Account (+/-) -20,360,660 2- Rediscount Account (+/-) -3,360,281 3- Mandatory Earthquake Insurance Account (+/-) 0 0 5- Deferred Tax Asset Accounts (+/-) 7,396,097 6-4- DeferredInflation AdjustmentTax Liability Account Expense (+/-) (+/-) 0 7- Other Income and Revenues 5,142,412 8- Other Expense and Losses (-) -553,670 9- Prior Period Income 0 10- Prior Period Losses (-) 0 N- Net Profit/(Loss) 71,559,946 92,641,906 2- Taxes Provisions (-) -21,081,960 1- Profit/(Loss) Before Tax 71,559,946 0 3- Net Profit (Loss) after Tax 4- Inflation Adjustment Account (+/-)

97 / Anadolu Sigorta Annual Report 2014 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

98 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Akis Bağımsız Denetim ve Serbest Telephone +90 (216) 681 90 00 Muhasebeci Mali Müşavirlik A.Ş. Fax +90 (216) 681 90 90

Kavak Sok. No: 3 Kavacık Rüzgarlı Bahçe Mah. İnternet www.kpmg.com.tr

Beykoz 34805 İstanbul

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Anadolu Anonim Türk Sigorta Şirketi

Introduction at 31 December 2014 and the related unconsolidated statement of income, unconsolidated statement of changes in equity and unconsolidatedWe have audited statement the accompanying of cash flows unconsolidated for the year balancethen ended, sheet and of Anadolua summary Anonim of significant Türk Sigorta accounting Şirketi policies (“the Company”) and other as explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these unconsolidated financial statements in accordance with the accounting principles and standards, in force as per the insurance legislation. This responsibility includes: designing, implementing and maintaining internal systems relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Independent Auditors’ Responsibility

Our responsibility is to express an opinion on these unconsolidated financial statements based on our audit. We conducted our audit in accordance with audit standards in force as per the insurance legislation. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. statements, whether due to fraud or error. In making those risk assessments, we consider internal systems relevant to the entity’s preparationThe procedures and selectedfair presentation depend on of ourthe judgment,financial statements including thein order assessment to design of theaudit risks procedures of material that misstatement are appropriate of the in financialthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal system. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis for Qualified Conclusion

As explained in Note 17, as of 31 December 2014 the accompanying unconsolidated financial statements included a general provision amounting to TL 7.702.761 provided by the Company management considering the circumstances which may arise from any changes in economy or market conditions recognized as expense in the prior periods. The total amount had been expensed in previous years’ financial statements.

99 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ 31 December 2014 Unconsolidated Financial Statements Together With Independent Auditors’ Report Thereon

Qualified Opinion

In our opinion, except for the effect on the unconsolidated financial statements of the matter described in the basis for qualified opinion paragraph above, nothing has come to our attention that causes us to believe that the accompanying unconsolidated at 31 December 2014, and of its unconsolidated financial performance and its unconsolidated cash flows for the year then ended infinancial accordance statements with the give accounting a true and principles fair view andof the standards unconsolidated (see Note financial 2) in force position as per of the Anadolu insurance Anonim legislation. Türk Sigorta Şirketi as

Report on Other Legal and Regulatory Requirements

Committee of Early Identification of Risks is presented to the Board of Directors of the Company on 29 January 2015. 1) Pursuant to the fourth paragraph of Article 398 of Turkish Commercial Code (“TCC”) no. 6102; Auditors’ Report on System and 2) Pursuant to the fourth paragraph of Article 402 of the TCC; no significant matter has come to our attention that causes us to believe that the Group’s bookkeeping activities, financial statements and group’s financial statements for the period 1 January - 31 December 2014 are not in compliance with TCC and provisions of the Company’s articles of association in relation to financial reporting.

3) Pursuant to the fourth paragraph of Article 402 of the TCC; the Board of Directors provided us the necessary explanations and required documents in connection with the audit.

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Partner Alper Güvenç, Certified Public Accountant

29 January 2015

İstanbul, Türkiye Additional paragraph for convenience translation to English: As explained in Note 2.1.1, the accompanying unconsolidated financial statements are not intended to present the financial position and results of operations of the Company in accordance with the accounting principles and practices generally accepted in countries and jurisdictions other than Turkey.

100 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Unconsolidated Financial Statements As at and for the Year Ended 31 December 2014

We confirm that the unconsolidated financial statements and related disclosures and footnotes as at 31 December 2014 which were prepared in accordance with the accounting principles and standards in force as per the regulations of T.C. Başbakanlık Hazine Müsteşarlığı 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, 29 January 2015

Musa ÜLKEN Fatih GÖREN Member of Board of Directors Executive Vice President of Finance Chief Executive Officer

Taylan MATKAP Accounting Reporting Manager Actuary Murat TETİK

101 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Unconsolidated Financial Statements As at and for the Year Ended 31 December 2014

Contents

UNCONSOLIDATED BALANCE SHEET 104-108

UNCONSOLIDATED STATEMENT OF INCOME 109-111

UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY 112

UNCONSOLIDATED STATEMENT OF CASH FLOWS 114

UNCONSOLIDATED STATEMENT OF PROFIT DISTRIBUTION 115

NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS 116-178

NOTE 1 General Information 116

NOTE 2 Summary of significant accounting policies 118

NOTE 43 ManagementCritical accounting of insurance estimates and and financial judgments risk in applying accounting policies 136135

NOTE 5 Segment reporting 149

NOTE 6 Tangible assets 152

NOTE 7 Investment properties 153

NOTE 8 Intangible assets 154

NOTE 9 Investments in associates 154

NOTE 10 Reinsurance assets and liabilities 155

NOTE 11 Financial assets 156

NOTE 12 Loans and receivables 160

NOTE 13 Derivative financial instruments 162

NOTE 14 Cash and cash equivalents 162

NOTE 15 Equity 162

NOTE 16 Other reserves and equity component of DPF 164

NOTE 17 Insurance contract liabilities and reinsurance assets 165

NOTE 18 Investment contract liabilities 169

NOTE 19 Trade and other payables and deferred income 169

NOTE 20 Financial liabilities 170

NOTE 21 Deferred tax 170

NOTE 22 Retirement benefit obligations 171

NOTE 23 Other liabilities and provisions 171

NOTE 24 Net insurance premium 172

NOTE 25 Fee revenue 172

102 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

NOTE 26 Investment income 172

NOTE 27 Net income accrual on financial assets 172

NOTE 28 Assets held at fair value through profit or loss 172

NOTE 29 Insurance rights and claims 172

NOTE 30 Investment contract benefits 172

NOTE 31 Other expenses 172

NOTE 32 Operating expenses 173

NOTE 33 Employee benefits expenses 173

NOTE 34 Financial costs 173

NOTE 35 Income tax 173

NOTE 36 Net foreign exchange gains 174

NOTE 37 Earnings per share 174

NOTE 38 Dividends per share 174

NOTE 39 Cash generated from operations 174

NOTE 40 Convertible bonds 174

NOTE 41 Redeemable preference shares 174

NOTE 42 Risks 174

NOTE 43 Commitments 175

NOTE 44 Business combinations 175

NOTE 45 Related party transactions 176

NOTE 46 Events after the reporting date 177

NOTE 47 Others 178

103 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Unconsolidated Balance Sheet As at 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

ASSETS Audited Audited Current Period Current Period I- Current Assets Note 31 December 2014 31 December 2013 A- Cash and Cash Equivalents 14 1.606.048.714 1.153.712.216 1- Cash 14 37.347 49.256 2- Cheques Received -- -- 3- Banks 14 1.356.733.446 901.838.577 4- Cheques Given and Payment Orders 14 (171.519) (1.025.984) 5- Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months 14 249.449.440 252.850.367 6- Other Cash and Cash Equivalents -- -- B- Financial Assets and Financial Investments with Risks on Policyholders 11 644.067.957 631.008.746 1- Available-for-Sale Financial Assets 11 442.140.789 456.674.161 2- Held to Maturity Investments 11 73.670.047 94.501.549 3- Financial Assets Held for Trading 11 134.054.733 85.630.648 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- Diminution in Value of Financial Investments 11 (5.797.612) (5.797.612) C- Receivables from Main Operations 12 797.454.113 773.925.226 1- Receivables from Insurance Operations 12 751.368.850 736.197.976 2- Provision for Receivables from Insurance Operations 2.21,12 (7.677.067) (9.475.078) 3- Receivables from Reinsurance Operations 12 47.022.365 42.073.701 4- Provision for Receivables from Reinsurance Operations -- -- 5- Cash Deposited to Insurance and Reinsurance Companies 12 6.739.965 5.128.627 6- Loans to the Policyholders -- -- 7- Provision for Loans to the Policyholders -- -- 8- Receivables from Individual Pension Operations -- -- 9- Doubtful Receivables from Main Operations 12 113.380.507 102.829.158 10- Provision for Doubtful Receivables from Main Operations 12 (113.380.507) (102.829.158) D- Due from Related Parties 12 -- 72.324 1- Due from Shareholders -- -- 2- Due from Associates -- -- 3- Due from Subsidiaries -- -- 4- Due from Joint Ventures -- -- 5- Due from Personnel -- 72.324 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 3.595.183 2.968.734 1- Finance Lease Receivables -- -- 2- Unearned Finance Lease Interest Income -- -- 3- Deposits and Guarantees Given 358.718 394.512 4- Other Miscellaneous Receivables 3.236.465 2.574.222 5- Rediscount on Other Miscellaneous Receivables -- -- 6- Other Doubtful Receivables -- -- 7- Provision for Other Doubtful Receivables -- -- F- Prepaid Expenses and Income Accruals 208.618.353 197.767.110 1- Prepaid Expenses 17 205.884.923 196.680.406 2- Accrued Interest and Rent Income -- -- 3- Income Accruals 10,12 2.733.430 1.086.704 4- Other Prepaid Expenses -- -- G- Other Current Assets 3.956.342 11.284.255 1- Stocks to be Used in the Following Months 212.258 888.774 2- Prepaid Taxes and Funds 19 1.848.492 9.659.923 3- Deferred Tax Assets -- -- 4- Job Advances 12 165.103 39.175 5- Advances Given to Personnel 12 4.631 35.897 6- Inventory Count Differences -- -- 7- Other Miscellaneous Current Assets 12 1.725.858 660.486 8- Provision for Other Current Assets -- -- I- Total Current Assets 3.263.740.662 2.770.738.611 The accompanying notes are an integral part of these unconsolidated financial statements.

104 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ASSETS Audited Audited Current Period Prior Period II- Non-Current Assets Note 31 December 2014 31 December 2013 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 -- -- 1- Finance Lease Receivables -- -- 2- Unearned Finance Lease Interest Income -- -- 3- Deposits and Guarantees Given -- -- 4- Other Miscellaneous Receivables -- -- 5- Rediscount on Other Miscellaneous Receivables -- -- 6- Other Doubtful Receivables -- -- 7- Provision for Other Doubtful Receivables -- -- D- Financial Assets 9 391.400.000 368.200.000 1- Investments in Equity Shares -- -- 2- Investments in Associates 9 391.400.000 368.200.000 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 32.307.481 34.793.176 1- Investment Properties 6,7 6.982.776 6.982.776 2- Impairment for Investment Properties -- -- 3- Owner Occupied Property 6 6.788.733 6.520.974 4- Machinery and Equipments 6 34.554.018 32.800.391 5- Furniture and Fixtures 6 11.775.416 11.331.085 6- Motor Vehicles 6 1.362.223 1.285.983 7- Other Tangible Assets (Including Leasehold Improvements) 6 19.401.127 18.262.277 8- Tangible Assets Acquired Through Finance Leases 6 4.166.354 4.166.354 9- Accumulated Depreciation 6 (52.723.166) (46.556.664) 10- Advances Paid for Tangible Assets (Including Construction in Progress) -- -- F- Intangible Assets 8 62.254.841 62.812.033 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 88.079.901 54.879.873 6- Accumulated Amortization 8 (43.804.438) (27.614.154) 7- Advances Paid for Intangible Assets 8 1.729.378 19.296.314 G- Prepaid Expenses and Income Accruals 17 3.562.038 34.671 1- Prepaid Expenses 17 3.562.038 34.671 2- Income Accruals -- -- 3- Other Prepaid Expenses and Income Accruals -- -- H- Other Non-Current Assets 21 20.125.763 16.191.701 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 20.125.763 16.191.701 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 509.650.123 482.031.581 TOTAL ASSETS 3.773.390.785 3.252.770.192 The accompanying notes are an integral part of these unconsolidated financial statements.

105 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

LIABILITIES Audited Audited Current Period Prior Period III- Short-Term Liabilities Note 31 December 2014 31 December 2013 A- Financial Liabilities -- -- 1- Borrowings from 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 -- -- B- Payables Arising from Main Operations 19 302.045.983 327.033.095 1- Payables Arising from Insurance Operations 19 218.662.943 260.656.406 2- Payables Arising from Reinsurance Operations -- -- 3- Cash Deposited by Insurance and Reinsurance Companies 10,19 7.277.133 3.105.906 4- Payables Arising from Individual Pension Business -- -- 5- Payables Arising from Other Main Operations 19 76.105.907 63.270.783 6- Discount on Payables from Other Main 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 19 47.561.333 56.534.780 1- Deposits and Guarantees Received 2.916.577 3.037.036 2- Medical Treatment Payables to Social Security Institution 16.625.234 26.428.955 3- Other Miscellaneous Payables 28.268.772 27.696.412 4- Discount on Other Miscellaneous Payables (249.250) (627.623) E- Insurance Technical Provisions 17 2.214.197.954 1.799.130.444 1- Reserve for Unearned Premiums - Net 17 1.159.630.507 1.097.540.759 2- Reserve for Unexpired Risks - Net 2.26,17 40.379.346 13.118.373 3- Mathematical Provisions - Net -- -- 4- Provision for Outstanding Claims - Net 17 1.014.188.101 688.471.312 5- Provision for Bonus and Discounts - Net -- -- 6- Other Technical Provisions - Net -- -- F- Provisions for Taxes and Other Similar Obligations 19 27.386.135 27.491.024 1- Taxes and Funds Payable 25.121.485 25.772.003 2- Social Security Premiums Payable 2.264.650 1.719.021 3- Overdue, Deferred or By Instalment Taxes and Other Liabilities -- -- 4- Other Taxes and Similar Payables -- -- 5- Corporate Tax Payable 35 21.081.960 -- 6- Prepaid Taxes and Other Liabilities Regarding Current Period Income (21.081.960) -- 7- Provisions for Other Taxes and Similar Liabilities -- -- G- Provisions for Other Risks -- -- 1- Provision for Employee Termination Benefits -- -- 2- Provision for Pension Fund Deficits -- -- 3- Provisions for Costs -- -- H- Deferred Income and Expense Accruals 80.052.263 64.374.616 1- Deferred Income 19 45.447.065 39.363.495 2- Expense Accruals 23 34.605.198 25.011.121 3- Other Deferred Income and Expense Accruals -- -- I- Other Short-Term Liabilities 23 1.433.153 1.187.490 1- Deferred Tax Liabilities -- -- 2- Inventory Count Differences -- -- 3- Other Various Short-Term Liabilities 23 1.433.153 1.187.490 III - Total Short-Term Liabilities 2.672.676.821 2.275.751.449

The accompanying notes are an integral part of these unconsolidated financial statements.

106 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

LIABILITIES Audited Audited Current Period Prior Period IV- Long-Term Liabilities Note 31 December 2014 31 December 2013 A- Financial Liabilities -- -- 1- Borrowings from 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 -- -- B- Payables Arising from Main Operations -- -- 1- Payables Arising from Insurance Operations -- -- 2- Payables Arising from Reinsurance Operations -- -- 3- Cash Deposited by Insurance and Reinsurance Companies -- -- 4- Payables Arising from Individual Pension Business -- -- 5- Payables Arising from Other Operations -- -- 6- Discount 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 68.252.637 52.282.601 1- Reserve for Unearned Premiums - Net -- -- 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 68.252.637 52.282.601 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 12.628.115 11.720.142 1- Provision for Employee Termination Benefits 23 12.628.115 11.720.142 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 -- -- 1- Deferred Tax Liabilities -- -- 2- Other Long-Term Liabilities -- -- IV- Total Long-Term Liabilities 80.880.752 64.002.743

The accompanying notes are an integral part of these unconsolidated financial statements.

107 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

EQUITY Audited Audited Current Period Prior Period V- Equity Note 31 December 2014 31 December 2013 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 8.809.304 8.161.541 1- Share Premiums -- -- 2- Cancellation Profits of Equity Shares -- -- 3- Profit on Asset Sales That Will Be Transferred to Capital ------5- Other Capital Reserves 15 8.809.304 8.161.541 4- Currency Translation Adjustments C- Profit Reserves 439.463.962 401.373.667 1- Legal Reserves 15 30.779.762 30.638.111 2- Statutory Reserves 15 7.262.220 6.993.082 3- Extraordinary Reserves 15 20.545.601 18.123.361 4- Special Funds -- -- 5- Revaluation of Financial Assets 15 336.666.816 302.035.089 6- Other Profit Reserves 15 44.209.563 43.584.024 D- Retained Earnings -- -- 1- Retained Earnings -- -- E- Accumulated Losses -- (63.981.132) 1- Accumulated Losses -- (63.981.132) F-Net Profit/(Loss) for the Period 71.559.946 67.461.924 1- Net Profit for the Period 70.639.674 66.814.161 2- Net Loss for the Period -- -- 3- Profit not Available for Distribution 15 920.272 647.763 V- Total Equity 1.019.833.212 913.016.000 TOTAL EQUITY AND LIABILITIES 3.773.390.785 3.252.770.192

The accompanying notes are an integral part of these unconsolidated financial statements.

108 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Unconsolidated Statement of Income For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

Audited Audited Current Period Prior Period I-TECHNICAL SECTION Note 31 December 2014 31 December 2013 A- Non-Life Technical Income 2.441.216.789 1.966.929.968 1- Earned Premiums (Net of Reinsurer Share) 2.235.759.340 1.825.789.170 1.1- Written Premiums (Net of Reinsurer Share) 17 2.325.110.061 2.067.216.007 1.1.1- Written Premiums, gross 17 3.004.830.066 2.749.704.405 1.1.2- Written Premiums, ceded 10,17 (605.617.965) (618.521.175) 1.1.3- Premiums Transferred to Social Security Institutions (74.102.040) (63.967.223) 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) 17,29 (62.089.748) (232.405.987) 1.2.1- Reserve for Unearned Premiums, gross 17 (68.928.251) (318.105.539) 1.2.2- Reserve for Unearned Premiums, ceded 17 4.900.846 71.144.433 1.2.3 - Reserve for Unearned Premiums, Social Security Institution Share 1.937.657 14.555.119 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) 29 (27.260.973) (9.020.850) 1.3.1- Reserve for Unexpired Risks, gross (30.198.184) (12.778.086) 1.3.2- Reserve for Unexpired Risks, ceded 2.937.211 3.757.236 2- Investment Income - Transferred from Non-Technical Section 190.509.410 123.220.226 3- Other Technical Income (Net of Reinsurer Share) 2.788.809 2.924.374 3.1- Other Technical Income, gross 2.788.809 2.924.374 3.2- Other Technical Income, ceded -- -- 4- Accrued Salvage and Subrogation Income 12.159.230 14.996.198 B - Non-Life Technical Expense (2.319.957.258) (1.866.051.751) 1- Incurred Losses (Net of Reinsurer Share) 17 (1.738.079.061) (1.346.087.004) 1.1- Claims Paid (Net of Reinsurer Share) 17,29 (1.412.362.272) (1.146.966.155) 1.1.1- Claims Paid, gross 17 (1.553.196.954) (1.249.199.210) 1.1.2- Claims Paid, ceded 10,17 140.834.682 102.233.055 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) 17,29 (325.716.789) (199.120.849) 1.2.1- Change in Provisions for Outstanding Claims, gross 17 (420.158.951) (245.037.920) 1.2.2- Change in Provisions for Outstanding Claims, ceded 17 94.442.162 45.917.071 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 Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) 29 (15.970.036) (12.422.591) 4- Operating Expenses 32 (522.686.229) (462.834.106) 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) 2.25 (43.221.932) (44.708.050) 6.1- Change in Other Technical Provisions, gross 2.25 (43.221.932) (44.708.050) 6.2- Change in Other Technical Provisions, ceded -- -- C- Net Technical Income-Non-Life (A - B) 121.259.531 100.878.217 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) -- -- 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.

109 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Audited Audited Current Period Prior Period I-TECHNICAL SECTION Note 31 December 2014 31 December 2013 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 -- -- 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.

110 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Audited Audited Current Period Prior Period II-NON-TECHNICAL SECTION Note 31 December 2014 31 December 2013 C- Net Technical Income - Non-Life (A-B) 121.259.531 100.878.217 F- Net Technical Income - Life (D-E) -- -- I - Net Technical Income - Pension Business (G-H) -- -- J- Total Net Technical Income (C+F+I) 121.259.531 100.878.217 K- Investment Income 258.928.064 186.213.348 1- Income from Financial Assets 4.2 130.174.857 85.749.368 2- Income from Disposal of Financial Assets 4.2 31.151.423 16.004.372 3- Valuation of Financial Assets 4.2 19.421.434 10.576.449 4- Foreign Exchange Gains 4.2 59.970.980 52.709.177 5- Income from Associates 4.2 16.000.000 18.000.000 6- Income from Subsidiaries and Joint Ventures -- -- 7- Income from Property, Plant and Equipment 1.815.006 2.848.377 8- Income from Derivative Transactions 4.2 205.678 212.931 9- Other Investments 188.686 112.674 10- Income Transferred from Life Section -- -- L- Investment Expense (275.809.588) (187.215.654) 1- Investment Management Expenses (inc. interest) 4.2 (136.623) -- 2- Diminution in Value of Investments 4.2 (3.509.979) (4.677.619) 3- Loss from Disposal of Financial Assets 4.2 (7.713.065) (13.581.516) 4- Investment Income Transferred to Non-Life Technical Section (190.509.410) (123.220.226) 5- Loss from Derivative Transactions 4.2 (184.509) (99.585) 6- Foreign Exchange Losses 4.2 (49.954.025) (28.804.896) 7- Depreciation and Amortization Expenses 6,8 (23.801.977) (16.831.812) 8- Other Investment Expenses -- -- M- Income and Expenses From Other and Extraordinary Operations (11.736.101) (32.413.987) 1- Provisions 47 (20.360.660) (23.892.951) 2- Rediscounts 47 (3.360.281) 2.353.934 3- Specified Insurance Accounts -- -- 4- Monetary Gains and Losses -- -- 5- Deferred Taxation (Deferred Tax Assets) 35 7.396.097 -- 6- Deferred Taxation (Deferred Tax Liabilities) 35 -- (11.654.589) 7- Other Income 5.142.413 3.469.073 8- Other Expenses and Losses (553.670) (2.689.454) 9- Prior Year’s Income -- -- 10- Prior Year’s Expenses and Losses -- -- N- Net Profit for the Period 71.559.946 67.461.924 1- Profit for the Period 92.641.906 67.461.924 2- Corporate Tax Provision and Other Fiscal Liabilities 35 (21.081.960) -- 3- Net Profit for the Period 71.559.946 67.461.924 4- Monetary Gains and Losses -- --

The accompanying notes are an integral part of these unconsolidated financial statements.

111 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Unconsolidated Statement of Changes in Equity For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

Audited Statement of Changes in Equity - 31 December 2013 Currency Other Reserves Own Shares of Revaluation of Inflation Translation Statutory and Retained Net Profit for Retained Notes Paid-in Capital the Company Financial Assets Adjustments Adjustments Legal Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - 31 December 2012 500.000.000 -- 212.235.915 -- -- 30.638.111 6.993.082 70.474.948 (63.981.132) -- 756.360.924 II - Change in Accounting Standards ------III - Restated balances (I+II) - 1 January 2013 500.000.000 -- 212.235.915 -- -- 30.638.111 6.993.082 70.474.948 (63.981.132) -- 756.360.924 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 income ------(606.022) -- -- (606.022) D- Change in the value of financial assets 11,15 -- -- 89.799.174 ------89.799.174 ------F- Other gains or losses ------E- Currency translation adjustments ------H- Net profit for the period ------67.461.924 -- 67.461.924 G- Inflation adjustment differences I - Dividends paid ------J - Transfers to reserves 15 ------63.981.132 (63.981.132) -- II - Balance at the end of the period - 31 December 2013 500.000.000 -- 302.035.089 -- -- 30.638.111 6.993.082 69.868.926 67.461.924 (63.981.132) 913.016.000

Audited Statement of Changes in Equity - 31 December 2014 Currency Other Reserves Paid-in Own Shares of Revaluation of Inflation Translation Statutory and Retained Net Profit for Retained Capital the Company Financial Assets Adjustments Adjustments Legal Reserves Reserves Earnings the Year Earnings Total Paid-in Capital I - Balance at the end of the previous year - 31 December 2013 500.000.000 -- 302.035.089 -- -- 30.638.111 6.993.082 69.868.926 67.461.924 (63.981.132) 913.016.000 II - Change in Accounting Standards ------III - Restated balances (I+II) -1 January 2014 500.000.000 -- 302.035.089 -- -- 30.638.111 6.993.082 69.868.926 67.461.924 (63.981.132) 913.016.000 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 income ------625.539 -- -- 625.539 D- Change in the value of financial assets 11,15 -- -- 34.631.727 ------34.631.727 ------F- Other gains or losses ------E- Currency translation adjustments ------H- Net profit for the period ------71.559.946 -- 71.559.946 G- Inflation adjustment differences I - Dividends paid ------J - Transfers to reserves 15 ------141.651 269.138 3.070.003 (67.461.924) 63.981.132 -- IV - Balance at the end of the period - 31 December 2014 500.000.000 -- 336.666.816 -- -- 30.779.762 7.262.220 73.564.468 71.559.946 -- 1.019.833.212

The accompanying notes are an integral part of these unconsolidated financial statements.

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113 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Unconsolidated Statement of Cash Flow For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

Audited Audited Current Period Prior Period Note 31 December 2014 31 December 2013 A - Cash flows from operating activities 1- Cash provided from insurance activities 3.153.798.374 2.854.861.834 2- Cash provided from reinsurance activities -- 6.871.227 3- Cash provided from individual pension business -- -- 4- Cash used in insurance activities (2.924.054.056) (2.501.075.344) 5- Cash used in reinsurance activities (6.560.002) (1.222.563) 6- Cash used in individual pension business -- -- 7- Cash provided by operating activities 223.184.316 359.435.154 8- Interest paid -- -- 9- Income taxes paid 19 (22.930.452) 980.233 10- Other cash inflows 26.050.558 50.333.609 11- Other cash outflows (37.055.680) (70.513.485) 12-Net cash provided by operating activities 189.248.742 340.235.511 B - Cash flows from investing activities 1- Proceeds from disposal of tangible assets -- 1.823.500 2- Acquisition of tangible assets 6, 8 (21.111.793) (47.756.100) 3- Acquisition of financial assets 11 (541.175.656) (714.083.260) 4- Proceeds from disposal of financial assets 865.215.792 431.437.029 5- Interests received (142.557.704) 89.565.184 6- Dividends received 10.000.000 8.000.000 7- Other cash inflows 62.448.109 198.407.879 8- Other cash outflows (205.552.139) (37.769.638) 9- Net cash provided by investing activities 27.266.609 (70.375.406) C- Cash flows from financing activities 1- Equity shares issued -- -- 2- Cash provided from loans and borrowings -- -- 3- Finance lease payments -- -- 4- Dividends paid -- -- 5- Other cash inflows -- -- 6- Other cash outflows -- -- 7- Net cash used in financing activities -- -- D- Effect of exchange rate fluctuations on cash and cash equivalents 1.701.066 31.224.213 E- Net increase in cash and cash equivalents 218.216.417 301.084.318 F- Cash and cash equivalents at the beginning of the year 14 825.512.807 524.428.489 G- Cash and cash equivalents at the end of the year 14 1.043.729.224 825.512.807

The accompanying notes are an integral part of these unconsolidated financial statements.

