AKSİGORTA A.Ş. — Interim / Quarterly Report 2019

Apr 26, 2019

AKSİGORTA A.Ş.

CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS PERIOD ENDED JANUARY 1 - MARCH 31, 2019

Gizli

AKSİGORTA A.Ş.

CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD JANUARY 1 - MARCH 31, 2019

TABLE OF CONTENTS PAGE	TABLE OF CONTENTS PAGE
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION ...................................	1
CONDENSED INTERIM INCOME STATEMENT ....................................................................	2
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME .........................	3
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY ....................................	4
CONDENSED INTERIM STATEMENT OF CASH FLOWS ....................................................	5
SELECTED NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS .......	6-30

Gizli

AKSİGORTA A.Ş.

CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION FOR THE PERIOD JANUARY 1 - MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

		Unaudited	Audited
Assets	Note	March 31, 2019	December 31, 2018
Total current assets		5,876,424,869	5,371,218,559
Cash and cash equivalents	9	1,865,790,262	1,969,568,662
Financial assets
Debt securities:
- Available for sale at company’s risk	8	666,911,368	548,004,718
- Available for sale at insurees' risk	8	1,686,241	1,686,241
- Held to Maturity at company’s risk		25,699,060	9,752,674
Premium receivables		654,844,907	550,022,938
Due from reinsurers		41,426,530	28,966,554
Reinsurance share of insurance liabilities	11	2,399,481,724	2,055,353,150
Deferred acquisition costs		113,248,964	120,592,122
Derivative financial assets		66,287,017	33,895,401
Other current assets		41,048,796	53,376,099
Total non-current assets		128,477,057	**114,824,301 **
Tangible assets	5	49,092,253	24,329,768
Intangible assets	6	55,281,504	55,639,894
Financial assets
Equity securities:
- Available for sale	8	430,032	430,032
Deferred income tax assets	14	23,523,288	34,274,627
Other non-current assets		149,980	149,980
Total assets		6,004,901,926	5,486,042,860
		Unaudited	Audited
Liabilities	Note	March 31, 2019	December 31, 2018
Total current liabilities		5,465,740,850	**4,833,268,731 **
Insurance liabilities	11	4,570,616,734	4,138,493,725
Payables to reinsurers	12	617,679,432	446,831,845
Other financial liabilities		-	8,495,065
Obligations under repurchase agreements		84,816,904	49,953,645
Provisions for other liabilities and charges		43,808,705	40,333,473
Trade and other payables	12	131,012,418	136,919,472
Current income tax liabilities	14	17,806,657	12,241,506
Total non-current liabilities		30,954,217	**6,503,684 **
Provision for retirement benefit obligation		5,260,903	6,503,684
Other financial liabilities		25,693,314	-
Total equity		508,206,859	646,270,445
Shareholders' equity	10	306,000,000	306,000,000
Legal and other reserves	10	137,889,692	112,230,612
Actuarial loss arising from employee benefit	10	(2,620,638)	(3,602,019)
Available-for-sale investments fund	10	(19,941,981)	(10,638,677)
Retained earnings/accumulated deficit	10	86,879,786	242,280,529
Total equity and liabilities		6,004,901,925	5,486,042,859

The accompanying notes form an integral part of these condensed interim financial statement.

Gizli

1

AKSİGORTA A.Ş.

CONDENSED INTERIM INCOME STATEMENT FOR THE PERIOD JANUARY 1 - MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

==> picture [455 x 443] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited
Income Statement Note March 31, 2019 March 31, 2018
Insurance premium revenue 13 870,040,350 677,945,636
Insurance premium ceded to reinsurers 13 (378,849,891) (280,599,024)
Net insurance premium revenue 13 491,190,459 397,346,612
Investment income 104,134,668 51,017,316
Commission income 46,626,235 67,123,291
Other operating income 2,786,601 2,424,808
Net income 644,737,963 517,912,027
Insurance claims 16 (591,888,152) (429,865,003)
Insurance claims recovered from reinsurers 16 221,851,911 162,131,018
Net insurance claims 16 (370,036,241) (267,733,985)
Commission expense (125,233,083) (137,878,222)
Expenses for marketing and administration 15 (52,314,588) (44,377,819)
Other operating expenses (23,300,010) (11,675,342)
Insurance claims and expenses (570,883,922) (461,665,368)
Results of operating activities 73,854,041 56,246,659
Foreign exchange gain / (loss), net 21,712,850 4,540,496
Profit before tax 95,566,891 60,787,155
Income tax expense 14 (23,348,554) (14,260,643)
Profit for the period 72,218,337 46,526,512
Earnings per share 0.0024 0.0015
----- End of picture text -----

The accompanying notes form an integral part of these condensed interim financial statements.

Gizli

2

AKSİGORTA A.Ş.

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD JANUARY 1 – MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

		Unaudited	Unaudited
Statement of comprehensive income	Note	March 31, 2019	March 31, 2018
Profit for the period		72,218,337	46,526,512
Other comprehensive income to be reclassified to profit or
loss in subsequent periods:
Change in available-for-sale financial assets fund, net off deferred tax		(9,303,304)	(810,982)
Cash flow hedging, net off deferred tax		-	1,322,755
Net other comprehensive income to be reclassified to profit or loss in subsequentperiods		(9,303,304)	511,773
Other comprehensive income not being reclassified to profit or
loss in subsequent periods:
Actuarial loss, net off deferred tax		981,381	(102,099)
Net other comprehensive income not being reclassified to profit or loss in subsequentperiods		981,381	(102,099)
Other comprehensive income, net of tax		(8,321,923)	409,674
Total comprehensive income for the year, net of tax		63,896,414	46,936,186

The accompanying notes form an integral part of these condensed interim financial statements.

Gizli

3

AKSİGORTA A.Ş.

