You Never Lose - Anadolu Sigorta

You Never Losewith Anadolu SigortaAnnual Report 2009

ContentsPresentation3 Corporate Profile, Our Vision, Our Mission, Corporate Values4 The historical development of Anadolu Sigorta8 Key Indicators10 Message from the Chairman12 Message from the Chief Executive Officer16 2009 Economic and Sectoral Overview23 An Overview of the Global and Turkish Insurance Industries, and Future Outlook26 An Assessment of Anadolu Sigorta in 200934 Anadolu Sigorta in the Industry36 Research and Development Pertaining to New Services and Business Activities37 Commitment to Social Responsibility38 Annual Activity Report Compliance OpinionCorporate Governance Practices at Anadolu Sigorta40 Board of Directors and Auditors42 Executive Committee44 Heads of Units Under the Internal Systems45 Organization Chart46 An Assessment of the Board Directors by the Corporate Governance Committee49 Committees Operating within Anadolu Sigorta51 An Assessment of the Operation of the Independent Audit Firm in 2009 ActivityPeriod via the Audit Committee52 Human Resources Policy54 The Company’s Transactions with the Risk Group55 Agenda of the Annual General Assembly56 Board of Directors Report Summary58 Dividend Distribution Proposal59 Corporate Governance Principles Compliance ReportFinancial Information and Assessment on Risk Management79 Summary of Statutory Auditors’ Report80 An Assessment of 2009 by the Board of Inspectors81 2009 Annual Report Compliance Statement82 Independent Auditor’s Report83 The Unconsolidated Financial Report for the Year Ended 31 December 200984 Detailed Balance Sheet89 Detailed Income Statement90 Statement of Changes in Equity92 Cash Flow Statement93 Statement of Profit Distribution94 Detailed Balance Sheet96 Notes to the Financial Statements as of 31 December 2009157 An Assessment of Financial Standing, Profitability and Solvency159 Information on Financial Structure160 Summary Financial Information for the Last 5 Years Including the Reporting Period161 Risk Management Policies Adhered to by Types of Risks164 Directory

Never Lose EnergyAs Turkey’s leading insurer for 84 years, Anadolu Sigorta’s priorities since the day it was foundedhave been to maximize the quality of the products and services that it offers its policyholders and tokeep on making continuous and lasting contributions to the growth and development of the Turkishinsurance industry. In line with these priorities, Anadolu Sigorta’s approach to insurance is based onthe principle of “Never Lose”.Anadolu Sigorta Annual Report 2009 1

Never Lose CustomersHaving defined its mission as being the insurance brand preferred by everyone who needs insurance,Anadolu Sigorta aims at achieving a strength that makes it a reference point in the worldwideinsurance industry as well with its corporate vales of rooted history, pioneership, integrity, andpowerful structure.2Anadolu Sigorta Annual Report 2009

Corporate ProfileSolid growth in 2009 has enabled Anadolu Sigorta tofurther strengthen its position in the Turkish insuranceindustry. The Company increased its total premiumproduction to TL 1,243 million, which corresponds to ayear-on rise of 7%.Rises were recorded in premium production levels insuch major branches as fire, accident, engineering,health, agriculture, and catastrophe, with the highestamount (close to TL 420 million) being booked inthe accident branch and the highest (35.57%) rate ofgrowth in premium production taking place in motorthird party liability branch. Based on provisionalfigures, Anadolu Sigorta controlled an 11.72% share ofthe overall market among non-life insurers.In keeping with its deep-rooted 84-year-old history asTurkey’s leading insurer, Anadolu Sigorta will continueto support the growth and development of the Turkishinsurance industry without letup and in the mostdetermined way possible while marshaling all of itsenergies and efforts to further strengthen the sector.Our Vision• To make Anadolu Sigorta the insurance brandpreferred by everyone who needs insurance.• To achieve a strength that makes it a referencepoint in the worldwide insurance industry as well.Our MissionIn keeping with the deeply-rooted, pioneering,honest, and solid corporate values of Anadolu Sigortato:• Lead the sector,• Help create a broad public awareness of insurancein Turkey,• Implement a customer-focused approach toservice,• Increase our financial strength to internationalstandards,• Enhance the value of our CompanyCorporate ValuesA Company Entrenched in History• It was founded in accordance with the instructionsgiven by Mustafa Kemal Atatürk• It is Turkey’s first national insurance company.• It has a powerful corporate structure built on itsknowledge of insurance accumulated through theyears.Pioneership• Pioneer in creating product;• Pioneer in service;• Pioneer in technology;• With its self- renewing ability preserves itspioneering position;• It plays a pioneering role in social responsibility.Integrity• It has ethical merits;• It fulfills its promises definitely;• It inheres in transparency as principle;• It never abandons human values.Powerful Structure• It has a stable financial power;• It has an extended and efficient service network;• It has a sophisticated and high qualified humansource;• It gains power from the synergy created by İşbank.Anadolu Sigorta Annual Report 2009 3

Key IndicatorsFinancial Highlights (TL thousand) 2008 2009Total Premium Production 1,161,386 1,243,477Total Assets 1,534,376 1,738,919Claims Paid 685,304 854,890Paid-in Capital 350,000 425,000Shareholders’ Equity 607,991 806,387Pretax Profit 140,723 59,217Net Profit 117,666 48,164Capital Adequacy Ratios 2008 2009Premiums Received/Shareholders’ Equity 1.91 1.54Shareholders’ Equity/Total Assets 0.40 0.46Shareholders’ Equity/Technical Provisions 0.82 1.00Asset Quality and Liquidity Ratios 2008 2009Liquid Assets/Total Assets 0.59 0.53Liquidity Ratio 1.01 1.03Current Ratio 1.50 1.52Premium and Reinsurance Receivables/Total Assets 0.28 0.25Receivables from Agencies/Shareholders’ Equity 0.68 0.51Operational Ratios 2008 2009Conservation Ratio 0.75 0.75Claims Payment Ratio 0.67 0.69Profitability Ratios 2008 2009Loss-Premium Ratio 0.70 0.75Loss-Premium Ratio (Net) 0.79 0.82Cost Ratio 0.20 0.27Combined Ratio (Loss-Premium Ratio+Cost Ratio) 0.99 1.09Pretax Profit/Premiums Received 0.12 0.05Financial Profit (Gross)/Premiums Received* 0.12 0.11Technical Profit/Premiums Received 0.08 0.04* In the calculation of financial profit, investment income that was transferred from the non-technical division to the technical division was excluded in theinvestments expenses figure.Capital Increase in 2009(TL)From 2008 Dividends 40,000,000From Retained Earnings 16,370,267From Sales Income 538,388From Prior-Year Profits 18,091,345Capital Increase 75,000,000During 2009 Anadolu Sigorta increased its capitalization 21.4% from TL 350,000,000 toTL 425,000,000 through bonus capital increase with the addition of TL 75,000,000 consisting ofTL 40,000,000 from its 2008 dividends, TL 16,370,267 from its retained earnings, TL 538,388 from salesincome to be added to the capital, and TL 18,081,345 from prior-year profits.The Company’s issued capital was registered on 3 July 2009 and announced in issue 7349 of TurkishTrade Registry Gazette dated 8 July 2009.Changes in the Articles of Association During the Reporting YearThere were no changes in the Company’s articles of association during 2009.8Anadolu Sigorta Annual Report 2009

Premium Production (TL thousand)Fire Marine AccidentMotor ThirdParty LiabilityEngineering AgricultureLegalProtectionPersonalAccidentHealthCredit225,172232,20167,55763,244442,403420,088186,246252,49349,99265,6687,3158,7095,0154,89743,59442,936133,920153,12717211408 09 08 09 08 09 08 09 08 09 08 09 08 09 08 09 08 09 08 09Increase in Premium Production (%)Fire Marine AccidentMotor ThirdParty LiabilityEngineering AgricultureLegalProtectionPersonalAccidentHealthCredit3.12-6.38-5.04-2.35-1.51-33.7235.5731.3619.0614.3409 09 09 09 09 09 09 09 09 09Premium Production by Branches (%)Fire Marine Accident Motor Third Party Liability Engineering18.675.09 33.78 20.31 5.28Agriculture Legal Protection Personal Accident Health Credit0.700.39 3.45 12.31 0.01Shareholder Structure (%)Türkiye İş Bankası A.Ş. Millî Reasürans T.A.Ş Others35.53 21.78 42.69Anadolu Sigorta Annual Report 2009 9

Message from the ChairmanAnadolu Sigorta remainscommitted to the neverendingpursuit ofimprovements in order tofurther expand its searchfor ways to better serve itspolicyholders and to delivertechnology-driven andinnovative products andservices in line with society’schanging requirements.Esteemed shareholders:We have put behind us a year of exigencies that wasovershadowed by the events of 2008 with the hopethat we have at last reached the “exit” stage in theglobal economic crisis. With the third quarter of 2009it was to be observed that economic indicators aroundthe world had begun to recover albeit to markedlydifferent degrees.The recent crisis has transformed our perception ofcountry risk. Developing countries appear to haveemerged from the global crisis stronger than theywere when it began. The underlying scenario for theperiod ahead of us is shaped by the realization thatweak growth will prevail in the developed countrieswhile the developing countries will be the engines ofglobal growth and trade.Both the Turkish economy as a whole and its realsector in particular were also in decline. Neverthelessthe participants in our battle-toughened financialsystem exhibited a strong stance in this volatileenvironment with a skill which was acquired as a resultof the lessons learned in previous crises and whichmay be summed up as “an ability to make the rightdecisions in times of emergency.”10Anadolu Sigorta Annual Report 2009

Although the global insurance industry sufferedseriously as a whole, in Turkey the sector did notexperience any dramatic contractions and, on the faceof things, even appears to have registered marginalgrowth.It is a source of pride for us all at Anadolu Sigorta toreport that we have emerged from such a tremendouscrisis with even greater strength. The sources of thatstrength are to be found in our company’s knowledgeand experience, in its corporate makeup, in itssteadfastness, and in its financial structure.We must never forget that the past is but prologue toour future. When Anadolu Sigorta was established atAtatürk’s directives just two years after the founding ofthe Turkish Republic, it undertook the mission of beingthe sector’s trailblazer and school. The first nationallyownedinsurer in Turkey, Anadolu Sigorta’s formationwas spearheaded by İşbank with the aim of makingsure that the Turkish economy would grow on soundfoundations. Since then, our company has maintainedits premier position by being the first to reach andchart every landmark that the sector has passed. Thesingular position of Anadolu Sigorta in the Turkishinsurance industry and the outstanding service that itprovides can be summed up in the unique one-wordtelegraph address that its headquarters used fordecades: imtiyaz (“privilege”).Acting in concert within the deep-rooted and robustgroup structure whose core consists of İşbank withindividuals whose efforts are spurred by theirpatriotism and by the conviction that the people oftheir country deserve a more prosperous future givesme both great pride and energy. With thesesentiments and thoughts, I repeat that we shallcontinue to strive with all our might to provide thepolicyholders that put their confidence in us with thebest protection possible while extending my gratitudeto all our employees and shareholders.SincerelyBurhan KaragözChairman of the Board of DirectorsHaving played a major role in the growth anddevelopment of its sector, Anadolu Sigorta remainscommitted to the never-ending pursuit ofimprovements in order to further expand its search forways to better serve its policyholders and to delivertechnology-driven and innovative products andservices in line with society’s changing requirements.Anadolu Sigorta Annual Report 2009 11