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ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Unconsolidated Profit Distribution For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

Audited Audited Current Period Prior Period Note 31 December 2014 31 December 2013(**) I. PROFIT DISTRIBUTION 1.1. CURRENT YEAR PROFIT (*) 94.279.437 66.814.161 1.2 TAX AND FUNDS PAYABLE (21.081.960) -- 1.2.1. Corporate Income Tax (Income Tax) (21.081.960) -- 1.2.2. Income tax deduction -- -- 1.2.3. Other taxes and Duties -- -- A NET PROFIT (1.1 - 1.2) 73.197.477 66.814.161 1.3. PREVIOUS PERIOD LOSSES (-) -- 63.981.132 1.4. FIRST LEGAL RESERVE 3.659.874 141.651 1.5. STATUTORY FUND (-) -- -- B NET PROFIT DISTRIBUTION [(A-(1.3 + 1.4 + 1.5)] 69.537.603 2.691.378 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 ------1.7. DIVIDEND TO PERSONNEL (-) -- -- 1.6.5. Holders of Profıt and Loss sharing certificate 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 ------1.10. SECOND LEGAL RESERVE (-) -- -- 1.9.5. Holders of Profıt and Loss sharing certificate 1.11. STATUTORY RESERVES (-) -- 269.138 1.12. EXTRAORDINARY RESERVES -- 2.422.240 1.13. OTHER RESERVES -- -- 1.14. SPECIAL FUNDS -- -- II. 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 ------2.4. DIVIDENDS TO PERSONNEL (-) -- -- 2.3.5 Holders of Profıt and Loss sharing certificate 2.5. -- -- III. PROFIT PER SHARE -- -- 3.1. HOLDERS OF SHARES -- -- 3.2. HOLDERS OF SHARES (%) -- -- 3.3. HOLDERS OF PREFERRED SHARES -- -- 3.4. HOLDERS OF PREFERRED SHARES (%) -- -- 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 (%) -- --

(*) on the consolidated profit figure. Profit for the year December 31, 2014, no.5 of the Corporate Tax Law than 75% of their income from investments in associates and Capital Markets Board’s no.2014/2 in the Weekly Bulletin “Profit Distribution Statement Preparation Guide” in accordance with the profit distribution are based consideration. real estate sales pursuant to the shareholders’ equity under “Profit not subject to distribution” account the amount of 1.394.625 TL allocated for follow-up taken into (**) Profit distribution table has not been filled yet due to profit distribution proposal for the year 2014 has not prepared by the Board of Directors.

(***)

The figures of 2013 is filled with the data which is “According to Legal Records” belongs to the Profit Distribution. The accompanying notes are an integral part of these unconsolidated financial statements.

115 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Notes to the Unconsolidated Financial Statements As at 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

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 at 31 December 2014, the shareholder having indirect control over the shares of Anadolu Anonim Türk Sigorta Şirketi (“the Company”) is Türkiye İş Bankası A.Ş. (“İş Bankası”). 31 December 2014 31 December 2013 Shareholding Shareholding Shareholding Shareholding Shareholder Amount (TL) Rate (%) Amount (TL) Rate (%)

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

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 moved from “Büyükdere Caddesi İş Kuleleri Kule 2 Kat: 22-26, 34330 4. Levent, Istanbul to the new address “Rüzgarlıbahçe Mahallesi, Kavak Sokak, NorthernNo:31 34805 Cyprus. Kavacık/İstanbul as of 2 December 2013 and the Company has nine regional offices; two of them established in İstanbul and others established in Antalya, İzmir, Samsun, Adana, Ankara, Trabzon and Bursa, and a branch in Turkish Republic of 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, transportation, fire and natural disasters, general loss, credit, financial losses, and legal protection.

As at 31 December 2014, the Company serves through, 2.485 authorized agencies and 91 unathorized agencies (31 December 2013: 2.468 authorized agencies and 83 unathorized agencies) of which, 2.576 agencies (31 December 2013: 2.551 authorized).

1.4 Description of the main operations of the Company

2007 dated and 26552 numbered Official Gazette and the communiqués and other regulations in force issued by the Turkish TreasuryThe Company based conducts on the Insurance its operations Law. inThe accordance Company withoperates the Insurancein insurance Law branches No.5684 as (the mentioned “Insurance above Law”) Note issued 1.3 Business in 14 June of the Company. laws and regulations for the matters of establishment, auditing, supervision/oversight, accounting and financial reporting in accordanceThe Company’s Capital shares Market have Law been No:6362, listed on part the ofIstanbul VIII and Stock paragraph Exchange of 5 (“ISE”). of Article The 136. company operates in their own specific

116 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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:

31 December 2014 31 December 2013

Senior level managers 7 8 Directors 37 38 Intermediate directors 3 3 142 128 Contracted personnel 799 760 Officers Total 988 937

1.6 Wages and similar benefits provided to the senior management

For the year ended 31 December 2014, wages and similar benefits provided to the senior management including chairman is amounting to TL 1.034.290 (31 December 2013: TL 948.790) and members of the board of the directors, general manager, general coordinator, and deputy general managers is amounting to TL 3.915.203 (31 December 2013: TL: 3.918.307)

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 InFinancial accordance Statements with the Being above Prepared mentioned In Accordance Communiqué, With insurance Insurance companies Accounting are Plan” allowed issued to transfer by the Turkish technical Treasury. section operating expense to insurance section through methods determined by Turkish Treasury or by the Company itself. Methods determined by the Company should be approved by the Turkish Treasury, 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 Incomewritten frompremiums” the assets and investedthe “total against number non-life of the claimstechnical reported”, provisions respectively. 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 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 at and for the year ended 31 December 2014.

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: Registered address of the head office: Anadolu Anonim Türk Sigorta Şirketi The web page of the Company: www.anadolusigorta.com.tr Rüzgarlıbahçe Mahallesi, Kavak Sokak, No:3134805 Kavacık /İstanbul The information presented above has not any change since the end of the previous reporting period.

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1.10 Events after the reporting date

There haven’t been any change at services of the company, recording of this services and company policies after accounting date.

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 byfinancial the Turkish reporting Treasury principles, based statements on Article 18 and of guidance the Insurance (collectively Law and “the Article Reporting 11 of the Standards”) 4632 numbered in accordance Individual with Pension the Savings“Communiqué and Investment Related to System the Financial Law (‘‘Individual Reporting Retirementof Insurance, Law’’). Reinsurance, and Individual Pension Companies” as promulgated

Although the 4th Insurance contracts’ became effective on 25 March 2006 for the accounting periods that begin on or after 31 December 2005, it is stated that TFRS 4 will not be standard of the Turkish Accounting Standards Board (“TASB”) for the ‘ implemented at this stage since the second phase of the International Accounting Standards Board project about the insurance contracts has not been completed yet. In this context, “Communiqué on Technical Reserves for Insurance, Reinsurance and 1Individual January 2008. Pension Subsequent Companies to andthe publicationthe Related ofAssets the Communiqué That Should Beon InvestedTechnical Against Reserves, Those some Technical other circulars Reserves” and (“Communiqué sector announcementson Technical Reserves”) which contain is published explanations in the Official and regulations Gazette dated related 7 August to application 2007, numbered of the Communiqué 26606 and onbecame Technical effective Reserves on are published. Accounting policies applied for the insurance contracts based on these communiqué, circulars and other sector announcements are summarized on their own captions in the following sections.

that,Accounting the companies for subsidiaries, will continue associates to apply and the joint principles ventures of is the regulated related withstandards 28 December of TFRSs 2007 for the dated accounting and 2007/26 of subsidiaries, numbered “Circular Related to the Accounting of Subsidiaries, Associates and Joint Ventures”, issued by the Turkish Treasury. It is stated byassociates the Turkish and jointTreasury venture in the until 31 theDecember publication 2008 of dated another and regulation 27097 numbered on this issue(4th repeat) by the OfficialTurkish Gazette, Treasury. constituted “Circular Relatedthe basis to theof consolidation Preparation ofto thebe effectiveConsolidated on the Financial dates that Statements circular specifies. of Insurance, Reinsurance, and Individual Pension Companies” issued

Additional paragraph for convenience translation to English

The differences between 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

Accordingly, the accompanying unconsolidated financial statements are not intended to present the financial position and results ofFinancial operations Reporting in accordance Standards with (“IFRS”), the accounting may have principles significant generally influence accepted on the accompanying in such countries unconsolidated other than Turkey. financial statements.

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 Financial Reporting in Hyperinflationary Economies 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 reportingLira based date, on “TAS and 29that - corresponding figures for previous years be restated” as in at the 31 same December terms. 2004.

118 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

With respect to the declaration of the Turkish Treasury with the article dated 4 April 2005 and numbered 19387, financial statements as of 31 December 2004 are adjusted for the opening balances of 2005 in accordance with the section with respect isto noinflation longer accounting applied starting of the from Capital 1 January Markets 2005, Board in (“CMB”) accordance Communiqué with the same No: 25declaration of Series XI,of the“Communiqué Turkish Treasury. on Accounting Accordingly, asStandards at 31 December in Capital 2014, Market” non-monetary published inassets the Official and liabilities Gazette and dated items 15 Januaryincluded 2003 in shareholders’ and numbered equity 25290. including Inflation paid-in accounting capital and items included in shareholders’ equity including paid-in capital recognized or recorded after 1 January 2005 are measured at theirrecognized nominal or valuesrecorded before 31 December 2004 in order to reflect inflation adjustments. Non-monetary assets and liabilities

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 until 31 December 2004, except for the financial assets at fair value through profit or loss, available-for-sale financial assets, derivativeThe accompanying financial financialinstruments statements and associates are prepared which onare the measured historical at costtheir basis fair values as adjusted unless for reliable the effects measures of inflation are available. that lasted

2.1.6 Accounting policies, changes in accounting estimates and errors applying the Company’s accounting policies are explained in Note 3 - Critical accounting estimates and judgments in applying accountingThere is not policies any change. in accounting estimates or determined errors in current year. Critical accounting judgements used in

2.2 Consolidation

force“Circular since Related 31 March to the 2009. Preparation Accordingly, of the consolidated Consolidated financial Financial statements Statements are ofprepared Insurance, using Reinsurance, the equity methodand Individual of accounting Pension to Companies” issued by the Turkish Treasury in the 31 December 2008 dated and 27097 numbered Official Gazette, has been in consolidate the Company’s associate; Anadolu Hayat Emeklilik A.Ş.

TurkishIn the 12 Treasury, August 2008 it is stateddated andthat 2008/36although numberedinsurance, “Sectorreinsurance Announcement and individual Related pension to the companies Accounting are of exempted Subsidiaries, from Associates TAS 27 -and Consolidated Joint Ventures and Separatein the Stand Financial Alone StatementsFinancial Statements of Insurance, Reinsurance and Individual Pension Companies” of the 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, subsidiaries,, Parallel to associates the related and sector joint-ventures announcements could mentionedbe accounted above, in accordance as at the reporting date the Company has accounted for its associate at fair value based on quoted market price.

119 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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 of income. recorded in “Revaluation of financial assets” under equity and the realized gain or losses are recognized directly in the statement 2.5 Tangible assets

Tangibletherefore assets they have of the been Company recorded are at recorded their costs at their restated historical for the costs effects that of have inflation been until adjusted 31 December for the effects 2004. of Tangible inflation assets until thethat endhave of been 31 December purchased 2004. after There1 January have 2005 been have no other been inflationaryrecorded at adjustmentstheir costs after for thesededucting tangible any assetsexchange for ratethe following differences years and and finance expenses.

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.

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 Tangible Assets (years) Rates (%) Buildings 50 2,0 Machinery and equipments 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 4 - 10 10,0 - 25,0

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2.6 Investment properties

Investment properties are held either to earn rentals and/or for capital appreciation or for both.

Investment properties are measured initially at cost including transaction costs.

Subsequent to initial recognition, the Company measured all investment properties based on the cost model in accordance with the cost model for property and equipment (i.e. at cost less accumulated depreciation and less impairment losses if any).

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. 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.

2.7 Intangible Assets

The Company’s intangible assets consist of computer software, goodwill and advances paid for tangible assets.

Accounting for intangible assets assets purchased before 31 December 2004 are restated from the purchasing dates to 31 December 2004, the date the hyperinflationaryIntangible assets are period recorded is considered at cost in to compliance be ended. Thewith intangible “TAS 38 - assets purchased after this date”. are The recorded cost of the at theirintangible historical costs.

Amortization is charged on a straight-line basis over their estimated useful lives over the cost of the asset.

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. liabilities. The value at acquisition of the portfolio amounting to TL 16.250.000 is capitalized as goodwill by the Company. The Company has acquired the health portfolio of Anadolu Hayat Emeklilik A.Ş. at 31 August 2004 with all of its rights and 2.8 Financial assets

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.

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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 assetsAvailable-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 disposal, the realized gain or losses are recognized directly in the statement of income. calculated per effective interest rate method are recorded in “Revaluation of financial assets” under shareholders’ equity. Upon 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.

Associates; in the financial statements and are recorded at their fair values since those shares are traded in an active market. shares of the associate of the Company; Anadolu Hayat Emeklilik A.Ş. are classified as available-for-sale financial assets 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.

2.9 Impairment on assets

Impairment on financial asset of impairment. If any such indication exists, the Company estimates the amount of impairment. A financial asset is impaired Financial assets or group of financial assets are reviewed at each reporting date to determine whether there is objective evidence eventsif, and onlyare not if, there recognized is objective even evidenceif the probability that the ofexpected loss is high. 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 Impairment on tangible and intangible assets

On each reporting date, the Company evaluates whether there is an indication of impairment of tangible and intangible assets. - Impairment of Assets lossIf there is made. is an objective evidence of impairment, the asset’s recoverable amount is estimated in accordance with the “TAS 36 ” and if the recoverable amount is less than the carrying value of the related asset, a provision for impairment 2.10 Derivative financial instruments

Financial Instruments: Recognition and measurementDerivative financial instruments are subsequently remeasured at fair value instrumentsand positive fairare includedvalue differences in the statement are presented of income. 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

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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

2.13 Share capital and 31 December 2013, the share capital and ownership structure of the Company are as follows: The shareholder having direct or indirect control over the shares of the Company is İş Bankası Group, As at 31 December 2014 31 December 2014 31 December 2013 Shareholding Shareholding Shareholding Shareholding Name Amount (TL) Rate (%) Amount (TL) Rate (%)

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

Sources of capital increases during the period

The company has not performed capital increase as at 31 December 2014. (31 December 2013: None).

Privileges on common shares representing share capital

As at 31 December 2014, the issued share capital of the Company is TL 500.000.000 (31 December 2013: TL 500.000.000) and the share capital of the Company consists of 50,000,000,000 (31 December 2013: 50,000,000,000 shares) issued shares with TL 0.01 nominal value each. The share capital is represented by 150 Group A shares of TL 0,01 each.

Registered capital system in the Company

The Company has accepted the registered capital system. As of 31 December 2014, the Company’s registered capital is TL 700.000.000 (31 December 2013: TL 700.000.000).

Repurchased own shares by the Company

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

Investmentcoverage of contractsinsurance are contracts those contracts recognized which as revenue transfer under financial the accountrisk with caption no significant “written insurance premiums”. 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 at the reporting date, the Company does not have a contract which is classified as an investment contract.

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2.15 Insurance contracts and investment contracts with discretionary participation feature benefits in addition to the guaranteed benefits. Discretionary participation feature (“DPF”) within insurance contracts and investment contracts is the right to have following (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 at the reporting date, the Company does not have any insurance or investment contracts that contain a DPF.

2.16 Investment contracts without DPF

As at the reporting date, the Company does not have any insurance contracts and investment contracts without DPF.

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

(like dividend income) and deductions (like investment incentives), and additions for certain non-tax deductible expenses and allowancesStatutory income for tax is purposes. subject to If corporate there is no tax dividend at 20%. distribution This rate is planned,applied to no accounting further tax income charges modified are made. for certain exemptions to withholding tax. The withholding tax rate on the dividend payments other than the ones paid to the non-resident institutions generatingDividends paid income to the in Turkeyresident through institutions their andoperations the institutions or permanent working representatives through local andoffices the or resident representatives institutions are is not 15%. subject 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

Prepaidnot considered taxes are as calculatedprofit distribution and paid and at the therefore rates valid is not for subject the earnings to withholding of the related tax. years. The payments can be deducted from the annual corporate tax calculated for the whole year earnings.

In accordance with the tax legislation, tax losses can be carried forward to offset against future taxable income for up to five years. The company has not deductible tax losses as of 31 December 2014. (31 December 2013: 3.664.725 TL).

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

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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 are recognized as an item under equity, then the related current and/or deferred tax effects are also recognized directly in the equity.

Transfer pricing

In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of dated 18 November 2007 sets details about implementation. “disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, 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.

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 Memurları Emekli Sandığı (“Anadolu AsAnonim per the Pension temporary Fund”) sub which article is No:established 20 of the in Article accordance 73 of thewith Social the temporary Security Law, Article pension 20 of funds the Social should Security be transferred Act No: 506. 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 8 May 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 9 April 2011. Accordingly, the three-year period expired on 8 May 2011 was extended to the 8 May 2015. The principles and applications of the transfer will be determined by the Decree of the Council of Ministers separately.

On the other hand, the application made on 19 June 2008 by the Republican People’s Party to the Constitutional Court for the annulment and motion for stay of some articles, including the first paragraph of the provisional article 20 of the Law, which

30 March 2011. covers provisions on transfers, was rejected in accordance with the decision taken at the meeting of the afore-mentioned court on

125 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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 9.8% shall be used in the actuarial calculation of the value in cash, and. 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.

In Accordance IAS 19 which published by Public Company Accounting Oversight Board (PCAOB) dated March 12,2013 is about actuarial gains and losses arising on re-measurement should be recognized in other comprehensive income under shareholders’ equity“Benefits and Employee this effect Accounting should be appliedStandard” retrospectively. and defined by The beginning company from started December to account 31,2012 current net actuarial defined benefit gains and liability losses of under the 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 2013 are as follows: , The major actuarial assumptions used in the calculation of the total liability as at 31 December 2014 and 31 December 31 December 2014 31 December 2013 Discount rate %4,46 %3,61 Expected rate of salary/limit increase %4,37 %6,37 Estimated employee turnover rate %6,29 %7,11 Expected rate of salary/limit increase above was determined according to the government’s annual inflation forecasts.

Other 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,

Athe contingent related liability asset is is a considered possible asset as “contingent” that arises from and disclosedpast events in andthe noteswhose to existence the financial will bestatements. 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.

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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

Claimsare accounted are recognized as “written as expense premiums, as they ceded” are inpaid. the Outstandingstatement of claims income. 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 20 September 2010; the Company may account for income accrual for subrogation receivables without any voucher after the completion of the claim payments made to the insure. 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 at the reporting date, in accordance with the related circular the Company provided TL 26.118.178 (31 December 2013: TL 25.286.057) subrogation receivables and recorded TL 30.648.790 (31 December 2013: TL 29.179.630) (Note 12) net subrogation and salvage receivables under receivables from main operations. The Company provided allowance for uncollected subrogation receivables amounting to TL 7.677.067 (31 December 2013: TL 9.475.078) (Note 12) in accordance with circular.

For the years ended 31 December 2013 and 2012, salvage and subrogation collected are as follows:

31 December 2014 31 December 2013 Motor Vehicles 255.938.892 198.341.171 Third Party liability for motor vehicles (MTPL) 4.894.794 5.275.881 Transportation 2.556.620 2.002.200 Fire and natural disaster 1.951.328 1.647.652 Water Vehicles 1.087.073 751.675 Accident 452.519 548.899 General Losses 248.943 85.598 General Responsibility 129.658 22.584 Air Craft 16.861 -- Credit 2.410 355.772 Legal Protection (22.011) 22.461 Health -- 21.104 Total 267.257.087 209.074.997

As at 31 December 2014 and 31 December 2013, accrued subrogation and salvage income per branches is as follows:

31 December 2014 31 December 2013 Motor Vehicles 29.805.959 27.506.620 Third Party liability for motor vehicles (MTPL) 213.733 1.450.379 Water Vehicles 34.052 -- Fire and natural disaster 397.028 146.400 Transportation 181.347 64.907 General Losses 16.671 10.291 Accident -- 1.033 Total 30.648.790 29.179.630

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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 1 January 2008 and recognizing deferred commission income and deferred commission expense in the financial statements for the policies produced after 1 January 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.

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 Dividendsassets” and “Loss from disposal of financial assets” in the accompanying unconsolidated financial statements.

Dividend income is recognized when the Company’s right to receive payment is ascertained.

2.22 Leasing transactions

The maximum period of the lease contracts is 10 years. Tangible assets acquired by way of finance leases are recorded in tangible account in the financial statements. In the determination of the related asset and liability amounts, the lower of the fair value of theassets leased and assetthe obligations and the present under valuefinance of leasesleasing arising payments from is the considered. lease contracts Financial are costspresented on leasing under agreements “Finance Lease are expanded Payables” in lease periods at a fixed interest rate.

If there is impairment in the value of the assets obtained through finance lease and in the expected future benefits, the leased assets are measured at net realizable value. Depreciation for assets obtained through financial lease is calculated in the same manner as tangible assets.

Payments made under operating leases are recognized in the statement of income on a straight-line basis over the term of the lease.

2.23 Dividend distribution

Based on the guidelines and principals issued by the CMB dated 27 January 2010 for the distribution of dividends from the profit generated from operating activities in 2009, concerning public entities, the shares of which are quoted in public equity markets, it has been agreed upon not to set a mandatory minimum dividend payment quota. Furthermore, it has been agreed upon to let public entities perform dividend distributions.

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.

The company did not perform dividend distribution in 2013 and 2014.

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2.24 Reserve for unearned premiums

inIn 26606accordance numbered with the and “Communiqué 7 August 2007 on dated Technical Official Reserves Gazette for and Insurance, put into effect Reinsurance starting and from Pension 1 January Companies 2008, the and reserve the Related for unearnedAssets That premiums Should Be represents Invested Againstthe proportions Those Technical of the gross Reserves” premiums (“Communiqué written without on Technical deductions Reserves”) of commission which was or any issued 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 transportation 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.

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 1 January 2008, the Turkish Treasury issued 4 July 2007 issuancedated and date 2007/3 and enactmentnumbered date“Circular of the to Communiqué Assure the Compliance on Technical of theReserves. Technical In accordance Reserves of with Insurance, the Compliance Reinsurance Circular, and it is statedPension that Companies companies With should the Insurance consider earthquake Law No,5684” premiums (“Compliance written Circular”) after 14 June to regulate 2007 in the the technical calculation provisions of the reserve between for the 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 14 June 2007, while the Company had not calculated reserve for unearned premiums for the earthquake premiums written before 14 June 2007.

According to the 2009/9 Numbered Circular Related to Application of Technical Reserves issued on 27 March 2009 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.

As at the reporting date, the Company has provided reserve for unearned premiums amounting to TL 1.491.252.563 (31 December 2013: TL 1.422.324.312) and reinsurer share in reserve for unearned premiums amounting TL 294.929.264 share amounting to TL 36.692.792 (31 December 2013: TL 34.755.134) as at 31 December 2014. (31 December 2013: TL 290.028.419). Furthermore, reserve for unearned premiums includes Social Security Institution (“SSI”) 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

Claimsat the reporting incurred datebefore as thewell accounting as the corresponding periods but handling reported costs. subsequent Incurred to thosebut not dates reported are considered claims (“IBNR”) as incurred are also but provided. not reported (“IBNR”) claims.

According to the “Communiqué on Amendments to Communiqué on Technical Reserves for Insurance, Reinsurance and Pension SeptemberCompanies 2010and the and Related numbered Assets 2010/12, That Should it is stated Be Invested that the Against difference Those between Technical the Reserves” result of the published actuarial in chain Official ladder Gazette method no and27655 reported dated 28but July not 2010 settled and (IBNR “Communiqué calculation on by Technical ACLM method) Reserves is comparedand Circular to teston Actuarial IBNR claims Chain and Ladder greater Method” amount dated is recorded 20 to financial statements are accepted as IBNR claims. Requirement on test IBNR calculation is removed per Communiqué on Amendments to Aforementioned Communiqué is published in Official Gazette no 28356 17 July 2013 dated. It is stated that amount, content and implementation principals of incurred but not reported claims should be determined according to IBNR calculation by ACLM method specified by Turkish Treasury or other methods determined by Turkish Treasury.

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As at 1 January 2012, 100% of the calculated negative IBNR balances per each insurance branch are taken into calculation in accordance with the Circular issued by the Turkish Treasury dated 26 December 2011 and numbered 2011/23. Accrued salvage, subrogation and similar income is taken into calculation with collections in ACLM method.

The Company recorded 100% of the IBNR calculated by ACLM method with additional provision explained below amounting to TL 327.611.024 (31 December 2013: TL 193.676.094) to the unconsolidated financial statements as IBNR and TL 17.969.121 (31 December 2013: TL 7.596.560) as reinsurer’s share of IBNR.

In Accordance with the Circular issued by the Turkish Treasury dated 2010/12 and 2010/16, the Company eliminated severe damages by using Box-Plot method to make more homogeneous calculation in ACML.

Also, according to Circular Article 7 issued in 2010/12, total number of files contained in the main branch, remaining branches can be done by actuary. excluding the health branch of the total number of files no more than one thousand of damage or major damage under 300 According to Treasury Circular 2010/16, the amounts with ACML determined the minimum amount of provision. If Amounts which are determined the company’s other tools or actuarial studies shows the company’s statu better than methods recommended by the Treasury, the company reflect amount of provision which provided higher than Treasury to financial to total TL 11.069.337 (31 December 2013: TL 4.831.998) which are TL 858.216 in branch of Health, TL 6.190.791 in branch of Waterstatements. Vehicles, In accordance TL 2.859.830 with in thesebranch judgments, of Air Craft as Responsibility a result of actuarial and TL studies, 1.160.500 the Companyin branch madeof Credit. IBNR provision amounts

17 June 2013 and numbered 2013/13 and the Company’s actuary decision starting from 30 June 2014, the Company updated provisionIn accordance for outstanding with the “Sector claims Announcement for general liability Related branch. to Updating Past Outstanding Claim Amounts for IBNR Calculation” dated

IBNR amounts which obtained results of updates provision for outstanding claims and uncorrected version in the ACLM triangular series are TL 417.681.075. In accordance with Circular no. 2011/1, the Company corrected updated provision for outstanding claims backwards to avoid deterioration of the data series in the history of the triangle ACLM. As 31 December 2014, IBNR figures obtained for this correction is TL 114.990.730. This amount is accounted in the Company’s financials.

ACLM to be used is announced with “Communiqué on Technical Reserves” which is issued by the Turkish Treasury on 20 selectionsSeptember for 2010, each Insurance branch are and presented reinsurance below. companies are allowed to use five different methods which are “Standard Chain, Claim/Premium, Cape Code, Frequency/Volume and Munich Chain Ladder” to make ACLM calculations. The Company’s method

thatIn accordance can be started with asthe of Circular first quarter of the of Turkish 2013 if Treasury minimal No:fluctuation 2013/8 between dated 5 April the periods 2013 “Circular is wanted. on Accordingly, Actuarial Chain in Discretionary Ladder FiscalMethod”, Responsibility according to branch, the Circular for the numbered purpose of2010/12, additional the IBNR ACLM need calculation to be aimed methods to determine start to be actuarial changed forecast at the end works of 2013 by the Company actuary for compatible with the branch’s ACML calculation method has been changed as of 30 September 2013 and

“Munich Chain” method was disused to “Standard Chain” method was started to carry out. As 30 September 2014, for the Motor Vehicles and General Losses branches, the Company started to use ‘Standard’ instead of Münich Chain’.

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Based on each branch, calculation amount of Net IBNR; reinsurance agreements’ effect in force was to be reflected based on actual reinsurance rate.