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD JANUARY 1 - MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

==> picture [701 x 116] intentionally omitted <==

----- Start of picture text -----

March 31, 2018 Unaudited
Available-for-sale Revaluation Actuarial loss arising Cash flow Retained
Note Share capital investment funds fund Legal reserves from employee benefit hedging earnings Total
Balances at December 31, 2017 10 306,000,000 (14,469) - 95,403,929 (3,472,406) 17,618,782 156,149,457 427,137,294
Profit for the year - - - - - - 46,526,512 46,526,512
Transfer - - - 16,826,683 - - (16,826,683) -
Other comprehensive income - (810,982) - - (102,099) 1,322,755 - 409,674
Total comprehensive income 10 - (810,982) - 16,826,683 (102,099) 1,322,755 29,699,829 46,936,186
Dividend payment - - - - - - (110,160,000) (110,160,000)
Balances at March 31, 2018 10 306,000,000 (825,451) - 112,230,612 (3,574,505) 18,941,536 75,689,286 508,461,477
----- End of picture text -----

==> picture [701 x 116] intentionally omitted <==

----- Start of picture text -----

March 31, 2019 Unaudited
Available-for-sale Revaluation Actuarial loss arising Cash flow Retained
Note Share capital investment funds fund Legal reserves from employee benefit hedging earnings Total
Balances at December 31, 2018 10 306,000,000 (10,638,677) - 112,230,612 (3,602,019) - 242,280,528 646,270,445
Profit for the year - - - - - - 72,218,337 72,218,337
Transfer - - - 25,659,080 - - (25,659,080) -
Other comprehensive income - (9,303,304) - - 981,381 - - (8,321,923)
Total comprehensive income 10 - (9,303,304) - 25,659,080 981,381 - 46,559,257 63,896,414
Dividend payment - - - - - - (201,960,000) (201,960,000)
Balances at March 31, 2019 10 306,000,000 (19,941,981) - 137,889,692 (2,620,638) - 86,879,785 508,206,859
----- End of picture text -----

The accompanying notes form an integral part of these condensed interim financial statements.

Gizli

4

AKSİGORTA A.Ş.

INTERIM CONDENSED STATEMENT OF CASH FLOWS FOR THE YEAR PERIOD JANUARY 1 - MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

==> picture [456 x 363] intentionally omitted <==

----- Start of picture text -----

January 1 – January 1 –
Cash Flow Statement Note March 31, 2019 March 31, 2018
Cash inflows from insurance operations 1,419,521,000 703,889,712
Cash outflows from insurance operations (1,363,212,362) (477,647,599)
Income tax payment (14,070,796) (13,745,830)
Cash inflows/(outflows )from operational expenses (51,401,186) (70,599,476)
Net cash flows from operating activities (9,163,344) 141,896,807
Tangible and intangible asset acquisitions (32,008,273) (270,101)
Financial asset acquisitions / disposals 68,631,794 (75,183,442)
Interest received 46,965,410 49,948,001
Other cash inflows/(outflows) 6,877,443 (291,042)
Net cash flows from investing activities 90,466,374 (25,796,584)
Dividends paid (201,960,000) (99,925,537)
Net cash flows from financing operations - -
Net increase/(decrease) in cash and cash equivalents (120,656,970) 16,174,686
Cash and cash equivalents at the beginning of the period 1,763,461,138 1,200,503,027
Cash and cash equivalents at the end of the period 9 1,642,804,168 1,216,677,713
----- End of picture text -----

The accompanying notes form an integral part of these condensed interim financial statements.

Gizli

5

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

1. General Information

Aksigorta A.Ş. (“the Company”) is a joint venture of Hacı Ömer Sabancı Holding A.Ş. and Ageas Insurance International N.V. as of March 31, 2019. 38.02% (December 31, 2017: 38.02%) of the Company is issued in Borsa İstanbul (“BİST”) (Note 2.3).

Agreement about the sale of 50% of 18,965,880,200 units of Aksigorta A.Ş. shares with TL 189,658,802 nominal value that belong to H.Ö. Sabancı Holding (“Holding”) portfolio was signed with Ageas Insurance International N.V. at 18 February 2011. At the date of 29 July 2011, 9,482,940,100 units of Aksigorta A.Ş. shares that correspond to 50% of the Holding’ s portfolio have been transferred to Ageas Insurance International N.V. with the sale price (excluding the corrections) of USD 220,029,000. According to the joint administration agreement that signed with Ageas Insurance International N.V. at 18 February 2011, Holding’s previous administrative controls over Aksigorta A.Ş. are going to remain equally with Ageas Insurance International N.V.

The Company is a corporation, which was established in accordance with the requirements of Turkish Commercial Code and registered in Turkey as at 25 April 1960. The Company is located at Poligon Cad. Buyaka 2 Sitesi No:8 Kule:1 Kat:0-6 Ümraniye 34771, İstanbul.

The Company’s main operations include insurance activities based on non-life insurance branches, including primarily motor third party liability, motor, fire, marine, accident, personal accident, engineering, agriculture and health.

Average numbers of employees during the period by category are as follows:

	March 31, 2019	December 31, 2018
Top and middle management	138	112
Otherpersonel(*)	513	627
Total	651	739

(*) The Company had 90 part-time employees who hold project-based responsibilities in 2018.

Remuneration and fringe benefits provided to top management such as; chairman and members of the board of directors, managing director and assistant managing directors amount to 1,854,658 TL in total for January 1 - March 31, 2019 (January 1 - March 31, 2018: TL 1,499,101).

Financial statements include only one company (Aksigorta A.Ş.) and the Company does not have any subsidiaries or affiliates as of March 31, 2019 (December 31, 2018: None).

The Company’s interim condensed financial statements as of March 31, 2019 are approved and authorized for issuance as of April 25, 2019 by the Board of Directors.

Gizli

6

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2. Summary of significant accounting policies

2.1 Basis of preparation

The financial statements at March 31, 2019 have been prepared in accordance with International Financial Reporting Standard as defined by IAS 1. In accordance with the International Accounting Standard No: 34 “Interim Financial Reporting”, entities are allowed to prepare a complete or condensed set of interim financial statements. In this respect, the Company has preferred to prepare condensed financial statements in the interim periods. Accordingly, the financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual financial statements as at March 31, 2019 and any public announcement made by the company during the period.

The Company maintains its books of account and prepares its statutory financial statements in Turkish Lira (“TL”) in accordance with the Insurance Law numbered 5684 and the regulations issued for insurance and reinsurance companies by the Undersecretary at of Treasury which is also the functional currency of the Company. These financial statements are based on the statutory records, with adjustments and reclassifications, for the purpose of fair presentation in accordance with IFRS.

The preparation of financial statements in accordance with IFRS requires the use of estimates. It also requires management to exercise its judgements in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to financial statements are disclosed Note 3.

Comparative information and restatement of prior period financial statements

The Company’s statement of financial position as of March 31, 2019 is presented in comparison with its statement of financial position as of December 31, 2018; statement of comprehensive income, statement of changes in equity and statement of cash flows for the period between January 1 - March 31, 2019 are presented in comparison with its statement of comprehensive income, statement of changes in equity and statement cash flows for the period between January 1 - March 31, 2018.

2.2 Adoption of New and Revised Standards

The new standards, amendments and interpretations

The accounting policies applied in the preparation of the financial statements as of January 1 - March 31, 2019 are consistent with those applied in the preparation of the financial statements as of December 31, 2018, except for the new standards and amended IAS/IFRS standards which are valid as of January 1, 2019 and International Financial Reporting Interpretations Committee’s (“IFRIC”) interpretations summarised below.

