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Our strength lies in our persistence

Annual Report 2013

2 Corporate Profile, Vision, Mission, Strategies, Corporate Values4 Our Quality Policy6 Historical Development of Halk Sigorta8 Message from the Deputy Chairman 9 Message from the General Manager10 Overview of the World and Turkish Insurance

Markets and Outlook

12 The Company’s Organization, Capital and Shareholding Structure

13 Information on Associates14 Board of Directors, Senior Executives and the Number of Personnel19 The Company’s Service Process Development

Activities20 Summary Board of Directors Report21 Key Financial Indicators

24 2013 Technical Results26 An Assessment of Technical Accounts in 2013 41 Information on Financial Structure41 Key Financial Highlights42 Balance Sheet as at 31 December 201348 Statement of Income for the Year Ended

31 December 201351 Statement of Cash Flows for the Year Ended

31 December 2013

Contents

Reliability, sustainability and proactivity are the pillars of our stability, from which we have drawn our strength to date at Halk Sigorta.

We believe that the prerequisites for achieving stability are good quality product and service delivery, continued economic improvement and the aptitude to be in the right place at the right time.

Reporting Period: 2013 Annual ReportCorporate Title: Halk Sigorta A.Ş.Web Site: www.halksigorta.orgTrade Registry No: 419740Central Registration System No: 1958421378256854

Head Office, Regional Offices Directory

Head OfficeHalide Edip Adıvar Mah. Darülaceze Cad. No: 23Tel: +90 212 314 73 73 Fax: +90 212 314 73 64Call Center: 444 1 545Web: www.halksigorta.orgE-mail: [email protected]

İstanbul Regional Sales DirectorateBankalar Cad. No: 25 K: 2 Karaköy/İSTANBULTel: +90 212 254 52 85 Fax: +90 212 254 50 68E-mail: [email protected]

Anatolia Regional Sales DirectorateOsmanağa Mah. Söğütlüçeşme Cad.No: 11 Kat: 5 Kadıköy/İSTANBULTel: +90 216 330 39 51 Fax: +90 216 337 62 73E-mail: [email protected]

Aegean Regional Sales DirectorateCumhuriyet Bulvarı No: 45/A İZMİRTel: +90 232 441 36 46 Fax: +90 232 441 91 01E-mail: [email protected]

Antalya Regional Sales DirectorateŞirinyalı Mah. İsmet Gökşen Cad. No: 66 Kat: 2 Lara/ANTALYATel: +90 242 316 70 12 Fax: +90 242 316 70 32E-mail: [email protected]

Ankara Regional Sales DirectorateCinnah Mah. Göreme Sok. Nazmi Bey İş MerkeziNo: 20 K: 4 Kavaklıdere/Çankaya/ANKARATel: +90 312 310 11 11 Fax: +90 312 310 45 45E-mail: [email protected]

Adana Regional Sales DirectorateDöşeme Mah. Karaisali Cad. Baysan İş MerkeziB Blok No: 87 K: 4 Seyhan/ADANATel: +90 322 459 94 88 Fax: +90 322 459 94 87E-mail: [email protected]

Bursa Regional Sales DirectorateKırcıali Mah. Fevzi Çakmak Cad. Kayalı Sok.Doğanbey İş Merk. No: 36 K: 2 Osmangazi/BURSATel: +90 224 221 11 30 Fax: +90 224 221 16 15E-mail: [email protected]

Trabzon Representative OfficeEsentepe Mah. Yavuz Selim Bulvarı No: 145 K: 2 D: 4 TRABZONTel: +90 462 326 96 65 Fax: +90 462 326 24 31E-mail: [email protected]

1Halk SigortaAnnual Report 2013

Corporate Profile, Vision, Mission, Strategies, Corporate Values

Corporate Profile

Halk Sigorta generated TL 470 million in total premiums in 2013, up by 19.03% year-on. The Company had 2.26% market share among non-life insurance companies. The Company’s portfolio is mainly made up of land vehicles liability (37.92%), fire and natural disasters (26.57%) and land vehicles 15.78%).

Halk Sigorta pursues its operations across the nation through seven regional offices two of which are in Istanbul, and one representation office. The Company had 225 employees on its payroll as at 31 December 2013.

The Company’s target for 2014 is to achieve growth on the principles of profitability and productivity, and continue offering quality service in the sector.

Our Vision

• To be one of the leaders of the sector that supports an enhanced awareness of insurance being one of the deepest-rooted insurance companies in Turkey, while securing profitable growth without sacrificing our values of being reliable, pioneering and innovative

Our Mission

• To streamline and enrich life, and ensure its continuity, for individuals and corporations through individual and corporate assurance solutions.

• To sustain good quality service.• To guarantee customer,

shareholder and employee satisfaction.

Strategies, Corporate Values

Strategies• To offer tailor-made product

options along with the traditional insurance activities;

• To offer privileged products especially to individual customers and SMEs within the scope of customer and risk segmentation;

• To adopt customer-focused and quality approach to service;

• To ensure efficiency in all work processes for the purpose of diversified product designs, process and system security, fast and quality claim payments as well as creation of a competitive structure;

• To ensure continuous improvement and motivation of employees within the frame of performance management systems.

Corporate Values• To uphold the principles of

customer focus, innovativeness, reliability, dynamism, rationalism, teamwork, productivity, sensitivity, awareness of social responsibility and sharing, and abide by these values in every stage of our operations.

2 Halk SigortaAnnual Report 2013

Reliable: We are committed to the priority target of being reliable before you, our stakeholders, without compromising our good quality product and service range.


Our Quality Policy

Halk Sigorta carries out insurance and reinsurance activities in non-life branches in accordance with the criteria set out in its quality policies, which are as follows:

• To be able to offer a variety of the most appropriate, the most preferred economic products and services, and to be the most preferred, admired company that is able to achieve 100% customer satisfaction in the insurance sector.

• To increase our production in the bancassurance channel by improving technological infrastructure, and to aim to rank among the top five companies in bancassurance in a certain time frame, while also increasing our market share in the agencies channel.

• To create new and profitable fields for our agencies, brokers and bank channel through developing customized products that are innovative, cater to our customers’ real needs and expectations, are positioned on the basis of customer segments and sectors, and are aligned with our quality and profitability policies, as well as through keeping a close eye on the market.

• To decrease sales and operational costs and to increase productivity.

• To achieve sustainable growth, profitability, and progress.

• To be guided in our actions by the principle of steering and managing our organization based on a customer-focused approach to service. Backed by the powerful parent company, Halkbank, which is a market maker and one of the biggest public banks in Turkey, our Company moves ahead strongly towards transforming from a small, profitable business to a big, profitable company recognized in the global markets, and is positioned accordingly with its employees, organization, technical infrastructure, administrative teams, sales channels and sales force.


Sustainable: We carry out economic value chain into the future on the back of our innovative philosophy.


Historical Development of Halk Sigorta

1958Under the leadership of Türkiye Halk Bankası A.Ş., it was founded as the first and only cooperative company in the field of insurance with the participation of Merchants and Craftsmen Guarantee Cooperatives and approximately 50 merchants and craftsmen, with a paid-in capital of TL 30,000 (currently worth TL 0.03). In 1997, it was converted into a joint stock company with a capital of TL 1,000,000,000,000 (currently worth TL 1,000,000).

With more than 1,200 shareholders, the Company moved to the registered capital system with the permission of the Capital Markets Board no. 710 and dated 02 May 2000 within the scope of the Capital Market Law no. 2499.

1998Registered with the Capital Markets Board, Birlik Sigorta A.Ş. transferred its life insurance business to Birlik Hayat Sigorta A.Ş., its associate established the same year.

1999İstanbul, Adana, Elazığ and Antalya Regional Offices were set up in addition to Ankara and Aegean Regional Offices.

2000Samsun and Bursa Regional Offices were set up.

2005The Company endorsed its approach to service and code of conduct with the ISO-9000-2000 Quality Standard and began implementing Quality Management System from then on.

Upon Halkbank’s acquisition of shares with a nominal value of TL 12,500,070 corresponding to 63.32% share held in the Company’s capital by Türkiye Halk Bankası Personeli Vakfı (Halkbank Personnel Foundation), which is in liquidation, in 2005, Halkbank’s share in the capital rose to 78.32%, and the changeover of capital was promulgated in the Turkish Trade Registry Gazette dated 19 January 2006.

2009Halkbank increased its shareholding to 89.18%. The Company’s registered capital was worth TL 60,000,000 and its paid-in capital amounted to TL 40,000,000.

2010Based on a resolution adopted at the Extraordinary General Meeting convened, the company name was changed from Birlik Sigorta A.Ş. to Halk Sigorta A.Ş.

2011In line with the resolution passed at the Extraordinary General Meeting, it was decided that Halk Sigorta A.Ş. be traded on the market and platform to be determined by Borsa Istanbul (BIST) in 2012 within the frame of the provision of Article 11(3) of the Capital Market Law, and the Company began to be traded on the BIST Free Trade Platform (FTP) as of 28 May 2012.

2012Registered capital was raised from TL 60,000,000 to TL 150,000,000.

2013Issued capital was raised from TL 40,000,000 to TL 70,000,000.


Proactive: We adopt a proactive approach in order to predict your needs and to fulfill and further go beyond your demands.