Message from the Chief Executive OfficerAchieved at a time whenthe effects of the globaleconomic crisis were beingseriously felt, such a risein premium production isan important indicationand reflection of AnadoluSigorta’s strength.2009 was not an easy year for the Turkishinsurance industry either.According to figures published by the Associationof Insurance and Reinsurance Companies of Turkey(TSRŞB), our sector’s premium production in 2009stood below the growth in 2008 with just a nominalgrowth.Insurance industry premium productioncontinued to decline worldwide during 2009.The effects of the global crisis made themselves feltin 2009 as well. 2008 marked the first year in whichthe global insurance industry experienced a genuinecontraction since 1980. The decline in premiumproduction persisted into 2009 as well.It is estimated that premiums in non-life brancheswere down more than 10% overall. Prices fell whenthe demand for insurance began to lag behind supplyin reaction to the economic downturn and this trendcontinued all year long. The result was stagnation ininsurers’ technical profits in 2009.To be sure, the life branch did perform fairly well butthe elementary branches were nowhere as successful.Non-life premium production in 2009 amounted toTL 10.6 billion, which corresponds to a year-on riseof just 4%, while life branch premium production bycomparison increased 15.6% during the same period.Overall growth however amounted to 5.6%, with atotal of TL 12.4 billion worth of premiums being takenin.In real terms, growth in the non-life branches was twoand a half points below the 6.53% twelve-month rise inconsumer prices as measured at year-end 2009.12Anadolu Sigorta Annual Report 2009

The effects of the financial sector’s crisis combinedwith the insurance industry’s obstinate insistenceon competing solely on the basis of price createdmarket conditions that were completely inhospitablefor smaller insurers in terms of both production andequity. There was a serious cutback in the sector’stechnical profits even as loss ratios mounted in somebranches.Losses resulting from flash floods caused by heavyrainfall during the year and disastrous flooding inthe Marmara region in September generated thehighest claims (totaling TL 700 million) experiencedby the Turkish insurance market since the frightfulearthquakes of 1999.Changes in laws and regulationsstrengthening the sector’s legal frameworksignal positive future developments.As a result of intensive efforts by the TreasuryUndersecretariat, the Turkish insurance industry’sproblems with respect to its legal underpinningshave been largely resolved. With the introduction ofregulations that comply with EU norms, the industrynow has a legal framework that conforms to currentinternational standards and practices.New General Terms, Tariffs, and Instructions wereintroduced in 2009 for some types of insurance whilechanges were made in those of others. A clutch ofamendments to the Life Insurance Regulations wentinto effect as of 1 March 2009. Another importantdevelopment was the formation of the InsuranceArbitration Commission under article 30 of Statute5684, which sets up an arbitration system that providesfor the prompt and straightforward resolution ofdisputes arising under insurance contracts.Anadolu Sigorta continued to register realgrowth in premium production.Anadolu Sigorta increased its premium productionin 2009 about 7% to TL 1,243 million. Rises wererecorded in premium production levels in such majorbranches as fire, accident, engineering, health,agriculture, and catastrophe, with the highest amount(close to TL 420 million) being booked in the accidentbranch. Based on TSRŞB provisional figures, AnadoluSigorta controlled an 11.72% share of the overallmarket among elementary insurers.Achieved at a time when the effects of the globaleconomic crisis were being seriously felt, such a risein premium production is an important indication andreflection of Anadolu Sigorta’s strength. Our companydid not just survive but continued to grow duringthe crisis thanks in no small part to its investments ininfrastructure, human resources, and communication.These results are also important as clear evidence thatour sector has begun to shake off the effects of thecrisis.Our bancassurance unit was launched in2009.Thanks to the strong synergies generated by theformation of our bancassurance unit, we haveembarked upon a new period in which AnadoluSigorta will be able to maximize its communicationand relationships with all of its bank agents fromİşbank on down the line. Our bancassurance projectis part of the C2C Customer-Focused TransformationProgram that we launched last year in order to makeAnadolu Sigorta a more innovative and competitiveinsurer. By creating stronger and more productivechannels of communication through increasedintegration, this project will allow our company togenerate higher premiums and to deliver betterservice.Anadolu Sigorta Annual Report 2009 13

Message from the Chief Executive OfficerAnadolu Sigorta continuesto lead the Turkishinsurance industry withinnovative practices andsolutions that set thestandards that its sectoraspires to.Developing new products to expand ourmarketAnadolu Sigorta believes that the key to growth anddevelopment in the insurance industry lies in enlargingthe breadth and depth of its overall market. Takingthis as our point of departure, we constantly seekto extend our innovative strengths and to introducenew products to the market and improve ourservice quality through the effective use of the latesttechnology.In 2009 Anadolu Sigorta once again demonstratedthat it was the sector’s most active company in termsof new products introduced to the market. Thelaunching of such products at a time when the effectsof the global economic crisis were still being felt hada favorable impact on our premium production whilebringing new dynamics to the sector. Products like theSME Package Policy, Credit Card Protection Policy,Comprehensive Motor Vehicle Policy, and HomeownerPolicy make it possible for Anadolu Sigorta to addressthe insurance needs of many different individuals andgroups.Addressing SMEs’ greater insurance needsin a crisis environmentSmall and medium-sized enterprises (SME) generatea huge amount of value for our national economybut are among the businesses that are most at risk intimes of economic crisis. For them Anadolu Sigortahas introduced its “SME Package Policy”, which isbased on our analysis of the needs of such firms. Webelieve that with this product we will be contributingindirectly to our country’s economic development byexpanding SMEs’ export capacities and increasingtheir competitive strength.Individualized motor vehicle insuranceIn 2009 Anadolu Sigorta rewrote its motor vehicleinsurance tariff as part of its overall efforts to improveits policyholder service quality and to be innovative inits service approach. Under the new tariff, which wentinto effect at the beginning of 2010, premiums are nolonger determined according to generalized segmentsbut rather are set on the basis of a policyholder’sindividual attributes and risks. This new tariff will makeit possible to quote and charge premiums that aremuch more realistic because they actually reflect apolicyholder’s individual risks.When preparing our new motor vehicle insurancetariff, we employed internationally accepted insurancetechniques while formulating comprehensive modelsusing advanced software and data bases containingmillions of entries.14Anadolu Sigorta Annual Report 2009

Turkey’s most admired and best knowninsurerAccording to a brand recognition survey conductedby GfK, Germany’s biggest market research institute,Anadolu Sigorta is the most admired and best knowninsurer in Turkey. In our opinion this result is a naturaloutcome of the levels of strength, reliability, andsatisfaction for which we are known among our targetgroups, customers, and delivery channels and it isproof to us that we have been successful in our effortsto create more value for all of our stakeholders.Lloyd’s List “Maritime Service” and “CrystalApple” awards for Anadolu SigortaAnadolu Sigorta continues to lead the Turkishinsurance industry with innovative practices andsolutions that set the standards that its sector aspiresto. In 2009 our company gave even greater attentionto the shipping sector than in previous years whilecontinuing to write all cargo insurance as well as hulland contingent liability insurance policies for theshipping branch.Anadolu Sigorta’s contributions to the Turkishshipping industry were acknowledged with theCompany’s recognition in the “Maritime ServiceAward” category of the Lloyd’s List “2009 TurkishShipping Awards” for “excellence and innovation inmaritime support services provided by a Turkish ornon-Turkish company, organization or other entitywhich has demonstrated outstanding service to theTurkish shipping industry”.In 2009 Anadolu Sigorta was also the recipient ofawards in many different categories from the TurkishAssociation of Advertising Agencies, whose “CrystalApple” is regarded as the “Oscar” of the Turkishadvertising industry. At last year’s ceremony AnadoluSigorta walked away with the most awards havingreceived four Crystal Apples along with three secondplace and one third place citations.The way forwardSteadily increasing signals that the contraction in theglobal economy is slowing down and their impact onour country’s national markets make it more and morelikely that the process of emerging from the crisis willwork its way out in 2010.Expectations are that real growth in the insuranceindustry will resume some time during the secondhalf of 2010. The issues of productivity, risk selection,and pricing that became crucial because of the crisiswill lose little–if any–of their importance in the nearterm. For this reason, our primary objective for theforeseeable future must be to continue competingfairly on price and improving the quality of ourservice in recognition of the fact that sustainable andadequate technical profitability is at least as importantand precious as premium production.In all events however we are determined to maintainour successful performance as Anadolu Sigorta in 2010and to remain on course with our strategy of steadygrowth.In closing I extend my thanks to all my colleaguesin service, to those at İşbank, and to all our agents,business partners, and policyholders for all the effortsthat have contributed to the success of the AnadoluSigorta family.Sincerely,Mustafa SuChief Executive OfficerAnadolu Sigorta Annual Report 2009 15

2009 Economic and Sectoral OverviewThe World EconomyThe impact of the crisis that began in developedcountries’ financial markets and spread throughoutthe world as it grew deeper in the last quarter of2008 began to lose effect in the third quarter of 2009in part due to the monetary and financial measuresbeing taken. The financial markets of both developedand developing countries embarked upon a processof recovery much more quickly than had beenanticipated. There were noteworthy improvementsobserved both in the developed countries’ productionindicators and in overall world trade.Recession ends in the United StatesWhile the US Federal Reserve is expected to keep itsshort-term interest rates (held in the 0-0.025% bandsince December 2008) at existing levels for sometime yet, the positive effects of the fiscal stimuluspackage that the Fed unveiled in the first quarter ofthe year can already be seen. There is renewed vigorin private consumption expenditures associated withautomotive and housing sales. Located at groundzero of the global economic crisis, the US economyregistered a 3.5% rate of growth in the third quarter of2009 for the first time in twelve months while growthin the fourth quarter also exceeded expectations.Indeed the Q4 5.7% growth that was announced is thehighest witnessed since Q3 2003. Although there aresome concerns that high unemployment (on the orderof 9.8%) may put a damper on rises in consumptionoutlays and that the progress of economic activitymay remain weak for some time yet, the fiscal andmonetary measures that have been taken appear tohave been remarkably effective in supporting therecovery. With recession (defined as at least twoconsecutive quarters of down GDP) technically over inthe US economy, growth is now expected to continuein 2010.Eurozone improvements more sluggishThe European Central Bank (ECB) lowered its shortterminterest rates from 2.5% at the end of 2008 ina series of cuts to 1% (their lowest level ever) during2009. It is expected that improvements in Eurozoneeconomies will continue and that growth will beThe impact of the crisisthat grew deeper in thelast quarter of 2008 beganto lose effect in the thirdquarter of 2009 in partdue to the monetary andfinancial measures beingtaken.supported by near-term rises in exports once stabilityis restored. Although the most recent developmentsappear to have reduced risks relatively speaking, anysudden, rapid rise in oil or commodity prices couldeasily provoke uncertainties among economic actors.It is thought that inflation, which has been in decline,could resume rising once again in the period aheadwith the elimination of base-year effects. Althoughthe increase may be expected to exceed 2%, thatis contingent upon domestic demand remainingweak. Unemployment remained high in the Eurozonethroughout the year and in the fourth quarter itsurpassed expectations by reaching the 10% level.Bank of Japan policies remain prudentExtending its implementation of measures aimedat supplying the private sector with liquidity untilthe end of 2009, the Bank of Japan (BOJ) left itsshort-term interest rates unchanged at the 0.1%level to which it had most recently lowered them inDecember 2008. It appears that the deterioration inthe Japanese economy has ended, that public sectorinvestments are on the rise, and that both productionand exports are gaining momentum but that privateconsumption outlays remain weak as a result of higherunemployment and lower income levels. The declinein inflation is likely to slow down as economic recoverytakes hold in the period ahead.16Anadolu Sigorta Annual Report 2009