Standards, amendments and interpretations applicable as at 31 March 2019:

• IFRS 9 - Financial instruments

• IFRS 15 - Revenue from contracts with customers

• Amendment to IFRS 15 - Revenue from contracts with customers

Gizli

7

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2. Summary of significant accounting policies (Continued)

• IFRS 16, ‘Leases’; effective from annual periods beginning on or after 1 January 2019, with earlier application permitted if IFRS 15‘Revenue from Contracts with Customers’ is also applied. This standard replaces the current guidance in IAS 17 and is a farreaching change in accounting by lessees in particular. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a ‘right of use asset’ for virtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees. For lessors, the accounting stays almost the same. However, as the IASB has updated the guidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors will also be affected by the new standard. At the very least, the new accounting model for lessees is expected to impact negotiations between lessors and lessees. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

• Amendments to IFRS 4 - Insurance contracts

• Amendment to IAS 40 - Investment property

• Amendments to IFRS 2 - Share based payments

• Annual improvements 2014-2016: IFRS 1 and IAS 28

• IFRIC 22 - Foreign currency transactions and advance consideration

These amendments did not have any impact on the financial position or performance of the Company.

Standards, amendments and interpretations that are issued but not effective as at 31 March 2019:

• Amendment to IFRS 9 - Financial instruments

• Amendment to IAS 28 - Investments in associates and joint venture

• IFRIC 23 - Uncertainty over income tax treatments

• IFRS 17 - Insurance contracts

• Annual improvements 2015-2017: IFRS 3, IFRS 11, IAS 12, IAS 23

• Amendments to IAS 19 - Employee benefits

The impacts of the new standards, amendments and improvements on the financial position and performance of the Company is being assessed.

Gizli

8

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

2.3 Share capital

As of March 31, 2019, the Company’s nominal capital is TL 306,000,000 (December 31, 2018: TL 306,000,000). Share capital is represented by 30,600,000,000 of equity shares having a nominal amount of TL 0,01 each.

Name of shareholders	March 31, 2019 Share Share amount	December 31, 2018
		Share Share amount
H. Ömer Sabancı Holding A.Ş. Ageas Insurance International NV Publicly quoted shares	36.00 110,160,000 36.00 110,160,000 28.00 85,680,000	36.00 110,160,000 36.00 110,160,000 28.00 85,680,000
Total	100.00 306,000,000	100.00 306,000,000

Agreement about the sale of 50% of 18,965,880,200 units of Aksigorta A.Ş. shares with nominal value of TL 189,658,802 that belong to H.Ö. Sabancı Holding (“Holding”) portfolio, was signed with Ageas Insurance International N.V. at 18 February 2011. 9,482,940,100 units of Aksigorta A.Ş. shares that correspond to 50% of the Holding’ s portfolio has been trasferred to Ageas Insurance International N.V. on 29 July 2011 with a sale price of USD 220,029,000 except for adjustments to sale price.

The Company has accepted the registered capital system set out in accordance with the provisions of Law No: 2499 and applied the system as of June 15, 2000 upon the permission no: 67/1039 granted by the Capital Markets Board. As of March 31, 2019, the Company’s registered share capital is TL 500,000,000 (December 31, 2018: TL 500,000,000).

3. Critical accounting estimates and judgements

Preparation of financial statements requires the use of estimations and assumptions which may affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the statement of financial position date and reported amounts of income and expenses during the financial period. Accounting estimates and assumptions are continuously evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under current circumstances. Although the estimations and assumptions are based on the best knowledge of the management for existing events and operations, they may differ from the actual results.

The estimation of the ultimate liability for technical expenses that can be incurred for the existing insurance contracts is one of the most critical accounting estimates. Estimation of the insurance liabilities, by nature, includes the evaluation of several uncertainties.

Gizli

9

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

4. Segment information

Information related to the operational reporting made by the Company to the chief operating decisionmaker in accordance with the “IFRS 8 - Operating Segments” is disclosed in this part.

Numerical limits in “IFRS 8 - Operating Segments” is also considered as the reporting to the chief operating decision-maker in the determination of segments and the premium production and net technical income of the segments are considered while determining a separate operating segment.

The Company has been operating in Turkey. Since the effect of the foreign operations on financial statements is extremely low, geographic segment information is not given.

Gizli

10

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

4. Segment information (Continued)

Segment results for period January 1 - March 31, 2019 is as follows:

==> picture [701 x 283] intentionally omitted <==

----- Start of picture text -----

Motor Own
Motor Third
January 1 - March 31, 2019 Fire Marine Damage General Losses Health Other Undistributed Total
Party Liability
(MOD)
TECHNICAL INCOME 37,024,679 6,555,920 165,235,322 218,470,287 20,773,749 20,000,608 23,129,893 - 491,190,459
Earned Premiums (Net of Reinsurer Share) 37,024,679 6,555,920 165,235,322 218,470,287 20,773,749 20,000,608 23,129,893 - 491,190,459
Premiums (Net of Reinsurer Share) 41,558,359 7,886,721 158,696,265 225,123,893 30,701,382 25,267,290 24,739,783 - 513,973,692
Change in Unearned Premiums Reserve
(Net of Reinsurers Shares and
Reserves Carried Forward) (+/-) (4,533,680) (1,330,801) 6,539,057 (6,653,606) (9,927,633) (5,266,681) (1,609,890) - (22,783,235)
TECHNICAL EXPENSES (37,662,403) (455,179) (193,098,738) (243,422,615) (31,208,019) (15,032,334) (591,799) - (521,471,086)
Total Claims (Net of Reinsurer Share) (19,547,441) 162,463 (134,707,831) (189,545,433) (18,076,820) (2,999,473) (5,321,705) - (370,036,240)
Claims Paid (Net of Reinsurer Share) (18,913,158) (23,610) (137,756,566) (135,930,097) (5,904,353) (1,781,127) (4,516,129) - (304,825,040)
Changes in Outstanding Claims Reserve -
(Net of Reinsurer Share and Reserves
Carried Forward) (+/-) (634,283) 186,073 3,048,735 (53,615,336) (12,172,468) (1,218,346) (805,576) - (65,211,202)
Commissions (Net) (7,180,267) (93,768) (37,152,979) (29,307,836) (7,544,022) (8,166,830) 10,838,854 - (78,606,848)
Operating Expenses (9,297,927) (234,053) (15,134,172) (14,911,327) (4,668,821) (2,981,854) (5,086,434) - (52,314,588)
Other Operating Income / Expenses (1,636,768) (289,821) (6,103,756) (9,658,020) (918,355) (884,176) (1,022,514) - (20,513,409)
(637,724) 6,100,741 (27,863,416) (24,952,328) (10,434,270) 4,968,274 22,538,095 - (30,280,627)
Investment income - - - - - - - 104,134,668 104,134,668
Foreign exchange income - - - - - - - 21,712,850 21,712,850
Tax expense - - - - - - - (23,348,554) (23,348,554)
Net Profit / (Loss) (637,724) 6,100,741 (27,863,416) (24,952,328) (10,434,270) 4,968,274 22,538,095 102,498,964 72,218,337
----- End of picture text -----