Message from the Deputy Chairman

Halk Sigorta strives to deliver products that cater to needs on the back of a high quality service concept, as well as customer-focused approach and sales channels.

Distinguished shareholders,

The world economy and the global insurance market saw new products and emerging markets, along with various accompanying developments in the reporting period. 2013 will be recalled as a year that compelled both the insurers and the policyholders to rethink and review the market dynamics due to the costs imposed by aggravated conditions.

Considering the evolution and importance of the insurance business in the world, significant steps were taken also in Turkey through new product developments aimed at raising enhanced awareness of insurance among the public. Versatile contributions from the increased insurance ownership in the world to the economies of developed countries changed the perspective of emerging countries towards insurance. Monitoring the economic activity and outcomes both in terms of individuals and corporations, adeptly managing the risk perception and taking important steps in new product development, the insurance industry has become a sector that attains improvement and adds value to the economy.

In parallel with the innovation-focused development and growth the sector achieved, our Company successfully maintained the momentum it has captured in premium production and technical profitability since 2012 also in 2013. Sustaining, in 2013, the successful performance captured based on productive business models devised through investments in technology, Halk Sigorta achieved the predefined targets.

Being one of the deepest-rooted insurance companies in the Turkish insurance sector that grows in line with the economy, which develops in keeping with the political stability in Turkey, we will continue to spend our best efforts in the years ahead in line with the vision formulated to be one of the reliable, pioneering and innovative leaders of the sector that supports an enhanced awareness of insurance, while securing profitable growth without compromising our values.

Our Company strives to deliver products that cater to needs on the back of a high quality service concept, as well as customer-focused approach and sales channels. Being a strong player in one of the world’s largest financial markets together with the other Group companies drawing on the shared corporate culture possessed as part of Halkbank, we will continue to grow and successfully move ahead along our path.

We would like to thank our agencies, policyholders, shareholders and employees who accompany us in our march towards our goals as part of the Company’s development process.

Yours sincerely,

Yusuf Duran OCAKDeputy Chairman of the Board of Directors


Message from the General Manager

We believe that the remarkable profit figure Halk Sigorta posted on insurance operations in 2013, following suit of 2012, has been pleasing for our shareholder, stakeholders, employees and business partners.

Dear Shareholders,

As well known, Turkey is uniquely situated geographically and is a constant magnet of global attention due to her position both as an intercontinental passageway and an energy corridor. Furthermore, our country is a center of attraction for capital movements owing to her significant economic potential.

Growth figures attest to the environment of trust and stability in our country. While the Turkish economy expanded by 2.2% in 2012, the average growth in the first three quarters of 2013 was 4.4%

The Sector in 2013The worldwide negative developments and stagnations that particularly concentrated in European and US economies resulted in static economic activity, which, in turn, bore a negative impact upon the insurance industry. However, the insurance industry grew more than the other sectors owing to a series of measures adopted by the public authority, the robust economic infrastructure possessed as opposed to the rest of the world, the environment of trust and stability, and the resulting atmosphere that kept the demand lively for the supply of all sorts of goods and services. Looking at the premium production figures, we gladly observe that the real rate of increase, which was 8.80% in the overall sector in 2012, was 13.34% in 2013, and that the insurance business in Turkey adopted a growth trend. However, despite the positive developments in our sector, growth opportunities that will allow capturing momentum still occur through acquisitions only.

Halk Sigorta in 2013At Halk Sigorta, we have invested in technology and in people, we have acquired the capability to issue policies with a single touch of a button at bank branches, and undertook another analysis of loss, technical and operational process management, turning them into a profit center. Owing to all these factors, combined with our agencies that trust and believe in us and the strong support of Halkbank behind us, we have increased our premium production to TL 470 million at year-end 2013 from TL 395 million at year-end 2012, up by 19%. In addition, our accounting profit went up from TL 15.4 million to TL 42.2 million in the same period.

We believe that the remarkable profit figure Halk Sigorta posted on insurance operations in 2013, following suit of 2012, has been pleasing for our shareholder, stakeholders, employees and business partners.

About the FutureAt Halk Sigorta, we will continue upholding our philosophy that targets profitability and success drawing on maintained environment of trust and stability in Turkey, the support of Halkbank that has always backed us with its strength, the investments we will make in bancassurance, the solid agency network, our policyholders and shareholders.

Yours sincerely,

Bülent SomuncuBoard Member and General Manager


Overview of the World and Turkish Insurance Markets and Outlook

2.5%In 2013, the growth rate of non-life branches in the worldwide insurance industry was unchanged from its 2012 value, and remained flat at 2.5%.

In the Turkish insurance market, Land Vehicles Liability branch claimed the highest premium production with TL 5.39 billion among non-life branches in 2013.

Overview of the World Insurance Market

The economic deceleration trend that began in 2012 in the world permeated also 2013 and resulted in a slow pace of growth for the global economy, whose expansion failed to capture the projections. Therefore, the IMF and the World Bank chose to revise the global growth targets downwards. Furthermore, the US Fed’s tapering affected the emerging economies the most, and caused the US dollar to appreciate in the face of other countries’ currencies. While this has led to some contraction in developing economies, it has caused the stagnation to persist in developed economies, which had been ongoing since 2012. However, economies quickly got out of this stagnated process and moved to a growth trend, sustaining their economic expansion in the time that followed.

The shrinkage that had been ongoing uninterruptedly in the Eurozone, another key component of the world economy, came to an end in the first quarter of 2013 and economies began to attain growth. The insurance industry maintained its growth trend, despite remaining somewhat below the expected level due to the continued contraction of the worldwide trade volume amid this economic conjuncture. According to data released at the end of 2013, global economic growth was registered as 2.4%. In 2013, the growth rate of non-life

branches in the worldwide insurance industry was unchanged from its 2012 value and remained flat at 2.5%. While the sector’s growth rate of 2013 was the same with the 2012 rate of 1.4% in developed economies, it was 8.0% in 2012 and 7.8% in 2013 in developing countries.

During 2013, the insurance industry experienced significant developments in terms of catastrophe losses. The Sigma report by Swiss Re established the total cost of natural disasters that took place in the first half of the year at USD 56 billion. The world insurance market covered USD 20 billion of this loss. Year-end data show that the catastrophe losses amounted to USD 130 billion in total, USD 44 billion of which was covered by insurers. The catastrophes that occurred in Europe in the second half of 2013 caused big-ticket losses. While it is estimated that the total cost of the St. Jude storm, which caused major damages in a number of locations across Europe, to insurers is approximately USD 3 billion, total damages resulting from the flood in Germany amounted to EUR 12 billion, EUR 6 billion of which was insured losses. These loss amounts provide a clearer picture of the importance attached to insurance and the high ratio of insurance ownership in Europe.

Moreover, the announcements made in September 2013 stated that the cost of catastrophe losses in Russia, China, the Philippines and Pakistan was approximately USD 10 billion.


22.2%Having increased its premium production by 22.2% year-over-year, the Turkish insurance sector maintained its steep rise and wrote TL 24,230 million in total premium production.

A series of measures are being adopted across the world in an effort to strengthen the financial structure of the insurance industry. One such measure was an agreement reached by country leaders at the G-20 summit held in September in Russia. According to this agreement, regulatory bodies will be advised to adopt the capital adequacy requirements in the insurance industry and to adopt stricter rules governing insurers so as to ensure continued economic growth.

In addition, the European Insurance and Occupational Pensions Authority (EIOPA) published the Solvency II Final Advice. Highly commented on by companies and industry experts, Solvency II was revised once again on the axis of these feedbacks. To be introduced partially in the year ahead, Solvency II arrangements cover important requirements that will facilitate the operability of the insurance sector.

Insurance Market in Turkey

Although the development in the world insurance market was slow in 2013, it continued at an increasing pace in Turkey. Having increased its premium production by 22.2% year-over-year, the insurance sector maintained its steep rise and wrote TL 24,230 million in total premium production.

When the year-end 2013 inflation rate is also taken into account, real growth in the sector registered as 13.34%. Of this production, TL 20.8 billion was generated on non-life branches whereas TL 3.4 million was derived from life branches. While companies taking the top ten ranks in terms of total premium production controlled 71.89% of the market share last year, this has risen to 73.94% in the reporting period. Land Vehicles Liability branch claimed the highest premium production with TL 5.39 billion among non-life branches in 2013. This branch was followed, in order, by Land Vehicles with a premium production of TL 5.02 billion, Fire and Natural Disasters with TL 3.32 billion, Health with TL 2.47 billion and General Losses with TL 2.19 billion.

In 2013, various regulatory arrangements were introduced so as to make sure that the sector would move ahead with more solid steps; within this scope, the Compulsory Earthquake Insurance Tariff and Guidelines were updated, and effective 1 March 2013, 10% tariff

discount began to be applied to buildings having a construction permit date of 2007 and later. Combined with the 20% renewal discount, total discount adds up to 30%. Another new implementation has been the transition to the address code practice, which will facilitate coordination and integration among all institutions dealing with housing units.

On 1 April 2013, amended general conditions went into force in relation to the land vehicle own damage insurance, under which four different land vehicle own damage policies can be created: narrow, standard, extended and full. Accordingly, the sum insured will no longer be written on the policy; instead, payment will be made based on the market value of the vehicle. Furthermore, a decision has been passed to move on 1 January 2014 to complete deregulation in insurance premiums in Land Vehicles Compulsory Liability Insurance.