Growth continues at high levels in ChinaWorries that recession among China’s trading partnersmight throttle the world’s second biggest economyprompted the People’s Bank of China (PBC) to unveila gigantic USD 586 billion incentives package thatappears to have succeeded in maintaining a high levelof growth in that country during 2009. It is expectedthat efforts will be made to keep this growth fromfalling below 8%, which is seen as the minimumthat is necessary to meet 2009 targets, to keepunemployment in check, and to pre-empt politicaltensions on the domestic front. Even as it protectsthe Chinese economy from the effects of the globaleconomic crisis however, this package is not withoutits critics. Specifically there are dire warnings that,by focusing particularly on construction projects, itsincentives could cause China’s chronic over-capacityproblem to become even worse.USD remains weak throughout the yearIn the face of the measures that were taken to dealwith the global downturn in the United States, the USdollar gained rapidly in value during 2008, particularlyat the expense of the euro due to concerns that aperceived inability to take quick, concerted in theEurozone would result in its economies sufferingmore from a global recession. As more encouragingnumbers started coming in from the economic fronthowever, investors became increasingly less riskaversewith the result that the dollar remained weakthroughout most of 2009.Buffeted by expectations about global financialmarkets movements, by changes in global riskperceptions, and by pronouncements, the dollar’sparity followed an erratic course against leadingcurrencies.The EUR/USD parity peaked at 1.5139 during 2009only to subside and end the year at the 1.4316 level.2008 2009 (E) 2010 (P)Growth (%)Global 3.0 -1.1 3.1USA 0.4 -2.7 1.5Eurozone 0.7 -4.2 0.3Japan -0.7 -5.4 1.7China 9.0 8.5 9.0Turkey 0.9 -6.5 3.7Developing Countries 6.0 1.7 5.1Inflation (%)USA 3.8 -0.4 1.7Eurozone 3.3 0.3 0.8Japan 1.4 -1.1 -0.8China 5.9 -0.1 0.6Turkey 10.4 6.2 6.8Developing Countries 9.3 5.5 4.9Source: IMF World Economic Outlook, October 2009(E): Estimation (P): ProjectionAnadolu Sigorta Annual Report 200917

2009 Economic and Sectoral OverviewIn its World EconomicOutlook, the IMF revisedits global economic growthprojections, saying thatit now expected a 1.1%contraction in 2009 but a3.1% growth rate in 2010.Global interest rates stay depressed during2009.Short-term interest rates at end-2009 were at the0-0.25% level in the US, 1.00% in the Eurozone, and0.10% in Japan.A surge in oil prices may be the offingThe spot price of a barrel of Brent crude, which wasbelow USD 40 at the end of 2008, surged in 2009reaching the USD 78.80 level–the highest in a year–inOctober. This rise was driven as much by signalsof recovery in the global economy as by increasesin other commodity prices and by EUR/USD paritymovements. By the end of the year the spot price hadedged down slightly to USD 77.70.The need for a soft transition in crisis exitstrategiesBoth modest improvements in economic indicatorsand restored stability in financial markets haveprompted debates over what strategies shouldbe employed when winding up the extraordinarymonetary and fiscal measures that have been takenduring the crisis. Even while there will inevitablybe differences from country to country, there is aconsensus that exit strategies must incorporate a“soft” transition as they move away from existingpolicies, that countries need to coordinate thisprocess, and that it is very important to remainfocused on strong and sustainable growth in theglobal economy. However just as abandoningsupportive fiscal and monetary policies withoutachieving long-term improvements in economicactivity or stability in financial markets may thwartgrowth, adhering to them for too long could easilyraise concerns about public sector debt levels andserviceability.Furthermore decisions on the part of monetaryauthorities to hold the line on interest rates athistorically low levels and to keep markets suppliedwith liquidity began to trigger significant rises infinancial asset and house prices throughout the worldin the second half of the year. This creates worriesabout new speculative bubbles in which asset pricescut free of their economic anchors once again take off.And in the last quarter of 2009…When balance sheet figures announced by many firms,particularly in the US, revealed results much betterthan had been expected, investors’ appetite for risksurged and there were rapid rises in stock exchangesaround the world. This situation had a favorableimpact on developing countries’ economies too. Manysuch countries became the targets of strong capitalinflows which not only caused their local currencies toappreciate but which also sent their stock markets onupward trends.Worries that the global economy is at risk ofencountering a “double-dip” recession are nowbeing voiced with increasingly less frequency. In itsOctober World Economic Outlook, the IMF revisedits global economic growth projections, saying thatit now expected a 1.1% contraction in 2009 but a3.1% growth rate in 2010. In the case of developingcountries, which grew an average 6% in 2008, growthshould be around 1.7% in 2009 but nearly three timesthat (5.1%) in 2010.18Anadolu Sigorta Annual Report 2009

2009 Economic and Sectoral OverviewMedium-term programIn the medium-term program announced by thegovernment for the years 2010-2012, it is stated thatemphasis will be given to economic policies to achievelasting increases in production, investment, andexports. At the same time, it is also said that the aim isfor the private sector to lead the way out of the crisisand during the post-crisis growth process. Foremostamong the measures that the government is to take isa changeover to the so-called “golden rule” of fiscalpolicy whose aim is to ensure that the ratio of publicsector debt to national income remains sustainableover the medium and long terms. A legal frameworkincorporating this guideline is supposed to be set inplace no later than the first quarter of 2010.According to the medium-term program, thegovernment has set GDP growth-rate targets of 3.5%,4%, and 5% for 2010, 2011, and 2012 respectively.(The program also posits a net 6% contractionin GDP in 2009.) Only modest improvements inunemployment rates are foreseen as taking place in2010 and 2011. A number of revisions are made in2009 budget performance projections with the deficitnow expected to weigh in at TL 62.8 billion (6.6% ofGDP) and the non-interest deficit (NID) at TL 20.8billion (2.2% of GDP). In its program, the governmentalso calls for NID/GDP ratios of 0.8% in 2010 and of0.2% in 2011 and says that it expects that there will bea non-interest surplus equal to 0.4% of GDP in 2012.Inflation subsides in line with global trendsIn the wake of the crisis there was a markedcontraction in total demand brought on by a clearcutback in economic activity resulting as much froman increasing propensity to save as from rapidlyshrinking external demand and tighter money. Whencombined with sharp declines in commodity prices,this led to a rapid drop in inflation rates everywherein the world, including Turkey. This trend manifestedconsiderable variation however. In categories that aredirectly affected by commodity price movements suchas energy and processed foods for example, therewas a sharp decline in inflation whereas in the case ofbasic goods and services whose prices are particularlysusceptible to changes in demand, prices continuedto rise albeit rather more slowly. Although changes insome tax rates with the intention of bringing publicfinances into balance in the third quarter exertedupward pressure on prices, twelve-month rises inconsumer prices continued to slip in line with theoverall downward trend.Factors influencing the underlying inflationary trendin the last quarter of 2009 conformed essentially tothe outlook presented in the Central Bank’s Octoberinflation report. Both domestic and external demandcontinued to recover modestly as foreseen whileeconomic resource utilization levels remained low.Nevertheless unprocessed food prices shot up quiteunexpectedly registering the highest rates of increasewitnessed in recent years with the result that yearendinflation in 2009 ended up a whole percentagepoint higher than the target. On other fronts, rises inoil and other commodity prices and the resumptionof normal advance tax rates (which had been cut tosupport economic activity) also contributed to greaterinflationary pressure during this period. The upshot ofall these developments is that annualized last-quarterinflation went from 5.27% to 6.53% in 2009.Improvements expected in foreign tradeAlthough there were hopes that recovery in Eurozoneeconomies would have a favorable impact on ourcountry’s exports, the actual results were mixed.Exports in October 2009 were up 3.9% compared withthe same period a year earlier but reversed themselvesand dropped 5.2% in November.According to twelve-month figures for 2009, theforeign trade balance was down 53.4% compared withthe previous year and showed a deficit amounting toUSD 24,729 million.Comparing twelve-month figures from 2009 and 2008on the basis of individual categories, CIF imports(including gold) amounted to USD 140,776 million(down 30.3%) and FOB export revenues to USD102,165 million (down 22.6%). Even unregisteredearnings from the so-called “shuttle trade” arethought to have declined 22.9% to USD 4,783 million.20Anadolu Sigorta Annual Report 2009

The current account deficit continues togrowCutbacks in both consumption and investmentbrought on by the global economic crisis led to lowerenergy prices which resulted in a substantial declinein Turkey’s current account deficit in the last quarterof 2008. The crisis also appears to have altered themakeup of the deficit as well. In August 2008 thecountry’s 12-month current account deficit peakedat USD 49.1 billion. Beginning in October, when theimpact of the global crisis on internal and externaldemand started to make itself felt, there was a rapiddecline in the deficit that did not reverse itself untilit bottomed out at USD 11.8 billion in October 2009.On a year-to-year basis, the current account deficitwas down 67%, going from USD 41.9 billion in 2008 toUSD 13.9 billion in 2009.In the period ahead, developments that help reducecountry risk, Turkey’s growth potential, restoringdiscipline in public finances, keeping inflation incheck, making continued improvements in countryratings as most recently announced, and signing anagreement with the IMF will all be important to thefinancing of the current account deficit insofar asthey rejuvenate both foreign direct and short-termportfolio investment in our country.The huge deficit that looms on the budgethorizonThe national budget deficit, which amounted to TL17.4 billion in 2008, reached TL 52.2 billion in 2009despite some improvements in performance inDecember. During the same period the non-interestsurplus all but dried up, going from TL 33.2 billion toTL 986 million. Centralized administration budgetaryoutlays in 2009 amounted to TL 267 billion while therewere TL 214 billion worth of non-interest expenses.Budget revenues weighed in at TL 215 billion.Two factors in particular are contributing adverselyto budget performance: a persistent rise in noninterestexpenses on the one hand and the perniciouseffect that the contraction in economic activity hason tax revenues on the other. Expectations thateconomic recovery is going to be gradual precludethe likelihood of any quick-fix rises in tax revenues inthe near term. At the same time, the fact that growthin non-interest expenses stems largely from health,pension, and social welfare outlays only underscoresthe need for urgent structural reforms in such areas.CBT keeps the lid on interest ratesthroughout 2009Having first lowered interest rates in November 2008,the Central Bank of Turkey (CBT) Monetary PolicyBoard continued to do so throughout 2009. At theboard’s last meeting on November 19th of the year,the overnight borrowing rate was reduced 25 basispoints to 6.50% while the lending rate was lowered to9%. While both actions were in line with expectations,the board also signaled it had reached the end of theroad insofar as its curtailment of interest rates wasconcerned.A rousing performance at ISEPositive indications of growth emanating from theUSA, China, and India had a favorable impact on mostequity markets. When a surprise increase in domesticindustrial output and improved country rating wereadded to this encouragement from abroad, the ISE100 index at the İstanbul Stock Exchange shot up16.48% in December.Trading at the İstanbul Stock Exchange paralleleddevelopments in international asset markets for themost part during 2009. The ISE National 100 indexclosed the year at 52,825 points, 97% higher than its26,864 level twelve months earlier.Anadolu Sigorta Annual Report 2009 21