Gizli

11

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

4. Segment information (Continued)

Segment results for period January 1 - March 31, 2018 is as follows:

==> picture [701 x 275] intentionally omitted <==

----- Start of picture text -----

Motor Own
Motor Third
January 1 - December 30, 2018 Fire Marine Damage General Losses Health Other Undistributed Total
Party Liability
(MOD)
TECHNICAL INCOME 34,491,864 7,700,025 151,815,788 140,785,383 20,088,457 21,335,289 21,129,806 - 397,346,612
Earned Premiums (Net of Reinsurer Share) 34,491,864 7,700,025 151,815,788 140,785,383 20,088,457 21,335,289 21,129,806 - 397,346,612
Premiums (Net of Reinsurer Share) 36,818,240 10,026,982 144,685,185 217,455,328 20,968,483 24,266,344 20,035,207 - 474,255,770
Change in Unearned Premiums Reserve
(Net of Reinsurers Shares and
Reserves Carried Forward) (+/-) (2,326,377) (2,326,958) 7,130,603 (76,669,945) (880,027) (2,931,055) 1,094,599 - (76,909,158)
TECHNICAL EXPENSES (27,302,645) (3,404,346) (167,354,513) (144,407,409) (17,798,427) (16,410,936) (15,438,994) - (392,117,269)
-
Total Claims (Net of Reinsurer Share) (12,843,295) (1,785,101) (124,392,640) (115,118,757) (4,385,837) (2,055,624) (7,152,731) (267,733,986)
-
Claims Paid (Net of Reinsurer Share) (11,676,125) (2,007,392) (138,494,540) (66,294,415) (5,025,143) (1,982,551) (3,804,644) (229,284,811)
Changes in Outstanding Claims Reserve -
(Net of Reinsurer Share and Reserves
Carried Forward) (+/-) (1,167,170) 222,291 14,101,900 (48,824,342) 639,305 (73,072) (3,348,087) - (38,449,175)
-
Commissions (Net) (7,206,570) (1,037,750) (26,237,719) (13,504,413) (8,854,892) (10,126,673) (3,786,914) (70,754,931)
-
Operating Expenses (6,485,481) (444,145) (14,248,240) (11,253,417) (4,121,998) (3,809,515) (4,015,024) (44,377,819)
Other Operating Income / Expenses (767,299) (137,350) (2,475,915) (4,530,822) (435,700) (419,124) (484,325) - (9,250,534)
7,189,219 4,295,679 (15,538,724) (3,622,026) 2,290,030 4,924,354 5,690,812 - 5,229,343
Investment income - - - - - - - 51,017,316 51,017,316
Foreign exchange income - - - - - - - 4,540,496 4,540,496
Tax expense - - - - - - - (14,260,643) (14,260,643)
Net Profit / (Loss) 7,189,219 4,295,679 (15,538,724) (3,622,026) 2,290,030 4,924,354 5,690,812 41,297,169 46,526,512
----- End of picture text -----

Gizli

12

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

5. Tangible assets

As of March 31, 2019 and 2018 tangible assets movement and its accumulated depreciation is as follows:

Costs:	January 1, 2019	Additions	Disposals	Transfers	March 31, 2019
Property for operational use	1,598,569	-	-	-	1,598,569
Motor vehicles	2,720,001	-	-	-	2,720,001
Furniture and fixtures and leased tangible assets	23,741,539	950,592	(704,504)	-	23,987,628
Other tangible assets (including leasehold improvements)	21,052,437	690	-	-	21,053,127
Total	49,112,546	951,282	(704,504)	-	49,359,324
Accumulated depreciation:(-)	January 1, 2019	Additions	Disposals	Transfers	March 31, 2019
Property for operational use	(569,248)	(7,883)	-	-	(577,131)
Motor vehicles	(5,962)	(134,137)	-	-	(140,098)
Furniture and fixtures and leased tangible assets	(14,906,985)	(722,400)	676,893	-	(14,952,492)
Other tangible assets	(9,300,583)	(569,179)	-	-	(9,869,762)
Total	**(24,782,778) **	**(1,433,600) **	676,893	-	(25,539,484)
Net book value	24,329,768	**(482,318) **	(27,610)	-	23,819,840
Costs:	January 1, 2018	Additions	Disposals	Transfers	March 31, 2018
Property for operational use	1,598,569	-		-	1,598,569
Furniture and fixtures and leased tangible assets	23,957,267	270,101	-	-	24,227,368
Other tangible assets (including leasehold improvements)	21,412,252	-	-	-	21,412,252
Total	46,968,088	270,101	-	-	47,238,189
Accumulated depreciation:(-)	January 1, 2018	Additions	Disposals	Transfers	March 31, 2018
Property for operational use	(537,189)	(7,907)	-	-	(545,096)
Furniture and fixtures and leased tangible assets	(12,652,946)	(746,085)	-	-	(13,399,031)
Other tangible assets	(7,580,602)	(581,426)	-	-	(8,162,028)
Total	**(20,770,737) **	(1,335,418)	-	-	(22,106,155)
Net book value	**26,197,351 **	(1,065,317)	-	-	25,132,034

The Company has not accounted for any impairment provision for tangible fixed assets in the current period.

Total depreciation expense is TL 7,260,961 (January 1 - March 31, 2018: TL 4,972,727).

Gizli

13

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

5. Tangible assets (Continued)

Details of the right-of-use assets accounted in the current period financial statements:

Right-of-use assets Furniture and fixtures and leased tangible assets Motor vehicles Total Depreciation of right-of-use assets Furniture and fixtures and leased tangible assets Motor vehicles Total Total lease liability Total Net Present Value of Lease Liabilities in relation to right-of-use assets(*) - Short-term lease liability - Long-term lease liability	31 March 2019 1January 2019 21,381,758 22,614,220 3,890,655 4,428,739 25,272,413 27,042,959 31 March 2019 1January 2019	31 March 2019 1January 2019 21,381,758 22,614,220 3,890,655 4,428,739 25,272,413 27,042,959 31 March 2019 1January 2019
	1,232,462 - 538,085 -
	1,770,546 -
	1January 2019 50,519,553 50,519,553 31 March 2019 1January 2019	1January 2019
		50,519,553
		50,519,553
	- - 25,693,314 27,042,959
	25,693,314 27,042,959