31 December 2014 31 December 2013 Motor vehicles Standard Chain Ladder Munich Chain Water vehicles Standard Chain Ladder Standard Chain Ladder Third party liability for motor vehicles (MTPL) Cape Code Munich Chain Third party liability Standard Chain Ladder Standard Chain Ladder Third party liability for air vehicles Standard Chain Ladder Standard Chain Ladder Fire and natural disasters Munich Chain Ladder Munich Chain Air crafts Standard Chain Ladder Standard Chain Ladder Accident Standard Chain Ladder Standard Chain Ladder General losses Standard Chain Ladder Munich Chain Financial losses Standard Chain Ladder Standard Chain Ladder Health Standard Chain Ladder Standard Chain Ladder Transportation Standard Chain Ladder Standard Chain Ladder Credit Standard Chain Ladder Standard Chain Ladder Legal protection Standard Chain Ladder Standard Chain Ladder General liability Cape Code Munich Chain

2011/23 and dated 26 November 2011, companies may decrease their outstanding claims reserve balances based on the winning ratioIn accordance of the sub-branches with “Circular calculated Related from to Information the last five on years Calculation claims. Winningof Incurred ratio But used Not forReported decrease Claims in provision Reserve” for numbered outstanding claims could not exceed 25% (15% for the new sub-branches which do not have five year data). Based on the aforementioned regulation, the Company calculated winning ratio from the last five year data set and TL 75.260.122 (31 December 2013: TL 53.749.627) as IBNR and 9.912.780 TL (31 December 2013: TL 6.764.302) as reinsurer’s share of IBNR is excluded from outstanding claims reserve balance

131 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

The calculated winning ratio of the Company as at 31 December 2014 is within 0% - 100% range (31 December 2013:%0-%35), Winning ratios used in and amounts decreased from provision for outstanding claims are as follows:

31 December 2014 Gross Amount Net Amount Branch Winning Ratios Used Decreased Decreased

Third party liability for motor vehicles (MTPL) %13 27.061.833 26.173.740 General responsibility %25 31.775.165 30.362.994 Fire and natural disasters %23 10.183.292 4.417.948 Motor vehicles %21 2.623.152 2.533.992 General losses %19 2.057.461 686.961 Water vehicles %25 791.187 493.422 Transportation %25 431.542 362.137 Accident %14 304.698 284.356 Credit %25 25.000 25.000 Legal protection %25 6.792 6.792 Total 75.260.122 65.347.342

31 December 2013 Gross Amount Net Amount Branch Winning Ratios Used Decreased Decreased

Third party liability for motor vehicles (MTPL) %17 27.348.214 26.167.440 General responsibility %25 15.096.889 14.288.654 Fire and natural disasters %17 6.386.641 2.789.609 Motor vehicles %18 2.065.493 1.977.160 Transportation %11 361.329 333.118 General losses %17 1.153.064 515.357 Motor vehicles %25 973.319 569.692 Accident %18 357.604 337.221 Legal protection %16 7.074 7.074 Total 53.749.627 46.985.325

New Regulations on Treatment Costs Resulted from Traffic Accidents in Accordance with the Circular Numbered 2011/18 “Circular Related to the Accounting of Payments Related to Payment of Treatment Costs Resulted from Traffic Accidents and New Accounts in the Insurance Chart of Accounts”

According to the Article 59 of the aforementioned law, starting from 25 February 2011, premiums written under compulsory motor third party liability insurance contracts providing health assurance will be transferred to SSI by the rate up to 15% traffic accidents will be compensated by SSI. According to the Provisional Article 1 and Article 59 of the Law, up to 20% of thewhich transferred will be later premium defined amount by Turkish defined Treasury. by the ByTurkish this premium Treasury transfer, will also all be liabilities transferred related to SSI to and body treatment injuries resultedcosts resulted from from traffic accidents occurred before 25 February 2011 will also be compensated by SSI. As part of the aforementioned law,

132 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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 Treasury 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. Accordingly, as at the reporting date, the Company has provided net reserve for unexpired risk amounting to TL 52.687.216 (31 December 2013: TL 22.489.032) and unexpired risk amounting of reassurance to TL 12.307.870 (31 December 2013: TL 9.370.659) in the accompanying unconsolidated financial statements.

As at 31 December 2014, reserve for unexpired risks at the beginning of the period is revised according to calculation method used in the current period in order to determine consistent claims /premium ratio.

According to the Circular numbered 2011/18, 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 transportation financial liability and compulsory personal accident for bus transportation branches.

2.27 Equalization provision

In accordance with the Communiqué on Technical Reserves put into effect starting from 1 January 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. reporting date, the Company provided equalization provision amounting to TL 60.549.876 in the accompanying unconsolidated financialEqualization statements provisions (31 are December presented 2013: under TL 44.579.840)“other technical reserves” in the accompanying financial statements. As at the

Net losses (after reinsurance) resulted from earthquake occurred in Van amounting to TL 7,101,831 (31 December 2013: TL 7.101.831) are decreased from prior periods’ equalization provision .

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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

• (b) the party is an associate of the Company; • has joint control over the Company;

(d)(c) thethe partyparty isis amember joint venture of the inkey which management the Company personnel is a venturer; 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 computations, such bonus shares issued are regarded as issued shares. distribution of shares (“Bonus Shares”) to existing shareholders from retained earnings. For the purpose of earnings per share 2.30 Events after the reporting date

whenPost-balance material. sheet events that provide additional information about the Company’s position at the reporting dates (adjusting events) are reflected in the financial statements. Post-balance sheet events that are not adjusting events are disclosed in the notes 2.31 New standards and interpretations not yet adopted

134 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Developing a new standard for the financial reporting of financial assets that is principle-based and less complex is aimed by financial assets that will present relevant and useful information to users of financial statements for their assessment of amounts, timingthis project. and uncertainty The objective of theof TFRS entity’s 9, being future the cash first flows. phase With of the TFRS project, 9 an entityis to establish shall classify principles financial for theassets financial as subsequently reporting of measured at either amortized cost or fair value on the basis of both the entity’s business model for managing the financial assets and the contractual cash flow characteristic of the financial assets. The guidance in TAS 39 on impairment of financial assets and hedge accounting continues to apply.

An entity shall apply TFRS 9 for annually years beginning on or after 1 January 2018. An earlier application is permitted. If an entity adopts this TFRS in its financial statements for a period beginning before 1 January 2012, then prior periods are not needed to be restated.

3 Critical accounting estimates and judgments in applying accounting policies

The notes given in this section are provided to addition/supplement the commentary on the management of insurance risk note 4.1 - Management of insurance risk and note 4.2 - Financial risk management. application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ fromThe preparation these estimates. of financial statements requires management to make judgments, estimates and assumptions that affect the

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. that have the most significant effect on the amount recognized in the financial statements are described in the following notes: In particular, information about significant areas at estimation uncertainty and critical judgment in applying accounting policies Note 4.1 - Management of insurance risk

Note 4.2 - Financial risk management

Note 10 - Reinsurance assets/liabilities

Note 11 - Financial assets

Note 12 - Loans and receivables

Note 17 - Insurance liabilities and reinsurance assets

Note 17 - Deferred acquisition costs

Note 19 - Trade and other payables, deferred income

Note 21 - Deferred income taxes

Note 23 - Provisions for other liabilities and charges

135 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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

determinePotential risks the riskthat measurement,may be exposed assessment, in transactions and control are managed procedures based and on themaintain requirements consistency set out between in the theCompany’s Company’s “Risk asset qualityManagement and limitations Policies” issued allowed by by the the approval insurance of the standards Board of together Directors. with The the main Company’s objective risk of tolerancerisk management of the accepted policies risk is to 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

Riskinstruments, tolerance such is determined as; risk limitations, by the Company’s are used inBoard achieving of Directors the related by considering objective. 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.

Whatsoever, 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 coinsurers 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.

Sensitivity to insurance risk

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 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.

136 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Insurance risk concentration

The Company’s gross and net insurance risk concentrations (after reinsurance) in terms of insurance branches are summarized as below:

Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2014 liability total claims liability claims liability Motor vehicles liability (MTPL) 536.683.814 (16.321.658) 520.362.156 General liability 302.883.129 (35.816.816) 267.066.313 Fire and natural disasters 126.898.890 (67.749.236) 59.149.654 General losses 68.615.172 (41.639.167) 26.976.005 Motor vehicles 83.781.790 1.274.635 85.056.425 Water vehicles 35.733.940 (18.673.835) 17.060.105 Transportation 19.805.194 (13.706.887) 6.098.307 Air crafts 28.943.534 (20.172.876) 8.770.658 Financial losses 17.017.918 (15.402.033) 1.615.885 Accident 15.096.696 (1.291.762) 13.804.934 Air crafts liability 4.955.110 (59.627) 4.895.483 Health 1.936.936 (53.446) 1.883.490 Credit 759.191 (186.986) 572.205 Legal protection 876.450 31 876.481 Total 1.243.987.764 (229.799.663) 1.014.188.101

Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2013 liability total claims liability claims liability Motor vehicles liability (MTPL) 392.957.242 (15.116.022) 377.841.220 General liability 145.694.331 (14.833.210) 130.861.121 Fire and natural disasters 75.030.329 (31.394.357) 43.635.972 Motor vehicles 57.404.411 1.789.780 59.194.191 General losses 55.319.765 (33.483.122) 21.836.643 Air crafts 24.940.859 (15.814.715) 9.126.144 Water vehicles 22.199.757 (8.976.371) 13.223.386 Transportation 22.053.555 (11.185.251) 10.868.304 Accident 16.393.181 (430.548) 15.962.633 Financial losses 7.323.143 (5.559.770) 1.763.373 Air crafts liability 1.482.083 (312.944) 1.169.139 Health 1.352.782 (18.250) 1.334.532 Credit 1.228.470 34.052 1.262.522 Legal protection 448.905 (56.773) 392.132 Total 823.828.813 (135.357.501) 688.471.312

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

137 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Gross and net insurance risk concentrations of the insurance contracts (after reinsurance) based on geographical regions are summarized as below:

Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2014 liability total claims liability claims liability

Turkey 945.064.232 (221.076.633) 723.987.599 Europe 1.905.186 (566.539) 1.338.647 America 156.303 (95.322) 60.981 Asia 224.723 (4.829) 219.894 Total 947.350.444 (221.743.323) 725.607.121

Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2013 liability total claims liability claims liability

Marmara Region 522.387.693 (121.442.279) 400.945.414 Middle Anatolian Region 137.929.862 (43.864.250) 94.065.612 Aegean Region 73.890.193 (11.987.253) 61.902.940 Mediterranean Region 68.908.939 (10.656.183) 58.252.756 South East Anatolian Region 43.207.867 (7.764.575) 35.443.292 Black Sea Region 34.487.066 (2.878.530) 31.608.536 East Anatolian Region 64.252.612 (22.483.563) 41.769.049 Marmara Region 945.064.232 (221.076.633) 723.987.599 (*) Total claims liability includes estimated compensation amounts for realized claims. Gross incurred but not reported claims amounting to TL 327.611.024 additional provision for outstanding claims per adequacy test amounting to TL 44.286.418 outstanding claims of treaty activities which could not be distributed to geographical regions and the contingent amounts deducted from claims reserve amounting to TL (75.260.122) are excluded from the table

Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2013 liability total claims liability claims liability

Turkey 645.190.292 (134.181.200) 511.009.092 Europe 1.969.039 (264.418) 1.704.621 Asia 293.765 (11.963) 281.802 Africa 190.977 (67.662) 123.315 Total 647.644.073 (134.525.243) 513.118.830

Total claims liability Gross total claims Reinsurance share of Net total 31 December 2013 liability total claims liability claims liability

Marmara Region 326.101.895 (84.537.280) 241.564.615 Middle Anatolian Region 80.036.803 (7.988.570) 72.048.233 Aegean Region 58.923.420 (5.953.188) 52.970.232 Mediterranean Region 55.160.378 (6.895.999) 48.264.379 South East Anatolian Region 47.737.283 (17.149.331) 30.587.952 Black Sea Region 45.936.845 (8.833.747) 37.103.098 East Anatolian Region 31.293.668 (2.823.085) 28.470.583 Total 645.190.292 (134.181.200) 511.009.092 (*) Total claims liability includes estimated compensation amounts for realized claims. Gross incurred but not reported claims amounting to TL 193.676.094 additional provision for outstanding claims per adequacy test amounting to TL 36.258.273 outstanding claims of treaty activities which could not be distributed to geographical regions and the contingent amounts deducted from claims reserve amounting to TL (53.749.627) are excluded from the table.

138 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Given insurance collateral amounts in respect to branches

31 December 2014 31 December 2013

Motor vehicles liability (MTPL) 4.283.371.745.693 4.511.111.250.942 Health 263.459.916.521 195.943.025.085 Fire and natural disasters 254.952.055.702 221.876.822.746 Accident 35.427.794.810 33.131.190.355 General liability 41.614.148.232 41.043.206.431 General losses 63.746.730.255 49.463.100.289 Motor vehicles 40.753.693.279 31.063.663.602 Transportation 46.432.952.597 21.981.060.492 Water vehicles 17.529.066.354 14.968.174.500 Air crafts 1.651.393.745 979.655.702 Legal protection 38.500 -- Total 5.048.939.535.688 5.121.561.150.144

4.2 Management of financial risk

Introduction and overview and processes for measuring and managing risk, and the Company’s management of capital. The Company has exposure to the followingThis note presentsrisks from information its use of financial about the instruments: Company’s exposure to each of the below risks, the Company’s objectives, policies

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.

139 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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. This 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 carrying value of the assets that is exposed to credit risk is shown in the table below.

31 December 2014 31 December 2013

Cash and cash equivalents (Note 14) 1.606.182.886 1.154.688.944 Receivables from main operations (Note 12) 797.454.113 773.925.226 Financial assets (Note 11) (*) 539.941.067 542.222.098 Reinsurer share in provision for outstanding claims (Note 10), (Note 17) 229.799.663 135.357.501 Prepaid taxes and funds (Note 19) 1.848.492 9.659.923 Other receivables (Note 12) 3.595.183 2.968.734 Other prepaid expenses (Note 10) 2.733.430 1.086.704 Other miscellaneous current assets (Not 12) 1.895.592 735.558 Due from related parties (Note 12) -- 72.324 Total 3.183.450.426 2.620.717.012 (*) Equity shares amounting to TL 104.126.890 are not included (31 December 2013: TL 88.786.648).

140 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, the aging of the receivables from main operations is as follows:

31 December 2014 31 December 2013 Gross Amount Provision Gross Amount Provision

Not past due 583.917.123 -- 565.073.223 -- Past due 0-30 days 89.759.753 -- 77.880.279 -- Past due 31-60 days 13.190.866 -- 12.545.113 -- Past due 61-90 days 3.147.750 -- 4.096.093 -- More than 90 days (*) 116.737.854 (113.380.507) 116.140.120 (102.829.158) Total (**) 806.753.346 (113.380.507) 775.734.828 (102.829.158)

(*) claim/legal action, related subrogation amount is recognized as doubtful receivables and allowance for doubtful receivables is provided by the same amount in the As per the 3 February 2005 dated and B.02.1.HM.O.SGM.0.3.1/01/05 numbered Circular issued by the Turkish Treasury, in case where subrogation is subject to (**) Except for TL 806.753.346 (31 December 2013: TL 775.734.828) presented under receivables from insurance operations in the financial statements, this amount financial statements. Related amounts are presented in “More than 90 days” line in the above table. also includes TL 81.109.551 (31 December 2013: TL 81.315.004) of untransferred amount collected by intermediaries and TL 30.648.790 (31 December 2013: TL 29.179.630) of subrogation and salvage receivables. Subrogation receivables having past over 4 months for individuals and 6 months for legal entities but not transferred to legal follow-up amounting to TL 7.677.067 (31 December 2013: TL 9.475.078) are excluded from the table.

The movements of the allowances for impairment losses for receivables from main operations during the period are as follows:

31 December 2014 31 December 2013

Provision for receivables from insurance operations at the beginning of the period 102.829.158 87.996.612 Collections during the period (Note 47) (1.071.425) (908.822) Impairment losses provided during the period (Note 47) 2.518.673 1.503.704 Impairment losses provided for subrogation - salvage receivables during the period (Note 47) 9.104.101 14.237.664 Provision for receivables from insurance operations at the end of the period 113.380.507 102.829.158

141 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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:

Carrying 6 to 12 31 December 2014 amount Up to 1 month 1 to 3 months 3 to 6 months months Over 1 year Unallocated

Cash and cash equivalents 1.606.048.714 563.509.281 960.079.777 82.459.656 ------Financial assets 644.067.957 16.290.316 29.820.736 33.595.436 43.855.877 248.492.451 272.013.141 Receivables from main operations 797.454.113 77.086.258 309.715.708 319.130.980 83.346.625 8.174.542 -- Other receivables and current assets 4.962.323 2.949.214 718.715 431.465 862.929 -- -- Other prepaid expenses 2.733.430 -- 1.250.015 1.483.415 ------Total monetary assets 3.055.266.537 659.835.069 1.301.584.951 437.100.952 128.065.431 256.666.993 272.013.141

Insurance technical provisions (*) 1.014.188.101 152.781.804 305.563.607 116.206.094 99.256.001 340.380.595 -- Payables arising from main operations 302.045.983 76.105.908 46.629.462 83.703.672 95.606.941 -- -- Other liabilities 47.561.333 18.251.375 26.393.381 -- -- 2.916.577 -- Provisions for taxes and other similar obligations 27.386.135 27.386.135 ------Provisions for other risks and expense accruals 47.233.313 -- 3.356.650 15.759.247 -- 28.117.416 -- Total monetary liabilities 1.438.414.865 274.525.222 381.943.100 215.669.013 194.862.942 371.414.588 --

(*) 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 inCarrying the above table. 6 to 12 31 December 2013 amount Up to 1 month 1 to 3 months 3 to 6 months months Over 1 year Unallocated

Cash and cash equivalents 1.153.712.216 552.341.090 585.163.978 16.207.148 ------Financial assets 631.008.746 26.458.758 13.800.085 28.181.861 70.723.063 308.660.105 183.184.874 Receivables from main operations 773.925.226 80.117.472 288.235.185 315.443.908 78.142.696 11.985.965 -- Due from related parties 72.324 12.054 24.108 24.108 12.054 -- -- Other receivables and current assets 3.234.708 656.067 1.312.134 936.264 330.243 -- -- Other prepaid expenses 1.086.704 -- -- 1.086.704 ------Total monetary assets 2.563.039.924 659.585.441 888.535.490 361.879.993 149.208.056 320.646.070 183.184.874

Insurance technical provisions (*) 688.471.312 105.907.915 211.815.830 80.988.022 68.551.187 221.208.358 -- Payables arising from main operations 327.033.095 51.873.735 4.506.003 263.749.010 6.904.347 -- -- Other liabilities 56.534.780 18.089.629 21.458.198 10.147.654 3.802.264 3.037.035 -- Provisions for taxes and other similar obligations 27.491.024 27.491.024 ------Provisions for other risks and expense accruals 36.731.263 -- 16.480.307 915.265 -- 19.335.691 -- Total monetary liabilities 1.136.261.474 203.362.303 254.260.338 355.799.951 79.257.798 243.581.084 --

(*) 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.

142 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated 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 manage and control market risk exposures within acceptable parameters, while optimizing the return on risk. the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to Currency risk

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.

Other 31 December 2014 US Dollar Euro currencies Total

Receivables from main operations 170.593.626 44.519.657 5.389.927 220.503.210 Financial assets -- 12.320.065 -- 12.320.065 Cash and cash equivalents 120.322.331 2.232.333 987.046 123.541.710 Total foreign currency assets 290.915.957 59.072.055 6.376.973 356.364.985

Insurance technical provisions 91.396.977 24.659.552 691.344 116.747.873 Payables arising from main operations 111.938.980 9.454.831 -- 121.393.811 Total foreign currency liabilities 203.335.957 34.114.383 691.344 238.141.684

Net financial position 87.580.000 24.957.672 5.685.629 118.223.301

Other 31 December 2013 US Dollar Euro currencies Total

Receivables from main operations 146.548.975 40.037.398 1.091.043 187.677.416 Financial assets -- 9.115.193 -- 9.115.193 Cash and cash equivalents 119.962.922 3.084.146 1.036.139 124.083.207 Total foreign currency assets 266.511.897 52.236.737 2.127.182 320.875.816

Insurance technical provisions 104.016.906 21.350.893 1.666.077 127.033.876 Payables arising from main operations 127.927.163 26.396.067 948.835 155.272.065 Total foreign currency liabilities 231.944.069 47.746.960 2.614.912 282.305.941

Net financial position 34.567.828 4.489.777 (487.730) 38.569.875

TL equivalents of the related monetary amounts denominated in foreign currencies are presented in the above table. of Turkey’s spot sales rates as at 31 December 2014 and Foreign currency transactions are recorded at the foreign exchange rates rulingIf technical at the provision dates of thedenominated transactions in andany currencyforeign currency not specified, denominated ıt is evaluated monetary are itemsevaluated are evaluated by the Central by the Bank Central of the Bank Republic of the Republic of Turkey’s spot purchase rates as at 31 December 2014.

143 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Exposure to currency risk

Foreign currency rates used for the translation of foreign currency denominated assets and liabilities as at 31 December 2014 and 31 December 2013 are as follows:

US Dollar Euro

31 December 2014 2,3189 2,8207 31 December 2013 2,1343 2,9365

31 December 2014 31 December 2013 Profit or loss Equity (*) Profit or loss Equity (*)

US Dollar 8.758.000 8.758.000 3.456.783 3.456.783 Euro 2.495.767 2.495.767 448.978 448.978 Other 568.563 568.563 (48.773) (48.773) Total, net 11.822.330 11.822.330 3.856.988 3.856.988

Exposure to interest 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 at reporting date; the interest rate profile of the Company’s interest earning financial assets and interest bearing financial liabilities are detailed as below:

31 December 31 December 2014 2013

Financial assets with fixed interest rates: Financial assets held for trading - reverse repos (Note 11) 5.887.281 26.447.255 Cash at banks (Note 14) (*) 1.350.525.371 885.045.104 Available for sale financial assets - Private debt securities (Note 11) -- 122.041.060 Cash deposited to insurance and reinsurance companies (Note 12) 6.739.965 5.128.627 Available for sale financial assets - Government bonds (Note 11) 260.405.699 191.749.446 Financial assets with variable interest rates: Held to maturity investments - Government bonds (Note 11) 73.670.047 94.501.549 Available for sale financial assets - Government bonds (Note 11) 11.198.005 11.180.763 Financial assets held for trading - Government bonds (Note 11) 900.017 914.787 Available for sale financial assets - Private debt securities (Note 11) 19.993.767 989.012

(*) Demand deposits amounting to TL 6.208.075 TL are not included (31 December 2013: 16.793.473 TL).

144 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Interest rate sensitivity of the financial instruments

Interest rate sensitivity of the statement of income is the effect of the assumed changes in interest rates on the fair values of financial assets at fair value through profit or loss and on the net interest income for the periods ended 31 December 2014 and 2013 of the floating rate non-trading financial assets and financial liabilities held at 31 December 2014 and 2013. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The table below demonstrating the effect of changes in interest rates on statement of income and equity excludes tax effects on related loss or income.

Profit or loss Equity (*) 100 bp 100 bp 100 bp 100 bp 31 December 2014 increase decrease increase decrease

Financial assets held for trading (20.889) 21.616 (20.889) 21.616 Available for sale financial assets -- -- (3.964.215) 4.094.020 Total, net (20.889) 21.616 (3.985.104) 4.115.636 (*) Equity effect also includes profit or loss effect.

Profit or loss Equity (*) 100 bp 100 bp 100 bp 100 bp 31 December 2013 increase decrease increase decrease

Financial assets held for trading (28.046) 29.286 (28.046) 29.286 Available for sale financial assets -- -- (3.107.941) 3.208.812 Total, net (28.046) 29.286 (3.135.987) 3.238.098 (*) Equity effect also includes profit or loss effect.

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 at 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. Held to maturity investments with a carrying amount of TL 73.670.047 (31 December 2013: TL: 94.501.549) are measured at amortised cost and their fair value amounting to TL 74.133.508 (31 December 2013: TL 93.990.092) as at 31 December 2014.

Management estimates that the fair value of other financial assets and liabilities are not materially different than their carrying amounts.

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Fair value sensitivity of the equities

The effect on income as a result of 10% change in the fair value of equity instruments held as held for trading financial assets is as follows (excluding tax effect): (traded at İstanbul Stock Exchange) due to a reasonably possible change in equity indices, with all other variables held constant, 31 December 2014 31 December 2013 Profit or loss Equity (*) Profit or loss Equity (*)

Financial assets held for trading (303.683) (303.683) (266.316) (266.316) Available for sale financial assets -- (9.717.561) -- (8.196.227) Associates -- (39.140.000) -- (36.820.000) Total, net (303.683) (49.161.244) (266.316) (45.282.543)

(*)

Equity impact includes impact of change of conjectural interest rates on income statement. 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 2:1: Fair value measurements using inputsquoted other prices than (unadjusted) quoted prices in active included markets within for Levelidentical 1 that assets are observableor liabilities; 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.

146 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

The classification of fair value measurements of financial assets and liabilities measured at fair value is as follows:

31 December 2014 Level 1 Level 2 Level 3 Total

Financial assets: Associates (Note 9) 391.400.000 -- -- 391.400.000 Financial assets held for trading (Note 11) 134.054.733 -- -- 134.054.733 Available for sale financial assets (*) (Note 11) 432.428.727 -- 3.297.263 435.725.990 Total financial assets 957.883.460 -- 3.297.263 961.180.723

31 December 2013 Level 1 Level 2 Level 3 Total

Financial assets: Associates (Note 9) 368.200.000 -- -- 368.200.000 Financial assets held for trading (Note 11) 85.630.648 -- -- 85.630.648 Available for sale financial assets (*) (Note 11) 446.715.336 -- 3.297.263 450.012.599 Total financial assets 900.545.984 -- 3.297.263 903.843.247

(*) As at 31 December 2014, securities that are not publicly traded and the determination of fair values could not be obtained reliably amounting to TL 617.187 have been measured at cost (31 December 2013: TL 863.950)

31 December 31 December 2014 2013

Available for sale, beginning of the period 3.297.263 3.272.355 Valuation gain, (valuation of financial assets) -- 24.908 Available for sale, at the end of the period 3.297.263 3.297.263

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Gains and losses from financial assets

Gains and losses recognized in the statement of income: 31 December 2014 31 December 2013

Interest income from bank deposits 99.252.595 63.016.751 Foreign exchange gains 59.970.980 52.709.177 Income from investments in associates 16.000.000 18.000.000 Income from debt securities classified as held to maturity financial investments 10.730.801 9.909.524 Income from equity shares classified as available-for-sale financial assets 10.197.910 20.210.895 Income from equity shares classified as trading financial assets 702.880 453.914 Income from debt securities classified as available-for-sale financial assets 35.373.747 15.639.877 Income from debt securities classified as held for trading financial assets 75.040 262.958 Income from derivative transactions 205.678 212.931 Income from investment funds 21.308.588 1.604.205 Other 3.106.153 1.232.065 Investment income 256.924.372 183.252.297

Loss from valuation of financial assets (3.509.979) (4.677.619) Foreign exchange losses (49.954.025) (28.804.896) Loss from derivative transactions (184.509) (99.585) Loss from disposal of financial assets (7.713.065) (13.581.516) Investment expenses - including interest (136.623) -- Investment expenses (61.498.201) (47.163.616)

Financial gains and losses recognized in the statement of income, net 195.426.171 136.088.681

Financial gains and losses recognized in equity: 31 December 2014 31 December 2013

Fair value changes in investments in associates (Note 15) 23.200.000 106.200.000 Net gains transferred from statement of equity to the statement of income on disposal of available for sale financial assets (Note 15) (9.609.723) (2.723.732) Fair value changes in available-for-sale financial assets (Note 15) 21.041.450 (13.677.094) Gains and losses recognized in equity, net 34.631.727 89.799.174

Capital management

The Company’s capital management policies include the following:

To comply with the insurance capital requirements required by the Turkish Treasury To safeguard the Company’s ability to continue as a going concern • • ; the Company measuredIn accordance its minimum with the “Communiquécapital requirement on Measurement as TL 847.030.553 and Assessment as at 30 June of Capital 2014. AdequacyAs at 31 December for Insurance, 2014, Reinsurance the capital amount and ofIndividual the Company Pension presented Companies” in the issued unconsolidated by Turkish financial Treasury statements on 19 January are above2008 datedthe minimum and 26761 capital numbered requirement amounts calculated according to the communiqué.

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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

Businesssubject to segment risks and rewards that are different from those of other segments.

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.

Motor Third Party Liability Insurance

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.

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,

• The actions of third parties resulted from bad intention or mischief, • Crash with fixed or moving items without desire of the driver or accidents due to crash, capsize, fall or tumble Burn, • Theft or attempted theft. • Health• daily allowances in this general framework with special conditions up to the amount written in the policy. Geographical limits of theInsurance insurance on health are stated compensates in the policy. treatment costs of illnesses or accidental injuries during the period of insurance and, if any,

149 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 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 natural party liability Health Motor vehicles disasters Other Unallocated Total

1 January - 31 December 2013 1- Earned Premiums (Net of Reinsurer Share) 704.976.162 242.507.645 786.541.564 190.560.310 311.173.659 -- 2.235.759.340 1.1- Written Premiums (Net of Reinsurer Share) 698.476.272 256.547.252 790.728.883 213.840.185 365.517.469 -- 2.325.110.061 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) 6.499.890 (14.039.607) (4.187.319) (23.279.875) (27.082.837) -- (62.089.748) 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) ------(27.260.973) -- (27.260.973) 2- Other Technical Income (Net of Reinsurer Share) 65.238 320.015 2.276.330 93.174 34.052 -- 2.788.809 3- Accrued Salvage and Subrogation Income 5.516.244 -- 5.561.204 918.516 163.266 -- 12.159.230 Technical Income (*) 710.557.644 242.827.660 794.379.098 191.572.000 311.370.977 -- 2.250.707.379

1- Incurred Losses (Net of Reinsurer Share) (579.959.219) (199.455.063) (555.299.019) (98.225.647) (305.140.113) -- (1.738.079.061) 1.1- Claims Paid (Net of Reinsurer Share) (437.438.283) (198.906.106) (529.436.786) (82.711.965) (163.869.132) -- (1.412.362.272) 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) (142.520.936) (548.957) (25.862.233) (15.513.682) (141.270.981) -- (325.716.789) 2- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) -- -- (3.035.177) (10.577.300) (2.357.559) -- (15.970.036) 3- Operating Expenses (181.604.847) (44.314.719) (186.178.682) (38.744.510) (71.843.471) -- (522.686.229) 4- Other Technical Provisions (10.218.490) (6.594.484) (14.949.198) (5.851.538) (5.608.222) -- (43.221.932) Technical Expense (771.782.556) (250.364.266) (759.462.076) (153.398.995) (384.949.365) -- (2.319.957.258)

Investment Income 258.928.064 258.928.064 Investment Expense (*) (85.300.178) (85.300.178) Other (**) (19.132.198) (19.132.198) Net loss before tax 85.245.809

Income tax (13.685.863) (13.685.863)

Net loss 71.559.946

(*) Investment income transferred to non-technical section from technical section amounting to TL 190.509.410 is not included. (**) Deferred tax income amounting TL 7.396.097 is presented as income tax.