2009 Economic and Sectoral OverviewThe Macroeconomic Outlook: 2010-20122009 Projection(Estimation) 2010 2011 2012I. NATIONAL INCOMEReal growth (%) -6.2 3.5 4 4GDP (Current prices, TL bn) 944.7 1,026.60 1,115.70 1,212.60GDP (USD bn) 609.5 660.6 683.6 709.3II. EXTERNAL BALANCECurrent balance (USD mn) -11,500 -19,900 -22,000 -26,000Exports (USD mn) (FOB) 98,100 108,190 117,600 127,800Imports (USD mn) (CIF) 136,800 151,350 165,000 183,000III. PUBLIC FINANCESTotal net public debt/GDP (%) 35.3 37.6 39 38.8IV. MONEY SUPPLY, DEPOSITS & CREDITSIncluding participation banksBank deposits (TL bn) (1) 515 575 660 760TL 329.6 370 429 501.6Convertible FX 185.4 205 231 258.4Credit stock (TL bn) (2) 380 437 515.7 608.5Banking sector total assets (TL bn) 805 903.1 1,049.10 1,216.30Banking sector total assets (USD bn) 533.1 564.5 627.4 694.9Banking sector total assets/GDP (%) 85.2 88 94 100.3V. INTEREST, INFLATION & EXCHANGE RATESReal interest rates (%) (3) 6.6 5 4.1 3.8Government debt securities interest rates (%) (4) 12.5 10 9 8.5PPI (%)- Average 1.19 5.21 4.2 4- End-to-end 5.4 4.5 4 4CPI (%)- Average 6.22 6.15 4.81 4.73- End-to-end 6.18 5.15 4.5 4.5USD/TL (5)- Year-end 1.51 1.6 1.6721 1.7504- Average 1.5494 1.554 1.6322 1.7095EUR/TL (5)- Year-end 2.2499 2.376 2.483 2.5906- Average 2.1636 2.2947 2.425 2.5395EUR/USD parity (6) 1.49 1.485 1.485 1.48(1) BRSA figures (includes interbank deposits).(2) Includes loans to the financial sector.(3) Shows the relationship between average yearly rate on government debt securities and average CPI inflation during the next year.(4) Average compounded rate determined by auctions.(5) CBT FX buying rate.(6) Year-end parities for 2010-2010 are based on Reuters, IIF, and similar institutional projections.22Anadolu Sigorta Annual Report 2009

An Overview of the Global and Turkish Insurance Industries, and FutureOutlookThe Global Insurance IndustryThe effects of the global economic crisis continued tomake themselves felt on the sector throughout 2008.Although companies made high underwriting profits,they experienced sharp declines in the returns on theirinvestment: indeed some even booked net losses onthem. When economic conditions slowly began torecover in 2009, developments in insurers’ investmentincome also began to return to normal.The global insurance industry experienced a realcontraction in 2008–the first such since 1980–withwritten premium down 3.7% on a year-to-year basis.A large part of that shortfall stemmed from the lifeinsurance, with premiums there off by 5.8%. Theshrinkage in non-life insurance was 0.6%, which wasthe result as much of weak demand as it was ofsoftening premium rates. Worldwide written premiumamounted to USD 4,217 billion, of which USD 2,436billion was from life insurance and USD 1,781 billionwas from non-life insurance.In 2008, among the industrialized nations, non-lifewritten premium was down 1.6% with such countriescontributing an 86.4% share of the total. Among thedeveloping countries, which contributed 13.6% ofworldwide written premium, the year-to-year rise was7.1%.In the Americas, which together make up the world’sbiggest market for non-life insurance, written premiumwas down 2.1% in 2008 overall but this figure masksan 8.8% increase in Latin America countered by a3% decline in North America. In Europe, the overallrise in written premium was 0.2% but again therewas considerable regional variation: a 0.4% declinein Western Europe but a 5.9% rise in Central andEastern Europe. In Japan and India, written premiumwas down 3.5% and 1.6% respectively but up 14.8% inChina, whose performance essentially made possiblethe overall 2.2% written premium increase registeredamong Asian countries.On the basis of available evidence it appears that thedecline in overall written premium continued in 2009and that non-life insurance premiums were droppedThe global insuranceindustry experienced a realcontraction in 2008–thefirst such since 1980–withwritten premium down3.7% on a year-to-yearbasis.by 11.2%. Premium rates fell when the demand forinsurance began to lag behind supply in reaction tothe economic downturn and this trend continuedall year long. The result was stagnation in insurers’technical profits in 2009.Expectations are however that such trends will reversethemselves in 2010 and that demand will pick uponce again. That, combined with a resumption ininvestment returns, is what underlies the belief thatthe global insurance industry will witness greaterprofitability in 2010.In 2008 USD 50 billion worth of damages caused bynatural disasters were paid out, making it one of themost expensive years experienced by the insurancesector in its history. Most companies managed tocover such high losses by having recourse to theircapital, except a number of American and Europeaninsurers who found it necessary to ask for governmentsupport in order to survive.2009 was a relatively lucky year from the standpoint ofnatural disasters. Total catastrophe losses and insuredlosses last year are estimated at around USD 52 billionand USD 24 billion respectively. The 52% declinein insured losses in 2009 is largely attributable to arelatively calm hurricane season in the United States.Indeed Europe was the continent that suffered themost from catastrophe losses last year. Insurers had topay out about USD 3.5 billion in damages as a resultof Klaus, a winter storm that hit southern France andAnadolu Sigorta Annual Report 2009 23

An Overview of the Global and Turkish Insurance Industries, and Future OutlookAlthough the Turkishinsurance industry’s lifebranch performed ratherwell in 2009, the samecannot be said for the nonlifebranches.northern Spain in January and was the biggest sourceof the sector’s losses. Hailstorms in Switzerland andAustria in June generated losses amounting to USD1.25 billion while brushfires in Australia caused anotherbillion dollars’ worth of insured losses. Despitesuch spectacular and high-profile events however,worldwide losses from natural disasters were lesscostly in 2009 than in previous years.However this should not be a cause for optimism.Catastrophe losses have been on the rise over the lasttwo decades and according to scientists we are nowlikely to experience much greater variation from yearto year than in the past. Some years, like 2009, will berelatively calm; others will not.Although reinsurers were seriously affected bythe global economic crisis, for the most part theycontinued to support insurers during 2009. Despiteindications that the economic downturn has begunto end, the reinsurance sector’s capital formationincreased only 8% in the first half-year of 2008 whereasit declined 15% in 2008. That being the case, it isclearly much too early to say that the problem ofcapital impairment brought on by the economic crisisis behind us. This view is supported by the “negative”outlook which Fitch, one of the world’s foremostcredit-rating agencies, assigned in its 2009-2010report on developments and prospects in the globalreinsurance market.The United Nations Climate Change Conferenceheld in Copenhagen on 7-18 December 2009 wasan event to which the global insurance industry paidparticular attention. The “Copenhagen Accord”which was signed at the conclusion of the conferenceand which, it had been hoped, would provide foreffective and radical measures as a successor to theKyoto Protocol, turned out to be a disappointmentboth for environmentally aware individuals and for aninsurance sector confronted by increasingly greaterlosses attributable to climate change. Neverthelessthe accord does go on record by acknowledging thereality of global warming and the need to reduceemissions so the conference was not a completefailure. What is needed now is for individuals andorganizations–including those in the insuranceindustry–to take action so as to make the decisionsreached in Copenhagen more effective and binding.The Turkish Insurance IndustryAlthough the Turkish insurance industry’s life branchperformed rather well in 2009, the same cannotbe said for the non-life branches. Like the rest ofthe world, the sector suffered from the effects ofthe global economic crisis to which were addedsubstantial losses caused by disastrous floods in thethird quarter of the year. Total premium productionin all non-life branches in 2009 was up 4% yearonand reached TL 10.6 billion in value. Duringthe same period however, premium production inthe life branch rose 15.6% and it was this superiorperformance that boosted the sector’s overallpremium production 5.6% to TL 12.4 billion.Given the twelve-month 6.53% rise in consumer priceslast year however, it becomes clear that the non-lifebranches’ performance actually corresponds to a 2.4%decline when the effects of inflation are taken intoaccount. It is expected that the contraction will reverseitself gradually as economic activity picks up again inthe period ahead.24Anadolu Sigorta Annual Report 2009

Since the beginning of 2009, insurers have beenrequired to publish consolidated financial statementsthat conform to prescribed standards set forth ina government communique concerning insurance,reinsurance, and pension companies that wasannounced in issue 27097 of the official gazette on 31December 2008.One other outcome of the global economic crisis in2009 was that major international insurers showedrather less interest in the Turkish insurance industrythan they had been in the habit of doing in previousyears. Vakıfbank, which had decided to sell stakes intwo firms–Güneş Sigorta (general) and Vakıf Emeklilik(life and pensions)–changed its mind in 2009. Anotherpension company, OYAK Emeklilik, which was sold toHolland-based ING, was reorganized under the nameof ING Emeklilik while Koç Allianz, all of whose shareswere bought up by Allianz last year, was recast simplyas “Allianz”.In what amounts to the deregulation of compulsorymotor vehicle financial liability insurance tariffs, in 2009the Treasury Undersecretariat raised the upper limit onapproved tariffs from +20% to +100%. Along with thisdevelopment, the Insurance Arbitration Commissionwas launched. Forty-four insurance companies havejoined the new system, which provides a mechanismfor resolving disagreements between service providersand consumers without there having to be recourse tolitigation.In a progress report concerning Turkey that waspublished on 14 October 2009 by the EuropeanCommission, it is noted that some progress hadbeen made in the areas detailed above after whichthe commission stated that while Turkey had largelysatisfied requirements with respect to financial marketinfrastructure, its compliance in the area of insurancewas still limited. The report also said that safeguardsand auditing standards in the banking and nonbankingfinancial sectors had not been strengthenedand that there still had been no progress in theestablishment of an independent regulatory andsupervisory agency for the insurance and privatepension sectors.Branches2008 PremiumProduction (TL) Share (%)2009 PremiumProduction (TL) Share (%)Change(%)Fire 1,596,779,129 13.56 1,670,810,100 13.44 4.6TCIP 272,824,680 2.32 322,611,823 2.59 18.2Marine 413,600,680 3.51 374,352,036 3.01 -9.5Accident 3,330,869,729 28.28 3,237,041,576 26.03 -2.8Motor Third Party Liability 2,062,285,307 17.51 2,249,245,391 18.09 9.1Engineering 535,217,981 4.54 623,890,949 5.02 16.6Agriculture 125,111,095 1.06 151,119,652 1.22 20.8Health 1,326,125,506 11.26 1,415,189,392 11.38 6.7Legal Protection 32,412,600 0.28 36,028,946 0.29 11.2Personal Accident 467,501,881 3.97 505,591,674 4.07 8.1Credit 40,944,611 0.35 28,436,157 0.23 -30.5Non-Life Total 10,203,673,200 86.6 10,614,317,698 85.35 4.0Life 1,576,208,875 13.4 1,821,653,559 14.65 15.6Grand Total 11,779,882,075 100 12,435,971,258 100 5.6Anadolu Sigorta Annual Report 2009 25