(*) discounted at incremental borrowing rate

Gizli

14

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

6. Intangible assets

==> picture [454 x 291] intentionally omitted <==

----- Start of picture text -----

Costs: January 1, 2019 Additions Disposals() Transfers March 31, 2019
Rights 111,808,560 3,144,197 (17,206) - 114,935,552
Advances given for intangible assets 1,949,163 571,434 - - 2,520,597
Total 113,757,723 3,715,630 (17,206) - 117,456,148
Accumulated depreciation: (-) January 1, 2019 Additions Disposals() Transfers March 31, 2019
Rights (58,117,829) (4,056,815) - - (62,174,644)
Total (58,117,829) (4,056,815) - - (62,174,644)
Net book value 55,639,894 (341,184) (17,206) - 55,281,504
Costs: January 1, 2018 Additions Disposals() Transfers March 31, 2018
Rights 87,041,349 2,968,786 - - 90,010,134
Advances given for intangible assets 2,600,646 283,609 - - 2,884,255
Total 89,641,994 3,252,395 - - 92,894,389
Accumulated depreciation: (-) January 1, 2018 Additions Disposals() Transfers March 31, 2018
Rights (43,097,276) (3,637,312) - - (46,734,588)
Total (43,097,276) (3,637,312) - - (46,734,588)
Net book value 46,544,718 (384,917) - - 46,159,801
----- End of picture text -----

Gizli

15

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

7. Management of insurance and financial risk

Foreign currency risk

The Company is exposed to foreign exchange risk through the impact of rate changes at the translation of Turkish Lira pertaining to foreign currency denominated assets and liabilities. These risks are monitored by the analysis of exchange rate position. The details of the Company’s foreign currency denominated assets and liabilities as of March 31, 2019 and December 31, 2018 are disclosed below:

March 31, 2019

Banks (Foreign Currency)	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	7,100,274	5.6284	39,963,183
EUR	1,531,151	6.3188	9,675,037
GBP	41,616	7.3354	305,270
CHF	257,998	5.6393	1,454,928
Total			51,403,199
Receivables from Insurance Operations	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	39,639,854	5.6284	223,108,954
EUR	23,880,989	6.3188	150,899,193
GBP	154,065	7.3354	1,130,128
CHF	237,985	5.6393	1,342,069
Total			376,480,345
Marketable Securities	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	21,557,236	5.6284	121,332,749
Total			121,332,749
Outstanding Claims Reserve	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	(7,994,745)	5.6284	(44,997,624)
EUR	(1,777,431)	6.3188	(11,231,230)
Other			(4,801)
Total			(56,233,655)
Payables from Insurance Operations	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	(40,715,112)	5.6284	(229,160,936)
EUR	(16,553,754)	6.3188	(104,599,859)
Other			(4,000,404)
Total			(337,761,199)
Trade Payables	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	(713,852)	5.6284	(4,017,847)
Total			(4,017,847)
Net Foreign Currency Position			151,203,593

Gizli

16

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

7. Management of insurance and financial risk (Continued)

December 31, 2018
Banks (Foreign Currency)	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	5,165,611	5.2609	27,175,763
EUR	2,029,314	6.0280	12,232,705
GBP	55,032	6.6528	366,117
CHF	157,666	5.3352	841,180
Total			40,615,764
Receivables from Insurance Operations	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	28,691,649	5.2609	150,943,896
EUR	17,295,218	6.0280	104,255,574
GBP	107,134	6.6528	712,741
CHF	8,052	5.3352	42,959
Total			255,955,170
Marketable Securities	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	23,320,119	5.2609	122,684,814
Total			122,684,814
Outstanding Claims Reserve	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	(6,818,960)	5.2609	(35,873,867)
EUR	(1,109,743)	6.0280	(6,689,531)
Other			(4,501)
Total			(42,567,898)
Payables from Insurance Operations	Amount in Foreign Currency	Exchange Rate	Amount (TL)
USD	(35,271,589)	5.2609	(185,560,303)
EUR	(7,373,885)	6.0280	(44,449,779)
Other			(2,193,297)
Total			(232,203,378)
Net Foreign Currency Position			144,484,471

Gizli

17

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

7. Management of insurance and financial risk (Continued)

Liquidity risk

Liquidity risk is the possibility of non-performance of the Company’s due liabilities. Events that give rise to funding shortages, such as; market deteriorations and decrease in credit ratings, are the main reasons of liquidity risk. The Company manages its liquidity risk through having adequate cash and cash equivalents in order to fulfill its current and possible liabilities by allocating its funds.

Table of liquidity risk as of March 31, 2019 is as follows:

==> picture [700 x 213] intentionally omitted <==

----- Start of picture text -----

March 31, 2019 Up to 1 month 1 – 3 months 3 months to 1 year 1 – 5 years 5 years and over No maturity Total
Cash and cash equivalents 328,234,871 857,258,805 653,406,397 - - 26,890,188 1,865,790,262
Financial assets available for sale 20,829,140 154,265,007 94,419,120 216,742,018 18,893,054 161,763,027 666,911,368
Financial assets held to maturity - - - 25,699,060 - - 25,699,060
Investments on policyholders’ risk - - - 1,686,241 - - 1,686,241
Receivables from main operations 207,779,579 228,738,713 185,997,382 32,022,541 - - 654,538,215
Due from reinsurance companies - - 41,426,530 - - - 41,426,530
Reinsurers’ share of insurance liabilities 929,671,854 663,367,150 732,442,115 63,955,486 10,045,120 - 2,399,481,724
- - - - -
Equity securities 430,032 430,032
Other assets - 154,604,452 - - - - 154,604,452
Total Assets 1,486,515,444 2,058,234,127 1,707,691,545 340,105,347 28,938,175 189,083,248 5,810,567,884
Insurance liabilities 1,526,684,474 1,209,866,699 1,714,781,258 103,092,203 16,192,100 - 4,570,616,734
Due to reinsurers - - 617,679,432 - - - 617,679,432
Trade and other payables - - 259,638,027 - - - 259,638,027
-
Total liabilities and shareholders' equity 1,526,684,474 1,209,866,699 2,592,098,717 103,092,203 16,192,100 - 5,447,934,193
Liquidity surplus/(deficit) (40,169,030) 848,367,427 (884,407,172) 237,013,144 12,746,075 189,083,248 362,633,691
----- End of picture text -----

Gizli

18

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

7. Management of insurance and financial risk (Continued)

Table of liquidity risk as of December 31, 2018 is as follows:

==> picture [700 x 213] intentionally omitted <==

----- Start of picture text -----

December 31, 2018 Up to 1 month 1 – 3 months 3 months to 1 year 1 – 5 years 5 years and over No maturity Total
Cash and cash equivalents 486,866,689 579,752,804 886,833,419 - - 16,115,750 1,969,568,662
Financial assets available for sale 2,098,623 45,006,797 110,705,440 145,757,862 52,382,624 192,053,371 548,004,717
Financial assets held to maturity - - - 9,752,674 - - 9,752,674
Investments on policyholders’ risk - - - 1,686,241 - - 1,686,241
Receivables from main operations 173,197,383 185,593,559 153,796,825 37,435,171 - - 550,022,938
Due from reinsurance companies - - 28,966,554 - - - 28,966,554
Reinsurers’ share of insurance liabilities 720,110,812 577,060,478 665,232,797 85,291,524 7,657,541 - 2,055,353,150
- - - - -
Equity securities 23,677,764 23,677,764
Other assets - 173,968,221 - - - - 173,968,221
Total Assets 1,382,273,507 1,561,381,859 1,845,535,035 279,923,473 60,040,165 231,846,885 5,361,000,923
Insurance liabilities 1,250,723,542 1,072,135,412 1,662,070,037 140,913,416 12,651,318 - 4,138,493,725
Due to reinsurers - - 446,831,845 - - - 446,831,845
Trade and other payables - - 227,206,590 - - - 227,206,590
-
Total liabilities and shareholders' equity 1,250,723,542 1,072,135,412 2,336,108,472 140,913,416 12,651,318 - 4,812,532,160
Liquidity surplus/(deficit) 131,549,965 489,246,446 (490,573,436) 139,010,057 47,388,847 231,846,885 548,468,763
----- End of picture text -----

Gizli

19

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

8. Financial assets

Available for sale debt securities:

==> picture [439 x 296] intentionally omitted <==

----- Start of picture text -----

March 31, 2019
Cost Value Fair Value Book Value
Private bonds 231,148,635 247,805,994 247,805,994
Investment Funds 101,971,533 120,756,333 120,756,333
Eurobonds 135,115,610 121,857,542 121,857,542
Equities 34,730,321 33,202,579 33,202,579
Government bonds 143,204,088 143,288,920 143,288,920
Total 646,170,187 666,911,368 666,911,368
Impairment (-) -
Total 646,170,187 666,911,368 666,911,368
December 31, 2018
Cost Value Fair Value Book Value
Private bonds 218,835,732 233,265,994 233,265,994
Investment Funds 142,717,574 168,805,442 168,805,442
Eurobonds 134,782,226 122,684,814 122,684,814
Equities 24,215,782 23,247,732 23,247,732
Government bonds 736 736 736
Total 520,552,050 548,004,718 548,004,718
----- End of picture text -----

Financial assets at insurees’ risk:

		March 31, 2019
	Cost Value	Fair Value	Book Value
Government bonds	1,647,665	1,686,241	1,686,241
Total	1,647,665	1,686,241	1,686,241
		December 31, 2018
	Cost Value	Fair Value	Book Value
Government bonds	1,647,665	1,686,241	1,686,241
Total	1,647,665	1,686,241	1,686,241

Gizli

20

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

8. Financial assets (Continued)

Held to maturity

==> picture [439 x 134] intentionally omitted <==

----- Start of picture text -----

March 31, 2019
Cost Value Fair Value Book Value
Held to maturity 25,087,447 25,699,060 25,699,060
Total 25,087,447 25,699,060 25,699,060
December 31, 2018
Cost Value Fair Value Book Value
Held to maturity 9,194,956 9,752,674 9,752,674
Total 9,194,956 9,752,674 9,752,674
----- End of picture text -----

Equity shares under available-for-sale investments:

As of March 31, 2019 the Company has an investment in Merter BV with a 25% participation rate (December 31, 2018: 25%). Merter BV is a real estate company which has an investment in a shopping mall and office building with 50% participation rate. The Company has a final participation rate of 12,5% in the real estates. Since the Company does not have any influence in the financial and operating policy decisions of the investee, this investment is classified as available for sale financial asset and carried at its fair value. The Company has booked impairment provision for Merter BV amounting to TL 30,116,653 in its financial statements as of March 31, 2019 in accordance with the appraisal report obtained from an independent appraisal firm (December 31, 2018: TL 30,116,653).

Gizli

21

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

8. Financial assets (Continued)

List of the investments and fair values is as below:

==> picture [439 x 194] intentionally omitted <==

----- Start of picture text -----

March 31, 2019
Cost Value Fair Value Book Value
Equity investments
Merter BV 30,116,653 - -
Unlisted 430,032 - 430,032
Total 30,546,685 - 430,032
December 31, 2018
Cost Value Fair Value Book Value
Equity investments
Merter BV 30,116,653 - -
Unlisted 430,032 - 430,032
Total 30,546,685 - 430,032
----- End of picture text -----

Fair Value Hierarchy

Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists. Fair value measurements are performed in accordance with the followingfair value measurment hierarchy.

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other thanqouted pricesincluded within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indircetly (that is, derived from prices).

• Level 3: Inputs for the asset or liability that is not based on observable market data (that is, unobservable inputs).

	March 31, 2019	Level 1	Level2
Available for sale at company’s risk	666,911,368	666,911,368	-
Available for sale at insurees' risk	1,686,241	1,686,241	-
Held to maturity at company’s risk	25,699,060	25,699,060	-
Equitysecurities,net(*)	430,032	-	-
Total	694,726,701	694,296,669	-
	December 31, 2018	Level 1	Level2
Available for sale at company’s risk	548,004,718	548,004,718	-
Equitysecurities,net(*)	430,032	-	-
Total	550,120,990	549,690,959	-

Gizli

22

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

9. Cash and cash equivalents

The details of cash and cash equivalents of the Company are as follows:

	March 31, 2019	December 31, 2018
Cash at banks	1,364,272,241	1,485,633,722
-time deposits	1,337,382,052	1,469,517,972
-demand deposits	26,890,188	16,115,750
Bank guaranteed credit card receivables
with maturity less than 3 months	501,518,021	483,934,940
Total cash and cash equivalents	1,865,790,262	1,969,568,662

The maturities of the Company’s time deposits as of March 31, 2019 are less than three months (December 31, 2018: Less than three months).

Cash and cash equivalents that are included in the statements of cash flows for the periods January 1 - March 31,2019 and 2018 are as follows:

	March 31, 2019	December 31, 2018
Total cash and cash equivalents	1,865,790,262	1,969,568,662
Interest accrual on cash at banks (-)	(21,587,225)	(11,676,242)
Blocked time deposits	(201,398,869)	(194,431,281)
Cash and cash equivalentsper statement of cash flow	1,642,804,168	1,763,461,139

Weighted average interest rates of time deposits:

==> picture [454 x 13] intentionally omitted <==

----- Start of picture text -----

March 31, 2019 December 31, 2018
----- End of picture text -----

TL	19,5 – 20,50	18,00 – 30,00
USD	2,50 – 3,5	1,15 – 3,75
EUR	1 – 2,85	1,4 – 2,85

Gizli

23

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

10. Equity

As of March 31, 2019, the Company’s total amount of nominal shares is 30,600,000,000 (December 31, 2018: 30,600,000,000) which has all been paid. The face value of the Company’s common stocks is TL 0,01 each and the total nominal amount is TL 306,000,000 (December 31, 2018: TL 306,000,000).