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

1 January - 31 December 2013 1- Earned Premiums (Net of Reinsurer Share) 493.420.390 199.257.307 721.082.517 149.968.441 262.060.515 -- 1.825.789.170 1.1- Written Premiums (Net of Reinsurer Share) 631.464.481 212.148.766 775.368.149 163.108.778 285.125.833 -- 2.067.216.007 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) (138.056.176) (12.891.459) (54.285.632) (13.140.337) (14.032.383) -- (232.405.987) 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) 12.085 ------(9.032.935) -- (9.020.850) 2- Other Technical Income (Net of Reinsurer Share) 54.849 185.128 2.524.934 75.063 84.400 2.924.374 3- Accrued Salvage and Subrogation Income 4.959.591 -- 7.752.323 637.426 1.646.858 14.996.198 Technical Income (*) 498.434.830 199.442.435 731.359.774 150.680.930 263.791.773 -- 1.843.709.742

1- Incurred Losses (Net of Reinsurer Share) (428.640.496) (156.834.895) (479.833.052) (73.474.442) (207.304.119) -- (1.346.087.004) 1.1- Claims Paid (Net of Reinsurer Share) (291.979.894) (156.751.764) (490.009.240) (68.674.051) (139.551.206) -- (1.146.966.155) 1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) (136.660.602) (83.131) 10.176.188 (4.800.391) (67.752.913) -- (199.120.849) 2- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) -- -- (2.087.392) (8.555.192) (1.780.007) -- (12.422.591) 3- Operating Expenses (141.750.670) (36.294.964) (178.514.725) (43.655.601) (62.618.146) -- (462.834.106) 4- Other Technical Provisions (13.428.446) (6.115.753) (15.995.101) (6.661.240) (2.507.510) -- (44.708.050) Technical Expense (583.819.612) (199.245.612) (676.430.270) (132.346.475) (274.209.782) -- (1.866.051.751)

Investment Income 186.213.348 186.213.348 Investment Expense (*) (63.995.428) (63.995.428) Other (**) (20.759.398) (20.759.398) Net loss before tax 79.116.513

Income tax (11.654.589) (11.654.589)

Net loss 67.461.924

(*) Investment income transferred to non-technical section from technical section amounting to TL 123.220.226 TL is not included. (**) Deferred tax income amounting TL 11.654.589 is presented as income tax.

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6 Tangible assets

Movements in tangible assets in the period from 1 January to 31 December 2014 are presented below:

31 December 1 January 2014 Additions Disposals 2014 Cost: Investment properties (Note 7) 6.982.776 -- -- 6.982.776 Buildings for own use 6.520.974 319.222 (51.463) 6.788.733 Machinery and equipment 32.800.391 2.925.379 (1.171.752) 34.554.018 Furniture and fixtures 11.331.085 444.331 -- 11.775.416 Motor Vehicles 1.285.983 383.160 (306.920) 1.362.223 Other tangible assets (including leasehold improvements) 18.262.277 1.138.850 -- 19.401.127 Leased tangible assets 4.166.354 -- -- 4.166.354 81.349.840 5.210.942 (1.530.135) 85.030.647 Accumulated depreciation: Investment properties (Note 7) 3.578.553 139.655 -- 3.718.208 Buildings for own use 1.795.812 131.780 (25.772) 1.901.820 Machinery and equipment 23.879.216 3.198.899 (1.164.362) 25.913.753 Furniture and fixtures 8.729.811 666.091 -- 9.395.902 Motor vehicles 813.465 215.321 (255.057) 773.729 Other tangible assets (including leasehold improvements) 3.593.702 3.259.748 -- 6.853.450 Leased tangible assets 4.166.105 199 -- 4.166.304 46.556.664 7.611.693 (1.445.191) 52.723.166

Carrying amounts 34.793.176 32.307.481

152 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Movements in tangible assets in the period from 1 January to 31 December 2013 are presented below:

31 December 1 January 2013 Additions Disposals 2013 Cost: Investment properties (Note 7) 6.982.776 -- -- 6.982.776 Buildings for own use 6.387.729 1.222.795 (1.089.550) 6.520.974 Machinery and equipment 26.268.960 6.531.431 -- 32.800.391 Furniture and fixtures 9.031.553 2.299.532 -- 11.331.085 Motor Vehicles 1.299.851 183.855 (197.723) 1.285.983 Other tangible assets (including leasehold improvements) 4.038.677 14.977.547 (753.947) 18.262.277 Leased tangible assets 4.166.354 -- -- 4.166.354 58.175.900 25.215.160 (2.041.220) 81.349.840 Accumulated depreciation: Investment properties (Note 7) 3.438.898 139.655 -- 3.578.553 Buildings for own use 2.221.271 116.975 (542.434) 1.795.812 Machinery and equipment 20.908.142 2.971.074 -- 23.879.216 Furniture and fixtures 8.495.404 234.407 -- 8.729.811 Motor vehicles 764.551 232.810 (183.896) 813.465 Other tangible assets (including leasehold improvements) 3.255.088 648.138 (309.524) 3.593.702 Leased tangible assets 4.165.906 199 -- 4.166.105 43.249.260 4.343.258 (1.035.854) 46.556.664

Carrying amounts 14.926.640 34.793.176

There is not any change in depreciation method in the current period.

There is not any mortgage over tangible assets of the Company as at 31 December 2014 and 31 December 2013.

7 Investment properties

As at 31 December 2014, the total carrying amount of the investment properties is TL 3.264.568 (31 December 2013: TL 3.404.223). The fair values of the investment properties are determined by a third party independent expertise firm authorized by Capital Markets Board of Turkey as TL 40.077.000. The total rental income from the investment properties for the year ended 31 December 2013 is TL 1.772.698 (31 December 2013: TL 1.698.492).

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8 Intangible assets

Movements in intangible assets in the period from 1 January to 31 December 2014 are presented below:

31 December 1 January 2014 Additions Transfers Disposals 2014 Cost: Goodwill 16.250.000 ------16.250.000 Advances given for intangible assets 19.296.314 2.853.643 (20.420.579) -- 1.729.378 Other intangible assets 54.879.873 12.779.449 20.420.579 -- 88.079.901 90.426.187 15.633.092 -- -- 106.059.279 Accumulated amortization: Other intangible assets 27.614.154 16.190.284 -- -- 43.804.438 27.614.154 16.190.284 -- -- 43.804.438

Carrying amounts 62.812.033 62.254.841

Movements in intangible assets in the period from 1 January to 31 December 2013 are presented below

31 December 1 January 2013 Additions Transfers Disposals 2013 Cost: Goodwill 16.250.000 -- -- 16.250.000 Advances given for intangible assets 31.717.343 11.190.332 (21.885.303) (1.726.058) 19.296.314 Other intangible assets 21.643.962 11.350.608 21.885.303 -- 54.879.873 69.611.305 22.540.940 -- (1.726.058) 90.426.187 Accumulated amortization: Other intangible assets 15.125.600 12.488.554 -- -- 27.614.154 15.125.600 12.488.554 -- -- 27.614.154

Carrying amounts 54.485.705 62.812.033

9 Investments in associates

31 December 2014 31 December 2013 Participation Participation Carrying value rate Carrying value rate 391.400.000 %20,0 368.200.000 %20,0 Investments in associates, net 391.400.000 368.200.000 Anadolu Hayat Emeklilik A.Ş.

Total financial assets (Note 4.2) 391.400.000 368.200.000

Total Shareholders’ Retained Profit for Audited Name assets equity earnings the period or not Period Anadolu Hayat Emeklilik 31 December statements) 10.157.734.455 616.308.553 12.090.039 95.160.780 Audited 2014 A.Ş. (consolidated financial In the current period, the Company has bonus stocks amounting to TL 6.000.000 owing to capital expenditure from internal resources in income from subsidiaries. The Company has TL 10.000.000 of dividend income from subsidiaries.

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10 Reinsurance assets and liabilities

As at 31 December 2014 and 31 December 2013, outstanding reinsurance assets and liabilities of the Company in accordance with existing reinsurance contracts are as follows:

Reinsurance assets 31 December 2014 31 December 2013

Reserve for unearned premiums, ceded (Note 17) 294.929.264 290.028.419 Provision for outstanding claims, ceded (Note 4.2), (Note 17) 229.799.663 135.357.501 Commission income accrual from reinsurers (Note 12) 1.250.015 1.086.704 Cash deposited to reinsurance companies (Note 12) 6.739.965 5.128.627 Reinsurers share in the provision for subrogation and salvage receivables 36.305 119.739 Total 532.755.212 431.720.990

There is no impairment losses recognised for reinsurance assets.

Reinsurance liabilities 31 December 2014 31 December 2013

Payables to the reinsurers related to premiums written (Note 19) 188.610.275 230.767.903 Deferred commission income (Note 19) 45.447.065 39.363.495 Commission payables to the reinsurers related to written premiums (Note 23) 1.576.728 915.265 Cash deposited by reinsurance companies (Note 19) 7.277.133 3.105.906 Total 242.911.201 274.152.569

Gains and losses recognized in the statement of income in accordance with existing reinsurance contracts are as follows:

31 December 2014 31 December 2013

Premiums ceded during the period (Note 17) (605.617.965) (618.521.175) Reserve for unearned premiums, ceded at the beginning of the period (Note 17) (290.028.419) (218.883.986) Reserve for unearned premiums, ceded at the end of the period (Note 17) 294.929.264 290.028.419 Premiums earned, ceded (Note 17) (600.717.120) (547.376.742)

Claims paid, ceded during the period (Note 17) 140.834.682 102.233.055 Provision for outstanding claims, ceded at the beginning of the period (Note 17) (135.357.501) (89.440.431) Provision for outstanding claims, ceded at the end of the period (Note 17) 229.799.663 135.357.501 Claims incurred, ceded (Note 17) 235.276.844 148.150.125

Commission income accrued from reinsurers during the period (Note 32) 60.026.011 51.944.012 Deferred commission income at the beginning of the period (Note 19) 30.698.798 25.952.255 Deferred commission income at the end of the period (Note 19) (32.107.489) (30.698.798) Commission income earned from reinsurers (Note 32) 58.617.320 47.197.469

Commission debt accrued to reinsurers (1.576.728) -- Commission receivable accrued from reinsurers 1.250.015 1.086.704

Total, net (307.149.669) (350.942.444)

155 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

11 Financial assets

As at 31 December 2014 and 31 December 2013, the Company’s financial assets are as follows

31 December 2014 31 December 2013

Available for sale financial assets 442.140.789 456.674.161 Held to maturity financial assets 73.670.047 94.501.549 Financial assets held for trading 134.054.733 85.630.648 Impairment loss on available for sale financial assets (5.797.612) (5.797.612) Total 644.067.957 631.008.746

As at 31 December 2014 and 31 December 2013, the Company’s available for sale financial assets are as follows:

31 December 2014 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 261.907.366 260.630.673 271.603.704 271.603.704 Private sector bonds - TL 19.560.000 19.561.015 19.993.767 19.993.767 Issued by ISGYO (Note 45) 14.360.000 14.360.000 14.713.703 14.713.703 Issued by ISFIN 5.000.000 5.000.000 5.078.714 5.078.714 Others 200.000 201.015 201.350 201.350 281.467.366 280.191.688 291.597.471 291.597.471

Other non-fixed income financial assets: Investment funds 3.714.742.000 43.165.318 43.655.648 43.655.648 Issued by İş Portföy (Note 45) 3.714.742.000 43.165.318 43.655.648 43.655.648 Equity shares 56.198.951 82.023.168 106.887.670 106.887.670 Impairment loss on equity shares -- -- (5.797.612) (5.797.612) 3.770.940.951 125.188.486 144.745.706 144.745.706

Total available for sale financial assets (Note 4.2) 4.052.408.317 405.380.174 436.343.177 436.343.177

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31 December 2013 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 208.933.298 205.043.677 202.930.209 202.930.209 Private sector bonds - TL 134.001.139 122.295.528 123.030.072 123.030.072 Issued by İş Bankası (Note 45) 133.000.000 121.293.570 122.028.890 122.028.890 Others 1.001.139 1.001.958 1.001.182 1.001.182 342.934.437 327.339.205 325.960.281 325.960.281

Other non-fixed income financial assets: Investment funds 4.089.046.000 42.399.932 38.792.780 38.792.780 Founded by Is Portföy (Note 45) 4.089.046.000 42.399.932 38.792.780 38.792.780 Equity shares 51.223.377 74.521.510 91.921.100 91.921.100 Impairment loss on equity shares -- -- (5.797.612) (5.797.612) 4.140.269.377 116.921.442 124.916.268 124.916.268

Total available for sale financial assets (Note 4.2) 4.483.203.814 444.260.647 450.876.549 450.876.549

As at 31 December 2014 and 31 December 2013, the Company’s financial assets held for trading are as follows

31 December 2014 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 900.000 907.616 900.017 900.017 Reverse repo receivables 5.885.733 5.887.281 5.887.281 900.000 6.793.349 6.787.298 6.787.298

Other non-fixed income financial assets: Investment funds 7.393.158.949 106.660.295 124.230.603 124.230.603 Founded by Iş Bankası (Note 45) 120.605.000 9.009.287 15.972.195 15.972.195 Founded by Iş Portföy Yönetimi A.Ş.(Note 45) 7.272.463.818 89.847.008 95.938.343 95.938.343 Founded by Işbank GmbH (Note 45) 90.131 7.804.000 12.320.065 12.320.065 Equity shares 2.287.783 4.085.272 3.036.832 3.036.832 110.745.567 127.267.435 127.267.435

Total financial assets held for trading (Note 4.2) 117.538.916 134.054.733 134.054.733

157 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

31 December 2013 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 900.000 910.156 914.787 914.787 Reverse repo receivables 26.442.546 26.447.255 26.447.255 27.352.702 27.362.042 27.362.042

Other non-fixed income financial assets: Investment funds 2.901.419.050 47.118.587 55.605.446 55.605.446 Founded by Iş Bankası (Note 45) 120.605.000 9.009.287 13.588.728 13.588.728 Founded by Iş Portföy Yönetimi A.Ş.(Note 45) 2.780.723.919 30.305.300 32.901.525 32.901.525 Founded by Işbank GmbH (Note 45) 90.131 7.804.000 9.115.193 9.115.193 Equity shares 2.287.783 4.085.272 2.663.160 2.663.160 51.203.859 58.268.606 58.268.606

Total financial assets held for trading (Note 4.2) 78.556.561 85.630.648 85.630.648

As at 31 December 2014 and 31 December 2013, the Company’s financial assets held to maturity are as follows:

31 December 2014 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 55.937.785 57.921.026 74.133.508 73.670.047 Total financial assets held to maturity 55.937.785 57.921.026 74.133.508 73.670.047

31 December 2013 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 73.661.976 76.666.867 93.990.092 94.501.549 Total financial assets held to maturity 73.661.976 76.666.867 93.990.092 94.501.549

All debt instruments (financial assets held to maturity) presented above are publicly traded in active markets and the fair value of financial assets are classified in the 1st Level.

As at 31 December 2014, equity shares classified as available for sale financial assets with a carrying amount of TL 3.914.450 are not publicly traded (31 December 2013: TL 4.161.213).

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. As at 31 December 2014, TL 5.797.612 of impairment loss is recognised for equity shares classified as available for sale in the accompanying unconsolidated financial statements (31 December 2013: TL 5.797.612).

158 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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 increase / Total increase Year (decrease) in value

2014 34.631.727 336.666.816 2013 89.799.174 302.035.089 2012 115.217.914 212.235.915

Movements of the financial assets during the period are presented below:

31 December 2014 Available Held to (*)Trading for sale maturity Total Balance at the beginning of the period 59.183.393 450.876.549 94.501.549 604.561.491 Acquisitions during the period 90.450.000 450.725.656 -- 541.175.656 Disposals (sale and redemption) (30.910.832) (494.361.599) (18.745.842) (544.018.273) Change in the fair value of financial assets (Note 15) 9.444.891 24.347.100 -- 33.791.991 Change in amortized cost of the financial assets -- -- (2.085.660) (2.085.660) Bonus shares acquired -- 4.755.471 -- 4.755.471 Balance at the end of the period 128.167.452 436.343.177 73.670.047 638.180.676

(*) Amount of reverse repo to TL 5.887.281 TL (31 December 2013: 26.447.255 TL) are excluded.

31 December 2013 Available Held to (*)Trading for sale maturity Total Balance at the beginning of the period 42.051.074 218.238.305 89.590.740 349.880.119 Acquisitions during the period 21.305.300 692.777.960 -- 714.083.260 Disposals (sale and redemption) (2.742.832) (447.305.977) (796.600) (450.845.409) Change in the fair value of financial assets (Note 15) (1.430.149) (16.767.758) -- (18.197.907) Change in amortized cost of the financial assets -- -- 5.707.409 5.707.409 Bonus shares acquired -- 3.934.019 -- 3.934.019 Balance at the end of the period 59.183.393 450.876.549 94.501.549 604.561.491

(*) Amount of reverse repo to TL 26.447.255 (31 December 2012: TL: 5.542.173) are excluded

159 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Financial assets blocked in favour of the Turkish Treasury as a guarantee for the insurance activities are as follows.

31 December 2014 Face Fair Value Cost Value Carrying Value

Held to maturity financial assets (Note 17) 55.937.785 57.921.026 74.133.508 73.670.047 Available for sale financial assets (Note 17) 10.000.000 9.801.651 10.145.962 10.145.962 Total 65.937.785 67.722.677 84.279.470 83.816.009

31 December 2013 Face Fair Value Cost Value Carrying Value

Available for sale financial assets (Note 17) 20.000.000 19.775.285 19.677.439 19.677.439 Held to maturity financial assets (Note 17) 64.467.988 67.074.876 82.079.788 82.596.991 Total 84.467.988 86.850.161 101.757.227 102.274.430

12 Loans and receivables

31 December 31 December 2014 2013

Receivables from main operations (Note 4.2) 797.454.113 773.925.226 Other receivables (Note 4.2) 3.595.183 2.968.734 Income prepaid expenses (Note 4.2), (Note 10) 2.733.430 1.086.704 Other current assets (Note 4.2) 1.895.592 735.558 Receivables from related parties (Note 4.2) -- 72.324 Total 805.678.318 778.788.546

Short-term receivables 805.678.318 778.788.546 Long and medium-term receivables -- -- Total 805.678.318 778.788.546

160 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, the details of the receivables from main operations are as follows:

31 December 2014 31 December 2013

Receivables from agencies, brokers and intermediaries 624.433.183 610.583.925 Salvage and subrogation receivables 30.648.790 29.179.630 Receivables from policyholders 33.242.694 35.367.913 Long term receivable which is bank guarantee and three months credit card 63.044.183 61.066.508 Total receivables from insurance operations, net 751.368.850 736.197.976

Receivables from reinsurance operations 47.022.365 42.073.701 Cash deposited to insurance and reinsurance companies (Note 4.2), (Note 10) 6.739.965 5.128.627 Provisions for receivables from insurance operations - subrogation receivables (7.677.067) (9.475.078) Doubtful receivables from insurance operations - subrogation receivables 86.645.265 77.541.164 Provisions for doubtful receivables from insurance operations - subrogation receivables (Note 4.2) (86.645.265) (77.541.164) Doubtful receivables from main operations - premium receivables 26.735.242 25.287.994 Provisions for doubtful receivables from main operations - premium receivables (Note 4.2) (26.735.242) (25.287.994) Receivables from main operations 797.454.113 773.925.226

As at 31 December 2014 and 31 December 2013, the details of mortgages and other guarantees for the Company’s receivables are presented below:

31 December 2014 31 December 2013

Mortgage notes 71.597.067 71.634.717 Letters of guarantees 71.825.655 64.353.218 Other guarantees 15.188.186 12.620.807 Government bonds and treasury bills 2.976.479 2.939.585 Total 161.587.387 151.548.327

Provisions for overdue receivables and receivables not due yet a) Receivables under legal or administrative follow up (due): 26.735.242 TL (31 December 2013: TL 25.287.994). b) Provision for subrogation receivables under legal or administrative follow up: 94.322.332 TL (31 December 2013: TL 87.016.242).

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.

161 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

13 Derivative financial instruments

As at 31 December 2014, the Company does not have derivative financial instruments (31 December 2013: None).

14 Cash and cash equivalents

As at 31 December 2014 and 31 December 2013, cash and cash equivalents are as follows:

31 December 2014 31 December 2013 At the At the At the At the end of beginning of end of beginning of the period the period the period the period

Cash on hand 37.347 49.256 49.256 59.000 Bank deposits 1.356.733.446 901.838.577 901.838.577 810.515.425 Cheques given and payment orders (171.519) (1.025.984) (1.025.984) (1.104.472) Bank guaranteed credit card receivables with maturities less than three months 249.449.440 252.850.367 252.850.367 159.051.422 Cash and cash equivalents in the balance sheet 1.606.048.714 1.153.712.216 1.153.712.216 968.521.375

Bank deposits - blocked (*) (Note 17) (223.171.410) (151.508.238) (151.508.238) (125.966.707) Time deposits with maturities longer than 3 months (335.567.238) (174.210.161) (174.210.161) (315.826.956) Interest accruals on banks deposits (3.580.842) (2.481.010) (2.481.010) (2.299.223) Cash and cash equivalents in the statement of cash flows 1.043.729.224 825.512.807 825.512.807 524.428.489

(*) As at 31 December 2014 and 31 December 2013 cash collateral kept in favour of the Turkish Treasury as a guarantee for the insurance activities.

As at 31 December 2014 and 31 December 2013, bank deposits are further analyzed as follows:

31 December 31 December 2014 2013

Foreign currency denominated bank deposits - time deposits 119.637.331 111.825.146 - demand deposits 3.883.616 12.217.907

Bank deposits in Turkish Lira - time deposits 1.230.888.040 773.219.958 - demand deposits 2.324.459 4.575.566 Bank deposits 1.356.733.446 901.838.577

15 Equity

Paid in capital

The Companyshareholder does having not increase direct or its indirect share capitalcontrol in over the thecurrent shares period. of the Company is İş Bankası Group.

As at 31 December 2014, the issued share capital of the Company is TL 500.000.000 (31 December 2013: TL 500.000.000) and The Company unregistered Group A shares as of 11 April 2013 in which approved in Main Article of the Company dated in 11 April 2013. The share capital of the Company consists of 50,000,000,000 (31 December 2013: 50,000,000,000 shares) issued shares with TL 0.01 nominal value each.

162 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Other capital reserves

In accordance with tax legislation, 75% of profits from sales of participation shares and real states 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 at 31 December 2014, tax exempt gain from participation shares and real estate sale in 2010 amounting to TL 8.081.516 and in 2011 amounting to TL 80.025 is classified as other capital reserves and also in 2013 amounting TL 647.763 reclassified to other capital reserves as a gain on sale of fixed assets and equity.

31 December 2014 31 December 2013

Other capital reserves at the beginning of the period 8.161.541 8.161.541 Transfer from profit 647.763 -- Other capital reserves at the end of the period 8.809.304 8.161.541

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 movements of legal reserves are as follows:

31 December 2014 31 December 2013

Legal reserves at the beginning of the period 30.638.111 30.638.111 Transfer from profit 141.651 -- Legal reserves at the end of the period 30.779.762 30.638.111

Extraordinary reserves

The movements of extraordinary reserves are presented below:

31 December 2014 31 December 2013

Extraordinary reserves at the beginning of the period 18.123.361 18.123.361 Transfer from profit 2.422.240 -- Extraordinary reserves at the end of the period 20.545.601 18.123.361

Statutory reserves

The movements of statutory reserves are presented below:

31 December 2014 31 December 2013

Statutory reserves at the beginning of the period 6.993.082 6.993.082 Transfer from profit 269.138 -- Statutory reserves at the end of the period 7.262.220 6.993.082

163 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Valuation of financial assets

Movement of fair value reserves of available for sale financial assets and associates are presented below:

31 December 2014 31 December 2013 Available Available for sale for sale financial financial assets Associates Total assets Associates Total Fair value reserves at the beginning of the period 8.866.957 293.168.132 302.035.089 25.267.783 186.968.132 212.235.915

Change in the fair value 24.347.100 23.200.000 47.547.100 (16.767.758) 106.200.000 89.432.242 Net gains transferred to the statement of income (3.609.723) (6.000.000) (9.609.723) (2.723.732) -- (2.723.732) Deferred tax effect (3.305.650) -- (3.305.650) 3.090.664 -- 3.090.664 Fair value reserves at the end of the period 26.298.684 310.368.132 336.666.816 8.866.957 293.168.132 302.035.089

Other profit reserves

In accordance with the 4 July 2007 dated and 2007/3 numbered Compliance Circular issued by the Turkish Treasury, 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 at 31 December 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 at 31 December 2006 and torelated dividend gains distribution obtained from or should investment not be of transferred these amounts, to other to the accounts. account called as “549.01 - transferred earthquake provisions” which would be opened as at 1 September 2007 within Uniform Chart of Account and the reserves amount should not be subject Accordingly, the Company initially transferred total provisions amounting to TL 96.036.157 including earthquake provisions reserved as at 31 December 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. Accordance with IAS 19, to add the amount of actuarial loss and net profit of TL 625.539 defined remeasure net profit debt, the amount of new balance is TL 44.209.563.

Profit on assets sale that will be transferred to capital

In the direction of sector announcement made by Treasury dated 27 October ,2008 and numbered 2008/41, the Company in accordance with the Board of Directors decision dated 2 April 2013 and numbered 6807,dated 26 June and numbered 6844. classified the gain on sale from the land in real estate amounting to TL 920.272 which is into “Profit not Available for Distribution” 16 Other reserves and equity component of DPF

As at 31 December 2014 and 31 December 2013, change in fair values of available-for-sale financial assets which is presented as are explained in detail in Note 15 - Equity above. As at 31 December 2014 and 31 December 2013, the Company does not hold any insurance“valuation orof investmentfinancial assets” contracts and earthquakewhich contain provisions a DPF. provided in the previous years presented under “other profit reserves”

164 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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 at 31 December 2014 and 31 December 2013, technical reserves of the Company are as follows::

31 December 2014 31 December 2013

Reserve for unearned premiums, gross 1.491.252.563 1.422.324.312 Reserve for unearned premiums, ceded (Note 10) (294.929.264) (290.028.419) Reserve for unearned premiums, SSI share (36.692.792) (34.755.134) Reserves for unearned premiums, net 1.159.630.507 1.097.540.759

Provision for outstanding claims, gross 1.243.987.764 823.828.813 Provision for outstanding claims, ceded (Note 10) (229.799.663) (135.357.501) Provision for outstanding claims, net 1.014.188.101 688.471.312

Gross of provision unexpired risk reserve 52.687.216 22.489.031 Reinsurer’s share of the provision for unexpired risk (12.307.870) (9.370.658) Provision unexpired risk reserve, net 40.379.346 13.118.373

Equalization provision, net (*) 60.549.876 44.579.840 General provision, net 7.702.761 7.702.761 Other technical provisions, net 68.252.637 52.282.601

Total technical provisions, net 2.282.450.591 1.851.413.045

Short-term 2.214.197.954 1.799.130.444 Medium and long-term 68.252.637 52.282.601 Total technical provisions, net 2.282.450.591 1.851.413.045

(*) Net losses (after reinsurance) resulted from earthquake occurred in Van amounting to TL 7.101.831 TL (31 December 2013: 7.101.831 TL) are decreased from prior periods’ equalization provision based on the regulation.