An Assessment of Anadolu Sigorta in 2009Anadolu Sigorta is an insurer active in non-life branches,the most important of which are fire, marine, accident,motor third party liability, engineering, agriculture, legalprotection, personal accident, health, and credit.Premium Production and Technical ResultsAnadolu Sigorta’s direct premium production reachedTL 1,189 million in value in 2009. With the addition ofTL 54 million in reinsurance premiums, the Company’stotal premium production amounted to TL 1,243million last year.As in previous years, the accident branch accountedfor the biggest (34%) share of the total portfolio. Thisis followed in order of importance by the motor thirdparty liability, fire, and health branches.Premium production in 2009 by branches are presented below with a comparison with the previous year.Premium Production byBranches (TL thousand) 2008 2009PremiumGrowth Rate (%) % ShareFire 225,172 232,201 3.12 18.67Marine 67,557 63,244 -6.38 5.09Accident 442,403 420,088 -5.04 33.78Motor Third Party Liability 186,246 252,493 35.57 20.31Engineering 49,992 65,668 31.36 5.28Agriculture 7,315 8,709 19.06 0.7Legal Protection 5,015 4,897 -2.35 0.39Personal Accident 43,594 42,936 -1.51 3.45Health 133,920 153,127 14.34 12.31Credit 172 114 -33.72 0.01Total 1,161,386 1,243,477 7.07 11.72**Temporary data (TSRŞB)FirePremium production on fire insurance policies was up 3.1% last year and reached TL 232,201 thousand whileclaim payments amounted to TL 109,569 thousand. Technical profit in this branch was TL 21,760 thousand in 2009(TL 26,640 thousand in 2008).The Performance of the Fire Branch in 2009Premium Production(TL thousand)Claims Paid(TL thousand)Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)225,172232,20167,016109,56959.873.511.89.408 09 08 09 08 09 08 0926Anadolu Sigorta Annual Report 2009

An Assessment of Anadolu Sigorta in 2009Motor Third Party LiabilityMotor third party liability insurance premium production increased 35.6% year-on-year in 2009 and reachedTL 252,493 thousand while claim payments rose 35.7% and stood at TL 179,745 thousand. Technical profitability inthe motor third party liability branch was 8.3%.The Performance of the Motor Third Party Liability Branch in 2009Premium Production(TL thousand)Claims Paid(TL thousand)Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)49,992 186,246Engineering65,668 252,493The year-on-year rise in engineering insurance premium production was 31.4% with TL 65,668 thousand booked inthis branch. Claim payments in the engineering branch amounted to TL 30,318 thousand in 2009. A technical loss ofTL -1,967 thousand was registered in the engineering insurance branch last year.The Performance of the Engineering Branch in 2009Premium Production(TL thousand)27,256 132,503Claims Paid(TL thousand)30,318 179,74508 09 08 09 08 09 08 09Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)08 09 08 09 08 09 08 0975.4 118.282.5 82.02.7 -18.2-3.0 8.328Anadolu Sigorta Annual Report 2009

AgricultureAgricultural insurance premium production showed an increase of 19.1% and reached TL 8,709 thousand in2009 while claim payments amounted to TL 3,615 thousand. Technical profit in the agriculture branch rosefrom TL -154 thousand in 2008 to TL 2,409 thousand in 2009.The Performance of the Agriculture Branch in 2009Premium Production(TL thousand)Claims Paid(TL thousand)Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)-2.154.37,3158,7093,1303,61594.227.708 09 08 09 08 09 08 09Legal ProtectionPremium production in the legal protection branch was down 2.4% to TL 4,897 thousand year-to-year in 2009while claim payments amounted to TL 38 thousand. Technical profit in the legal protection branch rose fromTL 725 thousand in 2008 to TL 3,903 thousand in 2009.The Performance of the Legal Protection Branch in 2009Premium Production(TL thousand)Claims Paid(TL thousand)Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)0.414.5205,0154,897382.479.708 09 08 09 08 09 08 09Anadolu Sigorta Annual Report 2009 29

An Assessment of Anadolu Sigorta in 2009Personal AccidentPersonal accident insurance premium production was down 1.5% in 2009 and amounted to TL 42,936 thousand.Claim payments stood at TL 8,700 thousand during the same period. Technical profit in the personal accidentbranch rose 6.8% from TL 34,324 thousand in 2008 to TL 36,661 thousand in 2009.The Performance of the Personal Accident Branch in 2009Premium Production(TL thousand)Claims Paid(TL thousand)Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)Health133,920 43,594153,127 42,936Anadolu Sigorta’s premium production on health insurance policies increased 14.3% in 2009 and amounted toTL 153,127 thousand while claim payments amounted to TL 132,900 thousand. Although the health branchshowed a technical profit of TL 7,162 thousand in 2008, it booked a technical loss of TL -21,750 thousand in 2009.The Performance of the Health Branch in 2009Premium Production(TL thousand)101,743 5,070Claims Paid(TL thousand)132,900 8,70008 09 08 09 08 09 08 09Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)08 09 08 09 08 09 08 0977.8 13.596.3 22.35.3 78.7-14.1 85.430Anadolu Sigorta Annual Report 2009

CreditPremium production in the credit insurance branch was down 33.7% year-on-year and amounted to TL 114thousand in 2009. After posting a technical loss of TL 8 thousand in 2008, the credit insurance branch showed atechnical profit of TL 5 thousand in 2009.The Performance of the Credit Branch in 2009Premium Production(TL thousand)Claims Paid(TL thousand)Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)1141720000-4.94.208 09 08 09 08 09 08 09TotalTotal premium production in 2009 was up 7.0% and amounted to TL 1,243,477 thousand in 2009. Total claimpayments went from TL 685,304 thousand in 2008 to TL 854,890 thousand in 2009. Overall technical profit last yearweighed in at TL 50,142 thousand.The Performance the Branches in 2009 (Total)Premium Production(TL thousand)Claims Paid(TL thousand)Combined Loss Premium Ratio(%)Technical Profitability Ratio(%)4.01,161,3861,243,477685,304854,89078.781.68.308 09 08 09 08 09 08 09Anadolu Sigorta Annual Report 2009 31

Revenues, Income, Expenses and Losses from Other OperationsThe “Revenues, income, expenses and losses from other operations” account showed a net year-on-yeardecline of 81% and a negative balance of TL -2,824 thousand. The biggest contributor to this loss stems from aTL -7,874 thousand charge against the “Reserves” account.Revenues, Income, Expenses and Losses from Other Operations (TL thousand) 31.12.2008 31.12.2009 (%)Provisions -13,666 -7,874 -42Rediscounts 3,808 5,460 43Compulsory Earthquake Insurance 57 0 -Deferred Tax Income 0 1,207 -Deferred Taxation -2,122 0 -Other Revenues and Income 1,124 912 -19Other Expenses and Losses -4,353 -2,529 -42Total -15,152 -2,824 -81Operating ResultsKey ratios concerning our company’s performance are shown in the accompanying chart along with prior-yearresults for comparison.2008 2009Technical Profitability Ratio 8.3% 4.0%Net Loss-Premium Ratio 78.7% 81.6%Return on Equity 19.4% 6.0%Return on Assets 7.7% 2.8%31.12.2008 31.12.2009 (%)Technical Division Balance 96,671 50,142 -48Investment Income 176,944 162,323 -8Investment Expenses -117,741 -150,424 28Revenues, Income, Expenses and Losses from Other Operations -15,151 -2,824 -81Total 140,723 59,217 -58Gross Income 140,723 59,217 -58Tax Provisions -23,057 -11,053 -52Net Income 117,666 48,164 -59As of end-2009, Anadolu Sigorta showed a gross profit of TL 59,127 thousand. After setting aside TL 11,053thousand as a tax provision, the remaining TL 48,164 thousand corresponds to a 59% year-on-year decline in theCompany’s net profit.Anadolu Sigorta Annual Report 2009 33

Anadolu Sigorta in the IndustryAs our country’s biggest nationally owned insurer,Anadolu Sigorta’s mission is to increase theCompany’s value while maintaining its financialrobustness at international standards.In line with this mission, the Company pursuesa soundly-based growth strategy that focuseson profitability while supporting that strategy byseeking to always make the right choices in terms ofproductivity, risk selection, and pricing.As Turkey’s first national insurance company, promotinginsurance awareness throughout the country is one ofAnadolu Sigorta’s primary strategic goals. Combiningthe deep-rooted experience that it regards as itsmost important capital with an innovative approachthat shapes the industry, Anadolu Sigorta undertakesprojects that reinforce its solid position in its sector.The most recent of these is the “C2C Customer FocusTransformation” project that was launched two yearsago and has now reached the final stage.As an outcome of the Company’s more customerfocusedapproach in the period ahead, even greaterattention will be given to the issues of thoroughly andcorrectly analyzing existing customers, seeking outand exploiting cross-sale opportunities, taking on newcustomers, and determining the right prices for theright risks. A team of specialists are currently involvedin extensive actuarial studies aimed at achieving theseobjectives.Small and medium-sized enterprises (SME) generatea huge amount of value for our national economy butare among the businesses that are most at risk in timesof economic crisis. Based on its analysis of the needsof such firms, Anadolu Sigorta has introduced its“SME Package Policy”. This product is seen as havinga unique importance and efforts are currently beingmade to broaden its use through strong promotionand effective sales activities.In the motor vehicle insurance business line, in whichAnadolu Sigorta controls a significant share of thesector’s total, the Company is currently working ona new and innovative tariff model that is about to beintroduced to the market.Anadolu Sigorta conductedits activities in 2009 whilecontinuing to build on theconcepts of quality service,leadership, innovation, andcustomer focus by whichits name is identified.Training and related activities are constantly beingcarried out in order to increase the effectiveness ofsales channels and in light of changes in the legalframework.A variety of activities are being carried out with theaim of taking the already high level of Anadolu Sigortabrand awareness, satisfaction, and recommendabilityamong target audiences and delivery channels to evengreater levels.2009 highlightsAnadolu Sigorta conducted its activities in 2009 whilecontinuing to build on the concepts of quality service,leadership, innovation, and customer focus by which itsname is identified. Important developments involvingchanges in the Company’s organization and in itsdistribution and sales channels are summarized below.• As required by the new insurance law (Statute5684 dated 3 June 2007) and the Insurance AgencyRegulations of 14 April 2008, agents were notifiedat regular intervals on matters related to their Unionof Chambers and Commodity Exchanges of Turkey(TOBB) registration. Checks were made from theTOBB website and the business activities of 148agents that had not completed their registrationrequirements within the required period of time weresuspended.34Anadolu Sigorta Annual Report 2009

The registrations of these agents were subsequentlyfinalized within a short time. At this time there areno active agents with which Anadolu Sigorta workswho have not fulfilled their TOBB registrationrequirements.• Priority was given to setting up agencies in provinceswere there was deemed to be a need with particularattention being given to recruiting new agents whowere properly trained and qualified. At the same time,efforts were also made to improve the existing agentprofile and to expand the Company’s broker andagent network.• In order to deal with severe price competition inthe sector, a number of campaigns were conductedby the Company to support its sales channels and tominimize commission fee losses.• A coordinated effort involving regional offices wasbegun to update and complete all customer-relatedinformation and documentation as required by“Regulations concerning Measures to Prevent Money-Laundering and the Financing of Terrorism”.• Based on findings from investigations of regionalbusiness process bottlenecks caused by agents havingto obtain the approval of their regional head officesand on discussions of problems frequently raised atmeetings in which agents take part, it was decided toallow agents to perform some types of transactions ontheir own authority. This action has also had the effectof reducing the Company’s own operational workload.• Quarterly reports of customer complaints brokendown by branch were prepared and submitted to theTreasury Undersecretariat as required by “Circular2008/28 concerning reports to be prepared pursuantto article 12 of the Regulations pertaining to InsuranceContract Information Disclosure” published on 19September 2009.• With the formation of the Bancassurance Unit set upon 1 July 2009 to provide for centralized monitoringand coordination of relations with banks and of directsales team activities, the erosion that had been takingplace in the Company’s Banks portfolio was halted andreversed. The immediate effect of this was a 0.25% risein this business line’s premiums in the month of August.• Activities were carried out in line with “Regulationsconcerning Principles applicable to Retail CreditProtection Insurance”.Delivery Channels as of 2009 year-endRegionNumber ofAgentsNumber ofCorporate AgentsNumber ofİşbank BranchesNumber of OtherBanks’ BranchesNumber ofBrokersTotalSouthern Anatolia 126 - 139 4 - 269Western Anatolia 189 - 156 7 3 355Marmara 152 - 76 3 1 232Central Anatolia 222 - 195 8 2 427Western Black Sea 45 - 29 - - 74Black Sea 70 - 60 2 - 132Mediterranean 68 - 56 2 - 126İstanbul 310 34 226 17 35 622Kadıköy 232 7 139 12 20 410TRNC 27 - 13 - - 40Total 1,441 41 1,089 55 61 2,687Anadolu Sigorta Annual Report 2009 35