In addition, the state subsidy that came into effect in the Private Pension System as of 1 January 2013 increased premium production in this field. The sector received positive contribution from the 25% state subsidy, which is paid on behalf of the participant and is limited to the aggregate of gross minimum wage for the relevant year. Thanks to this subsidy payment, premium production in the Private Pension System reached TL 22 billion.


The Company’s Organization, Capital and Shareholding Structure

Organization Structure

Board of Directors

Internal Audit Department

General Manager

Deputy General Manager

Marketing

Accounting Department

Collections Department

Claims Department


Technical Affairs


Operations

Deputy General Manager Financial

Management

Legal Affairs Department

Internal Control and Risk Management

Department

Consultant

Publicity and Public Relations

Department

Operations Department

ITDepartment

Technical Affairs Department

Risk Liquidation and Recourse Department

Actuary Department

Marketing Department

Reinsurance Department

Channel Management Department

Office Management

Claims Monitoring and Logistics Department

HR and Support Services

Department


89.18%The principal shareholder in Halk Sigorta is A.Ş. is T. Halk Bankası A.Ş. (Halkbank), which owns 89.18% of the Company’s capital.

Others10.82%

Türkiye Halk Bankası A.Ş.89.18%

Shareholding Structure

The Company’s Capital TL 70,000,000.-, which is divided into 7,000,000,000.- shares each with a value of TL 0.01.

Based on the Board of Directors resolution no 518 dated 14 August 2012, it was decided to raise the issued capital from TL 40,000,000.- to TL 70,000,000.-, and an application was filed with the Capital Markets Board of Turkey (CMB) to this

end. The CMB completed registration on 16 January 2013 and the capital increase was published in the Turkish Trade Registry Gazette issue of 28 January 2013.

The Chairman or the members of the Board of Directors, the General Manager and Assistant General Managers do not hold shares in the Company’s capital.

*None of the Company’s shares enjoy privileges.

Capital and Shareholding StructureThe Date of Incorporation 27 December 1958

Registered Capital TL 150,000,000Paid-in Capital TL 70,000,000

Shareholder Capital (TL)*Türkiye Halk Bankası A.Ş. 62,426,162Others 7,573,838Total 70,000,000

Information on Associates31 December 2013

Book Value Participation Ratio %

Halk Hayat ve Emeklilik A.Ş. 36,948,545 5.00Halk Gayrimenkul Yatırım Ortaklığı A.Ş. 310,128 0.04Halk Faktoring A.Ş. 553,062 1.25Halk Portföy Yönetim A.Ş. 376,599 4.00Tarım Sigortaları Havuz İşletmeleri A.Ş. 220,125 4.35Halk Yatırım Menkul Değerler A.Ş. 18,442 0.02Halk Finansal Kiralama A.Ş. 10 0.00Türk P ve I Sigorta A.Ş. 50,000 16.67Associated securities, net 38,476,911

During the current period, the Company obtained bonus shares worth TL 2,151,004 in total (TL 2,050,000 from Halk Hayat ve Emeklilik A.Ş., TL 4,204 from Halk Gayrimenkul Yatırım Ortaklığı A.Ş., TL 1,800 from Halk Yatırım Menkul Değerler A.Ş. and TL 95,000 from Tarım Sigortaları Havuz İşletmeleri A.Ş.). In addition, the Company paid TL 250,000 and participated in the capital increase through rights issue of Halk Factoring.


Board of Directors, Senior Executives and the Number of Personnel

Board of DirectorsYusuf Duran OCAK Deputy Chairman (Since 10 April 2013)Deniz TEKCİ Member Mehmet Hakan ATAŞ Member Cenk NİKSARLI Member Nurhan KÜÇÜKKAYALAR Member Ahmet ÇAKMAK Member Kıvanç ACAR Member Bülent SOMUNCU General Manager (Since 26 December 2011)

Yusuf Duran OCAKDeputy Chairman of the Board of DirectorsBorn in Kadirli, Adana in 1966, Yusuf Duran Ocak received his degree in public finance from the Economic and Administrative Sciences at Gazi University. He started his career at Halkbank as an assistant inspector in 1991, where he assumed the position of inspector in 1994, Vice Chairman of the Board of Inspectors in 2000, Head of General Accounting Department in 2001, and Head of Balance Sheet Consolidation and External Reporting Department in 2002. He has served as the Head of Financial Accounting and Reporting Department at Halkbank since July 2007 and as a Board member at Halk Sigorta since 01 June 2010, and the Deputy Chairman at Halk Sigorta since 01 April 2014.

Deniz TEKCİMember of the Board of DirectorsBorn in Bingöl in 1973, Deniz Tekci received his bachelor’s degree in business from the Faculty of Economics and Administrative Sciences at Çukurova University and his master’s degree from the Institute of Social Sciences at the same university. He started his career as an assistant specialist at Pamukbank and joined Halkbank in 2004, where he functioned as a financial analyst, marketing executive, loans executive, Head of Loans Section, Branch Manager and Head of SME Loans Department. He currently serves as the Head of Loans Policies and Practices Department at Halkbank.

Mehmet Hakan ATAŞMember of the Board of DirectorsBorn in 1969 in Antakya, Mehmet Hakan Ataş received his bachelor’s degree in business from the Faculty of Political Sciences at Ankara University in 1994. He started his career at Kızılcahamam branch of Halkbank in 1999, where he later worked in the Internal Control Department and Risk, Collection and Liquidation Department. He has been serving as the Head of the Retail Loans Department since 08 October 2010. He held a seat as a member on the boards of directors of Halk Leasing (01 December 2011 – 13 May 2012), and Halk Portfolio Management (14 May 2012 – 09 April 2013). He has been serving as a member of the Board of Directors of Halk Sigorta since 10 April 2013.


Cenk NİKSARLIMember of the Board of DirectorsBorn in 1968 in Ankara, Cenk Niksarlı received his degree in electronics and communication engineering from İstanbul Technical University. He got his master’s degree from the School of Management at Sabancı University in 2004. He began his professional life as an R&D engineer in the telecommunications industry in 1991 and worked as a specialist at Pamukbank from 1995 and as a consultant at ING Bank in the Netherlands in 1999. He later returned to Pamukbank as an executive and worked as the Head of Network Division at Halkbank from 2004. Cenk Niksarlı currently serves as the Head of IT Infrastructure Operation and Management Department.

Nurhan KÜÇÜKKAYALARMember of the Board of DirectorsBorn in Akdağmadeni, Yozgat in 1966, Nurhan Küçükkayalar received her law degree from Ankara University. Following the completion of her legal internship, she started her career practicing law privately. She worked as an attorney at Et Balık Kurumu (Meat and Fish Authority) Legal Affairs Department and joined Halkbank in 1991 as an attorney. She has been serving as the I. Legal Consultant at Halkbank since 2002.

Ahmet ÇAKMAK Member of the Board of DirectorsBorn in 1965 in Samsun, Ahmet Çakmak got his bachelor’s degree in mechanical engineering from the Faculty of Engineering at Erciyes University in 1987. His career path included positions as, in chronological order, engineer, chief engineer, assistant manager, and manager of construction and premises. He has been functioning as the Head of Support Services Department at Halkbank since 2011. In tandem, he has served as a member on the Board of Auditors at Halk REIT, a subsidiary of Halkbank, in 2012-2013. He currently holds a seat as a member on the Board of Directors of Halk Sigorta, a subsidiary of Halkbank.

Kıvanç ACARMember of the Board of DirectorsBorn in 1970 in İzmir, Kıvanç Acar got his bachelor’s degree from the Faculty of Political Sciences at Ankara University and his master’s degree from the Department of Economic Politics at İstanbul University. After starting his banking career in 1999, he continued as a Section Head in the Commercial Loans Department of Halkbank in 2009. After holding the position of a branch manager until July 2011, he has been appointed as the Head of the Head Office SME Marketing Department, a post he still holds.

Bülent SOMUNCUMember of the Board of Directors and General ManagerBorn in İstanbul in 1961, Bülent Somuncu graduated from Kabataş High School for Boys. He got his bachelor’s degree in business administration from the Faculty of Political Sciences at Ankara University and his master’s degree in the history of economics from Marmara University. He started his professional life in the Ministry of Trade in 1980 and functioned as a specialist in the Insurance Supervisory Board, Ankara Group Head, and Head of the Board. From 1988, he served as the Economic Counselor in Bulgaria, representing the Turkish Treasury for three years. He functioned as Acting Chairman of the Board at Rumeli Sigorta insurance company, representing the Turkish Treasury and the SDIA. He was appointed as the General Manager of Güven Sigorta insurance company on 18 September 2006. He has been brought to the position of the General Manager of Halk Sigorta effective 26 December 2011. He taught Insurance Law at İstanbul University, Institute of Social Sciences, Department of Insurance, and Insurance Claims Implementations at Başkent University, Faculty of Commercial Sciences. He speaks English and Bulgarian.