Movement of common stocks at opening balance and closing balance is as follows:

January 1, 2019 IssuedCapital Unit Nominal TL Unit Nominal TL Paid 30,600,000,000 306,000,000 - - Total 30,600,000,000 306,000,000 - - January 1, 2018 IssuedCapital Unit Nominal TL Unit Nominal TL Paid 30,600,000,000 306,000,000 - - Total 30,600,000,000 306,000,000 - - Movement of legal reserves is as follows: Legal Reserves	Amortised Unit Nominal TL - - - - Amortised Unit Nominal TL - - - -	March 31, 2019
		Unit Nominal TL
		30,600,000,000 306,000,000 30,600,000,000 306,000,000 March 31, 2018
		Unit Nominal TL
Opening balance, January 1 Addition related to profit for the period
Closing balance, March 31

Actuarial gain / (loss)

In accordance with changes regarding “IAS 19 – Employee Benefits” effective as of January 1, 2013, actuarial loss amounting to TL 3,275,798 (net off deferred tax: TL 2,620,638) resulting from retirement pay liability calculation has been accounted to extraordinary reserves under equity.

Movement of actuarial loss arising from employee benefit is as follows:

Actuarial Loss	2019	2018
Opening balance, January 1	4,502,524	4,053,534
Change for theperiod	(1,226,726)	448,990
Closing balance, March 31	3,275,798	4,502,524

Gizli

24

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

10. Equity (Continued)

Available for sale investments fund:

The unrealized gains and losses that result from the changes in the fair values of available for sale financial assets are directly recognized in the shareholders’ equity as “Available for sale investments fund”. Movement of available for sale investments fund is below:

Available for sale investments fund	2019	2018
Opening balance, January 1	(10,638,677)	(14,469)
Increase/decrease in value recognized under the shareholders’ equity in the current period Closing balance, March 31	(9,303,304) (19,941,981)	(10,624,208) (10,638,677)

11. Insurance liabilities

Gross	March 31, 2019	December 31, 2018
Outstanding claims provision	2,611,229,716	2,367,199,721
Reserve for unearned premiums	1,957,905,384	1,769,723,313
Life actuarial mathematical reserves	1,311,901	1,326,272
Life profit share provision	145,767	147,364
Bonus and rebates provision	23,966	97,055
Total	4,570,616,734	4,138,493,725
Reinsurance Share	March 31, 2019	December 31, 2018
Reinsurers’ share of outstanding claims	1,504,534,811	1,325,805,075
Reinsurers’ share of unerned premiums	894,946,913	729,548,075
Total	2,399,481,724	2,055,353,150
Net	March 31, 2019	December 31, 2018
Net outstanding claims	1,106,694,905	1,041,394,646
Net unearned premiums	1,062,958,471	1,040,175,238
Life actuarial mathematical reserves	1,311,901	1,326,272
Life profit share provision	145,767	147,364
Bonus and rebates provision	23,966	97,055
Total	2,171,135,010	2,083,140,575

Gizli

25

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

12. Payables to reinsurers, trade and other payables

==> picture [454 x 152] intentionally omitted <==

----- Start of picture text -----

March 31, 2019 December 31, 2018
Payables to reinsurers 582,402,117 418,719,301
Payables to SSI regarding medical expenses 35,277,315 28,112,544
Payables due to main operations 617,679,432 446,831,845
Taxes payable 25,929,614 31,884,957
Payables to Turkish Catastrophe Insurance Pool 26,991,063 18,902,758
Payables to contracted institutions 43,040,253 54,098,804
Payables to suppliers 12,071,967 26,701,130
Other 22,979,521 5,331,823
Total other short term payables 131,012,418 136,919,472
Total financial liabilities trade and other payables, deferred income 748,691,850 583,751,317
----- End of picture text -----

13. Net insurance premium income

The distribution of premium income is as follows:

==> picture [454 x 154] intentionally omitted <==

----- Start of picture text -----

January 1 – March 31, 2019 January 1 – March 31, 2018
Gross Reinsurers’ share Net Gross Reinsurers’ share Net
Written premium 1,058,222,422 (544,248,729) 513,973,693 932,143,175 (457,887,406) 474,255,770
Change in unearned premium reserve (188,182,072) 165,398,838 (22,783,234) (254,197,539) 177,288,382 (76,909,157)
Total premium revenue 870,040,350 (378,849,891) 491,190,459 677,945,636 (280,599,024) 397,346,612
Fire 230,304,566 (188,746,207) 41,558,359 162,696,824 (125,879,081) 36,817,743
Marine 26,657,602 (18,770,881) 7,886,721 23,298,668 (13,271,686) 10,026,982
Motor Own Damage 167,781,126 (9,084,861) 158,696,265 154,313,121 (9,627,936) 144,685,185
Motor Third Party Liability 290,474,055 (65,350,162) 225,123,893 292,176,363 (74,721,035) 217,455,328
Other 108,207,341 (83,467,557) 24,739,783 84,460,616 (64,425,412) 20,035,204
General Losses 107,744,461 (77,043,079) 30,701,382 108,738,153 (87,769,670) 20,968,483
Health 127,053,272 (101,785,982) 25,267,290 106,458,930 (82,192,585) 24,266,344
Life - - - 500 - 500
Total 1,058,222,422 (544,248,729) 513,973,693 932,143,175 (457,887,406) 474,255,770
----- End of picture text -----

14. Taxes

As at March 31, 2019 and December 31, 2018 prepaid income taxes are netted off with the current income tax payable as stated below:

	March 31, 2019	December 31, 2018
Income taxes payable	17,806,658	66,694,754
Prepaid income taxes	-	(54,453,247)
Taxpayable/(asset)	17,806,658	12,241,507

Deferred tax

The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial statements as reported for International Accounting Standards (IAS) purposes and its statutory tax financial statements. These differences usually result in the recognition of revenue and expenses in different reporting periods for IAS.