Research and Development Pertaining to New Services and BusinessActivities• Launched in order to apply the business model andprocesses identified as a result of the “Business Modeland Top Level Process Design” project which wasundertaken to examine and improve the Company’sbusiness model and processes and which wascompleted in 2008, Anadolu Sigorta’s C2C (“Closerto Customer”) Transformation Program is continuingwithout any loss in momentum.• As part of the C2C Customer FocusedTransformation Program, a Bancassurance Unit wasset up within the Agents and Marketing Departmentin order to create a targeted bancassurance model inwhich Anadolu Sigorta and İşbank join forces.• Organizational activities related to the formationof a Claims Management Department and an MotorClaims Department have been completed withattention being given to compliance with the businessmodel that is to be achieved in the C2C targetstructure.• In line with the objective of providing faster andmore effective service by centralizing damageassessment and compensation processes, the dutiesand responsibilities of the Motor Claims Departmenthave been expanded to encompass all automobiledamages files within the combined territory of allİstanbul regional departments.• Organizational activities related to the formation ofa Risk Management and Internal Control Departmenthave been completed as part of the structuring of theInternal Control System.• The Company’s risk management and internal controlmanager has been designated as its complianceofficer pursuant to article 4 of “Regulations concerningProgram Compliance with Obligations pertaining tothe Prevention of Money Laundering and the Financingof Terrorism” published on 16 September 2008.• The Organization Department has been restructuredas the “Project Management and OrganizationDepartment” with the addition of business analysisand project management functions.• The Project Management and OrganizationDepartment, the Software Development Department,and part of the Data Processing Department havebeen relocated to İşbank premises in the Güneşlidistrict of İstanbul.• A Business Continuity Management System hasbeen set up with the aim of quickly overcomingany interruptions that may take place during orafter earthquakes, floods, terrorist attacks, or otheremergencies and of allowing the Company tocontinue carrying out its essential activities.• New quality internal auditors have been giventraining as part of the quality management system.• A number of general use projects were carried underthe heading of application development:- Security tokens were introduced for agents to usewhen entering the Anadolu Sigorta computer system.- New rules and procedures were introduced toheighten security when entering the Anadolu Sigortacomputer system.- Improvements were made in products; agents weregiven greater decision-making authorities.- Policy, rider, offer, information form, questionnaire,and other document design activities were carried out.- Applications were further developed for use intransactions involving the İşbank Banking BasicOperations Unit (BTOB).- Improvements were made in all processes subject toanti-money laundering regulations.- Warnings that are sent out to lenders weredeveloped and other application-related activitieswere carried out in line with “Regulations concerningPrinciples applicable to Retail Credit ProtectionInsurance”.- The “My Workspace” screen on which offer andcustomer validation processes are performed wasimproved in line with new requirements.- Corporate customer offer processes were furtherdeveloped.36Anadolu Sigorta Annual Report 2009

Commitment to Social ResponsibilityWithin the framework of its sense of socialresponsibility, Anadolu Sigorta supports education,academic activities, sports, and cultural and artisticevents.Among the education and art-related activities thatthe Company sponsored in 2009, mention should bemade of Turkish Education Foundation İnanç TürkeşLycee Science & Art Week, theatrical performancesstaged by TEKSEM, and a sponsorship agreementwith the İstanbul Museum of Modern Art.In the area of professional organizations andactivities aimed at directly or indirectly supportingthe development of the insurance industry, AnadoluSigorta was a sponsor for the 2nd Active AcademyInsurance Summit, the Honorary Traffic InspectorsAssociation Panel, the Hastane Magazine HealthcareManagement Award Ceremony, the NART RiskManagement Forum 2009, the Fleet ManagementSeminar, the Lloyds List Shipping Awards, the AegeanInsurance Lobby, the Association of Aegean InsuranceAgencies, the Turkish Industrialists’ and Businessmen’sAssociation’s “Healthcare Workgroup Report”, theKadir Has University 2nd International HealthcareLaw Symposium, and the 3rd İstanbul InformaticsCongress.Anadolu Sigorta is a sponsor for a number ofsports federations and clubs: the Turkish BasketballFederation, the Turkish Ice Hockey Federation,the Efes Pilsen Premier League Men’s BasketballTeam, the Trabzonspor Club, the EczacıbaşıWomen’s Volleyball Team, and the Adana Tennis,Mountaineering, and Water Sports Club. TheCompany was also a sponsor for the Women’s Circuit2009 tennis tournament held at the Miltaş sportscomplex.Anadolu Sigorta is a founding member of a numberof social-purpose foundations such as the TurkishEarthquake Foundation and the Economic ResearchFoundation. It is also a member of professionalorganizations such as the Chamber of Shipping andthe İstanbul Chamber of Commerce.Within the frameworkof its sense of socialresponsibility, AnadoluSigorta supportseducation, academicactivities, sports, andcultural and artistic events.Anadolu Sigorta has contributed to the support offoundations and associations such as the InsuranceAgents Association, the İstanbul Technical UniversityMaritime Faculty Alumni Association, SolidarityAssociation for the Physical Disabled, the TurkishSpinal Cord Injury Association, and the Foundation forChildren with Leukemia.One of Anadolu Sigorta’s essential missions is tofoster an awareness of insurance and its importance inour country and to this end the Company undertakes avariety of informational, advertising, and promotionalcampaigns. In its 2009 communication campaignsthe Company focused on SME insurance during thespring months and on home-owner and automobileinsurance products towards the end of the year.In 2009 Anadolu Sigorta launched a series of activitiesaimed at outlining a much more comprehensive andlong-term social responsibility project that it will beundertaking as part of the celebrations surrounding its85th anniversary in 2010.When supporting projects, Anadolu Sigorta givesthe utmost attention to compliance with all laws andregulations pertaining to environmental and publichealth. Anadolu Sigorta has never been the target ofany complaint or sanction related to environmentalwellbeing.Anadolu Sigorta Annual Report 2009 37

Annual Activity Report Compliance OpinionTo the Board of Directors of Anadolu Anonim Türk Sigorta Şirketi:We have audited the accuracy and compliance of financial information provided in the accompanying annualactivity report of Anadolu Anonim Türk Sigorta Şirketi (“the Company”) with the audit report issued as ofDecember 31, 2009. The Board of Directors of the Company is responsible for the annual activity report. Asindependent auditors, our responsibility is to express an opinion on the audited annual activity report based onthe compliance of financial information provided in the annual activity report with the audited financial statementsand explanatory notes.Our audit was performed in accordance with the accounting standards and principles and procedures ofpreparing and issuing annual activity reports as set out by the Insurance Law No: 5684. Those standards requirethat we plan and perform our audit to obtain reasonable assurance whether the annual activity report is free frommaterial misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.In our opinion, the financial information provided in the accompanying annual activity report presents fairly, inall material respects, the financial position of Anadolu Anonim Türk Sigorta Şirketi as of December 31, 2009 inaccordance with the prevailing accounting principles and standards set out in the Insurance Law No: 5684. Thefinancial information provided in the annual activity report is in compliance with the audited financial statementsand explanatory notes, and also includes the summary Management report and our audit opinion on thesefinancial statements.DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş.Member of DELOITTE TOUCHE TOHMATSUSibel TürkerPartnerİstanbul, March 09, 201038Anadolu Sigorta Annual Report 2009

Corporate Governance Practices at Anadolu Sigorta40 Board of Directors and Auditors42 Executive Committee44 Heads of Units Under the Internal Systems45 Organization Chart46 An Assessment of the Board Directors by the Corporate Governance Committee49 Committees Operating within Anadolu Sigorta51 An Assessment of the Operation of the Independent Audit Firm in 2009 ActivityPeriod via the Audit Committee52 Human Resources Policy54 The Company’s Transactions with the Risk Group55 Agenda of the Annual General Assembly56 Board of Directors Report Summary58 Dividend Distribution Proposal59 Corporate Governance Principles Compliance ReportAnadolu Sigorta Annual Report 2009 39