Executive Management

Bülent SOMUNCU General Manager (Since 26.12.2011)Fahri UĞUR Deputy General Manager- Technical AffairsBülent KARAN Deputy General Manager- OperationsSuat İNAN Deputy General Manager- Financial Management

Bülent SOMUNCUGeneral ManagerBorn in İstanbul in 1961, Bülent Somuncu graduated from Kabataş High School for Boys. He got his bachelor’s degree in business administration from the Faculty of Political Sciences at Ankara University and his master’s degree in the history of economics from Marmara University. He started his professional life in the Ministry of Trade in 1980 and functioned as a specialist in the Insurance Supervisory Board, Ankara Group Head, and Head of the Board. From 1988, he served as the Economic Counselor in Bulgaria, representing the Turkish Treasury for three years. He functioned as Acting Chairman of the Board at Rumeli Sigorta insurance company, representing the Turkish Treasury and the SDIA. He was appointed as the General Manager of Güven Sigorta insurance company on 18 September 2006. He has been brought to the position of the General Manager of Halk Sigorta effective 26 December 2011. He taught Insurance Law at İstanbul University, Institute of Social Sciences, Department of Insurance, and Insurance Claims Implementations at Başkent University, Faculty of Commercial Sciences. He speaks English and Bulgarian.

Fahri UĞURDeputy General ManagerBorn in 1977 in Giresun, Fahri Uğur graduated from Yomra Science High School in Trabzon. After studying three years in the Electrical and Electronics Engineering Department at the Middle East Technical University, he transferred to Hacettepe University and got his bachelor’s degree in Public Finance. He started his career as an insurance auditor assistant specialist on the Insurance Inspection Board in 2002, where he was appointed as Insurance Inspection Specialist in 2006. He pursued his MBA studies at the New York University from 2008 to 2010. Since September 2013, he has been serving as the Deputy General Manager for Technical Services at Halk Sigorta.


Bülent KARANDeputy General ManagerBülent Karan received his degree in petroleum engineering from the Faculty of Mines at İstanbul Technical University in 1991 and then his MBA from the Institute of Social Sciences at Sakarya University. He started his career in 1991 at Aladdin Middle East Ltd. Şti. He then held managerial positions in media, advertising, construction and food industries. He joined Halk Sigorta in April 2006 as Marketing Group Manager. Mr. Karan was appointed as the Deputy General Manager for Marketing in September 2007, and as Deputy General Manager for Operations in February 2012. Mr. Karan is married and has two children.

Suat İNANDeputy General ManagerBorn in 1961 in Kastamonu, Suat İnan got his bachelor’s degree from the Faculty of Business Administration at Anadolu University. He began his career in 1983 as Assistant Supervisor of Loans at Pamukbank. He worked in the Loans unit at Dışbank for 4 years. He was appointed as Assistant Manager of Accounting at Pamukbank in 1994, where he was promoted as the Accounting Section Head in 1996. Brought to the position of the Section Head of Accounting Department at Halkbank Head Office in 2004, Suat İnan was assigned as Section Manager at the Tax Management and Accounting Department at Halkbank Head Office in 2007. He has been serving as the Deputy General Manager of Financial Management since June 2013. Suat İnan is married and has three children.



ManagementBülent SOMUNCU General Manager (Since 26.12.2011)

Deputy General Manager- MarketingFahri UĞUR Deputy General Manager- Technical AffairsBülent KARAN Deputy General Manager- OperationsSuat İNAN Deputy General Manager- Financial ManagementLevent ÖZİNCE Internal Audit DirectorBedriye HARPUT Internal Control and Risk Management DirectorMüjgan YILMAZ Legal Affairs DirectorBurak MİSKİ Marketing DirectorBerrin SADIKOĞLU Channel Management DirectorEbru KIR Reinsurance DirectorTarkan DENİZ Technical Affairs Director

Actuarial DirectorYahya Tekin ESATOĞLU Risk Liquidation and Recourse DirectorMehmet Bülent ERALTAN Operations Directorİsmail GÖNCÜ IT DirectorDilek KARAASLAN Publicity and Public Relations DepartmentNafiz GÜLHAN HR and Support Services DirectorHatice ÇİL Accounting Directorİnci Derya HASANEFENDİOĞLU Collections DirectorYılmaz TURHAN Claims DirectorM. Oğuz ALOBA Claims Monitoring and Logistics DirectorHabip ÇETİNKAYA İstanbul Region Sales DirectorMeltem HANLI Anatolia Region Sales Director (acting)Mehmet Yıldıray TUNÇ Ankara Region Sales Director

Aegean Region Sales DirectorMustafa ANDIRIN Adana Region Sales DirectorTamer KOŞANER Antalya Region Sales Director

Bursa Region Sales DirectorCihan SÜNÜN Trabzon Region Sales Manager

Number of Personnel Employed by Categories During the Reporting Period 31 December 2013

Executive management (*) 5Other employees 220Total 225

(*) Including the General Manager and the Deputy General Managers of the Company.

Number of personnel employed at the Head Office and Regional OfficesHead Office 160İstanbul Regional Sales Directorate 11Anatolia Regional Sales Directorate 8Ankara Regional Sales Directorate 11Aegean Regional Sales Directorate 11Adana Regional Sales Directorate 9Antalya Regional Sales Directorate 5Bursa Regional Sales Directorate 6Trabzon Regional Sales Representative Office 4Total 225


The Company’s Service Process Development Activities

The IP-structured “Tegsoft Contact Center” system, which had been introduced in June 2012, remains in use. The work on IVR has been brought to completion and it actively works in integration with Vizyoneks. In addition to those, the “Tegsoft Complaint Handling” system has been put into use, and the usage and improvement process is in progress for the complaint handling software.

Thanks to the new queue integrated to the new system in July 2012, the callers are able to leave a recorded message on the system when the call traffic at the Call Center exceeds the predetermined threshold, who are then called back based on the recordings. Due to the huge amount of calls and notices received from all sorts of channels, it has become impossible to call back the message-leavers within the planned time interval during the day, and the implementation that was initiated in July 2012 had to be terminated in May 2013. The “Automated Outgoing Call Module”, which was put into use by the end of 2013 and is automatically run by the system, works in integration with Vizyoneks and it began to place the return calls in claims processes to make informative calls; as such, the system can be considered as an alternative to the informative process.

Besides all these initiatives, the renewals below were effected:

• During the reporting period, the business intelligence software was purchased, thereby increasing the Company’s reporting capability, which was a major need.

• During 2013, the search robot and TTS (Text To Speech) were bought and began to be used for Claims Files and Subrogation Files processes. On the Claims side, the current stage of the file is being informed to customers in an effort to enhance customer satisfaction (when the file is opened, at the lacking documents stage, when the payment date is set, and when the payment is made). On the subrogation side, we step in at the time subrogation is demanded, and as a result, we are able to reach and get back to the relevant person faster.

• Transition to the .NET collection was completed.

• Transition to the .NET addendum was completed.

• .NET land vehicles (own damage) product was finalized. (It was made available for use by Bank users)

• Transition to .NET claims was completed.

• The software needed by our Company (HP BLADE Server) was purchased and virtualization was initiated. (Up until now, six physical servers were converted to virtual structure.)

• Progress has been secured in the integration with the Bank. (Policies of 14 products can be issued with a single button)

• Transition was made to the UAVT (National Address Database System).

• Land vehicles (own damage) renewal program was prepared.

• Land vehicles (own damage) quick quotation program was designed.

• Quotation work in relation to online products was completed. (Compulsory Earthquake (DASK) Quotation and Traffic (land vehicle TPL) Quotation)


Distinguished Shareholders,

After posting a profit of TL 15.4 million in 2012 by capitalizing on the positive momentum the national economy captured as opposed to the global economic trend, our Company sustained its profitability and booked a profit of TL 42.2 million as at year-end 2013. The national insurance industry generated a premium production figure of TL 21 billion on non-life branches in 2013, representing a changeover by 21.72% as compared with 2012 on the basis of total premium production. During the same period of time, our Company increased its premium production from TL 395 million to TL 470 million, up by 19.03%. Our market share, on the other hand, went down from 2.31%. to 2.26% despite our significantly expanded premium production.

Our key target for 2014 and thereafter is to achieve sustainable profitable growth, as well as shareholder and employee happiness, to make a breakthrough in bancassurance with the support of our controlling shareholder Halkbank, and to make optimum use of the Bank’s potential to climb to high rankings in premium production generated by the bank. Our primary targets will also include to grow the insurance pie in Turkey and to lead making better use of the potential with the impact and support of the positive trend in national economy.

We hereby respectfully present the Company’s operating results in 2013 fiscal year for your review and approval.

I. IncomeA. Technical IncomeThe Company’s premium production on non-life branches amounted to TL 470,364 thousand in 2013. The highest contributors to increased premiums were land vehicles liability, fire and natural disasters, general losses branches.

B. Financial IncomeThe Company’s investment income was worth TL 26,765 thousand at year-end 2013. TL 20,021 thousand of this amount was generated on income from financial assets, TL 4,575 thousand on currency translation gains, TL 2,151 thousand on income from affiliates, TL 12 thousand on derivative products, TL 6 thousand on revenues from land, building lots and buildings.

II. ExpensesA. Technical ExpensesOut of TL 470,364 thousand written in 2013, TL 152,889 thousand and TL 17,535 thousand have been ceded to reinsurance companies and Social Security Institution, respectively. Gross claims paid were up by 16.90% year-to-year and rose from TL 163,991 thousand to TL 191,702 thousand.