165 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, movements of the insurance liabilities and related reinsurance assets are presented below:

31 December 2014 Reinsurer Reserve for unearned premiums Gross share SSI share Net

Reserve for unearned premiums at the beginning of the period 1.422.324.312 (290.028.419) (34.755.134) 1.097.540.759 Premiums written during the period 3.004.830.066 (605.617.965) (74.102.040) 2.325.110.061 Premiums earned during the period (2.935.901.815) 600.717.120 72.164.382 (2.263.020.313) Reserve for unearned premiums at the end of the period 1.491.252.563 (294.929.264) (36.692.792) 1.159.630.507

31 December 2013 Reinsurer Reserve for unearned premiums Gross share SSI share Net

Reserve for unearned premiums at the beginning of the period 1.104.218.773 (218.883.986) (20.200.015) 865.134.772 Premiums written during the period 2.749.704.405 (618.521.175) (63.967.223) 2.067.216.007 Premiums earned during the period (2.431.598.866) 547.376.742 49.412.104 (1.834.810.020) Reserve for unearned premiums at the end of the period 1.422.324.312 (290.028.419) (34.755.134) 1.097.540.759

31 December 2014 Provision for outstanding claims Gross Ceded Net

Provision for outstanding claims at the beginning of the period 823.828.813 (135.357.501) 688.471.312 Claims reported during the period and changes in the estimations of provisions for outstanding claims provided at the beginning of the period 1.973.355.905 (235.276.844) 1.738.079.061 Claims paid during the period (1.553.196.954) 140.834.682 (1.412.362.272) Provision for outstanding claims at the end of the period 1.243.987.764 (229.799.663) 1.014.188.101

31 December 2013 Provision for outstanding claims Gross Ceded Net

Provision for outstanding claims at the beginning of the period 578.790.894 (89.440.431) 489.350.463 Claims reported during the period and changes in the estimations of provisions for outstanding claims provided at the beginning of the period 1.494.237.129 (148.150.125) 1.346.087.004 Claims paid during the period (1.249.199.210) 102.233.055 (1.146.966.155) Provision for outstanding claims at the end of the period 823.828.813 (135.357.501) 688.471.312

166 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Claim development tables

The basic assumption used in the estimation of provisions for outstanding claims is the Company’s past experience on claim legislation affect the estimates. The sensitivity of certain assumptions like legislative change, uncertainty in the estimation process,developments. etc, is notJudgment possible is usedto quantify. to assess Furthermore, the extent tobecause which ofexternal delays factors that arise such between as judicial occurrence decisions of and a claim government 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.

31 December 2014 Claim year 2010 2011 2012 2013 2014 Total Claim year 856.910.386 1.075.581.281 1.495.474.317 1.229.263.704 1.717.748.856 6.374.978.544 1 year later 867.349.763 1.144.103.263 1.543.105.072 1.300.026.322 -- 4.854.584.420 2 years later 878.025.588 1.189.429.253 1.609.382.065 -- -- 3.676.836.906 3 years later 900.866.545 1.238.843.054 ------2.139.709.599 4 years later 928.050.817 ------928.050.817 Current estimate of cumulative claims 928.050.817 1.238.843.054 1.609.382.065 1.300.026.322 1.717.748.856 6.794.051.114 Cumulative payments to date 861.604.436 1.131.547.961 1.398.954.819 1.116.056.443 1.189.365.685 5.697.529.344 Liability recognized in the financial statements 66.446.381 107.295.093 210.427.246 183.969.879 528.383.171 1.096.521.770 Liability recognized before 2009 ------147.465.994 Total gross outstanding claims presented in the financial statements at the end of the period 1.243.987.764

31 December 2013 Claim year 2009 2010 2011 2012 2013 Total Claim year 902.239.347 851.459.419 1.067.586.430 1.482.692.631 1.272.774.899 5.576.752.726 1 year later 907.824.330 861.798.734 1.135.585.447 1.529.990.732 -- 4.435.199.243 2 years later 921.465.530 872.386.982 1.180.548.434 -- -- 2.974.400.946 3 years later 931.210.335 895.069.601 ------1.826.279.936 4 years later 962.409.997 ------962.409.997 Current estimate of cumulative claims 962.409.997 895.069.601 1.180.548.434 1.529.990.732 1.272.774.899 5.840.793.663 Cumulative payments to date 899.070.812 840.148.526 1.092.013.460 1.336.660.376 919.034.121 5.086.927.295 Liability recognized in the financial statements 63.339.185 54.921.075 88.534.974 193.330.356 353.740.778 753.866.368 Liability recognized before 2008 ------69.962.445 Total gross outstanding claims provision presented in the financial statements at the end of the period 823.828.813

167 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Total amount of guarantee that should be placed by the Company for life and non-life branches and guarantees placed for the life and non-life branches in respect of related assets

31 December 2014 Should be Carrying placed (**) Placed (*) amount Non-life: Bank deposits (Note 14) 222.697.267 223.171.410 Financial assets (*) (Note 11) 84.612.376 83.816.009 Total 282.343.518 307.309.643 306.987.419

31 December 2013 Should be Carrying placed (**) Placed (*) amount Non-life: Bank deposits (Note 14) 151.443.845 151.508.238 Financial assets (*) (Note 11) 101.932.249 102.274.430 Total 230.055.081 253.376.094 253.782.668

(*) Turkey in accordance with the 6th

(**) “As at 31 December th2014 and 31 December 2013, government bonds and treasury bills are measured at daily official prices announced by the Central Bank of Article of “Circular Related to the Financial Structure of Insurance, Reinsurance, and Private Pension Companies. guarantee amount, minimum guarantee fund for capital adequacy calculation period will be established as a guarantee in two months following the calculation period. “According to the 7 article of the “Circular Related to the Financial Structure of Insurance, Reinsurance, and Private Pension Companies” which regulates necessary must prepare their capital adequacy tables twice in a financial year at June and December periods and must sent capital adequacy tables to the Turkish Treasury DepartmentAccording to within “Regulations two months. Regarding Since to the Capital amounts Adequacy that should Measurement be placed and as ofAssessment 31 December of Insurance, 2014 (31 Reinsurance,December 2013) and willPrivate be throughPension theCompanies”, calculated companies amounts as of

Company’s30 June 2014 (30 number June 2013), of life the insurancesettled amounts policies, as of June additions, is presented disposals as “should duringbe placed” the amounts. 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 at 31 December 2014, short-term prepaid expenses amounting to TL 205.884.923 (31 December 2013: TL 196.680.406) consist of deferred commission expenses amounting to TL 187.284.759 (31 December 2013: TL 182.110.391) and other prepaid expenses amounting to TL 5.260.484 (31 December 2013: TL 5.905.318). The amount of commission expense TL13.339.680 TL (31 December 2013: 8.664.697) Long-term prepaid expenses amounting TL 3.562.038 (31 December 2013: TL 34.671) are composed of other prepaid expenses.

168 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, the movements of deferred commission expenses are presented below:

31 December 2014 31 December 2013

Deferred commission expenses at the beginning of the period 190.775.088 156.049.462 Commissions accrued during the period 429.400.515 392.156.692 Commissions expensed during the period (*) (419.551.164) (357.431.066) Deferred commission expenses at the end of the period 200.624.439 190.775.088

(*) Commission expense are included as a reinsurance commissions.

Individual pension funds

None.

18 Investment contract liabilities

None

19 Trade and other payables and deferred income

31 December 2014 31 December 2013

Payables from main operations 302.045.983 327.033.095 Other payables 47.561.333 56.534.780 Deferred income and expense accruals (Note 10) 45.447.065 39.363.495 Taxes and funds payable and other similar obligations 27.386.135 27.491.024 Total 422.440.516 450.422.394

Short-term liabilities 422.440.516 450.422.394 Long-term liabilities -- -- Total 422.440.516 450.422.394

As at 31 December 2014, other payables amounting to TL 47.561.333 (31 December 2013: TL 56.534.780) consist of treatment cost payables to SSI amounting to TL 16.375.984 (31 December 2013: TL 25.801.332), payables to Tarsim and DASK and outsourced benefits and services amounting to TL 28.268.772 (31 December 2013: TL 27.696.412) and deposits and guarantees received amounting to TL 2.916.577 (31 December 2013: TL 3.037.036).

Payables arising from main operations of the Company as at 31 December 2014 and 31 December 2013 are as follows:

31 December 2014 31 December 2013

Payables to reinsurance companies (Note 10) 188.610.275 230.767.903 Payables to agencies, brokers and intermediaries 30.052.668 29.888.503 Total payables arising from insurance operations 218.662.943 260.656.406

Payables arising from other operating activities 76.105.907 63.270.783 Cash deposited by insurance and reinsurance companies (Note 10) 7.277.133 3.105.906 Payables arising from main operations 302.045.983 327.033.095

169 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

Corporate tax liabilities and prepaid taxes are disclosed below:

31 December 2014 31 December 2013

Corporate tax liabilities 22.930.452 9.659.923 Taxes paid during the period (21.081.960) -- Corporate tax assets, net 1.848.492 9.659.923

Total amount of investment incentives which will be benefited in current and forthcoming periods

None.

20 Financial liabilities

The Company has no financial liabilities as at 31 December 2014 (31 December 2013: None).

21 Deferred tax

As at 31 December 2014 and 31 December 2013, deferred tax assets and liabilities are attributable to the following:

31 December 2014 31 December 2013 Deferred tax Deferred tax assets /(liabilities) assets /(liabilities)

Deferred tax effect of current period tax losses (Note 2.18) -- 732.945 Other provisions 3.588.669 2.944.113 Equalization provision 8.907.829 6.299.668 Reserve for unexpired risks 8.075.869 2.623.675 Provisions for employee termination benefits and unused vacations 2.812.254 2.581.526 Provision for subrogation receivables 1.535.413 1.895.016 Difference in depreciation methods on tangible and intangible assets between tax regulations and the Reporting Standards (2.192.013) (1.224.897) Discount of receivables and payables (88.941) 115.797 Valuation differences in financial assets (1.547.916) 827.566 Subrogation receivables from third parties (965.401) (603.708) Deferred tax assets, net 20.125.763 16.191.701

As at 31 December 2014 The company has not deductible tax losses. (31 December 2013: 9.302.276 TL).

Expiration date 31 December 2014 31 December 2013

31 December 2016 -- -- 31 December 2017 -- 3.664.725 Total -- 3.664.725

Movement of deferred tax assets table:

31 December 2014 31 December 2013

Opening balance at 1 January 16.191.701 24.604.121 Recognised in profit or loss (Note 35) 7.396.097 (11.654.589) Recognised in equity (Note 15) (3.462.035) 3.242.169 Deferred tax asset 20.125.763 16.191.701

170 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

22 Retirement benefit obligations

The participants or beneficiaries of pension funds are required to be transferred Social Security Institution according to which was published in the Official Gazette dated 8 May 2008 and numbered 26870. Transfer will be completed within a period of“Amendments 3 years and prescribesto the Social the Security extension and period General of Health the transfer Insurance as maximum Act Including of two Certain years uponLaws theand order Decrees” of the numbered Cabinet. The5754 related three-year transfer period has been prolonged for two years by the Cabinet decision, which was published on the Official Gazette dated 9 April 2011. Accordingly, the three-year period expired on 8 May 2011 was extended to the 8 May 2013. In accordance with the Act, as of the transfer date, present value of the liabilities will be determined by considering the income and expense of the pension fund. Technical deficit rate of 9.8% shall be used in the actuarial calculation of the value in cash, and uncovered other rights and compensations of participants or beneficiaries of pension funds should be covered by the entities that transfer the funds.

theUp toArticle date, 20as perof the the Social actuarial Securities calculation Act No: performed, 506 and the there Company has not has been made any nodeficit payment in Anadolu for this Anonim purpose. Türk It is Sigorta believed Şirketi that theMemurları assets of Emekli this institution Sandığı (Pension are adequate Fund ofenough Anadolu to cover Anonim its totalTürk obligations; Sigorta Şirketi), therefore which this has shall been not founded constitute in accordance any additional with liability on the Company. numbered 28227 which was published in the Official Gazette dated 8 March 2012 and numbered 506 law which has relevant termsPhrases was of changed2 years which to 4 years expression Banks, in insurance “ Amendments and reinsurance Social Insurance companies, and Generalchambers Health of commerce, Insurance industry Law Amending chambers, the Law” exchanges which take part scope of Law 506, No: 20 or the crate which established for constituted staff association are included in this Law to transferred Social Security Administration in the publication of this article within three years from the date. Three year period may be extended by a maximum two years via The Council of Ministers . As of the date of transfer, pension fund contributors are insured scope of this Law Article 4 (a).With this amendment, the authority postpone the transfer of the funds are given The Council of Ministers modified 4 years. (8 May 2011 to 8 May 2015) In this context, the Council of Ministers postpone transfer of the funds one more year with the decision of The Council of Ministers dated 24 February 2014 No. 2014/6042.

23 Other liabilities and provisions

As at 31 December 2014 and 31 December 2013; the details of the provisions for other risks are as follows:

31 December 2014 31 December 2013

Provision for employee termination benefits 12.628.115 11.720.142 Provision for unused vacation pay liability 1.433.153 1.187.490 Total provision for other risks 14.061.268 12.907.632

31 December 2014 31 December 2013

Provision for agency award 3.356.650 4.300.000 Provision for guarantee account 7.182.519 6.180.307 Provision for employee bonus 7.000.000 6.000.000 Expense provision for gauge commission (Not 10) 1.576.728 915.265 Provision for tax assessment (Not 42, (Not 47) 15.489.301 7.615.549 Prepaid income and expense accruals 34.605.198 25.011.121

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Movements of provision for employee termination benefits during the period are presented below:

31 December 2014 31 December 2013

Provision at the beginning of the period 11.720.142 9.856.211 Interest cost (Note 47) 1.196.136 757.050 Service cost (Note 47) 930.599 936.206 Payments made during the period (Note 47) (436.838) (586.852) Actuarial difference (Note 47) (781.924) 757.527 Provision at the end of the period 12.628.115 11.720.142

24 Net insurance premium

Net insurance premium revenue is presented in detailed in the accompanying consolidated statement of income.

25 Fee revenue

None.

26 Investment income

Note 4.2 - Financial Risk Management.

27Investment Net income income accrual is presented on financial in “ assets

Note 4.2 - Financial Risk Management.

28Net Assets realized held gains at onfair financial value through assets are profit presented or loss in “

Note 4.2

29Presented Insurance in “ rights and - Financial claims Risk Management”.

31 December 2014 31 December 2013

Claims paid, net off reinsurers’ share 1.412.362.272 1.146.966.155 Changes in reserve for unearned premiums, net off reinsurers’ share 62.089.748 232.405.987 Changes in provision for outstanding claims, net off reinsurers’ share 325.716.789 199.120.849 Change in equalization provisions 15.970.036 12.422.591 Changes in reserve for unexpired risks, net off reinsurers’ share 27.260.973 9.020.850 Total 1.843.399.818 1.599.936.432

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.

172 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

32 Operating expenses

The operating expenses are disclosed as follows:

31 December 2014 31 December 2013

Commission expenses (Note 17) 385.141.391 357.431.066 Commissions to intermediaries accrued during the period (Note 17) 390.315.759 392.156.692 Change in deferred commission expenses (Note 17) (5.174.368) (34.725.626) Employee benefit expenses (Note 33) 104.693.751 95.467.768 Commission income from reinsurers (Note 10) (58.617.320) (72.496.752) Commission income from reinsurers accrued during the period (Note 10) (60.026.011) (76.879.895) Change in deferred commission income (Note 10) 1.408.691 4.383.143 Administration expenses 69.230.043 69.800.405 Advertising and marketing expenses 13.987.613 10.695.100 Outsourced benefits and services 8.250.751 1.936.519 Total 522.686.229 462.834.106

33 Employee benefits expenses

31 December 2014 31 December 2013

Wages and salaries 76.090.749 67.586.147 Employer’s share 15.758.608 13.983.364 Other 12.844.394 13.898.257 Total 104.693.751 95.467.768

34 Financial costs

Note 4.2 in production costs or capitalized on tangible assets. All financial costs are directly recognised as expense in the unconsolidated statementFinance costs of income. of the period are presented in “ - Financial Risk Management” above. There are no finance costs classified

35 Income tax

Income tax expense in the accompanying unconsolidated financial statements is as follows:

31 December 2014 31 December 2013 Current tax expense provision: Corporate tax provision (21.081.960) -- Deferred taxes: Origination and reversal of temporary differences 7.396.097 (11.654.589) Total income tax expense recognised in profit or loss (13.685.863) (11.654.589)

173 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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 is as follows:

31 December 2014 31 December 2013 Profit before tax 85.245.809 Tax rate (%) 79.116.513 Tax rate (%) Taxes on income per statutory tax rate 17.049.162 20,00 15.823.303 20,00 Tax exempt income (4.041.796) (4,74) (4.940.572) (6,24) Non deductible expenses 678.497 0,80 771.858 0,98 Total tax income recognized in profit or loss 13.685.863 16,05 11.654.589 14,73

36 Net foreign exchange gains

Note 4.2

37Net Earnings foreign exchange per share gains are presented in “ - Financial Risk Management” above.

Earnings per share are calculated by dividing net profit of the period to the weighted average number of shares.

31 December 31 December 2014 2013

Net profit /(loss) for the period 71.559.946 67.461.924 Weighted average number of shares 50.000.000.000 50.000.000.000 Earnings /(loss) per share (TL) 0,00143 0,00135

38 Dividends per share

The company did not perform profit distribution in years of 2013 and 2014.

39 Cash generated from operations

The cash flows from operating activities are presented in the accompanying consolidated 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 at 31 December 2014, total amount of the claims that the Company face is TL 1.040.392.000 in gross (31 December 2013: TL 726.988.000). The Company provided provision for outstanding claims in the consolidated financial statements by considering collateral amounts.

174 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

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.

Legal process has been initiated related to 2007 and 2008, also as of the report date there are cases against/on behalf of us and also for the against result cases the case has been moved to a higher court. In addition, some part of the payment orders relevant parties. submitted to us for the following periods are subjected to litigation and for the other part of the cases compromise were made to As of the report date the Company made a payment of TL 3.801.378 for tax assessments, also due to a precautionary condition the company has made a provision to the amount of TL 15.489.301 (31 December 2013: 7.615.549).

As a result of investigation conducted by the Ministry of Finance Tax Audit Board, tax penalty which is amount of TL 2.1 million insurance transactions tax. The Company does not make any provision for this tax penalty because of thinking that the Company’s operations(actual tax), are and in TL line 3.1 with million the localtax penalty regulations. is announced by reason to tax salvage operations not subject to the banking and

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.

The future aggregate minimum lease payments under operating leases for properties rented for use of head office and regional offices and motor vehicles rented for sales and marketing departments are as follows:

31 December 2014 31 December 2013 Within one year 7.517.871 5.871.892 Between one to five years 3.476.491 7.725.700 Total of minimum lease payments 10.994.362 13.597.592

44 Business combinations

None.

175 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 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 Theand therelated affiliates party and balances associates as of of31 İş December Bankası Group 2014 andare defined31 December as related 2013 parties are as offollows: the Company.

31 December 2014 31 December 2013

533.547.278 678.467.430 -- 13.055 İş Bankası - cash at banks Banks 533.547.278 678.480.485 Türkiye Sınai ve Kalkınma Bankası - cash at banks (Note 11) -- 122.028.890 Bonds issued by Is GYO (Not 11) 14.713.703 -- Bonds issued by İş Bankası Bonds issued by Is Leasing (Not 11) 5.078.714 -- (Note 11) 15.972.195 13.588.728 (Note 11) 139.593.991 71.694.305 Investment funds founded by İş Bankası (Note 11) 12.320.065 9.115.192 Investment funds founded by İş Portföy Yönetimi A.Ş. Financial assets 187.678.668 216.427.115 Investment funds founded by İşbank GmbH 91.802.800 76.454.603

İş Bankası - receivables stem from premiums written via the Bank 2.924.252 5.743.294 Receivables stems from premiums written via Şişecam Sigorta Aracılık 167.971 21.600 Hiz. A.Ş. 1.416 644 Trakya Cam Sanayii A.Ş. 490.293 4.650 Milli Reasürans T.A.Ş. - receivables from reinsurance operations Receivables from main operations 95.386.732 82.224.791 Anadolu Hayat Emeklilik A.Ş. - premium receivables 11.953.520 20.215.519 7.082.553 5.900.234 Milli Reasürans T.A.Ş.- payables from reinsurance operations 23.437 365.739 İş Bankası - commission payables Payables from main operations 19.059.510 26.481.492 Şişecam Sigorta Aracılık Hizmetleri A.Ş. - commission payables No guarantees have been taken against receivables from related parties.

NoThere guarantees, are no doubtful commitments, receivables guarantee from shareholders, letters, advances subsidiaries and endorsements and joint ventures. given in favour of shareholders, associates and subsidiaries.

176 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

The Company accrued TL 57.835.977 premium (31 December 2013: 50.126.169 TL) for related party policies. The transactions with related parties during the year ended 31 December 2014 and 2013 are as follows:

31 December 2014 31 December 2013

328.891.626 261.701.058 41.316.107 38.432.938 İş Bankası - premiums written via the Bank 17.077.324 14.231.789 Premiums written via Şişecam Sigorta Aracılık Hizmetleri A.Ş. Premiums written via TSKB 101.511 952.525 İş Finansal Leasing- premiums written Premiums written 387.386.568 315.318.310

(93.328.833) (79.445.393) Premiums written, ceded (93.328.833) (79.445.393) Milli Reasürans T.A.Ş 55.732.060 36.922.222 9.488.742 -- İş Bankası - interest income from deposits 11.500 -- İş Portföy Yönetimi - income from investment funds 560.304 -- İş Yatırım Menkul Değerler - income from investment funds 11.828.210 3.797.714 İş Gayrimenkul Yatırım Ortaklığı - income from bonds Investment income 77.620.816 40.719.936 İş Bankası - income from bonds (33.650.040) (24.613.912) (8.674.189) (7.353.671) Türkiye İş Bankası A.Ş - commission expense (3.240.935) (2.744.249) Şişecam Sigorta Aracılık Hizmetleri A.Ş. - commission expense TSKB - commission expense -- (75.589) İş Leasing - commission expense 21.497.125 18.214.159 Operating expenses, net (24.068.039) (16.573.262) Milli Reasürans T.A.Ş- commission expense (3.250.000) (3.271.539) -- (371.750) İş Bankası - banking service fee (2.837.238) (1.480.031) İş Bankası - rent expense -- (4.883.609) İş Merkezleri Yönetim ve İşletim A.Ş. - building service cost (632.924) (475.950) İş Gayrimenkul Yatırım Ortaklığı A.Ş. - rent expense Other expenses (6.720.162) (10.482.879) İş Portföy Yönetimi - management commission 46 Events after the reporting date

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

177 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon

47 Others group to which they relate or 5% of the total assets in the balance sheet Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of the 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 None.term payables”, and which have balance more than 1% of the total assets

None.Subrogation recorded in “Off-Balance Sheet Accounts”

Real rights on immovable and their values

None.

Explanatory note for the amounts and nature of previous years’ income and losses

None.

For the years ended 31 December 2014 and 2013, details of discount and provision expenses are as follows:

Provision expenses 31 December 2014 31 December 2013

Other provision income /(expense) 1.071.425 908.822 Provision expense for unused vacation (Note 23) (245.663) (338.452) Provision expense for employee termination benefits (Note 23) (1.689.897) (1.106.404) Provision expense for doubtful receivables (Note4.2) (11.622.773) (15.741.368) Tax assessment expense (Not 23) (7.873.752) (7.615.549) Total (20.360.660) (23.892.951)

Rediscount expenses 31 December 2014 31 December 2013

Rediscount income 12.636.796 12.842.993 Rediscount expense (15.997.077) (10.489.059) Total of rediscounts (3.360.281) 2.353.934

178 / Anadolu Sigorta Annual Report 2014 ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

179 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / Information on Consolidated Subsidiaries

Information on Consolidated Subsidiaries

companyOffering service in the sectorin private in terms pension of total and fundslife insurance attained segments, in life insurance Anadolu and Hayat private Emeklilik pension was branches, founded while in 1990 preserving as “Turkey’s its top first spotlife insurance with the numbercompany”. of participantsThe first and achieved only publicly-traded in the Private pension Pension company System. in Turkey, Anadolu Hayat Emeklilik is the largest symbol (ANHYT) A subsidiary of İşbank, Anadolu Hayat Emeklilik’s shares are quoted on the Borsa Istanbul (BIST) National Market under the

nearlyHeadquartered 300 agencies. in İstanbul, Anadolu Hayat Emeklilik brings its products to its customers via regional offices in İstanbul (2), Ankara, Adana, Antalya, Bursa, Trabzon and İzmir a branch in the Turkish Republic of Northern Cyprus, direct sales force, and Anadolu Hayat Emeklilik possesses the most extensive bank insurance network in Turkey. The Company uses the branches of delivery. İşbank, Anadolubank, HSBC, TSKB, BankPozitif and Albaraka Türk Participation Bank as fundamental element of its service Controlling a 11% share of the market with a premium production of TL 365 million in the life insurance branch, Anadolu Hayat Emeklilik retained its leadership by a large margin with total life insurance funds in excess of TL 1.8 billion.

According to the Pension Monitoring Center (PMC) data dated 2 January 2015, Anadolu Hayat Emeklilik achieved 18% increase in the number of participants and in total funds in the twelve months to year-end 2014. Having reached TL 7,399 million in total funds and 863,978 people in the number of participants, Anadolu Hayat Emeklilik is the sector’s leader with respective market shares of 20% and 17% in total funds including state contributions and number of participants.

Total unconsolidated assets of Anadolu Hayat Emeklilik were up 28% year-to-year and reached TL 10,154 million at year-end 2014.

Posting TL 97.7 million in net profit, the company successfully completed yet another year in terms of sustainable profitability

180 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ 31 December 2014 Consolidated Financial Statements Together With Independent Auditors’ Report Thereon Convenience Translation of the Independent Auditors’ Report Originally Prepared and Issued in Turkish (See Note 2.1.1) (Currency: Turkish Lira (TL))

Akis Bağımsız Denetim ve Serbest Telephone +90 (216) 681 90 00 Muhasebeci Mali Müşavirlik A.Ş. Fax +90 (216) 681 90 90 Kavacık Rüzgarlı Bahçe Mah. İnternet www.kpmg.com.tr Kavak Sok. No: 3 Beykoz 34805 İstanbul

INDEPENDENT AUDITOR’S REPORT

IntroductionTo the Board of Directors of Anadolu Anonim Türk Sigorta Şirketi

December 2014 and the related consolidated statement of income, consolidated statement of changes in equity and consolidated We have audited the accompanying consolidated balance sheet of Anadolu Anonim Türk Sigorta Şirketi (“the Company”) as at 31

Management’sstatement of cash Responsibility flows for the for year the Financialthen ended, Statements and a summary of significant accounting policies and other explanatory notes. with the accounting principles and standards, in force as per the insurance legislation. This responsibility includes: designing, Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and makingimplementing accounting and maintaining estimates that internal are reasonable systems relevant in the circumstances. to the preparation and fair presentation of financial statements that

Independent Auditors’ Responsibility audit in accordance with audit standards in force as per the insurance legislation. Those standards require that we comply with Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our are free of material misstatement. relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements

statements,An audit involves whether performing due to fraud procedures or error. to In obtain making audit those evidence risk assessments, about the amounts we consider and internaldisclosures systems in the relevant financial to statements. the entity’s The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal system. An audit also includespreparation evaluating and fair the presentation appropriateness of the financialof accounting statements principles in order used to and design the reasonableness audit procedures of thataccounting are appropriate estimates in made the by management, as well as evaluating the overall presentation of the financial statements. opinion. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit Basis for Qualified Opinion

7.702.761 provided by the Company management considering the circumstances which may arise from any changes in economy As explained in Note 17, the accompanying consolidated financial statements included a general provision amounting to TL statements. or market conditions recognized as expense in the prior periods. The total amount had been expensed in previous years’ financial

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ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Financial Statements As at and for the Year Ended 31 December 2014

Qualified Opinion opinion paragraph above, nothing has come to our attention that causes us to believe that the accompanying consolidated In our opinion, except for the effect on the consolidated financial statements of the matter described in the basis for qualified accordancefinancial statements with the accountinggive a true and principles fair view and of standards the consolidated (see Note financial 2) in force position as per of theAnadolu insurance Anonim legislation. Türk Sigorta Şirketi as at 31 December 2014, and of its consolidated financial performance and its consolidated cash flows for the year then ended in Report on Other Legal and Regulatory Requirements

1) Pursuant to the fourth paragraph of Article 398 of Turkish Commercial Code (“TCC”) no. 6102; Auditors’ Report on System and Committee of Early Identification of Risks is presented to the Board of Directors of the Company on 29 January 2015.

2) Pursuant to the fourth paragraph of Article 402 of the TCC; no significant matter has come to our attention that causes us to reporting.believe that the Group’s bookkeeping activities, financial statements and group’s financial statements for the period 1 January - 31 December 2014 are not in compliance with TCC and provisions of the Company’s articles of association in relation to financial 3) Pursuant to the fourth paragraph of Article 402 of the TCC; the Board of Directors provided us the necessary explanations and required documents in connection with the audit.

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Partner Alper Güvenç, Certified Public Accountant

29 Ocak 2015

İstanbul, Türkiye

Additional paragraph for convenience translation to English: and results of operations of the Company in accordance with the accounting principles and practices generally accepted in As explained in Note 2.1.1, the accompanying consolidated financial statements are not intended to present the financial position countries and jurisdictions other than Turkey.