Gizli

26

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

14. Taxes (Continued)

Tax rate is applied as 22% for the calculation of deferred tax asset and liabilities. The details of deferred tax are presented in the following statements:

==> picture [454 x 214] intentionally omitted <==

----- Start of picture text -----

Deferred tax assets/
Cumulative temporary differences
(liabilities)
March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018
Impairment on financial assets 30,116,655 30,116,655 6,625,664 6,625,664
Claim handling 15,533,870 14,999,177 3,106,774 2,999,835
General expense provision 12,476,423 3,552,177 2,744,813 781,479
Employment termination benefit 5,260,905 6,503,684 1,052,181 1,300,737
Doubtful receivable provisions 8,220,809 3,874,391 1,808,578 852,366
Unused vacation provision 2,435,191 1,834,000 535,742 403,480
Unexpired risks reserve 19,225,027 20,653,059 4,229,506 4,543,673
Bonus provision 3,884,764 7,131,518 854,648 1,568,934
Claim reserves (19,225,027) (20,653,057) (4,229,506) (4,543,673)
Other 10,679,968 14,962,768 (11,002,826) 3,291,809
Total deferred income tax assets / liabilities 88,608,584 82,974,371 5,725,574 17,824,304
Discounting in outstanding claims 187,496,236 131,991,307 38,972,886 36,962,187
Useful life of tangible and intangible assets (18,289,955) (20,164,460) (4,023,790) (4,032,892)
Equalization reserve (77,960,831) (82,394,863) (17,151,383) (16,478,973)
Total deferred tax assets / liabilities 179,854,035 112,406,356 23,523,288 34,274,627
----- End of picture text -----

In accordance with the regulation numbered 7061, published in Official Gazette on 5 December 2017, “Law on the Amendment of Some Tax Acts and Some Other Laws”, corporate tax rate for the years 2018, 2019 and 2020 has increased from 20% to 22%. Therefore, deferred tax assets and liabilities as of 31 December 2017 are calculated with 22% tax rate for the temporary differences which will be realized in 2018, 2019 and 2020, and with 20% tax for those which will be realized after 2021 and onwards.

==> picture [454 x 87] intentionally omitted <==

----- Start of picture text -----

March 31, 2019 March 31, 2018
Profit/(Loss) before taxes 95,566,891 60,787,155
Tax rate 22% 22%
Taxes on income/expense per statutory tax rate (21,024,716) (13,373,174)
The effect of non-deductible expenses (2,323,838) (887,469)
Closing balance (23,348,554) (14,260,643)
----- End of picture text -----

Gizli

27

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

15. Expenses by nature

==> picture [442 x 236] intentionally omitted <==

----- Start of picture text -----

January 1 - January 1 -
March 31, 2019 March 31, 2018
Personnel expenses (26,309,478) (21,924,565)
Depreciation expenses (7,260,961) (4,972,727)
Information technology expenses (3,584,406) (3,606,803)
Rent expenses (594,889) (2,411,979)
Assistance expenses (4,255,605) (2,653,174)
Meeting and training expenses (1,944,019) (1,568,425)
Transportation expenses (1,000,288) (1,357,559)
Advertisement expenses (1,141,770) (1,790,991)
Social relief expenses (1,310,370) (1,037,544)
Repair and maintanence (1,078,224) (760,521)
Communication expenses (473,282) (439,041)
Outsourcing service expenses (605,479) (695,250)
Other (2,755,817) (1,159,240)
Total (52,314,588) (44,377,819)
----- End of picture text -----

16. Insurance claims and claims recovered from reinsurers

March 31, 2019

	Gross	Reinsurers'Share	Net
Paid Claims	407,718,510	(102,893,470)	304,825,040
Change in outstanding claims	244,029,996	(178,729,736)	65,300,260
Change in mathematical reserves	(15,968)	-	(15,968)
Bonus and rebatesprovison	(59,844,386)	59,771,295	(73,091)
Total	591,888,152	(221,851,911)	370,036,241
March 31, 2018
	Gross	Reinsurers'Share	Net
Paid Claims	328,071,654	(98,786,844)	229,284,810
Change in outstanding claims	102,013,270	(63,462,833)	38,550,437
Change in mathematical reserves	(97,463)	-	(97,463)
Bonus and rebatesprovison	(122,458)	118,659	(3,799)
Total	429,865,003	(162,131,018)	267,733,985

Gizli

28

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

17. Related parties

The details of transactions between the Company and other related parties are disclosed below:

Due from /to related parties

	March 31, 2019	December 31, 2018
Shareholder’s subsidiaries	108,487,396	62,857,652
Shareholders	936,977	61,264
Total	109,424,374	62,918,916
Banks
	March 31, 2019	December 31, 2018
Shareholder’s subsidiaries	182,298,715	322,410,622
Total	182,298,715	322,410,622
Marketable securities
	March 31, 2019	December 31, 2018
Shareholder’s subsidiaries	64,848,496	48,709,250
Total	64,848,496	48,709,250
Investment funds
	March 31, 2019	December 31, 2018
Shareholder’s subsidiaries	128,560,508	168,805,699
Total	128,560,508	168,805,699
Written Premium
	March 31, 2019	March 31, 2018
Shareholder’s subsidiaries	41,003,040	43,827,857
Shareholders	562,337	843,514
Total	41,565,377	44,671,370
Claims Paid
	March 31, 2019	March 31, 2018
Shareholder’s subsidiaries	1,064,735	16,543,572
Total	1,064,735	16,543,572

Investment Income

	March 31, 2019	March 31, 2018
Shareholder’s subsidiaries	4,899,074	13,135,295
Total	4,899,074	13,135,295

Gizli

29

AKSİGORTA A.Ş.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2019

(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)

18. Contingencies

As of June 24, 2014, Tax Inspection Board of T.C. Ministry of Finance has launched a limited tax investigation related to the Banking and Insurance Transaction Tax for the years 2009, 2010, 2011 and 2012 and as a consequence of the tax inspection, tax of TL 1,8 million and tax penalty of TL 2,8 million for the year 2009, tax of TL 2 million and tax penalty of TL 3 million for the year 2010, tax of TL 3 million and tax penalty of TL 4,6 million for the year 2011 and tax of TL 4,3 million and tax penalty of TL 6,4 million for the year 2012 and in total tax and tax penalty of TL 27,9 million related to Banking Insurance Transaction Tax were imposed to the Company. There is no accrued interest on this amount as of report date. The Company has not booked any provision in the financial statements since it believes that its practice is in compliance with the regulations. On January 16, 2015, the Company filed a reconciliation request for the year 2009 and on February 20, 2015 filed a reconciliation request for the years 2010, 2011 and 2012 to the Large Taxpayers Office Commission of Reconciliation. The reconciliation meeting took place on February 15, 2018, however parties could not reach a consensus. As a consequence, the Company sued Large Taxpayers Office on February 27, 2018. Tax courts decided in favor of the Company for the years 2009, 2010, 2011 and 2012.

19. Subsequent events

There are no significant events that occured after the reporting period except for the matters stated in the footnotes.

…………………….

30