B. Financial CostsFinancial costs for 2013 amounted to 20,028 thousand. Of this amount, TL 11,671 thousand consisted of investment income transferred to technical accounts, TL 3,258 thousand of currency translation losses, TL 2,097 thousand of depreciation, and TL 2,766 thousand of income/profits and expenses/losses on other operations and extraordinary operations.

C. Overhead ExpensesDuring 2013, administrative expenses totaled TL 3.,196 thousand, marketing and sales expenses TL 519 thousand, and overhead costs TL 26,313 thousand.

III. ConclusionThe Company booked a technical income of TL 333,619 thousand and technical expenses of TL 287,517 thousand on non-life branches in 2013. Investment income and investment expenses amounted to TL 26,765 thousand and TL 17,261 thousand respectively, while losses on other operations and extraordinary operations totaled TL 2,766 thousand. At the bottom line, the Company posted a gross profit for the period in the amount of 52,840 thousand and a net profit after tax for the period of TL 42,248 thousand.

Summary Board of Directors Report

Bülent SomuncuMember of the Board of Directors and General Manager

Yusuf Duran OCAKDeputy Chairman of the Board of Directors


Key Financial Indicators

Financial Highlights (TL million) 2013 2012

Total Premium Production 470 395

Total Assets 505 381

Claims Paid 192 164

Paid-in Capital 70 70

Shareholders’ Equity 164 90

Pretax Profit/ 53 16

Net Profit 42 15

Capital Adequacy Ratios 2013 2012

Premiums Received/Shareholders’ Equity 2.87 4.38

Shareholders’ Equity/Total Assets 0.32 0.24

Shareholders’ Equity/Technical Provisions 0.65 0.38

Asset Quality and Liquidity Ratios 2013 2012

Liquid Assets/Total Assets 0.68 0.77

Liquidity Ratio 1.04 1.04

Current Ratio 1.38 1.32

Premium and Reinsurance Receivables/Total Assets 0.14 0.11

Receivables from Agencies/Shareholders’ Equity 0.35 0.36

Operational Ratios 2013 2012

Retention Ratio 0.64 0.69

Claims Payment Ratio 0.57 0.63

Profitability Ratios 2013 2012

Loss-Premium Ratio (gross) 0.52 0.59

Combined Ratio (Loss-Premium Ratio (net) + Cost Ratio) 0.89 0.96

Loss-Premium Ratio (net) 0.63 0.67

Cost Ratio 0.26 0.30

Pretax Profit/Written Premiums 0.11 0.04

Technical Profit (Technical Division Balance)/Written Premiums 0.10 0.04


Key Financial Indicators

TL 470,364 thousandIn 2013, total premium production of Halk Sigorta reached TL 470,364 thousand.

Premium Production (TL thousand)

2012

395,170470,364

19.0%

2013

Premium Production by Branches (TL thousand)

Land Vehicle Liability Fire and Natural Disasters Land Vehicles

2012 2012 2012

158,15887,108

80,257178,364 124,97874,236

12.8% 43.5%

-7.5%

2013 2013 2013

General Losses Accident Illness/Health

2012 2012 2012

32,807

14,595

12,617

50,303 14,220 15,440

53.3%

-2.6%

22.4%

2013 2013 2013


TL 178,364 thousandIn 2013, Land Vehicles Liability branch claimed the highest share in premium production with TL 178,364 thousand.

TL 124,978 thousandLand Vehicles Liability branch was followed by Fire and Natural Disasters branch with a premium production of TL 124,978 thousand.

TL 74,236 thousandLand Vehicles branch ranked third in total premium production with TL 74,236 thousand.

Aircraft Liability

2012

1011

10%

2013

Aircraft Watercraft

2012 2012

701 263

494

240

-29.5% -8.7%

2013 2013

Financial Losses Marine General Liability

2012 2012 2012

3,624

2,492

2,488

5,240

1,720

5,056

44.6%

-31.0%

103.2%

2013 2013 2013

Fidelity

2012

49

63

28.6%

2013

During 2013, total premium production of Halk Sigorta grew by 19.0%.


2013 Technical Results

Branches

31.12.2013 Premium Production

(TL)Share (%)


(TL)Share (%)

Accident 887,277,513 3.66 670,011,467 3.38

Illness/Health 2,473,114,766 10.21 2,237,100,853 11.28

Land Vehicles 5,025,804,558 20.74 4,533,678,699 22.87

Rail Vehicles 5,286 0.00 256,342 0.00

Aircraft 41,755,849 0.17 49,384,012 0.25

Watercraft 139,916,316 0.58 133,166,490 0.67

Marine 415,936,425 1.72 377,880,621 1.91

Fire and Natural Disasters 3,324,489,250 13.72 2,645,119,291 13.34

General Losses 2,186,115,156 9.02 1,741,950,686 8.79

Land Vehicle Liability 5,382,930,773 22.22 3,937,163,237 19.86

Aircraft Liability 69,721,106 0.29 78,766,956 0.40

Watercraft Liability 1,675,496 0.01 438,040 0.00

General Liability 508,124,765 2.10 419,997,806 2.12

Credit 106,601,433 0.44 74,468,868 0.38

Fidelity 24,702,020 0.10 19,175,517 0.10

Financial Losses 171,417,052 0.71 135,549,791 0.68

Legal Protection 67,218,062 0.28 58,086,280 0.29

Support 7,482,251 0.03 3,739,251 0.02

Total Non-Life 20,834,288,077 85.99 17,115,934,207 86.33

Total Life 3,395,327,657 14.01 2,710,826,393 13.67

Grand Total 24,229,615,734 100.00 19,826,760,600 100.00

Non-life Premium Production by Branches by the Turkish Insurance Industry


Branches

Growth in the Sector’s Premium Production

(Nominal) (%)

Growth in the Sector’s Premium Production

(Real) (%)

Growth in Halk Sigorta’s Premium

Production(Nominal) (%)

Growth in Halk Sigorta’s Premium

Production(Real) (%)

Accident 32.43 23.30 -2.57 -9.28Illness/Health 10.55 2.93 22.38 13.95Land Vehicles 10.85 3.22 -7.50 -13.87Rail Vehicles -97.94 -98.08Aircraft -15.45 -21.27 -29.61 -34.46Watercraft 5.07 -2.17 -8.67 -14.96Marine 10.07 2.49 -31.00 -35.75Fire and Natural Disasters 25.68 17.02 43.47 33.59General Losses 25.50 16.85 53.33 42.77Land Vehicle Liability 36.72 27.30 12.78 5.01Aircraft Liability -11.48 -17.58 11.65 3.96Watercraft Liability 282.50 256.14General Liability 20.98 12.65 103.21 89.21Credit 43.15 33.29Fidelity 28.82 19.94 29.30 20.39Financial Losses 26.46 17.75 44.57 34.60Legal Protection 15.72 7.75Support 100.10 86.31Total Non-Life 21.72 13.34 19.03 10.83Total Life 25.25 16.62Grand Total 22.21 13.79 19.03 10.83

Branches


(TL)Share (%)


(TL)Share (%)

Accident 14,219,661 3.02 14,594,969 3.69Illness/Health 15,440,353 3.28 12,616,732 3.19Land Vehicles 74,236,181 15.78 80,256,594 20.31Aircraft 493,613 0.10 701,237 0.18Watercraft 240,495 0.05 263,315 0.07Marine 1,719,681 0.37 2,492,230 0.63Fire and Natural Disasters 124,977,698 26.57 87,108,115 22.04General Losses 50,303,411 10.69 32,807,224 8.30Land Vehicle Liability 178,363,506 37.92 158,158,050 40.02Aircraft Liability 11,005 0.00 9,856 0.00General Liability 5,056,012 1.07 2,488,114 0.63Fidelity 63,136 0.01 48,830 0.01Financial Losses 5,239,173 1.11 3,624,459 0.92Total 470,364,461 100.00 395,169,723 100.00

Growth Rates by Branches in 2013 (%)

During 2013, Halk Sigorta attained 10.83% real growth in premium production and wrote TL 470 million in premiums. Our market share in non-life insurance that was 2.31% in 2012 was registered as 2.16% in 2013.


An Assessment of Technical Accounts in 2013

TL 470,364 thousandPremium production grew by TL 75,194 thousand in the twelve months to end-2013 and reached TL 470,364 thousand.

Combined Ratio (Net) (%) Technical Profitability Ratio (%)

2012 2012

96.35

4.22

89.449.80

-6.91 pps

+5.58 pps

2013 2013

Total Premium Production (TL thousand) Claims Paid (TL thousand) Loss Premium Ratio (Net) (%)

2012 2012 2012

395,170 163,99166.60470,364 191,703 63.24

19.0% 16.9%

-3.36 pps

2013 2013 2013

9.80%Technical profitability rose from 4.22% to 9.80%.


TL 178,364 thousandIn Land Vehicles Liability branch, premium production went up by TL 20,206 thousand over the course of one year to TL 178,364 thousand at end-2013.


2012 2012

112.75

2.34

98.795.12

-13.96 pps

2013 2013

Premium Production (TL thousand) Claims Paid (TL thousand) Loss Premium Ratio (Net) (%)

2012 2012 2012

158,158

42,894

82.40178,364 94,91075.19

12.8% 121.3%

-7.21%

2013 2013 2013

Land Vehicles Liability

+2.78 pps

5.12%Technical profitability went up from -2.34% to 5.12%.