182 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Financial Statements As at and for the Year Ended 31 December 2014

We confirm that the consolidated financial statements and related disclosures and footnotes as at 31 December 2014 which were prepared in accordance with the accounting principles and standards in force as per the regulations of T.C. Başbakanlık Hazine Müsteşarlığı 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, 29 January 2015

Musa ÜLKEN Fatih GÖREN Member of Board of Directors Executive Vice President of Finance Chief Executive Officer

Taylan MATKAP Accounting Reporting Manager Actuary Murat TETİK

183 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Financial Statements As at and for the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

CONTENTS

CONSOLIDATED BALANCE SHEET 186-190

CONSOLIDATED STATEMENT OF INCOME 191-193

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 194

CONSOLIDATED STATEMENT OF CASH FLOWS 196

CONSOLIDATED STATEMENT OF PROFIT DISTRIBUTION 197

NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS 198-260

NOTE 1 General Information 198

NOTE 2 Summary of significant accounting policies 200

NOTE 43 ManagementCritical accounting of insurance estimates and and financial judgments risk in applying accounting policies 218217

NOTE 5 Segment reporting 231

NOTE 6 Tangible assets 234

NOTE 7 Investments in associate 235

NOTE 8 Intangible assets 236

NOTE 9 Investments in associates 236

NOTE 10 Reinsurance assets and liabilities 237

NOTE 12 Loans and receivables 242

NOTE 13 Derivative financial instruments 243

NOTE 14 Cash and cash equivalents 244

NOTE 15 Equity 245

NOTE 16 Other reserves and equity component of DPF 247

NOTE 17 Insurance contract liabilities and reinsurance assets 247

NOTE 18 Investment contract liabilities 252

NOTE 19 Trade and other payables and deferred income 252

NOTE 20 Financial liabilities 253

NOTE 21 Deferred tax 253

NOTE 22 Retirement benefit obligations 254

NOTE 23 Other liabilities and provisions 255

NOTE 24 Net insurance premium 255

NOTE 25 Fee revenue 255

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NOTE 26 Investment income 255

NOTE 27 Net income accrual on financial assets 255

NOTE 28 Assets held at fair value through profit or loss 255

NOTE 29 Insurance rights and claims 256

NOTE 30 Investment contract benefits 256

NOTE 31 Other expenses 256

NOTE 32 Operating expenses 256

NOTE 33 Employee benefits expenses 256

NOTE 34 Financial costs 256

NOTE 35 Income tax 257

NOTE 36 Net foreign exchange gains 257

NOTE 37 Earnings per share 257

NOTE 38 Dividends per share 257

NOTE 39 Cash generated from operations 257

NOTE 40 Convertible bonds 257

NOTE 41 Redeemable preference shares 257

NOTE 42 Risks 258

NOTE 43 Commitments 258

NOTE 44 Business combinations 258

NOTE 45 Related party transactions 259

NOTE 46 Events after the reporting date 260

NOTE 47 Others 260

185 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Balance Sheet As at 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

ASSETS Audited Current Period Audited Prior Period I- Current Assets Note 31 December 2014 31 December 2013 A- Cash and Cash Equivalents 14 1.606.048.714 1.153.712.216 1- Cash 14 37.347 49.256 2- Cheques Received -- -- 3- Banks 14 1.356.733.446 901.838.577 4- Cheques Given and Payment Orders 14 (171.519) (1.025.984) 5- Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months 14 249.449.440 252.850.367 6- Other Cash and Cash Equivalents -- -- B- Financial Assets and Financial Investments with Risks on Policyholders 11 644.067.957 631.008.746 1- Available-for-Sale Financial Assets 11 442.140.789 456.674.161 2- Held to Maturity Investments 11 73.670.047 94.501.549 3- Financial Assets Held for Trading 11 134.054.733 85.630.648 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-Provision in Value of Financial Investments 11 (5.797.612) (5.797.612) C- Receivables from Main Operations 12 797.454.113 773.925.226 1- Receivables from Insurance Operations 12 751.368.850 736.197.976 2- Provision for Receivables from Insurance Operations 2.21,12 (7.677.067) (9.475.078) 3- Receivables from Reinsurance Operations 12 47.022.365 42.073.701 4- Provision for Receivables from Reinsurance Operations -- -- 5- Cash Deposited to Insurance and Reinsurance Companies 12 6.739.965 5.128.627 6- Loans to the Policyholders -- -- 7- Provision for Loans to the Policyholders -- -- 8- Receivables from Individual Pension Operations -- -- 9- Doubtful Receivables from Main Operations 12 113.380.507 102.829.158 10- Provision for Doubtful Receivables from Main Operations 12 (113.380.507) (102.829.158) D- Due from Related Parties 12 -- 72.324 1- Due from Shareholders -- -- 2- Due from Associates -- -- 3- Due from Subsidiaries -- -- 4- Due from Joint Ventures -- -- 5- Due from Personnel -- 72.324 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 3.595.183 2.968.734 1- Finance Lease Receivables -- -- 2- Unearned Finance Lease Interest Income -- -- 3- Deposits and Guarantees Given 358.718 394.512 4- Other Miscellaneous Receivables 3.236.465 2.574.222 5- Rediscount on Other Miscellaneous Receivables -- -- 6- Other Doubtful Receivables -- -- 7- Provision for Other Doubtful Receivables -- -- F- Prepaid Expenses and Income Accruals 208.618.353 197.767.110 1- Prepaid Expenses 17 205.884.923 196.680.406 2- Accrued Interest and Rent Income -- -- 3- Income Accruals 10,12 2.733.430 1.086.704 4- Other Prepaid Expenses -- -- G- Other Current Assets 3.956.342 11.284.255 1- Stocks to be Used in the Following Months 212.258 888.774 2- Prepaid Taxes and Funds 19 1.848.492 9.659.923 3- Deferred Tax Assets -- -- 4- Job Advances 12 165.103 39.175 5- Advances Given to Personnel 12 4.631 35.897 6- Inventory Count Differences -- -- 7- Other Miscellaneous Current Assets 12 1.725.858 660.486 8- Provision for Other Current Assets -- -- I- Total Current Assets 3.263.740.662 2.770.738.611

The accompanying notes are an integral part of these unconsolidated financial statements.

186 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ASSETS Audited Audited Current Period Prior Period II- Non-Current Assets Note 31 December 2014 31 December 2013 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 -- -- 1- Finance Lease Receivables -- -- 2- Unearned Finance Lease Interest Income -- -- 3- Deposits and Guarantees Given -- -- 4- Other Miscellaneous Receivables -- -- 5- Rediscount on Other Miscellaneous Receivables -- -- 6- Other Doubtful Receivables -- -- 7- Provision for Other Doubtful Receivables -- -- D- Financial Assets 9 123.261.711 108.028.666 1- Investments in Equity Shares -- -- 2- Investments in Associates 9 123.261.711 108.028.666 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 32.307.481 34.793.176 1- Investment Properties 6,7 6.982.776 6.982.776 2- Impairment for Investment Properties -- -- 3- Owner Occupied Property 6 6.788.733 6.520.974 4- Machinery and Equipments 6 34.554.018 32.800.391 5- Furniture and Fixtures 6 11.775.416 11.331.085 6- Motor Vehicles 6 1.362.223 1.285.983 7- Other Tangible Assets (Including Leasehold Improvements) 6 19.401.127 18.262.277 8- Tangible Assets Acquired Through Finance Leases 6 4.166.354 4.166.354 9- Accumulated Depreciation 6 (52.723.166) (46.556.664) 10- Advances Paid for Tangible Assets (Including Construction in Progress) -- -- F- Intangible Assets 8 62.254.841 62.812.033 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 88.079.901 54.879.873 6- Accumulated Amortization 8 (43.804.438) (27.614.154) 7- Advances Paid for Intangible Assets 8 1.729.378 19.296.314 G- Prepaid Expenses and Income Accruals 17 3.562.038 34.671 1- Prepaid Expenses 17 3.562.038 34.671 2- Income Accruals -- -- 3- Other Prepaid Expenses and Income Accruals -- -- H- Other Non-Current Assets 21 20.125.763 16.191.701 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 20.125.763 16.191.701 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 241.511.834 221.860.247 TOTAL ASSETS 3.505.252.496 2.992.598.858

The accompanying notes are an integral part of these unconsolidated financial statements.

187 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

The accompanying notes are an integral part of these unconsolidated financial statements.

188 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

The accompanying notes are an integral part of these unconsolidated financial statements.

189 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

EQUITY Audited Audited Current Period Prior Period V- Equity Note 31 December 2014 31 December 2013 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 8.809.304 8.161.541 1- Share Premiums -- -- 2- Cancellation Profits of Equity Shares -- -- 3- Profit on Asset Sales That Will Be Transferred to Capital ------5- Other Capital Reserves 15 8.809.304 8.161.541 4- Currency Translation Adjustments C- Profit Reserves 154.907.376 127.158.918 1- Legal Reserves 15 46.999.839 45.293.051 2- Statutory Reserves 15 7.710.040 7.161.457 3- Extraordinary Reserves 15 20.962.756 19.723.583 4- Special Funds -- -- 5- Revaluation of Financial Assets 15 35.200.299 11.454.747 6- Other Profit Reserves 15 44.034.442 43.526.080 D- Retained Earnings 13.386.141 -- 1- Retained Earnings 13.386.141 -- E- Accumulated Losses -- (48.878.904) 1- Accumulated Losses -- (48.878.904) F-Net Profit/(Loss) for the Period 74.592.102 66.403.111 1- Net Profit for the Period 73.197.477 65.755.348 2- Net Loss for the Period -- -- 3- Profit not Available for Distribution 15 1.394.625 647.763 V- Total Equity 751.694.923 652.844.666 TOTAL EQUITY AND LIABILITIES 3.505.252.496 2.992.598.858

The accompanying notes are an integral part of these unconsolidated financial statements.

190 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Statement of Income For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

The accompanying notes are an integral part of these unconsolidated financial statements.

191 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

Audited Audited Current Period Prior Period I-TECHNICAL SECTION Note 31 December 2014 31 December 2013 E- Life Technical Expense -- -- 1- Incurred Losses (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 -- -- 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.

192 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

Audited Audited Current Period Prior Period II-NON-TECHNICAL SECTION Note 31 December 2014 31 December 2013 C- Net Technical Income - Non-Life (A-B) 121.259.531 100.878.217 F- Net Technical Income - Life (D-E) -- -- I - Net Technical Income - Pension Business (G-H) -- -- J- Total Net Technical Income (C+F+I) 121.259.531 100.878.217 K- Investment Income 261.960.220 185.154.535 1- Income from Financial Assets 4.2 130.174.857 85.749.368 2- Income from Disposal of Financial Assets 4.2 31.151.423 16.004.372 3- Valuation of Financial Assets 4.2 19.421.434 10.576.449 4- Foreign Exchange Gains 4.2 59.970.980 52.709.177 5- Income from Associates 4.2 19.032.156 16.941.187 6- Income from Subsidiaries and Joint Ventures -- -- 7- Income from Property, Plant and Equipment 1.815.006 2.848.377 8- Income from Derivative Transactions 4.2 205.678 212.931 9- Other Investments 188.686 112.674 10- Income Transferred from Life Section -- -- L- Investment Expense (275.809.588) (187.215.654) 1- Investment Management Expenses (inc. interest) 4.2 (136.623) -- 2- Diminution in Value of Investments 4.2 (3.509.979) (4.677.619) 3- Loss from Disposal of Financial Assets 4.2 (7.713.065) (13.581.516) 4- Investment Income Transferred to Non-Life Technical Section (190.509.410) (123.220.226) 5- Loss from Derivative Transactions 4.2 (184.509) (99.585) 6- Foreign Exchange Losses 4.2 (49.954.025) (28.804.896) 7- Amortization Expenses 6,8 (23.801.977) (16.831.812) 8- Other Investment Expenses -- -- M- Income and Expenses From Other and Extraordinary Operations (11.736.101) (32.413.987) 1- Provisions 47 (20.360.660) (23.892.951) 2- Rediscounts 47 (3.360.281) 2.353.934 3- Specified Insurance Accounts -- -- 4- Monetary Gains and Losses -- -- 5- Deferred Taxation (Deferred Tax Assets) 35 7.396.097 -- 6- Deferred Taxation (Deferred Tax Liabilities) 35 -- (11.654.589) 7- Other Income 5.142.413 3.469.073 8- Other Expenses and Losses (553.670) (2.689.454) 9- Prior Year’s Income -- -- 10- Prior Year’s Expenses and Losses -- -- N- Net Profit for the Period 74.592.102 66.403.111 1- Profit for the Period 95.674.062 66.403.111 2- Corporate Tax Provision and Other Fiscal Liabilities 35 (21.081.960) -- 3- Net Profit for the Period 74.592.102 66.403.111 4- Monetary Gains and Losses -- --

The accompanying notes are an integral part of these unconsolidated financial statements.

193 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Statement of Changes in Equity For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

Audited Statement of Changes in Equity - 31 December 2013 Other Currency Reserves and Own Shares of Revaluation of Inflation Translation Legal Statutory Retained Net Profit for Retained Notes Paid-in Capital the Company Financial Assets Adjustments Adjustments Reserves Reserves Earnings the Year Earnings Total I - Balance at the end of the previous year - 31 December 2012 500.000.000 -- 34.628.767 -- -- 43.918.190 9.737.625 72.916.015 (55.790.717) 4.848.165 610.258.045 II - Change in Accounting Standards ------III - Restated balances (I+II) - 1 January 2013 500.000.000 -- 34.628.767 -- -- 43.918.190 9.737.625 72.916.015 (55.790.717) 4.848.165 610.258.045 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 income ------(663.966) -- -- (663.966) D- Change in the value of financial assets 11,15 -- -- (23.174.020) ------(23.174.020) ------F- Other gains or losses ------400.000 -- 400.000 E- Currency translation adjustments ------H- Net profit for the period ------66.403.111 -- 66.403.111 G- Inflation adjustment differences I - Dividends paid ------(378.504) -- (378.504) J - Transfers to reserves 15 ------1.374.861 (2.576.168) (840.845) 55.769.221 (53.727.069) -- II - Balance at the end of the period - 31 December 2013 500.000.000 -- 11.454.747 -- -- 45.293.051 7.161.457 71.411.204 66.403.111 (48.878.904) 652.844.666

Audited Statement of Changes in Equity - 31 December 2014 Other Currency Reserves and Own Shares of Revaluation of Inflation Translation Legal Statutory Retained Net Profit for Retained Note Paid-in Capital the Company Financial Assets Adjustments Adjustments Reserves Reserves Earnings the Year Earnings Total I Balance at the end of the previous year - 31 December 2013 500.000.000 -- 11.454.747 -- -- 45.293.051 7.161.457 71.411.204 66.403.111 (48.878.904) 652.844.666 II - Change in Accounting Standards ------III - Restated balances (I+II) -1 January 2014 500.000.000 -- 11.454.747 -- -- 45.293.051 7.161.457 71.411.204 66.403.111 (48.878.904) 652.844.666 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 income ------512.603 -- -- 512.603 D- Change in the value of financial assets 11,15 -- -- 23.745.552 ------23.745.552 ------F- Other gains or losses ------E- Currency translation adjustments ------H- Net profit for the period ------74.592.102 -- 74.592.102 G- Inflation adjustment differences I - Dividends paid ------J - Transfers to reserves 15 ------1.706.788 548.583 1.882.695 (66.403.111) 62.265.045 -- IV - Balance at the end of the period - 31 December 2014 500.000.000 -- 35.200.299 -- -- 46.999.839 7.710.040 73.806.502 74.592.102 13.386.141 751.694.923

The accompanying notes are an integral part of these unconsolidated financial statements.

194 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ

195 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Statement of Cash Flow For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

Audited Audited Current Period Prior Period Note 31 December 2014 31 December 2013 A - CASH FLOWS FROM OPERATING ACTIVITIES 1- Cash provided from insurance activities 3.153.798.374 2.854.861.834 2- Cash provided from reinsurance activities -- 6.871.227 3- Cash provided from individual pension business -- -- 4- Cash used in insurance activities (2.924.054.056) (2.501.075.344) 5- Cash used in reinsurance activities (6.560.002) (1.222.563) 6- Cash used in individual pension business -- -- 7- Cash provided by operating activities 223.184.316 359.435.154 8- Interest paid -- -- 9- Income taxes paid 19 (22.930.452) 980.233 10- Other cash inflows 26.050.558 50.333.609 11- Other cash outflows (37.055.680) (70.513.485) 12-Net cash provided by operating activities 189.248.742 340.235.511 B - CASH FLOWS FROM INVESTING ACTIVITIES 1- Proceeds from disposal of tangible assets -- 1.823.500 2- Acquisition of tangible assets 6, 8 (21.111.793) (47.756.100) 3- Acquisition of financial assets 11 (541.175.656) (714.083.260) 4- Proceeds from disposal of financial assets 865.215.792 431.437.029 5- Interests received (142.557.704) 89.565.184 6- Dividends received 10.000.000 8.000.000 7- Other cash inflows 62.448.109 198.407.879 8- Other cash outflows (205.552.139) (37.769.638) 9- Net cash provided by investing activities 27.266.609 (70.375.406) C- CASH FLOWS FROM FINANCING ACTIVITIES 1- Equity shares issued -- -- 2- Cash provided from loans and borrowings -- -- 3- Finance lease payments -- -- 4- Dividends paid -- -- 5- Other cash inflows -- -- 6- Other cash outflows -- -- 7- Net cash used in financing activities -- -- D- EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH EQUIVALENTS 1.701.066 31.224.213 E- Net increase in cash and cash equivalents 218.216.417 301.084.318 F- Cash and cash equivalents at the beginning of the year 14 825.512.807 524.428.489 G- Cash and cash equivalents at the end of the year 14 1.043.729.224 825.512.807

The accompanying notes are an integral part of these unconsolidated financial statements.

196 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Consolidated Profit Distribution For the Year Ended 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

Audited Audited Current Period Prior Period Note 31 December 2014 31 December 2013(**) I. PROFIT DISTRIBUTION 1.1. CURRENT YEAR PROFIT (*) 94.279.437 66.814.161 1.2. TAX AND FUNDS PAYABLE (21.081.960) -- 1.2.1. Corporate Income Tax (Income Tax) (21.081.960) -- 1.2.2. Income tax deduction -- -- 1.2.3. Other taxes and Duties -- -- A NET PROFIT (1.1 - 1.2) 73.197.477 66.814.161 1.3. PREVIOUS PERIOD LOSSES (-) -- 63.981.132 1.4. FIRST LEGAL RESERVE 3.659.874 141.651 1.5. STATUTORY FUND (-) -- -- B NET PROFIT DISTRIBUTION [(A-(1.3 + 1.4 + 1.5)] 69.537.603 2.691.378 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 ------1.7. DIVIDEND TO PERSONNEL (-) -- -- 1.6.5. Holders of Profıt and Loss sharing certificate 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 ------1.10. SECOND LEGAL RESERVE (-) -- -- 1.9.5. Holders of Profıt and Loss sharing certificate 1.11. STATUTORY RESERVES (-) -- 269.138 1.12. EXTRAORDINARY RESERVES -- 2.422.240 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 ------2.4. DIVIDENDS TO PERSONNEL (-) -- -- 2.3.5 Holders of Profıt and Loss sharing certificate 2.5. DIVIDENDS TO BOARD OF DIRECTORS (-) -- -- III. PROFIT PER SHARE -- -- 3.1. HOLDERS OF SHARES -- -- 3.2. HOLDERS OF SHARES (%) -- -- 3.3. HOLDERS OF PREFERRED SHARES -- -- 3.4. HOLDERS OF PREFERRED SHARES (%) -- -- 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 (%) -- --

(***)

197 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ Notes to the Consolidated Financial Statements As at 31 December 2014 Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1 (Currency: Turkish Lira (TL))

1 General Information

1.1 Name of the Company and the ultimate owner of the group

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

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 moved from “Büyükdere Caddesi İş Kuleleri Kule 2 Kat: 22-26, 34330 4. Levent, Istanbul to the new address “Rüzgarlıbahçe Mahallesi, Kavak Sokak, No:31 34805 Kavacık/İstanbul and the Company has nine regional offices; two of them established in İstanbul and others established in 1.3Antalya, Business İzmir, of Samsun, the Company Adana, Ankara, Trabzon and Bursa, and a branch in Turkish Republic of Northern Cyprus.

1.4 Description of the main operations of the Company

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:

31 December 2014 31 December 2013

Senior level managers 7 8 Directors 37 38 Intermediate directors 3 3 Officers 142 128 Contracted personnel 799 760 Total 988 937

198 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

1.6 Wages and similar benefits provided to the senior management

For the year ended 31 December 2014, wages and similar benefits provided chairman is amounting to TL 1.034.290 TL (31 December 2013: 948.790 TL), senior management 3.915.203 TL (31 December 2013: 3.918.307 TL).

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. in the accompanying consolidated financial statements by using the equity method of accounting. The Company owns 20% of Anadolu Hayat Emeklilik Anonim Şirketi (“Anadolu Hayat”) and this associate have been consolidated 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: Registered address of the head office: Anadolu Anonim Türk Sigorta Şirketi The web page of the Company: www.anadolusigorta.com.tr Rüzgarlıbahçe Mahallesi, Kavak Sokak, No:3134805 Kavacık /İstanbul Since the end of the previous reporting period, there is not been any change in presented information.

1.10 Events after the reporting date

There haven’t been any change at services of the company, recording of this services and company policies after accounting date.

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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

Additional paragraph for convenience translation to English

The differences between 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

Accordingly, the accompanying consolidated financial statements are not intended to present the financial position and results of operationsFinancial Reporting in accordance Standards with the(“IFRS”), accounting may have principles. significant influence on the accompanying consolidated financial statements.

2.1.2 Other accounting policies appropriate for the understanding of the financial statements

Accounting in hyperinflationary countries

is no longer applied starting from 1 January 2005, in accordance with the same declaration of the Turkish Treasury. Accordingly, asStandards at 31 December in Capital 2014, Market” non-monetary published inassets the Official and liabilities Gazette and dated items 15 Januaryincluded 2003 in shareholders’ and numbered equity 25290. including Inflation paid-in accounting capital recognized or recorded before 1 January 2005 are measured as restated to 31 December 2004 in order to reflect inflation or recorded after 1 January 2005 are measured at their nominal values. adjustments. Non-monetary assets and liabilities and items included in shareholders’ equity including paid-in capital recognized Other accounting policies

2.1.3 Valid and presentation currency

The accompanying consolidated 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 until 31 December 2004, except for the financial assets at fair value through profit or loss, available-for-sale financial assets and derivativeThe accompanying financial financialinstruments statements which are are measured prepared aton their the historical fair values cost unless basis reliable as adjusted measures for the are effects available. of inflation that lasted

2.2 Consolidation

Accordingly,consolidate the consolidated Company’s financial associate; statements Anadolu Hayatare prepared Emeklilik using A.Ş. the equity method of accounting to consolidate the Company’s associate; Anadolu Hayat.

2.3 Segment reporting

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2.4 Foreign currency transactions

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 rates and estimated useful lives are as follows:

2.6 Investment properties

Investment properties are held either to earn rentals and/or for capital appreciation or for both.

Investment properties are measured initially at cost including transaction costs.

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2.7 Intangible Assets

The Company’s intangible assets consist of computer software, goodwill and advances paid for tangible assets.

Amortization is charged on a straight-line basis over their estimated useful lives over the cost of the asset.

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.

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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 losses are recognized directly in the statement of income. rate method are recorded in “Revaluation of financial assets” under shareholders’ equity. Upon disposal, the realized gain or 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.

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.

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.

2.9 Impairment on assets

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. recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversalAn impairment is recognized loss is reversedin the statement if the reversal of operations. can be related For available-for-sale objectively to an financial event occurring assets that after are theequity impairment securities, loss the was reversal is recognized directly in equity.

Impairment on tangible and intangible assets

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2.10 Derivative financial instruments

As of the reporting date, the Company does not have any derivative financial instruments. Derivative instruments are treated as held for trading financial assets in compliance with the standard TAS 39 - Financial Instruments: Recognition and measurement.

Derivative financial instruments are initially recognized at their fair value.

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 accompanying financial statements. All unrealized gains and losses on these instruments are included in the statement of income. either as “financial assets held for trading” and negative fair value differences are presented as “other financial liabilities” in the 2.11 Offsetting of financial assets

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.

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

Sources of capital increases during the period

The company has not performed capital increase as at 31 December 2014 . (31 December 2013: None).

Privileges on common shares representing share capital

As at 31 December 2014, the issued share capital of the Company is TL 500.000.000 (31 December 2013: 500.000.000 TL).

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Registered capital system in the Company

The Company has accepted the registered capital system. As of 31 December 2014, the Company’s registered capital is TL 700.000.000 (31 December 2013: 700.000.000 TL).

Repurchased own shares by the Company

None.

2.14 Insurance and investments contracts - classification

As at the reporting date, the Company does not have a contract which is classified as an investment contract

As at the reporting date, the Company does not have any insurance or investment contracts that contain a DPF.

2.16 Investment contracts without DPF

As at the reporting date, the Company does not have any insurance contracts and investment contracts without DPF.

2.17 Liabilities

2.18 Income taxes

Corporate tax

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to withholding tax. The withholding tax rate on the dividend payments other than the ones paid to the non-resident institutions generatingDividends paid income to the in Turkeyresident through institutions their andoperations the institutions or permanent working representatives through local andoffices the or resident representatives institutions are is not 15%. subject 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

In accordance with the tax legislation, tax losses can be carried forward to offset against future taxable income for up to five years. As at 31 December 2014 The Company has not deductible tax losses. (31 December 2013: 3.664.725 TL).

Deferred taxes

Transfer pricing

2.19 Employee benefits

Pension and other post-retirement obligations

Employees of the Company are the members of “Anadolu Anonim Türk Sigorta Şirketi Memurları Emekli Sandığı (“Anadolu Anonim Pension Fund”) which is established in accordance with the temporary Article 20 of the Social Security Act No: 506.

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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 8 May 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 9 April 2011. Accordingly, the three-year period expired on 8 May 2011 was extended to the 8 May 2014. The principles and applications of the transfer will be determined by the Decree of the Council of Ministers separately.

30 March 2011. covers provisions on transfers, was rejected in accordance with the decision taken at the meeting of the afore-mentioned court on 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 9,8% shall be used in the actuarial calculation of the value in cash, and 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 computation of the liability is based upon the retirement pay ceiling announced by the Government. The applicable ceiling amount as at 31 December 2014 is TL 3.438 (31 December 2013: 3.254 TL) . defined by beginning from December 31,2012 net defined benefit liability of the actuarial gains and losses arising on re- measurementIn Accordance shouldIAS 19 bewhich recognized published in otherby KGK comprehensive dated March 12,2013 income underis about shareholders’ “Benefits Employee equity and Accounting this effect Standard” should be and 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

Employee Benefits application permitted. With very few exceptions retrospective application is required. Numerous changes or clarifications are madeThe amended under the TAS amended 19 “ standard. Among” is thereeffective numerous for annual amendments, periods beginning the most on important or after 1 changes January are2013, removing with earlier the corridor mechanism and making the distinction between short-term and other long-term employee benefits based on expected timing of settlement rather than employee entitlement. The company, couldn’t recognized previous years actuarial gains and losses under the equity due to the related amount is under the materiality but the current year actuarial gains and losses is recognized at the other reserves in equity.

Expected rate of salary/limit increase above was determined according to the government’s annual inflation forecasts.

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Other 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

2.21 Revenue recognition

Written premiums and claims paid

Subrogation, salvage and quasi income

According to the Circular 2010/13 dated 20 September 2010; the Company may account for income accrual for subrogation receivables without any voucher after the completion of the claim payments made to the insure. 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 at the reporting date, in accordance with the related circular the Company provided TL 26.118.178 (31 December 2013: 25.286.057 TL) subrogation receivables and recorded 30.648.790 TL (31 December 2013: 29.179.630 TL) (Note 12) net subrogation and salvage receivables under receivables from main operations. The Company provided allowance for uncollected subrogation receivables amounting to TL 7.677.067 (31 December 2013: 9.475.078 TL) (Note 12) in accordance with circular.

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For the year ended 31 December 2014 and 2013, salvage and subrogation collected are as follows:

31 December 2014 31 December 2013 Motor Vehicles 255.938.892 198.341.171 Third Party liability for motor vehicles (MTPL) 4.894.794 5.275.881 Transportation 2.556.620 2.002.200 Fire and natural disaster 1.951.328 1.647.652 Water Vehicles 1.087.073 751.675 Accident 452.519 548.899 General Losses 248.943 85.598 General Responsibility 129.658 22.584 Air Vehicles 16.861 -- Credit 2.410 355.772 Legal Protection (22.011) 22.461 Health -- 21.104 Total 267.257.087 209.074.997

As at 31 December 2014 and 31 December 2013, accrued subrogation and salvage income per branches is as follows:

Commission income and expense

Interest income and expense

The calculation of the effective interest rate includes all fees and points paid or received transaction costs, and discounts or premiums 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.

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Trading income/expense

Dividend income is recognized when the Company’s right to receive payment is ascertained.

2.22 Leasing transactions

Payments made under operating leases are recognized in the statement of income on a straight-line basis over the term of the lease.

2.23 Dividend distribution

The Company did not perform dividend distribution in 2013 and 2014.