Board of Directors and Auditors1 2345 6(1) Burhan KaragözChairmanBorn on 22 December 1929 in İstanbul, BurhanKaragöz graduated from İstanbul HigherEducation School of Economics and Commercein 1951. He started his career at İşbank in 1953 asan Assistant Inspector at the Board of Inspectorsand was later promoted to the position ofInspector. After serving as the Manager ofthe Deposits Department, as the Chairman ofİşbank’s Board of Inspectors and lastly as theManager of the Loans Department of İşbank; hewas appointed as Deputy Chief Executive Officerin 1972. He was appointed as the Chief ExecutiveOfficer of İşbank in 1982. After his retirement in1988; Burhan Karagöz was appointed to İşbank’sBoard as a Member. He served as the Chairmanof the Board of Directors from 1996 until 2002.Between 1966-1993, he served on the Boardsof Directors of Anadolu Bankası A.Ş., EreğliDemir Çelik Fabrikaları A.Ş, Türk EximbankA.Ş, and Türkiye Sınai Kalkınma Bankası A.Ş. asa Member, and İstanbul Segman ve GömlekSan. T.A.Ş., Aslan Çimento A.Ş., Türkiye SınaiKalkınma Bankası A.Ş., T. Dış Ticaret BankasıA.Ş. and Türk Eximbank A.Ş. as the Chairman.Burhan Karagöz was elected as the Chairmanof the Board at Anadolu Sigorta on 18 October1993. He is also the Head of the AnadoluSigorta Corporate Governance Committee,and a Member of Turkish Industrialists’ andBusinessmen’s Association (TÜSİAD).(4) Ahmet Doğan ArıkanDirectorBorn in 1949 in Ankara. Ahmet Doğan Arıkangraduated from Middle East Technical Universityin 1971. He began his career as a systems analystat the General Directorate for the Turkish StateMeteorological Service and he joined İşbank in1973. In 1974-1975 Ahmet Doğan Arıkan alsodid his military service as a systems analyst andprogramming officer.Returning to İşbank upon completion of hismilitary service, Ahmet Doğan Arıkan continuedto serve in various capacities both in Turkey andabroad for about ten years, becoming GeneralManager of an İşbank-owned foreign tradingcompany in 1987. This was followed by GeneralManager positions at two other bank-ownedcompanies: İzmir Demir Çelik Sanayi A.Ş. in 1991and Türkiye Şişe ve Cam Fabrikaları A.Ş. in 2000.Ahmet Doğan Arıkan retired from the latterposition on 16 September 2009. In the course ofhis career, Ahmet Doğan Arıkan has served as aMember or Chairman of the Boards of Directorsof firms in the textiles, automotives, maritimeshipping, lodging, tourism, manufacturing, andbanking industries(2) Yaşar İğdirselDeputy ChairmanBorn in 1946 in Çivril/Denizli, Yaşar İğdirselgraduated from Ankara University, Faculty ofPolitical Sciences, the Department of Economicsand Finance. He started his career at İşbankin 1973 as an Assistant Inspector at the Boardof Inspectors. He was appointed as AssistantManager to the Galata Branch in 1985 andbecame the Manager of Gayrettepe Branch in1988. He functioned at Levent, Yenicami andŞişli branches as Branch Manager between1989-1997, then became the Deputy ChiefExecutive Officer in 1997. Between 1998-2004,he was appointed as Chief Executive Officer of İşFactoring Financial Services. After his retirementin 2004, Yaşar İğdirsel has been elected asa Board Director of Anadolu Sigorta on 30April 2008. He is also the Deputy Head of theCorporate Governance Committee at AnadoluSigorta.(5) Mustafa Nail YağcıDirectorBorn on 07 May 1950 in Güdül/Ankara, MustafaNail Yağcı graduated from Ankara University,Faculty of Law. After completion of his internshipin law, he joined İşbank as an Assistant Inspectorat the Board of Inspectors in 1974. He becamethe Assistant Manager of Corporate LoansDepartment in 1985 and Non-Performing LoansDepartment in 1986. He was appointed toMersin Branch as a Manager in 1988 and becamethe Manager of Credit Information and FinancialAnalysis Department in 1990. He functioned atRıhtım-Kadıköy and Yenicami branches as BranchManager between 1993-2002. He was appointedto İşbank’s Board of Directors as a Member in2002. After his retirement in 2008, Mustafa NailYağcı has been elected as a Board Director ofAnadolu Sigorta on 30 April 2008.(3) Mustafa Ali SuDirector and Chief Executive OfficerBorn on 28 September 1953 in Antalya, MustafaAli Su graduated from Middle East TechnicalUniversity, Faculty of Administrative Sciences,Department of Business Administration. Hestarted his career at İşbank in 1976 as anAssistant Inspector at the Board of Inspectors.Mustafa Ali Su was appointed to theOrganization Department as Assistant Managerin 1986, as Unit Manager to the IT Departmentin 1988 and then became the Manager of theDepartment of Credit Cards in 1990, and theManager of the Organization Departmentin 1992. He became the Director of the NewHead Office Construction Project during therelocation of İşbank Head Office to İstanbul in1996. Appointed as the Chief Executive Officerof Anadolu Hayat Emeklilik in 2001, MustafaAli Su has become the Chief Executive Officerof Anadolu Sigorta on 01 February 2006.Mustafa Ali Su is a Member of the Graduates’Associations of TED Ankara College and of theMiddle East Technical University, Board Memberof TSRŞB (Association of the Insurance andReinsurance Companies of Turkey), and Head ofthe Coordination Committee of the InsuranceInformation Center.(6) Necati AksoyoğluDirectorBorn in 1957 in Ankara, Necati Aksoyoğlugraduated from Ankara University Faculty ofLaw in 1979, and completed LLM in 1981 at thesame faculty. He worked as a legal practitionerbetween 1981-1983 and joined İşbank as alawyer in 1984, where he has been serving asthe Chief Legal Counsel of the Legal AffairsDepartment since 1999. He has participatedin various, and mostly internal, seminars andworkshops as an instructor and speaker on theBanks Law, Legal Proceedings Law, Collaterals,and Service of Notices Law.40Anadolu Sigorta Annual Report 2009

78910(7) Ömer KarakuşDirectorBorn on 01 January 1965 in Gümüşhane, ÖmerKarakuş graduated from Gazi University, Facultyof Economic and Administrative Sciences,Department of Public Administration in 1986.He started his career at İşbank in 1988 as anAssistant Inspector at the Board of Inspectors,where he later became an Inspector. Hewas appointed as Assistant Manager to theAccounting Department in 1998, where hesubsequently rose to Unit Manager andManager. He was appointed as the Managerof İşbank Yenişehir Branch in Ankara on 02 July2007 and the Manager of Human ResourcesDepartment on 08 October 2008. Elected to aseat on the Board of Anadolu Sigorta on30 March 2006. Ömer Karakuş is also a Memberon Anadolu Sigorta Audit Committee.Board of Auditors(10) Zeliha İlke SelviAuditorBorn on 12 July 1962 in Gördes/Manisa, Zelihaİlke Selvi graduated from Middle East TechnicalUniversity, Faculty of Engineering, Departmentof Computer Engineering in 1985 and started hercareer at İşbank as a Software Specialist traineeat İzmir Electronic Data Processing Center thesame year. She became an assistant programmerat the Head Office Organization Departmentin 1986. After serving at İzmir Electronic DataProcessing Center from 1988 until 1992;she started working at the Head Office ITDepartment in 1992. She was appointed as anAssistant Manager at the Software DevelopmentDepartment in 1999, and promoted to GroupManager position on 29 March 2005. Zelihaİlke Selvi has been appointed as an auditor ofAnadolu Sigorta on 27 April 2006.Information on Board of Directors Meetings11(8) Aziz Ferit EraslanDirectorBorn in İstanbul in 1969, Aziz Ferit Eraslangraduated from Middle East TechnicalUniversity, Department of Public Administrationin 1991. He got his master’s degree in bankingand finance from the University of Stirling. Afterattending Ziraat Bank School of Banking for ninemonths in 1991 and 1992, Eraslan joined İşbankas a Member of the Bank’s Board of Inspectorsin 1992 before he became an Assistant Managerin the Accounting Department in 2000, wherehe also served as a Group Manager. On 26 July2007, he has been appointed as AccountingManager, a position he still holds under the newname Financial Management Division.(11) Ayşe Alev AtaçAuditorBorn on 05 August 1963 in Ankara, Ayşe AlevAtaç graduated from Ankara University, Facultyof Political Sciences, Department of Economicsin 1984. She began her career at İşbank asa trainee clerk in the International RelationsDepartment in 1985. She was promoted toassistant service officer in the same departmentin 1992, to II. Manager in 1998, to AssistantManager in 2000 and to Unit Manager in 2006.Since 2008, Ayşe Alev Ataç has been servingas a Group Manager in the Cash Managementand International Trade Financing ProductsManagement Unit under the Corporate BankingProducts Department.12(9) Emre DuranlıDirectorBorn in 1972 in Düsseldorf/Germany, EmreDuranlı graduated from Hacettepe University,Faculty of Economic and AdministrativeSciences, Department of Business Administration(English). He started his career at İşbank as anAssistant Inspector at the Board of Inspectorsin 1996. He later became an Inspector andwas appointed as Assistant Manager to EquityParticipations Department in 2004. Currently theInsurance and Capital Market Unit Manager inthe Equity Participations Department at İşbank,Emre Duranlı served as a Member of the Boardof Auditors at Anadolu Sigorta in 2005 and 2006,and has been elected to a seat on the Boardof Directors on 30 March 2006. A Member onthe Audit Committee and the Board Directorresponsible for internal systems at AnadoluSigorta, Duranlı also serves as a Board Memberat Anadolu Hayat Emeklilik, Milli Reasürans,İş Yatırım, İş Portföy Yönetimi, and YatırımFinansman Menkul Değerler A.Ş.(12) Engin EkşiAuditorBorn on 01 April 1976 in Karasu/Sakarya, EnginEkşi graduated from İstanbul University with aBS degree in Management in 1997 and startedhis professional career at İşbank’s Board ofInspectors as an Assistant Inspector in 2000. Hehas been appointed to the Equity ParticipationsDepartment as Assistant Manager in 2008, aposition he still holds. Elected as an Auditor ofAnadolu Sigorta on 26 March 2009, Engin Ekşiis an Auditor of İş Portföy Yönetimi A.Ş. and İşGirişim Sermayesi Yatırım Ortaklığı A.Ş., as well.He also serves as a Board Member at MipaşMümessillik İthalat İhracat ve Pazarlama DağıtımA.Ş. and Trakya Yatırım Holding A.Ş.The Board of Directors holds meetings on a monthly basis, while interim meetings are alsoconvened as and when deemed necessary. Topics to be discussed at the meetings aredetermined in the meeting agenda consisting of proposals requiring the approval of theCompany’s Board of Directors and Executive Board reports for informative purposes. Duringthe meetings, other topics raised by the members so as to inform the Board of Directorsand the auditors are addressed in the time allocated for any other business. Consisting ofthe agenda, proposal, informative notes and reports, member files are distributed to all themembers nearly four days in advance of the meeting date. The Board of Directors met 14times during 2009. Five of these meetings were held with full participation of the members,whereas two members were unable to attend one meeting, and one member was absent ineight other meetings.Ayşen AyanBoard of Directors ReporterAnadolu Sigorta Annual Report 2009 41

Executive Committee1 2345(1) Mustafa Ali SuDirector and Chief Executive OfficerBorn on 28 September 1953 in Antalya, MustafaAli Su graduated from Middle East TechnicalUniversity, Faculty of Administrative Sciences,Department of Business Administration. Hestarted his career at İşbank in 1976 as an AssistantInspector at the Board of Inspectors. MustafaAli Su was appointed to the OrganizationDepartment as Assistant Manager in 1986, asUnit Manager to the IT Department in 1988 andthen became the Manager of the Departmentof Credit Cards in 1990, and the Manager of theOrganization Department in 1992. He becamethe Director of the New Head Office ConstructionProject during the relocation of İşbank HeadOffice to İstanbul in 1996. Appointed as the ChiefExecutive Officer of Anadolu Hayat Emeklilikin 2001, Mustafa Ali Su has become the ChiefExecutive Officer of Anadolu Sigorta on 01February 2006. Mustafa Ali Su is a Member of theGraduates’ Associations of TED Ankara Collegeand of the Middle East Technical University,Board Member of TSRŞB (Association of theInsurance and Reinsurance Companies of Turkey),and Head of the Coordination Committee of theInsurance Information Center.(2) Musa Ülken1. Deputy Chief Executive OfficerClaim ManagementMotor ClaimsLegal Affairs and SubrogationBorn on 20 August 1953 in Tarsus, MusaÜlken graduated from the İstanbul Academyof Economic and Commercial Sciences,Department of Economics and Public Finance.He began his career at Anadolu Sigorta ClaimsDepartment as a Clerk on 01 November 1978and subsequently rose to the positions ofAssistant Superintendent on 01 January 1984,Superintendent on 01 January 1988, AccidentDepartment Superintendent on 07 February1990, Chief Superintendent on 01 January 1991,Assistant Manager on 01 August 1992, Manageron 01 May 1993, Marmara Regional Manager on06 June 1997 and Kadıköy Regional Manager on01 June 2002. Having served in the last positionuntil 31 July 2004, Musa Ülken became a DeputyChief Executive Officer on 01 August 2004, andI. Deputy Chief Executive Officer on 01 February2008.(4) Hakkı Efe GündeşDeputy Chief Executive OfficerAgencies and MarketingRegional OfficesBorn on 08 January 1960 in Ankara, H. Efe Gündeşgraduated from Gazi Teacher-Training Institute,Department of Mathematics and from MiddleEast Technical University Faculty of Economic andAdministrative Sciences, Department of PoliticalScience and Public Administration. Gündeş beganhis career at İşbank as an Inspector Trainee atthe bank’s Board of Inspectors on 01 December1986 and rose to the position of grade 3 Inspectorbefore becoming Assistant Accounting Manageron 31 October 1996, and Unit Manager in thesame section on 24 February 2000. Having servedin this last position at İşbank until 30 April 2005,H. Efe Gündeş became a Deputy Chief ExecutiveOfficer at Anadolu Sigorta on 01 May 2005.(3) Mehmet Metin OğuzDeputy Chief Executive OfficerMotor InsuranceHealth InsuranceFire and Engineering InsuranceBorn on 04 April 1959 in Çanakkale, M. MetinOğuz graduated from Middle East TechnicalUniversity, Faculty of Arts and Sciences,Department of Physics and Mathematics,and holds a master’s degree from MarmaraUniversity Institute of Banking and Insurance,Department of Insurance. M. Metin Oğuz beganhis career at Anadolu Sigorta as a Clerk in theAccident Department on 16 October 1985 andsubsequently rose to Assistant Superintendent on01 February 1989, Superintendent on 01 February1992, Chief Superintendent on 01 February 1995,Assistant Manager on 01 May 1997, Manager on01 March 1998, and Motor Insurance Manager on01 June 2002. Having served in the last positionuntil 31 July 2004, M. Metin Oğuz became aDeputy Chief Executive Officer on 01 August2004.(5) Tahsin ErdoğanDeputy Chief Executive OfficerITSoftware DevelopmentProject Management & OrganizationBorn on 20 May 1956 in Sürmene, TahsinErdoğan graduated from Hacettepe UniversityFaculty of Science, Department of Mathematics.He began his career at Anadolu Sigorta as aProgrammer in the Data Processing Departmenton 15 September 1980 and subsequentlyrose to Senior Programmer on 01 January1987, Chief Programmer on 21 April 1989,Organization and Data Processing DepartmentChief Superintendent on 01 May 1991, AssistantManager on 01 February 1993, Manager on01 May 1996, and Data Processing Manager on01 June 2002. Having served in this position until31 August 2005, Tahsin Erdoğan became DeputyChief Executive Officer on 01 September 2005.42Anadolu Sigorta Annual Report 2009