2012 2012

51.86 16.7149.4414.46

-2.42 pps -2.25 pps

2013 2013


2012 2012 2012

87,108

52,18718.76

124,978

18,650

20.57

43.5%

-64.3%

+1.81pps

2013 2013 2013

Fire and Natural Disasters

TL 124,978 thousandIn the Fire and Natural Disasters branch, 2013 premium production reached TL 124,978 thousand, higher than its 2012 value by TL 37,870 thousand.

TL 18,650 thousandClaims paid went down from TL 52,187 thousand to TL 18,650 thousand.



2012 2012

111.95

-6.87

97.195.16

-14.76 pps

2013 2013


2012 2012 2012

80,25752,915

84.0174,236

62,90671.14

-7.5%

18.9%

12.03 pps

-12.87 pps

2013 2013 2013

Land Vehicles

TL 74,236 thousandIn the Land Vehicles branch, 2013 premium production slimmed down by TL 6,021 thousand to TL 74,236 thousand.

5.16%Technical profitability increased from -6.87% to 5.16% in 2013.




2012 2012

1593

26.4560.82

18.83

2013 2013


2012 2012 2012

2,492

1,359

52.66

1,720

1,639

24.11

20.6%

2013 2013 2013

Marine

-31.0%-28.55 pps

+44.89 pps -7.62 pps

TL 1,720 thousandIn the Marine branch, 2013 premium production decreased by TL 772 thousand to TL 1,720 thousand.

24.11%Loss premium ratio fell from 52.66% to 24.11%.



2012 2012

89.25 12.32

61.32

5.39

2013 2013


2012 2012 2012

263

33 39.86

24046 61.37

2013 2013 2013

Watercraft

-8.7%

39.4% +21.51 pps

-27.93 pps-6.93 pps

TL 240 thousandIn the Watercraft branch, premium production shrank by TL 23 thousand and went down to TL 240 thousand during 2013.

5.39%Technical profitability dropped from 12.32% to 5.39%.



Premium Production (TL thousand) Technical Profitability Ratio (%)

2012 2012

701

4.58

494

9.20

2013 2013

Aircraft

-29.5%

+4.62 pps

TL 494 thousandIn the Aircraft branch, premium production slimmed down by TL 207 thousand to TL 494 thousand in 2013.

9.20%Technical profitability increased from 4.58% to 9.20%.



2012 2012

74.28

22.41

60.08

38.89

2013 2013


2012 2012 2012

14,595

1,318

21.9014,220 2,956

7.83-14.07 pps

2013 2013 2013

Accident

-2.6%

124.3%

-14.2 pps

+16.48 pps

TL 14,220 thousand In the Accident branch, premium production decreased by TL 375 thousand to TL 14,220 thousand in 2013.

38.89%Technical profitability rose from 22.41% to 38.89%.


2012

-4.18

10.74

2013

14.92 pps

2012

129.43

44.07

2013

-85.36 pps

2012

146.16

53.44

2013

-92.72 pps

2012

286 271

2013

-5.2%

2012

2,488

5,056

2013

103.2%


Loss Premium Ratio (Net) (%)

Technical Profitability Ratio (%)

Claims Paid (TL thousand)Premium Production (TL thousand)

Combined Ratio (Net) (%)

General Liability

TL 5,056 thousandIn the General Liability branch, premium production expanded by TL 2,568 thousand year-on to reach TL 5,056 thousand in 2013.

10.74%Technical profitability hiked from -4.18% to 10.74%.



2012 2012

36.93 9.93

25.048.43

2013 2013


2012 2012 2012

32,807

11,544 26.9650,303

8,449 21.06

2013 2013 2013

General Losses

53.3%

-26.8% -5.9 pps

-11.89 pps -1.50 pps

TL 50,303 thousandIn the General Losses branch, premium production was up by TL 17,496 thousand to TL 50,303 thousand in 2013.

TL 8,449 thousandClaims paid declined from TL 11,544 thousand to TL 8,449 thousand.




2012 2012

13.77

18.55 57.76

2013 2013


2012 2012 2012

49

0

1.8363 7 1.83

28.6% 100%

2013 2013 2013

Fidelity

+4.78 pps52.29

+5.47 pps

TL 63 thousandIn the Fidelity branch, premium production was worth TL 63 thousand in 2013.

57.76%Technical profitability went up from 52.29% in 2012 to 57.76% in 2013.



2012 2012

37.64

20.1470.07 20.08

-0.06 pps

2013 2013


2012 2012 2012

12,617 1,250

17.7815,440 1,673

12.78

2013 2013 2013

Illness/Health

22.4% 33.8%

-5.00 pps

+32.43 pps

TL 15,440 thousandIn the Health branch, premium production grew by TL 2,823 thousand year-on to reach TL 15,440 thousand in 2013.

12.78%Loss premium ratio fell from 17.78% to 12.78% in 2013.




2012 2012

-16.73

44.076.14

23.56

2013 2013


2012 2012 2012

3,624

206 1.445,240 197

0.22

-1.22 pps

2013 2013 2013

Financial Losses

44.6%

22.87 pps

-4.4%

-20.51 pps

TL 5,240 thousandIn the Financial Losses branch, premium production increased by TL 1,616 thousand annually and reached TL 5,240 thousand in 2013.

0.22%Net loss premium ratio decreased from 1.44% to 0.22%.


Premium Production (TL thousand) Technical Profitability Ratio (%)

2012 2012

1065.4511

-6.13

2013 2013

Aircraft Liability

10%-71.58 pps

TL 11 thousandIn the Aircraft Liability branch, premium production rose from TL 10 thousand to TL 11 thousand during 2013.



Investment Income (TL thousand) 2013 2012 Change (%)Income from Financial Investments 16,104 7,391 117.89Revenues from the Sales of Financial Investments 34 0 0.00Valuation of Financial Investments 3,883 4,382 (11.36)FX Gains 4,575 1,473 210.59Dividend from Affiliates 2,151 1,604 34.10Income from Derivatives 12 0 0.00Income from Real Estate 6 5 20Total 26,765 14,856 80.09

Investment Expenses (TL thousand) 2013 2012 Change (%)Investment Expenses Transferred to the Technical Division (-) (11,671) (8,527) (36.87)FX Losses (-) (3,258) (2,111) (54.36)Investment Management Expenses Including Interests (137) 0 0.00Devaluation of Investments (60) 0 0.00Losses from the Sales of Investments (37) 0 0.00Depreciation Expenses (-) (2,097) (1,634) (28.34)Total (17,262) (12,272) 38.74

Revenues, Income, Expenses and Losses from Other Operations (TL thousand) 2013 2012 Change (%)Provisions (+/-) (3,895) (1,426) (173.10)Rediscounts (+/-) 394 (362) 208.64Deferred Tax Liability Revenues 817 0 0.00Deferred Tax Liability Expenses (-) 0 (1,065) 0.00Other Revenues and Profits 104 60 73.86Other Expenses and Losses (-) (186) (199) (6.45)Total (2,766) (2,993) 7.58

Equity Breakdown (TL thousand) 2013 2012 Change (%)Paid-in Capital 70,000 70,000 0Nominal Capital 70,000 70,000 0Capital Reserves 95 95 0Profit Reserves 51,633 13,741 275.76Prior Years' Losses 0 (8,875) 0Net Profit 42,248 15,445 173.54Total Shareholders' Equity 163,976 90,405 81.38

Investments (TL thousand) 2013 2012 Change (%)Financial Assets and Risk Insureds' Financial Investments 53,408 41,820 27.71Affiliates 38,478 4,386 777.29Real Estate 614 469 30.92Total 92,500 46,675 98.18


Information on Financial Structure

Financial Highlights (TL thousand) 2013 2012 2011 2010 2009Total Premium Production 470,364 395,170 206,502 155,691 113,349Total Assets 505, 381 381,996 212,947 181,889 141,917Claims Paid 191,703 163,991 123,608 55,105 54,813Paid-in Capital 70,000 70,000 40,003 40,003 40,003Shareholders’ Equity 163,976 90,405 44,855 57,426 54,356Technical Profit (Technical Division Balance) 46,102 16,674 (10,057) 4,233 4,174Pretax Profit 52,839 16,265 (8,932) 5,495 5,793Net Profit 42,248 15,445 (8,932) 4,002 4,446

Capital Adequacy Ratios 2013 2012 2011 2010 2009Written Premiums/Shareholders’ Equity 2.87 4.38 4.60 2.71 2.09Shareholders’ Equity/Total Assets 0.32 0.24 0.21 0.32 0.38Shareholders’ Equity/Technical Provisions 0.65 0.38 0.35 0.62 0.83

Asset Quality and Liquidity Ratios 2013 2012 2011 2010 2009Liquid Assets/Total Assets 0.68 0.77 0.68 0.61 0.59Liquidity Ratio 1.04 1.04 0.90 0.91 0.98Current Ratio 1.38 1.32 1.27 1.44 1.61Premium and Reinsurance Receivables/Total Assets 0.14 0.11 0.19 0.25 0.29Receivables from Agencies/Shareholders’ Equity 0.35 0.36 0.54 0.70 0.67