2.24 Reserve for unearned premiums

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According to the 2009/9 Numbered Circular Related to Application of Technical Reserves issued on 27 March 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..

As at the reporting date, the Company has provided reserve for unearned premiums amounting to TL 1.491.252.563 (31 December 2013: 1.422.324.312 TL) and reinsurer share in reserve for unearned premiums amounting TL 294.929.264 share amounting to TL 36.692.792 (31 December 2013: 34.755.134 TL). (31 December 2013: 290.028.419 TL) . Furthermore, reserve for unearned premiums includes Social Security Institution (“SSI”) 2.25 Provision for outstanding claims

According to the “Communiqué on Amendments to Communiqué on Technical Reserves for Insurance, Reinsurance and Pension SeptemberCompanies 2010and the and Related numbered Assets 2010/12, That Should it is stated Be Invested that the Against difference Those between Technical the Reserves” result of the published actuarial in chain Official ladder Gazette method no and27655 reported dated 28but July not 2010 settled and (IBNR “Communiqué calculation on by Technical ACLM method) Reserves is comparedand Circular to teston Actuarial IBNR claims Chain and Ladder greater Method” amount dated is recorded 20 to financial statements are accepted as IBNR claims. Requirement on test IBNR calculation is removed per Communiqué on Amendments to Aforementioned Communiqué is published in Official Gazette no 28356 17 July 2012 dated. It is stated that amount, content and implementation principals of incurred but not reported claims should be determined according to IBNR calculation by ACLM method specified by Turkish Treasury or other methods determined by Turkish Treasury.

The Company recorded 100% of the IBNR calculated by ACLM method with additional provision explained below amounting to TL 327.611.024 (31 December 2013: 193.676.094 TL) to the unconsolidated financial statements as IBNR and TL 17.969.121 (31 December 2013: 7.596.560 TL) as reinsurer’s share of IBNR.

In Accordance with the Circular issued by the Turkish Treasury dated 2010/12 and 2010/16, the Company eliminated severe damages by using Box-Plot method to make more homogeneous calculation in ACML.

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Also, according to Circular Article 7 issued in 2010/12, total number of files contained in the main branch, excluding the health done by actuary branch of the total number of files no more than one thousand of damage or major damage under 300 remaining branches can be According to Treasury Circular 2010/16, the amounts with ACML determined the minimum amount of provision. If Amounts which are determined the company’s other tools or actuarial studies shows the company’s statu better than methods recommended by the Treasury, the company reflect amount of provision which provided higher than Treasury to financial to total TL 11.069.337 (31 December 2013: TL 4.831.998) which are TL 858.216 in branch of Health, TL 6.190.791 in branch of Waterstatements. Vehicles, In accordance TL 2.859.830 with in thesebranch judgments, of Air Craft as Responsibility, a result of actuarial TL 1.160.500 studies, thein branch Company of Credit. made IBNR provision amounts

IBNR amounts which obtained results of updates provision for outstanding claims and uncorrected version in the ACLM triangular series are TL 417.681.075. In accordance with Circular no. 2011/1, the Company corrected updated provision for outstanding claims backwards to avoid deterioration of the data series in the history of the triangle ACLM. As 31 December 2014, IBNR figures for obtained this correction is TL 114.990.730. This amount is accounted in the Company’s financials.

“Munich Chain” method was disused to “Standard Chain” method was started to carry out. As 30 September 2014, started to use Based‘Standard’ on each instead branch, of Münich calculation Chain’. amount of Net IBNR; reinsurance agreements’ effect in force was to be reflected based on actual reinsurance rate.

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The calculated winning ratio of the Company as at 31 December 2014 is within %0 -%100 (31 December 2013: %0-%35). Winning ratios used in and amounts decreased from provision for outstanding claims are as follows:

Winning Ratios Gross Amount Net Amount 31 December 2014 Branch Used Decreased Decreased

Winning Ratios Gross Amount Net Amount 31 December 2013 Branch Used Decreased Decreased

Third party liability for motor vehicles (MTPL) %17 27.348.214 26.167.440 General responsibility %25 15.096.889 14.288.654 Fire and natural disasters %17 6.386.641 2.789.609 Motor vehicles %18 2.065.493 1.977.160 Transportation %11 361.329 333.118 General losses %17 1.153.064 515.357 Water vehicles %25 973.319 569.692 Accident %18 357.604 337.221 Legal protection %16 7.074 7.074 Total 53.749.627 46.985.325

58th and 59th articles and 1st and 2nd

Official Gazette numbered 27857 and provisional has come articlesinto effect of theon 25Law February no 6111 2011. on “Restructuring of certain receivables and amendment to the law of social insurance and general health insurance and certain other laws and decree laws” published in the

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28038 and dated 27 August 2011 has become effective. On 17 October 2011, the Turkish Treasury issued circular numbered “Communiqué on Payment of Treatment Costs Resulted from Traffic Accidents” which was issued in Official Gazette numbered outstanding2011/18 “Circular claims Related reserve to amounting the Accounting to TL 2.279.273of Payments related Related to treatment to Payment costs of Treatment occurred beforeCosts Resulted issuance from of the Traffic aforementioned Accidents and New Accounts in the Insurance Chart of Accounts”. In accordance with the related circular, the Company eliminated financial statements law, with “Paid Claims” account. The same amount is recorded as “Payable to SSI” under “Other Payables” in the accompanying In accordance with the circular numbered 2011/18, the Company recalculated test IBNR amount by excluding treatments costs covered by the aforementioned law as at 31 March 2011 and eliminated difference between the newly calculated IBNR amount and IBNR amount in the financial statements amounting to TL 2,375,923 with “Paid Claims” account. The same amount is Therecorded Company as “Payable is classified to SSI” total under of TL “Other 2.452.947 Payables” which in includesthe accompanying new calculation financial difference statements. over premiums written under compulsory motor third party liability insurance contracts between 25 February 2011 - 26 August 2011 per “Circular Stated Principals on Implementation Related to Collection of Health Service Fees in Connection with Traffic Accidents” stated by the TheTurkish Turkish Treasury Treasury as “Payable informed to theSSI”. Company 7.02% for motor third party liability, 2.08% for compulsory personal accident seat insurance and 15.8% for compulsory transportation liability for traffic accidents occurred before issuance of the aforementioned law. The difference amounting to TL 1.153.501 (31 December 2013: TL 5.721.687) between the amount informed by the Turkish

2014. Treasury and the amount eliminated by the Company is transferred to “Other Technical Expense” for the year ended 31 December 2.26 Reserve for unexpired risks

In accordance with Treasury circular numbered 2012/15, unexpired risk reserve started to be calculated over main branches as of December 31, 2013. 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. Accordingly, as at the reporting date, the Company has provided net reserve for unexpired risk amounting to TL 52.687.216 (31 December 2013: TL 22.489.032) and unexpired risk amounting of reassurance to TL 12.307.870 (31 December 2013: TL 9.370.659) in the accompanying unconsolidated financial statements

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2.27 Equalization provision

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 financial statements. As at the reporting date, the Company provided equalization provision amounting to TL 60.549.876 in the accompanyingby first in first outconsolidated method. Equalization financial statements provisions (31 are December presented 2013: under 44.579.840 “other technical TL). reserves” in the accompanying

Net losses (after reinsurance) resulted from earthquake occurred in Van amounting to TL 7.101.831 (31 December 2013: 7.101.831 TL) are decreased from prior periods’ equalization provision.

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 (b)• the has party joint iscontrol an associate over the of Company; the Company;

(d)(c) thethe partyparty isis amember joint venture of the inkey which management the Company personnel is a venturer; 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);

(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.

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2.29 Earnings per share

There are a number of new standards, updates related to the existing standards and interpretations which are not adopted in the preparation of the accompanying financial statements and have not yet entered into force for the accounting period 31 December 2014. TFRS 9 - Financial instruments, is published by International Accounting Standards Board in November 2009 as a part Financial Instruments: Recognition and Measurement published by the Turkish Accounting Standards Board on Official Gazette dated 27 April 2010 and numbered 27564. of a wider project that aims to bring new regulations to replace TAS 39 - Developing a new standard for the financial reporting of financial assets that is principle-based and less complex is aimed by financial assets that will present relevant and useful information to users of financial statements for their assessment of amounts, timingthis project. and uncertainty The objective of theof TFRS entity’s 9, being future the cash first flows. phase With of the TFRS project, 9 an entityis to establish shall classify principles financial for theassets financial as subsequently reporting of measured at either amortized cost or fair value on the basis of both the entity’s business model for managing the financial assets and the contractual cash flow characteristic of the financial assets. The guidance in TAS 39 on impairment of financial assets and hedge accounting continues to apply.

An entity shall apply TFRS 9 for annually years beginning on or after 1 January 2015. An earlier application is permitted. If an entity adopts this TFRS in its financial statements for a period beginning before 1 January 2013, then prior periods are not needed to be restated.

3 Critical accounting estimates and judgments in applying accounting policies

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that have the most significant effect on the amount recognized in the financial statements are described in the following notes: In particular, information about significant areas at estimation uncertainty and critical judgment in applying accounting policies Not 4.1 - Management of insurance risk

Not 4.2 - Financial risk management

Not 10 - Reinsurance assets/liabilities

Not 11 - Financial assets

Not 12 - Loans and receivables

Not 17 - Insurance liabilities and reinsurance assets

Not 17 - Deferred acquisition costs

Not 19 - Trade and other payables, deferred income

Not 21 - Deferred income taxes

Not 23 - Provisions for other liabilities and charges

4 Management of insurance and financial risk

4.1 Management of insurance risk

Objective of managing risks arising from insurance contracts and policies used to minimize such risks

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decision to be made on risk acceptance will be possible by transferring the coverage to the reinsurers and/or coinsurers and considering the terms of the insurance policy.

Sensitivity to insurance risk

The Company’s gross and net insurance risk concentrations (after reinsurance) in terms of insurance branches are summarized as below:

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Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2014 liability total claims liability claims liability

Turkey 945.064.232 (221.076.633) 723.987.599 Europe 1.905.186 (566.539) 1.338.647 America 156.303 (95.322) 60.981 Asia 224.723 (4.829) 219.894 Total 947.350.444 (221.743.323) 725.607.121

Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2014 liability total claims liability claims liability

(*) Total claims liability includes estimated compensation amounts for realized claims. Gross incurred but not reported claims amounting to TL 327.611.024TL t additional provision for outstanding claims per adequacy test amounting to TL 44.286.418 outstanding claims of treaty activities which could not be distributed to geographical regions and the contingent amounts deducted from claims reserve amounting to TL (75.260.122) are excluded from the table.

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Total claims liability (*) Gross total claims Reinsurance share of Net total 31 December 2014 liability total claims liability claims liability

Turkey 645.190.292 (134.181.200) 511.009.092 Europe 1.969.039 (264.418) 1.704.621 Asia 293.765 (11.963) 281.802 Africa 190.977 (67.662) 123.315 Total 647.644.073 (134.525.243) 513.118.830

Total claims liability Gross total claims Reinsurance share of Net total 31 December 2013 liability total claims liability claims liability

(*) Total claims liability includes estimated compensation amounts for realized claims. Gross incurred but not reported claims amounting to TL 193.676.094 additional provision for outstanding claims per adequacy test amounting to TL 36.258.273 outstanding claims of treaty activities which could not be distributed to geographical regions and the contingent amounts deducted from claims reserve amounting to TL (53.749.627) are excluded from the table.

Given insurance collateral amounts in respect to branches

31 December 2014 31 December 2013

Motor vehicles liability (MTPL) 4.283.371.745.693 4.511.111.250.942 Health 263.459.916.521 195.943.025.085 Fire and natural disasters 254.952.055.702 221.876.822.746 Accident 35.427.794.810 33.131.190.355 General losses 41.614.148.232 41.043.206.431 General liability 63.746.730.255 49.463.100.289 Motor vehicles 40.753.693.279 31.063.663.602 Transportation 46.432.952.597 21.981.060.492 Water vehicles 17.529.066.354 14.968.174.500 Air crafts 1.651.393.745 979.655.702 Legal protection 38.500 -- Total 5.048.939.535.688 5.121.561.150.144

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4.2 Management of financial risk

Credit Risk

Cash at banks Other cash and cash equivalents • • Financial assets held for trading (except equity-shares) • Available for sale financial assets (except equity-shares) • Premium receivables from policyholders • Held to maturity financial asset 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. This 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.

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Net carrying value of the assets that is exposed to credit risk is shown in the table below.

31 December 2014 31 December 2013

As at 31 December 2013 and 31 December 2012, the aging of the receivables from main operations is as follows:

31 December 2014 31 December 2013 Gross Amount Provision Gross Amount Provision

(*) claim/legal action, related subrogation amount is recognized as doubtful receivables and allowance for doubtful receivables is provided by the same amount in the As per the 3 February 2005 dated and B.02.1.HM.O.SGM.0.3.1/01/05 numbered Circular issued by the Turkish Treasury, in case where subrogation is subject to (**) Except for TL 806.753.346 TL (31 December 2013: 775.734.828 TL) presented under receivables from insurance operations in the financial statements, this financial statements. Related amounts are presented in “More than 90 days” line in the above table. amount also includes TL 81.109.551 (31 December 2013: 81.315.004 TL) of untransferred amount collected by intermediaries and TL 30.648.790 (31 December 2013: 29.179.630 TL) of subrogation and salvage receivables. subrogation receivables having past over 4 months for individuals and 6 months for legal entities but not transferred to legal follow-up amounting to TL 7.677.067 (31 December 2013: 9.475.078 TL) are excluded from the table.

The movements of the allowances for impairment losses for receivables from main operations during the period are as follows:

31 December 2014 31 December 2013

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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

Maturity distribution of monetary assets and liabilities:

Carrying 31 December 2014 amount Up to 1 month 1 to 3 months 3 to 6 months 6 to 12 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 datedCarrying in the above table. 31 December 2013 amount Up to 1 month 1 to 3 months 3 to 6 months 6 to 12 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.

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Market risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and credit spreads will affect manage and control market risk exposures within acceptable parameters, while optimizing the return on risk. the Company’s income or the value of its holdings of financial instruments, The objective of market risk management is to 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:

Other 31 December 2014 US Dollar Euro currencies Total

Net financial position 87.580.000 24.957.672 5.685.629 118.223.301

Other 31 December 2013 US Dollar Euro currencies Total

Net financial position 34.567.828 4.489.777 (487.730) 38.569.875

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Exposure to currency risk

Foreign currency rates used for the translation of foreign currency denominated assets and liabilities as at 31 December 2014 and 31 December 2013 are as follows:

US Dollar Euro

31 December 2014 2,3189 2,8207 31 December 2013 2,1343 2,9365

A 10 percent depreciation of the TL against the following currencies as at 31 December 2014 and 31 December 2013 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.

31 December 2014 31 December 2013 Profit or loss Equity (*) Profit or loss Equity (*)

US Dollar 8.758.000 8.758.000 3.456.783 3.456.783 Euro 2.495.767 2.495.767 448.978 448.978 Other 568.563 568.563 (48.773) (48.773) Total, net 11.822.330 11.822.330 3.856.988 3.856.988 (*) Equity effect also includes profit or loss effect of 10% depreciation of TL against related currencies.

Exposure to interest 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 at reporting date; the interest rate profile of the Company’s interest earning financial assets and interest bearing financial liabilities are detailed as below:

31 December 31 December 2014 2013

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Interest rate sensitivity of the financial instruments

Interest rate sensitivity of the statement of income, is the effect of the assumed changes in interest rates on the fair values of financial assets at fair value through profit or loss and on the net interest income for the periods ended 31 December 2014 and 2013 of the floating rate non-trading financial assets and financial liabilities. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The effects of changes in tax is not considered in the calculations.

Profit or loss Equity (*) 100 bp 100 bp 100 bp 100 bp 31 December 2014 increase decrease increase decrease

Profit or loss Equity (*) 100 bp 100 bp 100 bp 100 bp 31 December 2013 increase decrease increase decrease

Financial assets held for trading (28.046) 29.286 (28.046) 29.286 Available for sale financial assets -- -- (3.107.941) 3.208.812 Total, net (28.046) 29.286 (3.135.987) 3.238.098

(*) Equity effect also includes profit or loss effect.

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 at 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. Held to maturity investments with a carrying amount of TL 73.670.047 (31 December 2013: 94.501.549 TL) are measured at amortised cost and their fair value amounting to TL 74.133.508 TL (31 December 2013: 93.990.092 TL) as at 31 December 2014.

Management estimates that the fair value of other financial assets and liabilities are not materially different than their carrying amounts.

Fair value sensitivity of the equities

Equity price risk is the risk that the fair values of equities decrease as a result of the changes in the levels of equity indices and the value of individual stocks.

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Financial assets held for trading (303.683) (303.683) (266.316) (266.316) Available for sale financial assets -- (9.717.561) -- (8.196.227) Total, net (303.683) (10.021.244) (266.316) (8.462.543)

(*)

Equity impact includes impact of change of conjectural interest rates on income statement. Classification of fair value measurements

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.

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The classification of fair value measurements of financial assets and liabilities measured at fair value is as follows:

31 December 2014 Level 1 Level 2 Level 3 Total

Financial assets: Financial assets held for trading (Note 11) 134.054.733 -- -- 134.054.733 Available for sale financial assets (*) (Note 11) 432.428.727 -- 3.297.263 435.725.990 Total financial assets 566.483.460 -- 3.297.263 569.780.723

31 December 2013 Level 1 Level 2 Level 3 Total

Financial assets: Financial assets held for trading (Note 11) 85.630.648 -- -- 85.630.648 Available for sale financial assets (*) (Note 11) 446.715.336 -- 3.297.263 450.012.599 Total financial assets 532.345.984 -- 3.297.263 535.643.247 (*) As at 31 December 2014 securities that are not publicly traded and the determination of fair values could not be obtained reliably amounting to TL 617.187 have been measured at cost (31 December 2013: 863.950 TL).

31 December 31 December 2014 2013

Available for sale financial assets beginning of the period 3.297.263 3.272.355 Valuation gain (valuation of financial assets account) -- 24.908 Available for sale financial assets end of the period 3.297.263 3.297.263

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Gains and losses from financial assets

31 December 31 December Gains and losses recognized in the statement of income: 2014 2013

Interest income from bank deposits 99.252.595 63.016.751 Foreign exchange gains 59.970.980 52.709.177 Income from investments in associates 19.032.156 16.941.187 Income from debt securities classified as held to maturity financial investments 10.730.801 9.909.524 Income from equity shares classified as available-for-sale financial assets 10.197.910 20.210.895 Income from equity shares classified as trading financial assets 702.880 453.914 Income from debt securities classified as available-for-sale financial assets 35.373.747 15.639.877 Income from debt securities classified as held for trading financial assets 75.040 262.958 Income from derivative transactions 205.678 212.931 Income from investment funds 21.308.588 1.604.205 Other 3.106.153 1.232.065 Investment income 259.956.528 182.193.484

Financial gains and losses recognized in the statement of income, net 198.458.327 135.029.868

31 December 31 December Financial gains and losses recognized in equity: 2014 2013

Fair value changes in investments in associates (Note 15) 6.313.825 2.131.545 Net gains transferred from statement of equity to the statement of income on disposal of available for sale financial assets (Note 15) (3.609.723) (2.723.732) Fair value changes in available-for-sale financial assets (Note 15) 21.041.450 (22.581.833) Gains and losses recognized in equity, net 23.745.552 (23.174.020)

Capital management

The Company’s capital management policies include the following:

To comply with the insurance capital requirements required by the Turkish Treasury To safeguard the Company’s ability to continue as a going concern • • measuredIn accordance its minimum with the “Communiquécapital requirement on Measurement as TL 847.030.553 and Assessment as at 30 June of Capital 2014. AdequacyAs at 31 December for Insurance, 2014, Reinsurance the capital amount and of theIndividual Company Pension presented Companies” in the consolidated issued by Turkish financial Treasury statements on 19 are January above 2008 the minimum dated and capital 26761 requirement numbered; the amounts Company calculated according to the communiqué.

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5 Segment reporting

Businesssubject to segment risks and rewards that are different from those of other segments.

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

Motor Third Party Liability Insurance

Motor Vehicles insurance

Accident with the motorized or non-motorized vehicles which used in high-ways,

• The actions of third parties resulted from bad intention or mischief, • Crash with fixed or moving items without desire of the driver or accidents due to crash, capsize, fall or tumble Burn, • Theft or attempted theft • Health• daily allowances in this general framework with special conditions up to the amount written in the policy. Geographical limits of theInsurance insurance on health are stated compensates in the policy. treatment costs of illnesses or accidental injuries during the period of insurance and, if any,

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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 natural party liability Health Motor vehicles disasters Other Unallocated Total

1 January - 31 December 2014 1- Earned Premiums (Net of Reinsurer Share) 704.976.162 242.507.645 786.541.564 190.560.310 311.173.659 -- 2.235.759.340 1.1- Written Premiums (Net of Reinsurer Share) 698.476.272 256.547.252 790.728.883 213.840.185 365.517.469 -- 2.325.110.061 1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) 6.499.890 (14.039.607) (4.187.319) (23.279.875) (27.082.837) -- (62.089.748) 1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) ------(27.260.973) -- (27.260.973) 2- Other Technical Income (Net of Reinsurer Share) 65.238 320.015 2.276.330 93.174 34.052 -- 2.788.809 3- Accrued Salvage and Subrogation Income 5.516.244 -- 5.561.204 918.516 163.266 -- 12.159.230 Technical Income (*) 710.557.644 242.827.660 794.379.098 191.572.000 311.370.977 -- 2.250.707.379

1- Incurred Losses (Net of Reinsurer Share) (579.959.219) (199.455.063) (555.299.019) (98.225.647) (305.140.113) -- (1.738.079.061) 1,1- Claims Paid (Net of Reinsurer Share) (437.438.283) (198.906.106) (529.436.786) (82.711.965) (163.869.132) -- (1.412.362.272) 1,2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) (142.520.936) (548.957) (25.862.233) (15.513.682) (141.270.981) -- (325.716.789) 2- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) -- -- (3.035.177) (10.577.300) (2.357.559) -- (15.970.036) 3- Operating Expenses (181.604.847) (44.314.719) (186.178.682) (38.744.510) (71.843.471) -- (522.686.229) 4- Other Technical Provisions (10.218.490) (6.594.484) (14.949.198) (5.851.538) (5.608.222) -- (43.221.932) Technical Expense (771.782.556) (250.364.266) (759.462.076) (153.398.995) (384.949.365) -- (2.319.957.258)

Investment Income 261.960.220 261.960.220 Investment Expense (*) (85.300.178) (85.300.178) Other (**) (19.132.198) (19.132.198) Net loss before tax 88.277.965

Income tax (13.685.863) (13.685.863)

Net loss 74.592.102

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

1 January - 31 December 2013 1- Earned Premiums (Net of Reinsurer Share) 493.420.390 199.257.307 721.082.517 149.968.441 262.060.515 -- 1.825.789.170 1,1- Written Premiums (Net of Reinsurer Share) 631.464.481 212.148.766 775.368.149 163.108.778 285.125.833 -- 2.067.216.007 1,2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) (138.056.176) (12.891.459) (54.285.632) (13.140.337) (14.032.383) -- (232.405.987) 1,3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) 12.085 ------(9.032.935) -- (9.020.850) 2- Other Technical Income (Net of Reinsurer Share) 54.849 185.128 2.524.934 75.063 84.400 2.924.374 3- Accrued Salvage and Subrogation Income 4.959.591 -- 7.752.323 637.426 1.646.858 14.996.198 Technical Income (*) 498.434.830 199.442.435 731.359.774 150.680.930 263.791.773 -- 1.843.709.742

1- Incurred Losses (Net of Reinsurer Share) (428.640.496) (156.834.895) (479.833.052) (73.474.442) (207.304.119) -- (1.346.087.004) 1,1- Claims Paid (Net of Reinsurer Share) (291.979.894) (156.751.764) (490.009.240) (68.674.051) (139.551.206) -- (1.146.966.155) 1,2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) (136.660.602) (83.131) 10.176.188 (4.800.391) (67.752.913) -- (199.120.849) 2- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts Carried Forward) -- -- (2.087.392) (8.555.192) (1.780.007) -- (12.422.591) 3- Operating Expenses (141.750.670) (36.294.964) (178.514.725) (43.655.601) (62.618.146) -- (462.834.106) 4- Other Technical Provisions (13.428.446) (6.115.753) (15.995.101) (6.661.240) (2.507.510) -- (44.708.050) Technical Expense (583.819.612) (199.245.612) (676.430.270) (132.346.475) (274.209.782) -- (1.866.051.751)

Investment Income 185.154.535 185.154.535 Investment Expense (*) (63.995.428) (63.995.428) Other (**) (20.759.398) (20.759.398) Net loss before tax 78.057.700

Income tax (11.654.589) (11.654.589)

Net loss 66.403.111

(*) Investment income transferred to non-technical section from technical section amounting to TL 123,220,226 is not included. (**) Deferred tax income amounting TL 11,654,589 is presented as income tax.

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6 Tangible assets

Movements in tangible assets in the period from 1 January to 31 December 2014 are presented below:

1 January 31 December 2014 Additions Disposals 2014 Cost: Investment properties (Note 7) 6.982.776 -- -- 6.982.776 Buildings for own use 6.520.974 319.222 (51.463) 6.788.733 Machinery and equipment 32.800.391 2.925.379 (1.171.752) 34.554.018 Furniture and fixtures 11.331.085 444.331 -- 11.775.416 Vehicles 1.285.983 383.160 (306.920) 1.362.223 Other tangible assets (including leasehold improvements) 18.262.277 1.138.850 -- 19.401.127 Leased tangible assets 4.166.354 -- -- 4.166.354 81.349.840 5.210.942 (1.530.135) 85.030.647 Accumulated depreciation: Investment properties (Note 7) 3.578.553 139.655 -- 3.718.208 Buildings for own use 1.795.812 131.780 (25.772) 1.901.820 Machinery and equipment 23.879.216 3.198.899 (1.164.362) 25.913.753 Furniture and fixtures 8.729.811 666.091 -- 9.395.902 Motor vehicles 813.465 215.321 (255.057) 773.729 Other tangible assets (including leasehold improvements) 3.593.702 3.259.748 -- 6.853.450 Leased tangible assets 4.166.105 199 -- 4.166.304 46.556.664 7.611.693 (1.445.191) 52.723.166

Carrying amounts 34.793.176 32.307.481

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Movements in tangible assets in the period from 1 January to 31 December 2013 are presented below:

1 January 31 December 2013 Additions Disposals 2013 Cost: Investment properties (Note 7) 6.982.776 -- -- 6.982.776 Buildings for own use 6.387.729 1.222.795 (1.089.550) 6.520.974 Machinery and equipment 26.268.960 6.531.431 -- 32.800.391 Furniture and fixtures 9.031.553 2.299.532 -- 11.331.085 Vehicles 1.299.851 183.855 (197.723) 1.285.983 Other tangible assets (including leasehold improvements) 4.038.677 14.977.547 (753.947) 18.262.277 Leased tangible assets 4.166.354 -- -- 4.166.354 58.175.900 25.215.160 (2.041.220) 81.349.840 Accumulated depreciation: Investment properties (Note 7) 3.438.898 139.655 -- 3.578.553 Buildings for own use 2.221.271 116.975 (542.434) 1.795.812 Machinery and equipment 20.908.142 2.971.074 -- 23.879.216 Furniture and fixtures 8.495.404 234.407 -- 8.729.811 Motor vehicles 764.551 232.810 (183.896) 813.465 Other tangible assets (including leasehold improvements) 3.255.088 648.138 (309.524) 3.593.702 Leased tangible assets 4.165.906 199 -- 4.166.105 43.249.260 4.343.258 (1.035.854) 46.556.664

Carrying amounts 14.926.640 34.793.176

There is not any change in depreciation method in the current period.

There is not any mortgage over tangible assets of the Company as at 31 December 2014 and 31 December 2013.

7 Investments in associate

The Company’s net book value of 3.264.568 TL (31 December 2013: 3.404.223 TL) as shown in the valuation work performed by the fair value of investment properties is amount of TL 40.077.000.The fair value of real estate carried out by an independent valuation firm is authorized by the Capital Markets Board of Turkey. Rental income on investment properties were obtained TL 1.772.698 (31 December 2013: TL 1.698.492).

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8 Intangible assets

Movements in intangible assets in the period from 1 January to 31 December 2014 are presented below:

1 January 31 December 2014 Additions Transfers Disposals 2014 Cost: Goodwill 16.250.000 ------16.250.000 Advances given for intangible assets 19.296.314 2.853.643 (20.420.579) -- 1.729.378 Other intangible assets 54.879.873 12.779.449 20.420.579 -- 88.079.901 90.426.187 15.633.092 -- -- 106.059.279 Accumulated amortization: Other intangible assets 27.614.154 16.190.284 -- -- 43.804.438 27.614.154 16.190.284 -- -- 43.804.438

Carrying amounts 62.812.033 62.254.841

Movements in intangible assets in the period from 1 January to 31 December 2013 are presented below:

31 December Additions Transfers Disposals 1 January 2013 2013 Cost: Goodwill 16.250.000 -- -- 16.250.000 Advances given for intangible assets 31.717.343 11.190.332 (21.885.303) (1.726.058) 19.296.314 Other intangible assets 21.643.962 11.350.608 21.885.303 -- 54.879.873 69.611.305 22.540.940 -- (1.726.058) 90.426.187 Accumulated amortization: Other intangible assets 15.125.600 12.488.554 -- -- 27.614.154 15.125.600 12.488.554 -- -- 27.614.154

Carrying amounts 54.485.705 62.812.033

9 Investments in associates

31 December 2014 31 December 2013 Carrying Participation Carrying Participation value rate value rate 123.261.711 %20,0 108.028.666 %20,0 Investments in associates, net 123.261.711 108.028.666 Anadolu Hayat Emeklilik A.Ş. Total financial assets (Note 4.2) 123.261.711 108.028.666

Total Shareholders’ Retained Profit for Audited Name assets equity earnings the period or not Period Anadolu Hayat Emeklilik 31 December statements) 10.157.734.455 616.308.553 12.090.039 95.160.780 Audited 2014 A.Ş. (consolidated financial TL 19.032.156 of income is obtained from associates through equity accounted consolidation method (31 December 2013: TL 16.941.187) .

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10 Reinsurance assets and liabilities

As at 31 December 2014 and 31 December 2013, outstanding reinsurance assets and liabilities of the Company in accordance with existing reinsurance contracts are as follows:

Reinsurance assets 31 December 2014 31 December 2013

There is no impairment losses recognised for reinsurance assets.

Reinsurance liabilities 31 December 2014 31 December 2013

Gains and losses recognized in the statement of income in accordance with existing reinsurance contracts are as follows:

31 December 2014 31 December 2013

Commission debt accrued to reinsurers (1.576.728) -- Commission receivable accrued from reinsurers 1.250.015 1.086.704

Total, net (307.149.669) (350.942.444)

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11 Financial assets

As at 31 December 2014 and 31 December 2013, the Company’s financial assets are as follows:

31 December 2014 31 December 2013

As at 31 December 2014 and 31 December 2013, the Company’s available for sale financial assets are as follows:

31 December 2014 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 261.907.366 260.630.673 271.603.704 271.603.704 Private sector bonds - TL 19.560.000 19.561.015 19.993.767 19.993.767 Issued by ISGYO (Not 45) 14.360.000 14.360.000 14.713.703 14.713.703 Issued by ISFIN 5.000.000 5.000.000 5.078.714 5.078.714 Other 200.000 201.015 201.350 201.350 281.467.366 280.191.688 291.597.471 291.597.471

Other non-fixed income financial assets: Investment funds 3.714.742.000 43.165.318 43.655.648 43.655.648 Issued by ISFIN (Not 45) 3.714.742.000 43.165.318 43.655.648 43.655.648 Equity shares 56.198.951 82.023.168 106.887.670 106.887.670 Impairment loss on equity shares -- -- (5.797.612) (5.797.612) 3.770.940.951 125.188.486 144.745.706 144.745.706

Total available for sale financial assets (Note 4.2) 4.052.408.317 405.380.174 436.343.177 436.343.177

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31 December 2013 Face Fair Value Cost Value Carrying Value

Other non-fixed income financial assets: Investment funds 4.089.046.000 42.399.932 38.792.780 38.792.780 Issued by Is Portföy (Not 45) 4.089.046.000 42.399.932 38.792.780 38.792.780 Equity shares 51.223.377 74.521.510 91.921.100 91.921.100 Impairment loss on equity shares -- -- (5.797.612) (5.797.612) 4.140.269.377 116.921.442 124.916.268 124.916.268

Total available for sale financial assets (Note 4.2) 4.483.203.814 444.260.647 450.876.549 450.876.549

As at 31 December 2013 and 31 December 2012, the Company’s financial assets held for trading are as follows:

31 December 2014 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 900.000 907.616 900.017 900.017 Reverse repo receivables 5.885.733 5.887.281 5.887.281 900.000 6.793.349 6.787.298 6.787.298

Other non-fixed income financial assets: Investment funds 7.393.158.949 106.660.295 124.230.603 124.230.603 Founded by Iş Bankası (Note 45) 120.605.000 9.009.287 15.972.195 15.972.195 Founded by Iş Portföy Yönetimi A,Ş,(Note 45) 7.272.463.818 89.847.008 95.938.343 95.938.343 Founded by Işbank GmbH (Note 45) 90.131 7.804.000 12.320.065 12.320.065 Equity shares 2.287.783 4.085.272 3.036.832 3.036.832 110.745.567 127.267.435 127.267.435

Total financial assets held for trading (Note 4.2) 117.538.916 134.054.733 134.054.733

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31 December 2013 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 900.000 910.156 914.787 914.787 Reverse repo receivables 26.442.546 26.447.255 26.447.255 900.000 27.352.702 27.362.042 27.362.042

Other non-fixed income financial assets: Investment funds 2.901.419.050 47.118.587 55.605.446 55.605.446 Founded by Iş Bankası (Note 45) 120.605.000 9.009.287 13.588.728 13.588.728 Founded by Iş Portföy Yönetimi A,Ş,(Note 45) 2.780.723.919 30.305.300 32.901.525 32.901.525 Founded by Işbank GmbH (Note 45) 90.131 7.804.000 9.115.193 9.115.193 Equity shares 2.287.783 4.085.272 2.663.160 2.663.160 51.203.859 58.268.606 58.268.606

Total financial assets held for trading (Note 4.2) 78.556.561 85.630.648 85.630.648

As at 31 December 2013 and 31 December 2012, the Company’s financial assets held to maturity are as follows:

31 December 2014 Face Fair Carrying Value Cost Value Value

Debt instruments: Government bonds - TL 55.937.785 57.921.026 74.133.508 73.670.047 Total financial assets held to maturity 55.937.785 57.921.026 74.133.508 73.670.047

31 December 2013 Face Fair Value Cost Value Carrying Value

Debt instruments: Government bonds - TL 73.661.976 76.666.867 93.990.092 94.501.549 Total financial assets held to maturity 73.661.976 76.666.867 93.990.092 94.501.549

All debt instruments (financial assets held to maturity) presented above are publicly traded in active markets and the fair value of financial assets are classified in the 1st Level.

As at 31 December 2014, equity shares classified as available for sale financial assets with a carrying amount of TL 3.914.450 are not publicly traded (31 December 2013: TL 4.161.213)

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 of impairment loss is recognised for equity shares classified as available for sale in the accompanying consolidated financial statements (31 December 2013: 5.797.612 TL).

240 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

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 increase / Total increase Year (decrease) in value

2014 23.745.552 35.200.299 2013 (23.174.020) 11.454.747 2012 38.943.340 34.628.767

Movements of the financial assets during the period are presented below:

31 December 2014 Available Held to (*) Trading for sale maturity Total Balance at the beginning of the period 59.183.393 450.876.549 94.501.549 604.561.491 Acquisitions during the period 90.450.000 450.725.656 -- 541.175.656 Disposals (sale and redemption) (30.910.832) (494.361.599) (18.745.842) (544.018.273) Change in the fair value of financial assets (Note 15) 9.444.891 24.347.100 -- 33.791.991 Change in amortized cost of the financial assets -- -- (2.085.660) (2.085.660) Bonus shares acquired -- 4.755.471 -- 4.755.471 Balance at the end of the period 128.167.452 436.343.177 73.670.047 638.180.676 (*) Amount of reverse repo to TL 5.887.281 (31 December 2013: 26.447.255 TL) are excluded.

31 December 2013 Available Held to (*) Trading for sale maturity Total Balance at the beginning of the period 42.051.074 218.238.305 89.590.740 349.880.119 Acquisitions during the period 21.305.300 692.777.960 -- 714.083.260 Disposals (sale and redemption) (2.742.832) (447.305.977) (796.600) (450.845.409) Change in the fair value of financial assets (Note 15) (1.430.149) (16.767.758) -- (18.197.907) Change in amortized cost of the financial assets -- -- 5.707.409 5.707.409 Bonus shares acquired -- 3.934.019 -- 3.934.019 Balance at the end of the period 59.183.393 450.876.549 94.501.549 604.561.491 (*) Amount of reverse repo to TL 26,447,255 (31 December 2012: TL 5,542,173) are excluded.

241 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

Financial assets blocked in favour of the Turkish Treasury as a guarantee for the insurance activities are as follows.

31 December 2014 Face Fair Value Cost Value Carrying Value

31 December 2013 Face Fair Value Cost Value Carrying Value

12 Loans and receivables

31 December 31 December 2014 2013

Short-term receivables 805.678.318 778.788.546 Long and medium-term receivables -- -- Total 805.678.318 778.788.546

242 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, the details of the receivables from main operations are as follows:

31 December 31 December 2014 2013

As at 31 December 2014 and 31 December 2013, the details of mortgages and other guarantees for the Company’s receivables are presented below:

31 December 31 December 2014 2013

Provisions for overdue receivables and receivables not due yet a) Receivables under legal or administrative follow up (due): TL 26.735.242 (31 December 2013: 25.287.994 TL). b) Provision for subrogation receivables under legal or administrative follow up: TL 94.322.332 TL (31 December 2013: 87.016.242 TL).

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 at 31 December 2014, the Company does not have derivative financial instruments (31 December 2013: None).

243 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

14 Cash and cash equivalents

As at 31 December 2014 and 31 December 2013, cash and cash equivalents are as follows:

31 December 2014 31 December 2013 At the At the At the At the end of beginning of end of beginning of the period the period the period the period

As at 31 December 2014 and 31 December 2013, bank deposits are further analyzed as follows:

31 December 31 December 2014 2013

Foreign currency denominated bank deposits - time deposits 119.637.331 111.825.146 - demand deposits 3.883.616 12.217.907

Bank deposits in Turkish Lira - time deposits 1.230.888.040 773.219.958 - demand deposits 2.324.459 4.575.566 Bank deposits 1.356.733.446 901.838.577

244 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

15 Equity

Paid in capital

The Companyshareholder does having not increase direct or its indirect share capitalcontrol in over the thecurrent shares period. of the Company is İş Bankası Group.

As at 31 December 2014, the issued share capital of the Company is TL 500,000,000 (31 December 2013: TL 500,000,000) and The Company unregistered Group A shares as of 11 April 2013 in which approved in Main Article of the Company dated in 11 April 2013. The share capital of the Company consists of 50,000,000,000 (31 December 2013: 50,000,000,000 shares) issued shares with TL 0.01 nominal value each.

Other capital reserves

In accordance with tax legislation, 75% of profits from sales of participation shares and real states 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 at 31 December 2013, tax exempt gain from participation shares and real estate sale in 2010 amounting to TL 8.081.516, and in 2011 amounting to TL 80.025 is classified as other capital reserves. and to also in 2013 amounting TL 647.763 reclassified to other capital reserves as a gain on sale of fixed assets and equity.

31 December 2014 31 December 2013

Other capital reserves at the beginning of the period 8.161.541 8.161.541 Transfer from profit 647.763 -- Other capital reserves at the end of the period 8.809.304 8.161.541

Legal reserves

245 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

The movements of legal reserves are as follows:

31 December 2014 31 December 2013

Legal reserves at the beginning of the period 45.293.051 43.918.190 Transfer from profit 1.706.788 1.374.861 Legal reserves at the end of the period 46.999.839 45.293.051

Extraordinary reserves

The movements of extraordinary reserves are presented below:

31 December 2014 31 December 2013

Extraordinary reserves at the beginning of the period 19.723.583 20.564.428 Transfer from profit 1.239.173 (840.845) Extraordinary reserves at the end of the period 20.962.756 19.723.583

Statutory reserves

The movements of statutory reserves are presented below:

31 December 2014 31 December 2013

Statutory reserves at the beginning of the period 7.161.457 9.737.625 Transfer from profit 548.583 (2.576.168) Statutory reserves at the end of the period 7.710.040 7.161.457

Valuation of financial assets

Movement of fair value reserves of available for sale financial assets and associates are presented below:

31 December 2014 31 December 2013 Valuation differences at the beginning of the period 11.454.747 34.628.767 Fair value changes during the period 24.347.100 (16.767.758) Subsidiaries consolidated according to the equity method 6.313.825 (6.773.194) Net gains transferred to the statement of income (3.609.723) (2.723.732) Deferred tax effect (3.305.650) 3.090.664 Valuation differences at the end of the period 35.200.299 11.454.747

246 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

Other profit reserves

InNot Accordance subject to profitterms distribution of tax legislation %75 portion of the gains from sales real estate and subsidiaries are exempt from corporate tax on condition that it has kept in a special fund account at least five years. Exempt gains can not be transferred to another account except to add capital or in any way can not be withdrawn from the business in five years. In relation to these issues,

Treasury disclosure Sales profit amounting TL 1.394.625 provided by sales of real estate and equity is classified as a “subject to 16distribution Other reserves non profit” and .equity component of DPF

17 Insurance contract liabilities and reinsurance assets

247 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, technical reserves of the Company are as follows:

31 December 31 December 2014 2013

Equalization provision, net (*) 60.549.876 44.579.840 General provision, net 7.702.761 7.702.761 Other technical provisions, net 68.252.637 52.282.601

Total technical provisions, net 2.282.450.591 1.851.413.045

Short-term 2.214.197.954 1.799.130.444 Medium and long-term 68.252.637 52.282.601 Total technical provisions, net 2.282.450.591 1.851.413.045 (*) Net losses (after reinsurance) resulted from earthquake occurred in Van amounting to TL 7.101.831 TL (31 December 2013: 7.101.831 TL) are decreased from prior periods’ equalization provision based on the regulation.

248 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, movements of the insurance liabilities and related reinsurance assets are presented below:

31 December 2014 Reinsurer Reserve for unearned premiums Gross share SSI share Net

31 December 2013 Reinsurer Reserve for unearned premiums Gross share SSI share Net

31 December 2014 Provision for outstanding claims Gross Ceded Net

31 December 2013 Provision for outstanding claims Gross Ceded Net

249 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

Claim development tables

31 December 2014 Claim year 2010 2011 2012 2013 2014 Total Claim year 856.910.386 1.075.581.281 1.495.474.317 1.229.263.704 1.717.748.856 6.374.978.544 1 year later 867.349.763 1.144.103.263 1.543.105.072 1.300.026.322 -- 4.854.584.420 2 years later 878.025.588 1.189.429.253 1.609.382.065 -- -- 3.676.836.906 3 years later 900.866.545 1.238.843.054 ------2.139.709.599 4 years later 928.050.817 ------928.050.817 Current estimate of cumulative claims 928.050.817 1.238.843.054 1.609.382.065 1.300.026.322 1.717.748.856 6.794.051.114 Cumulative payments to date 861.604.436 1.131.547.961 1.398.954.819 1.116.056.443 1.189.365.685 5.697.529.344 Liability recognized in the financial statements 66.446.381 107.295.093 210.427.246 183.969.879 528.383.171 1.096.521.770 Liability recognized before 2009 ------147.465.994 Total gross outstanding claims provision presented in the financial statements at the end of the period 1.243.987.764

31 December 2013 Claim year 2009 2010 2011 2012 2013 Total Claim year 902.239.347 851.459.419 1.067.586.430 1.482.692.631 1.272.774.899 5.576.752.726 1 year later 907.824.330 861.798.734 1.135.585.447 1.529.990.732 -- 4.435.199.243 2 years later 921.465.530 872.386.982 1.180.548.434 -- -- 2.974.400.946 3 years later 931.210.335 895.069.601 ------1.826.279.936 4 years later 962.409.997 ------962.409.997 Current estimate of cumulative claims 962.409.997 895.069.601 1.180.548.434 1.529.990.732 1.272.774.899 5.840.793.663 Cumulative payments to date 899.070.812 840.148.526 1.092.013.460 1.336.660.376 919.034.121 5.086.927.295 Liability recognized in the financial statements 63.339.185 54.921.075 88.534.974 193.330.356 353.740.778 753.866.368 Liability recognized before 2007 ------69.962.445 Total gross outstanding claims provision presented in the financial statements at the end of the period 823,828,813

250 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

Total amount of guarantee that should be placed by the Company for life and non-life branches and guarantees placed for the life and non-life branches in respect of related assets

(*) Turkey in accordance with the 6th

(**)“As at 31 December th2014 and 31 December 2013, government bonds and treasury bills are measured at daily official prices announced by the Central Bank of Article of “Circular Related to the Financial Structure of Insurance, Reinsurance, and Private Pension Companies. guarantee amount, minimum guarantee fund for capital adequacy calculation period will be established as a guarantee in two months following the calculation period. “According to the 7 article of the “Circular Related to the Financial Structure of Insurance, Reinsurance, and Private Pension Companies” which regulates necessary must prepare their capital adequacy tables twice in a financial year at June and December periods and must sent capital adequacy tables to the Turkish Treasury DepartmentAccording to within “Regulations two months. Regarding Since to the Capital amounts Adequacy that should Measurement be placed and as ofAssessment 31 December of Insurance, 2014 (31 Reinsurance,December 2013) and willPrivate be throughPension theCompanies”, calculated companies amounts as of

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

251 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 and 31 December 2013, the movements of deferred commission expenses are presented below:

31 December 2014 31 December 2013

Deferred commission expenses at the beginning of the period 190.775.088 156.049.462 Commissions accrued during the period (Note 32) 429.400.515 392.156.692 Commissions expensed during the period (*) (419.551.164) (357.431.066) Deferred commission expenses at the end of the period 200.624.439 190.775.088 (*) Commission expense are included as a reinsurance commissions..

Individual pension funds

None.

18 Investment contract liabilities

None.

19 Trade and other payables and deferred income

31 December 2014 31 December 2013

Short-term liabilities 422.440.516 450.422.394 Long-term liabilities -- -- Total 422.440.516 450.422.394

Payables arising from main operations of the Company as at 31 December 2014 and 31 December 2013 are as follows:

31 December 2014 31 December 2013

252 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

Corporate tax liabilities and prepaid taxes are disclosed below:

31 December 2014 31 December 2013

Corporate tax liabilities 22.930.452 9.659.923 Taxes paid during the period (21.081.960) -- Corporate tax assets, net 1.848.492 9.659.923

Total amount of investment incentives which will be benefited in current and forthcoming periods

None.

20 Financial liabilities

The Company has no financial liabilities as at 31 December 2014 (31 December 2013: None)

21 Deferred tax

As at 31 December 2014 and 31 December 2013, deferred tax assets and liabilities are attributable to the following:

31 December 2014 31 December 2013 Deferred tax Deferred tax assets /(liabilities) assets /(liabilities)

253 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

As at 31 December 2014 The company has not deductible tax losses.(31 December 2013: TL 9.302.276)

Expiration date 31 December 2014 31 December 2013

31 December 2016 -- -- 31 December 2017 -- 3.664.725 Total -- 3.664.725

Movement of deferred tax assets table:

31 December 2014 31 December 2013

22 Retirement benefit obligations

254 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

23 Other liabilities and provisions

As at 31 December 2014 and 31 December 2013; the details of the provisions for other risks are as follows:

31 December 2014 31 December 2013

Provision for employee termination benefits 12.628.115 11.720.142 Provision for unused vacation pay liability 1.433.153 1.187.490 Total provision for other risks 14.061.268 12.907.632

31 December 2014 31 December 2013

Movements of provision for employee termination benefits during the period are presented below:

31 December 2014 31 December 2013

24 Net insurance premium

Net insurance premium revenue is presented in detailed in the accompanying consolidated statement of income.

25 Fee revenue

None.

26 Investment income

Note 4.2

27Investment Net income income accrual is presented on financial in “ assets - Financial Risk Management”.

Note 4.2 - Financial Risk Management.

28Net Assets realized held gains at onfair financial value through assets are profit presented or loss in “

Note 4.2

Presented in “ - Financial Risk Management”.

255 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

29 Insurance rights and claims

31 December 2014 31 December 2013

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 31 December 2014 and 31 December 2013 the operating expenses are disclosed as follows:

31 December 2014 31 December 2013

33 Employee benefits expenses

31 December 2014 31 December 2013

Wages and salaries 76.090.749 67.586.147 Employer’s share 15.758.608 13.983.364 Other 12.844.394 13.898.257 Total 104.693.751 95.467.768

34 Financial costs

Note 4.2 in production costs or capitalized on tangible assets. All financial costs are directly recognised as expense in the consolidated statementFinance costs of income. of the period are presented in “ - Financial Risk Management” above. There are no finance costs classified

256 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

35 Income tax

Income tax expense in the accompanying consolidated financial statements is as follows:

In the end of accounting period 31 December 2013 and 31 December 2014, 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 is as follows:

31 December 2014 31 December 2013 Profit before tax 88.277.965 Tax rate (%) 78.057.700 Tax rate (%) Taxes on income per statutory tax rate 17.655.593 20,00 15.611.540 20,00 Tax exempt income (4.041.796) (4,58) (4.728.809) (6,06) Non deductible expenses 72.066 0,08 771.858 0,99 Total tax income recognized in profit or loss 13.685.863 15,50 11.654.589 14,93

36 Net foreign exchange gains

Note 4.2

37EarningsNet foreign exchange per share gains are presented in “ - Financial Risk Management” above.

Earnings per share are calculated by dividing net profit of the period to the weighted average number of shares.

31 December 2014 31 December 2013

Net profit /(loss) for the period 74.592.102 66.403.111 Weighted average number of shares 50.000.000.000 50.000.000.000 Earnings /(loss) per share (TL) 0,00149 0,00133

38 Dividends per share

The company did not perform profit distribution in years of 2013 and 2014.

39 Cash generated from operations

The cash flows from operating activities are presented in the accompanying consolidated statement of cash flows

40 Convertible bonds

None.

41 Redeemable preference shares

None.

257 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

42 Risks

As at 31 December 2014, ongoing law suits prosecuted by the Company against the third parties amounting TL 194.259.000 (31 December 2013: TL 206.337.000). in accordance with the Turkish Commercial and Civil Laws which is examined by Tax Audit Committee inspectors due to the CompanyAnadolu Anonim payments Türk what Sigorta are fulfilled Şirketi Mensuplarıobligations Dayanışmato the foundation Vakfı” owingwas established to deed of by the Anadolu foundation Anonim and theTürk related Sigorta act. Şirketi As a result of this investigation, an examination was reported for periods of 2007, 2008, 2009, 2010 and 2011.

As a result of investigation conducted by the Ministry of Finance Tax Audit Board, tax penalty which is amount of TL 2.1 million insurance transactions tax. The company does not make any provision for this tax penalty because of thinking that the Company’s operations(actual tax), are and in TL line 3.1 with million the localtax penalty regulations. is announced by reason to tax salvage operations not subject to the banking and

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.

31 December 2014 31 December 2013 Within one year 7.517.871 5.871.892 Between one to five years 3.476.491 7.725.700 Total of minimum lease payments 10.994.362 13.597.592

44 Business combinations

None.

258 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

45 Related party transactions

31 December 2014 31 December 2013

259 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

31 December 2014 31 December 2013

(93.328.833) (79.445.393) Premiums written, ceded (93.328.833) (79.445.393) Milli Reasürans T.A.Ş 55.732.060 36.922.222 9.488.742 -- İş Bankası - interest income from deposits 11.500 -- İş Portföy Yönetimi - income from investment funds 560.304 -- İş Yatırım Menkul Değerler - income from investment funds 11.828.210 3.797.714 İş Gayrimenkul Yatırım Ortaklığı - income from bonds Investment income 77.620.816 40.719.936 İş Bankası - income from bonds (33.650.040) (24.613.912) (8.674.189) (7.353.671) Türkiye İş Bankası A.Ş - commission expense (3.240.935) (2.744.249) Şişecam Sigorta Aracılık Hizmetleri A.Ş. - commission expense TSKB - commission expense -- (75.589) İş Finansal Kiralama - commission expense 21.497.125 18.214.159 Operating expenses, net (24.068.039) (16.573.262) Milli Reasürans T.A.Ş- commission expense (3.250.000) (3.271.539) -- (371.750) İş Bankası - banking service fee (2.837.238) (1.480.031) İş Bankası - rent expense -- (4.883.609) İş Merkezleri Yönetim ve İşletim A.Ş. - building service cost (632.924) (475.950) İş Gayrimenkul Yatırım Ortaklığı A.Ş. - rent expense Other expenses (6.720.162) (10.482.879) İş Portföy Yönetimi - management commission 46 Events after the reporting date

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

260 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements / 31 December 2014 Consolidated Financial Statements Together with Independent Auditors’ Report Thereon

None.Subrogation recorded in “Off-Balance Sheet Accounts”

Real rights on immovable and their values

None.

Explanatory note for the amounts and nature of previous years’ income and losses

None.

For the years ended 31 December 2014 and 2013, details of discount and provision expenses are as follows:

Provision expenses 31 December 2014 31 December 2013

Rediscount expenses 31 December 2014 31 December 2013

Rediscount income 12.636.796 12.842.993 Rediscount expense (15.997.077) (10.489.059) Total of rediscounts (3.360.281) 2.353.934

261 / Anadolu Sigorta Annual Report 2014 Other Matters and Financial Statements /

An Assessment of Financıal Standing, Profitability and Solvency

Premium production Premium Production (TL thousand) Anadolu Sigorta registered TL 3,004,83 thousand in premium production in 2014. The greatest contributors to premium production were motor 3,004,830 2,749,704 and natural disasters, and illness-health vehicles, motor vehicles liability, fire branches. 2,234,633

A portion in the amount of TL 605,618 thousand of premiums were ceded through reinsurance in 2014, thus 12 13 14 branches likely to present high claim significantly reducing retained risk in watercraft and general losses. settlements in particular, such as fire, Solvency and solvency performance Claims Paid Claims Retention Ratio Loss/Premium Ratio (TL thousand) (TL thousand) (TL thousand) Having adopted it as a duty to make claim payments fully and timely to its

policyholders, Anadolu Sigorta attained 81.2 77.7 this goal once again in 2014 drawing on 73.7 1,553,197 its solid asset structure and balanced 1,412,362 1,371,855 liquidity ratio. A big part of the risk was 1,243,327 1,146,966 ceded through reinsurance contracts 1,249,199 made in branches under which high- amount coverage is provided such as it possible for the Company’s asset 12 13 14 12 13 14 12 13 14 structurefire and general to remain losses, unaffected thus making by claims paid in big amounts.

In 2014, claims paid amounted to portion of the claims paid arose, in Gross Profit/Loss Gross Profit-Loss/Gross order,TL 1,553,197 from losses thousand. in motor A significant vehicles, (TL thousand) Premium Production motor vehicles liability, health/illness, (TL thousand) and general losses branches. Combined 3.1 loss/premium ratio was 77.7%, 4.0 2.5 points lower than its 2013 value. 92.642 67.462 Assessment of profitability -2.9

TL 92,642 thousand in 2014. Return onThe equity company and bookedreturn on a profit assets of stood at -63.981 %7.0 and %1.9, respectively. 12 13 14 12 13 14 Other Matters and Financial Statements / Information on Financial Structure

Information on Financial Structure

Assets performance Total Assets (TL thousand) As of year-end 2014, total assets reached TL 3,773,391thousand, up 16.0% year-on. With a share of 59.6% representing the largest item in total 3,773,391 grew 26.1% year-on to TL 2,250,117 3,252,770 assets, total cash and financial assets respect to payment of possible losses to 2,498,198 policyholdersthousand, giving with confidence this large with volume.

Capital volume 12 13 14

The nominal capital of Anadolu Sigorta Nominal Capital was TL 500,000 thousand as at year-end (TL thousand) 2014. 500,000 500,000 500,000

12 13 14 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) 2014 2013 2012 2011 2010 Gross Premiums 3,004,830 2,749,704 2,234,633 1,926,090 1,420,458 Technical Division Balance 121,260 100,878 -72,500 -10,068 43,108 Investment Income 258,928 186,213 154,411 150,280 143,931 Investment Expenses -275,810 -187,216 -154,271 -141,443 -128,587 Other Income and Expenses -11,736 -32,414 8,378 5,301 -14,703 Period Gross Income (Loss) 92,642 67,462 -63,981 4,069 43,749 Taxation -21,082 0 0 0 -6,203 Period Net Income (Loss) 71,560 67,462 -63,981 4,069 37,546 Shareholders’ Equity 1,019,833 913,016 756,361 705,124 848,547 Total Assets 3,773,391 3,252,770 2,498,198 2,209,016 1,951,240 Head Office

Address:

Rüzgarlıbahçe Mah. Kavak Sok. Tel: +90 850 744 0 744 No: 31 34805 Kavacık/İSTANBUL Fax: +90 850 744 0 745 E-mail: [email protected]

Produced by Tayburn Tel: (90 212) 227 04 36 www.tayburnkurumsal.com www.anadolusigorta.com.tr