Operational Ratios 2013 2012 2011 2010 2009Retention Ratio 0.64 0.69 0.67 0.61 0.60Claims Payment Ratio 0.57 0.63 0.58 0.53 0.59

Profitability Ratios 2013 2012 2011 2010 2009Loss-Premium Ratio (gross) 0.52 0.59 0.90 0.52 0.53Combined Ratio (Loss-Premium Ratio (net) + Cost Ratio) 0.89 0.96 1.18 1.06 1.00Loss-Premium Ratio (net) 0.63 0.67 0.83 0.72 0.65Cost Ratio 0.26 0.30 0.35 0.35 0.35Pretax Profit/Written Premiums 0.11 0.04 (0.04) 0.04 0.05Technical Profit (Technical Division Balance)/Written Premiums 0.10 0.04 (0.05) 0.03 0.04

Key Financial Highlights


Balance Sheet as at 31 December 2013Halk Sigorta Anonim Şirketi

(Currency: Turkish Lira (TL))

ASSETS

I- Current Assets

Audited Current Period

31 December 2013

Audited Prior Period

31 December 2012A- Cash and Cash Equivalents 292,554,318 251,448,8891- Cash - -2- Cheques Received - -3- Banks 225,590,018 152,380,7974- Cheques Given and Payment Orders - (110)5- Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months 66,964,300 99,068,2026- Other Cash and Cash Equivalents - -B- Financial Assets and Financial Investments with Risks on Policyholders 53,409,014 41,819,7641- Available-for-Sale Financial Assets 4,710 1,9292- Held to Maturity Investments 49,460,742 41,817,8353- Financial Assets Held for Trading 3,943,562 -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 - -C- Receivables from Main Operations 68,381,673 40,786,9001- Receivables from Insurance Operations 67,954,161 38,376,3782- Provision for Receivables from Insurance Operations (2,076,895) (520,827)3- Receivables from Reinsurance Operations - -4- Provision for Receivables from Reinsurance Operations - -5- Cash Deposited to Insurance and Reinsurance Companies (141) (141)6- Loans to the Policyholders - -7- Provision for Loans to the Policyholders - -8- Receivables from Individual Pension Operations - -9- Doubtful Receivables from Main Operations 19,252,092 18,274,28010- Provision for Doubtful Receivables from Main Operations (16,747,544) (15,342,790)D- Due from Related Parties 16,843 16,8431- 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 16,843 16,8437- Rediscount on Receivables from Related Parties - -8- Doubtful Receivables from Related Parties - -9- Provision for Doubtful Receivables from Related Parties - -E- Other Receivables 1,775,323 804,5341- Finance Lease Receivables - -2- Unearned Finance Lease Interest Income - -3- Deposits and Guarantees Given 122,556 -4- Other Miscellaneous Receivables 1,652,767 804,5345- Rediscount on Other Miscellaneous Receivables - -6- Other Doubtful Receivables - -7- Provision for Other Doubtful Receivables - -F- Prepaid Expenses and Income Accruals 34,307,447 34,967,0861- Prepaid Expenses 33,654,200 34,753,7132- Accrued Interest and Rent Income - -3- Income Accruals 7,316 8,0924- Other Prepaid Expenses 645,931 205,281G- Other Current Assets 8,168,525 1,315,7361- Stocks to be Used in the Following Months 158,418 127,5132- Prepaid Taxes and Funds 7,997,437 1,175,7433- Deferred Tax Assets - -4- Job Advances (5,415) (1,510)5- Advances Given to Personnel - -6- Inventory Count Differences - -7- Other Miscellaneous Current Assets 18,085 13,9908- Provision for Other Current Assets - -I- Total Current Assets 458,613,143 371,159,752




ASSETS

II- Non-Current Assets


31 December 2013


31 December 2012A- 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 61,965 118,3211- Finance Lease Receivables - -2- Unearned Finance Lease Interest Income - -3- Deposits and Guarantees Given 61,965 118,3214- Other Miscellaneous Receivables - -5- Rediscount on Other Miscellaneous Receivables - -6- Other Doubtful Receivables - -7- Provision for Other Doubtful Receivables - -D- Financial Assets 38,476,911 4,386,4641- Investments in Equity Shares 38,476,911 4,386,4642- Investments in Associates - -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 - -




ASSETS

II- Non-Current Assets


31 December 2013


31 December 2012E- Tangible Assets 2,718,632 2,295,8201- Investment Properties 613,771 469,2712- Impairment for Investment Properties - -3- Owner Occupied Property - -4- Machinery and Equipments 225,003 225,0035- Furniture and Fixtures 4,912,564 3,814,1436- Land Vehicles 11,550 11,5507- Other Tangible Assets (Including Leasehold Improvements) 931,970 927,7768- Tangible Assets Acquired Through Finance Leases - -9- Accumulated Depreciation (3,976,226) (3,151,923)10- Advances Paid for Tangible Assets (Including Construction in Progress) - -F- Intangible Assets 2,567,014 1,989,1861- Rights - -2- Goodwill - -3- Pre-operating Expenses - -4- Research and Development Costs - -6- Other Intangible Assets 6,697,535 4,846,7417- Accumulated Amortization (4,130,521) (2,857,555)8- Advances Paid for Intangible Assets - -G- Prepaid Expenses and Income Accruals - -1- Prepaid Expenses - -2- Income Accruals - -3- Other Prepaid Expenses and Income Accruals - -H- Other Non-Current Assets 2,943,469 2,046,4991- 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 2,943,469 2,046,4996- Other Miscellaneous Non-Current Assets - -7- Amortization on Other Non-Current Assets - -8- Provision for Other Non-Current Assets - -II- Total Non-Current Assets 46,767,991 10,836,290TOTAL ASSETS 505,381,134 381,996,042



LIABILITIES

III- Short-Term Liabilities


31 December 2013


31 December 2012A- Financial Liabilities - -1- Borrowings from Financial Institutions - -2- Finance Lease Liabilities - -3- Deferred Leasing Costs - -4- Current Portion of Long Term Debts - -5- Principal Installments 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 39,365,964 17,250,1151- Payables Arising from Insurance Operations 39,365,964 17,250,1152- 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 Main Operations - -6- Discount on Payables from Other Main Operations - -C- Due to Related Parties 280,794 345,5491- Due to Shareholders 267,206 279,5062- Due to Associates - -3- Due to Subsidiaries - -4- Due to Joint Ventures - -5- Due to Personnel 13,588 66,0436- Due to Other Related Parties - -D- Other Payables 15,896,756 16,109,3291- Deposits and Guarantees Received 381,737 324,3252- Other Miscellaneous Payables 9,697,874 7,026,0543- Discount on Other Miscellaneous Payables - -4- Payables to Social Security Institution 5,817,145 8,758,950E- Insurance Technical Provisions 248,127,263 233,543,4791- Reserve for Unearned Premiums - Net 148,147,726 168,248,6752- Reserve for Unexpired Risks - Net - 84,8693- Life Mathematical Provisions - Net - -4- Provision for Outstanding Claims - Net 99,979,537 65,209,9355- Provision for Bonus and Discounts - Net - -6- Provision for Investment Risk at Life Insurance Policyholders - Net - -7- Other Technical Provisions - Net - -F- Provisions for Taxes and Other Similar Obligations 14,971,397 5,411,3931- Taxes and Funds Payable 4,089,293 4,354,8262- Social Security Premiums Payable 290,645 236,1053- Overdue, Deferred or By Installment Taxes and Other Liabilities - -4- Other Taxes and Similar Payables - -5- Corporate Tax Payable and Provision for other Legal Liabilities 10,591,459 820,4626- Prepaid Taxes and Other Liabilities Regarding Current Period Income - -7- Provisions for Other Taxes and Similar Liabilities - -G- Provisions for Other Risks 438,108 349,1461- Provision for Employee Termination Benefits - -2- Provision for Pension Fund Deficits - -3- Provisions for Costs 438,108 349,146H- Deferred Income and Expense Accruals 13,289,310 9,240,3811- Deferred Commission Income 11,892,234 9,235,2402- Expense Accruals 1,397,076 5,1413- Other Deferred Income and Expense Accruals - -I- Other Short-Term Liabilities - -1- Deferred Tax Liabilities - -2- Inventory Count Differences - -3- Other Various Short-Term Liabilities - -III - Total Short-Term Liabilities 332,369,592 282,249,392




LIABILITIES

IV- Long-Term Liabilities


31 December 2013


31 December 2012A- 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 607,856 3,352,4071- Deposits and Guarantees Received - -2- Other Miscellaneous Payables - -3- Discount on Other Miscellaneous Payables - -4- Medical Treatment Payables to the Social Security Institution 607,856 3,352,407E- Insurance Technical Provisions 3,964,342 2,770,3371- Reserve for Unearned Premiums - Net - -2- Reserve for Unexpired Risks - Net - -3- Life Mathematical Provisions - Net - -4- Provision for Outstanding Claims - Net - -5- Provision for Bonus and Discounts - Net - -6- Provision for Investment Risk at Life Insurance Policyholders - Net - -7- Other Technical Provisions - Net 3,964,342 2,770,337F- Other Liabilities and Relevant Accruals 2,921,564 2,186,3141- Other Liabilities - -2- Overdue, Deferred or By Installment Taxes and Other Liabilities - -3- Other Liabilities and Expense Accruals 2,921,564 2,186,314G- Provisions for Other Risks 1,541,461 1,032,1461- Provision for Employee Termination Benefits 1,541,461 1,032,1462- 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 9,035,223 9,341,204




EQUITY

V- Equity


31 December 2013


31 December 2012A- Paid in Capital 70,000,000 70,000,0001- (Nominal) Capital 70,000,000 70,000,0002- Unpaid Capital - -3- Positive Capital Restatement Differences - -4- Negative Capital Restatement Differences - -5- Register in Progress Capital - -B- Capital Reserves 95,152 95,1521- Share Premiums 95,152 95,1522- Cancellation Profits of Equity Shares - -3- Profit on Asset Sales That Will Be Transferred to Capital - -4- Currency Translation Adjustments - -5- Other Capital Reserves - -C- Profit Reserves 51,633,243 13,740,9331- Legal Reserves 1,790,144 1,461,6762- Statutory Reserves - -3- Extraordinary Reserves 11,494,612 5,253,7194- Special Funds - -5- Revaluation of Financial Assets 31,642,220 -6- Other Profit Reserves 6,706,267 7,025,538D- Retained Earnings - -1- Retained Earnings - -E- Accumulated Losses - (8,875,357)1- Accumulated Losses - (8,875,357)F- Net Profit / (loss) for the Period 42,247,924 15,444,7181- Net Profit for the Period 42,247,924 15,444,7182- Net Loss for the Period - -2- Profit not Available for Distribution - -V- Total Equity 163,976,319 90,405,446TOTAL EQUITY AND LIABILITIES 505,381,134 381,996,042



Statement of Income for the Year Ended 31 December 2013Halk Sigorta Anonim Şirketi

I- TECHNICAL SECTION


31 December 2013


31 December 2012A- Non-Life Technical Income 333,619,508 195,831,2961- Earned Premiums (Net of Reinsurer Share) 320,126,398 185,352,8211.1- Written Premiums (Net of Reinsurer Share) 299,940,580 272,945,7751.1.1- Written Premiums, gross 470,364,461 395,169,7231.1.2- Written Premiums, ceded (152,888,845) (106,422,900)1.1.3- Premiums Transferred to Social Security Institutions (17,535,036) (15,801,048)1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the Amounts Carried Forward) 20,100,949 (96,216,976)1.2.1- Reserve for Unearned Premiums, gross (8,695,178) (117,284,620)1.2.2- Reserve for Unearned Premiums, ceded 30,631,391 12,318,3171.2.3 - Reserve for Unearned Premiums, Social Security Institution Share (1,835,264) 8,749,3271.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts Carried Forward) 84,869 8,624,0221.3.1- Reserve for Unexpired Risks, gross 358,197 11,928,9041.3.2- Reserve for Unexpired Risks, ceded (273,328) (3,304,882)2- Investment Income - Transferred from Non-Technical Section 11,671,196 8,527,4193- Other Technical Income (Net of Reinsurer Share) 645 306,4293.1- Other Technical Income, gross 645 306,4293.2- Other Technical Income, ceded - -4- Accrued Salvage and Subrogation Income 1,821,269 1,644,627B- Non-Life Technical Expense (287,517,512) (179,157,287)1- Incurred Claims (Net of Reinsurer Share) (202,463,607) (123,446,909)1.1- Claims Paid (Net of Reinsurer Share) (167,694,005) (105,150,160)1.1.1- Claims Paid, gross (191,702,667) (163,990,622)1.1.2- Claims Paid, ceded 24,008,662 58,840,4621.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the Amounts Carried Forward) (34,769,602) (18,296,749)1.2.1- Change in Provisions for Outstanding Claims, gross (47,046,159) (6,247,007)1.2.2- Change in Provisions for Outstanding Claims, ceded 12,276,557 (12,049,742)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 Provisions (Net of Reinsurer Share and Less the Amounts Carried Forward) (1,194,005) (577,130)4- Operating Expenses (76,463,900) (47,009,358)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) (7,396,000) (8,123,890)6.1- Change in Other Technical Provisions, gross (7,396,000) (8,123,890)6.2- Change in Other Technical Provisions, ceded - -C- Net Technical Income-Non-Life (A - B) 46,101,996 16,674,009D- 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 - -





I- TECHNICAL SECTION


31 December 2013


31 December 2012E- Life Technical Expense - -1- Incurred Claims (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 Life Mathematical Provisions (Net of Reinsurance) - -3.1- Mathematical Reserves (Life) - -3.2- Retrocessionaires’ Share in Mathematical Reserves (Life) - -4- Change in Provision for Investment Risk at Life Insurance Policyholders (Net of Reinsurance) - -4.1- Provision for Investment Risk at Life Insurance Policyholders - -4.2- Retrocessionaires’ Share in Provision for Investment Risk at Life Insurance Policyholders - -5- Change in Other Technical Provisions (Net of Reinsurer Share and Less the Amounts Carried Forward) - -6- Operating Expenses - -7- Investment Expenses - -8- Unrealized Losses on Investments - -9- 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) - -



I- NON-TECHNICAL SECTION


31 December 2013


31 December 2012C- Net Technical Income - Non-Life (A-B) 46,101,996 16,674,009F- Net Technical Income - Life (D-E) - -I - Net Technical Income - Pension Business (G-H) - -J- Total Net Technical Income (C+F+I) 46,101,996 16,674,009K- Investment Income 26,765,585 14,855,8451- Income from Financial Assets 16,103,757 7,390,5472- Income from Disposal of Financial Assets 34,390 -3- Valuation of Financial Assets 3,883,174 4,381,7994- Foreign Exchange Gains 4,575,051 1,473,4445- Income from Associates 2,151,004 1,604,2956- Income from Subsidiaries and Joint Ventures - -7- Income from Property, Plant and Equipment 6,000 5,7608- Income from Derivative Transactions 12,209 -9- Other Investments - -10- Income Transferred from Life Section - -L- Investment Expense (17,261,727) (12,272,087)1- Investment Management Expenses (inc. interest) (137,284) -2- Diminution in Value of Investments (60,455) -3- Loss from Disposal of Financial Assets (37,144) -4- Investment Income Transferred to Non-Life Technical Section (11,671,196) (8,527,419)5- Loss from Derivative Transactions - -6- Foreign Exchange Losses (3,258,379) (2,110,928)7- Depreciation and Amortization Expenses (2,097,269) (1,633,740)8- Other Investment Expenses - -M- Income and Expenses From Other and Extraordinary Operations (2,766,471) (2,992,587)1- Provisions (3,895,261) (1,426,301)2- Rediscounts 393,625 (362,320)3- Specified Insurance Accounts - -4- Monetary Gains and Losses - -5- Deferred Taxation (Deferred Tax Assets) 817,153 -6- Deferred Taxation (Deferred Tax Liabilities) - (1,064,837)7- Other Income 104,274 59,9778- Other Expenses and Losses (186,262) (199,106)9- Prior Year’s Income - -10- Prior Year’s Expenses and Losses - -N- Net Profit for the Period 42,247,924 15,444,7181- Profit for the Period 52,839,383 16,265,1802- Corporate Tax Provision and Other Fiscal Liabilities (10,591,459) (820,462)3- Net Profit for the Period 42,247,924 15,444,7184- Monetary Gains and Losses - -



Statement of Cash Flows for the Year Ended 31 December 2013Halk Sigorta Anonim Şirketi



31 December 2013


31 December 2012A - Cash flows from operating activities1- Cash provided from insurance activities 516,488,969 392,262,8402- Cash provided from reinsurance activities - -3- Cash provided from private pension business - -4- Cash used in insurance activities (477,369,581) (297,838,931)5- Cash used in reinsurance activities - -6- Cash used in individual pension business - -7- Cash provided by operating activities 39,119,388 94,423,9098- Interest paid - -9- Income taxes paid (6,821,694) -10- Other cash inflows 2,844,032 12,905,27511- Other cash outflows (6,174,198) (122,476)12- Net cash provided by operating activities 28,967,528 107,206,708B. CASH FLOWS FROM INVESTING ACTIVITIES - 1- Proceeds from disposal of tangible assets - -2- Acquisition of tangible assets (3,097,909) (2,445,580)3- Acquisition of financial assets (52,182,471) (31,667,926)4- Proceeds from disposal of financial assets 44,323,955 27,145,3105- Interests received 16,039,649 8,919,3916- Dividends received 2,151,004 1,604,2957- Other cash inflows 4,697,534 1,649,0538- Other cash outflows (5,395,535) (2,655,656)9- Net cash provided by investing activities 6,536,227 2,548,887C. CASH FLOWS FROM FINANCING ACTIVITIES - 1- Equity shares issued - 29,120,5142- Cash provided from loans and borrowings - - 3- Finance lease payments - -4- Dividends paid - -5- Other cash inflows - 95,1526- Other cash outflows - -7- Net cash used in financing activities - 29,215,666D. EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH EQUIVALENTS - -E- Net increase in cash and cash equivalents 35,503,755 138,971,261F- Cash and cash equivalents at the end of the year 230,811,000 91,839,739G- Net increase in cash and cash equivalents 266,314,755 230,811,000


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