678(6) Filiz TaşyumrukDeputy Chief Executive OfficerHuman Resources and TrainingPublic RelationsBorn on 26 June 1967 in İstanbul, Filiz Taşyumrukgraduated from Anadolu University, Facultyof Business Administration, Department ofBusiness Administration. She started hercareer at Anadolu Sigorta as a Clerk at theFire Department on 16 September 1985. Sherose to Assistant Superintendent at the samedepartment on 01 January 1990. She wasappointed to the Claims Department on 01February 1993 as Superintendent,then roseto Chief Superintendent on 01 May 1996, andAssistant Manager on 01 March 1998 at the samedepartment. She became a Manager at theTraining Department on 01 June 2000 and wasthen appointed as the Human Resources andTraining Manager on 01 August 2004. She wasappointed as Deputy Chief Executive Officer on01 February 2008.(8) Erdinç GökalpDeputy Chief Executive OfficerReinsuranceActuarial ConsultancyBorn on 26 July 1967 in Ankara, Erdinç Gökalpgraduated from Kuleli Military High Schooland Turkish Military Academy, Departmentof Business Administration. He then got hismaster’s degree in insurance from MarmaraUniversity, Institute of Banking and Insurance.During his employment with Anadolu Sigorta,he earned the Atatürk scholarship grantedby TSRŞB (Association of the Insurance andReinsurance Companies of Turkey) and pursuedhis studies abroad. Having started his career atAnadolu Sigorta as Specialist at the MarketingDepartment on 01 May 1991, Erdinç Gökalp wasappointed to the Reinsurance Department on23 September 1991 and continued working till30 April 1996 with the same title. He promotedto Chief Superintendent position on 01 May1996 and to Assistant Manager position on 01October 1997, he was appointed to the MarketingDepartment. Erdinç Gökalp was appointed to theAccident Department on 26 December 1997 withthe same title. He rose to the position of Managerand was assigned to the Reinsurance Departmenton 01 July 2001. Erdinç Gökalp has beenappointed as Deputy Chief Executive Officer on01 February 2008.9(7) M. Levent SönmezDeputy Chief Executive OfficerMarine and Liability InsuranceCorporate InsuranceBorn on 22 June 1962 in Ankara, M. LeventSönmez graduated from İstanbul TechnicalUniversity, Faculty of Maritime Studies,Department of Marine Engineering in 1985,got his master’s degree in “ContemporaryManagement Techniques” from MarmaraUniversity & Maine University and completed the“SITC (Swiss Re) Marine Insurance” program.Having participated in various training programsin Turkey and abroad, M. Levent Sönmez alsoholds “Chartered Insurance Institute / LondonDip. CII” degree. He started his career at AnadoluSigorta as a Specialist at the Marine Departmenton 01 May 1991 and continued working withsame title till 30 April 1996. He subsequentlyrose to Specialist position on 01 March 1994,Chief Superintendent position on 01 May 1996,Assistant Manager on 01 October 1997, andManager on 01 May 1999. M. Levent Sönmezhas become Bakırköy Regional Manager on 01June 2002 and Kadıköy Regional Manager on 01August 2004. He has been appointed as DeputyChief Executive Officer on 01 February 2008.(9) Fatih GörenDeputy Chief Executive OfficerAccounting and FinancePurchasingSupport and PremisesBorn on 11 November 1969 in Ankara, FatihGören graduated from Ankara University, Facultyof Political Sciences, Department of InternationalRelations. He worked as a Specialist at RetailBanking and Agricultural Loans Departmentsat Ziraat Bank between 1991 and 1994. Havingjoined Anadolu Sigorta as an Assistant Inspectoron the Board of Inspectors on 01 November1994, Fatih Gören rose to Senior Inspectoron 01 November 1997 and grade 3 Inspectoron 01 November 1998. He was appointed asAssistant Manager to the Accounting and FinanceDepartment on 01 June 2000, where he waspromoted to Manager position on 01 August2004. Fatih Gören has been appointed as DeputyChief Executive Officer on 01 February 2008.Anadolu Sigorta Annual Report 2009 43

Heads of Units Under the Internal Systems1 2(1) Dr. İbrahim Erdem EsenkayaChairman of the Board of InspectorsBorn on 03 November 1969 in İstanbul,İbrahim Erdem Esenkaya graduated fromİstanbul University, Faculty of Political Sciences,Department of Public Administration. Hethen completed a master’s degree withoutdissertation in the graduate program for themanagement of financial institutions at İstanbulUniversity, Faculty of Business Administration,Institute of Business Administration. He earnedhis master’s degree in business managementand organization, and his doctorate degreein accounting and auditing from the Instituteof Social Sciences at the same university. Hestarted his career at Anadolu Sigorta as anAuditor at the Board of Inspectors on 01 May1995 till 31 May 2001. He was appointed tothe Accounting and Finance Department on01 June 2001 as an Assistant Manager and toInternal Audit Department on 01 January 2005as a Manager. İbrahim Erdem Esenkaya hasbeen appointed as the Chairman of the Boardof Inspectors on 01 June 2007.(2) Ömer AltunRisk Management and Internal ControlManagerBorn on 31 October 1970 in Malatya, ÖmerAltun graduated from Hacettepe University,Faculty of Science, Department of Statistics. Hebegan his career at Anadolu Sigorta as a Clerkat the Accounting and Finance Departmenton 01 May 1997, where he subsequentlyrose to Specialist position on 01 February1998 and continued working with same titletill 30 November 2005 and then he rose toAssistant Manager position on 01 December2005. On 01 February 2008, Ömer Altun hasbeen appointed as a Manager to the RiskManagement and Actuarial Department, whichwas renamed to Risk Management and InternalControl Department within the scope of therestructuring of internal systems organization.44Anadolu Sigorta Annual Report 2009

Organization ChartCorporate GovernanceCommitteeBurhan KaragözYaşar İğdirselAudit CommitteeEmre DuranlıÖmer KarakuşI. Deputy ChiefExecutive OfficerMusa ÜlkenDeputy ChiefExecutive OfficerM. Metin OğuzLegal ConsultantSamim ÜnanMotor InsuranceDepartmentHeadquarters ConsultantAhmet Hamdi BaşarHealth InsuranceDepartmentFire and EngineeringInsurance DepartmentClaimsDepartmentLegal Affairs andSubrogationDepartmentMotorClaimsDepartmentDeputy ChiefExecutive OfficerH. Efe GündeşAgencies and MarketingDepartmentRegional OfficesSouthern AnatoliaWestern AnatoliaMarmaraCentral AnatoliaWestern Black SeaBlack SeaMediterraneanİstanbulKadıköyTRNC BranchBoard of DirectorsChief Executive OfficerMustafa Ali SuDeputy ChiefExecutive OfficerTahsin ErdoğanDeputy ChiefExecutive OfficerFiliz TaşyumrukInformationTechnologiesDepartmentLabor LawCounsellorÖmer EkmekçiSoftware DevelopmentDepartmentProject Management &OrganizationDepartmentHuman Resourcesand TrainingDepartmentDeputy ChiefExecutive OfficerM. Levent SönmezMarine and LiabilityInsurance DepartmentCorporate InsuranceDepartmentPublic RelationsDepartmentCoordination Department tothe Board of DirectorsBoard of AuditorsRisk Management andInternal Control DepartmentDeputy ChiefExecutive OfficerErdinç GökalpDeputy ChiefExecutive OfficerFatih GörenActuarial Consultancy Accounting andFinance DepartmentReinsuranceDepartmentPurchasing, Supportand PremisesDepartmentAnadolu Sigorta Annual Report 2009 45

Anadolu Anonim Türk Sigorta ŞirketiAn Assessment of the Board Directors by the Corporate Governance CommitteeApart from the CEO, the Board of Directors consists of non-executive members.Chairman of the Board and CEO functions are carried out by different individuals.Taking into consideration that there are no non-corporate ultimate shareholders with a controlling interest inour Company, it is thought that the Board Directors naturally possess the advantage to act independently andtherefore, to be impartial in their decisions, upholding the interests of our Company and stakeholders aboveeverything else.The Board of Directors meets regularly and at least monthly as pre-scheduled, and at any time as and whendeemed necessary. The Board of Directors met 14 times during the reporting period. The Board Directors, inprinciple, attend every meeting.Care is paid to determine the Board meeting date during the immediately preceding meeting, followed bywritten invitation. It is intended to set the meeting date so as to allow all Directors to participate, and save forunforeseeable exceptional events, the Board meetings are held with the participation of all Directors.The draft Board meeting agenda is prepared by the CEO and finalized in line with the proposals of the Chairmanand the Board Directors.Utmost care is paid to ensure that the information and documents about the topics covered in the Board meetingagenda are made available for the examination of the Directors at least seven days in advance, and when suchtiming cannot be met, efforts are spent to ensure equal flow of information to the Board Directors.Each Director is entitled to one vote and none has weighted vote or affirmative/negative vetoing rights.Pursuant to the articles of association, the Board of Directors convenes on the basis of absolute majority andmakes decisions with the absolute majority of Directors present in the meeting.Pursuant to the articles of association, our Board of Directors is authorized on matters of importance such as;• Establishment and abolition of agencies, branches and representation offices, and determination of the termsand conditions applicable therefor,• Being a proxy, leading insurer, representative or agency of other insurance and reinsurance companies,• Setting the dates for commencing and terminating activities in various insurance branches,• Determination of the essential conditions of insurance and reinsurance agreements,• Execution and termination of all kinds of reinsurance agreements,• Entering into financial and industrial undertakings and initiatives, founding companies in relation to insurancebusiness, participating in companies that are or will be established for this purpose,• Buying and selling immovables, and constructing buildings.The Board of Directors fulfills its responsibilities remaining outside the scope of its basic functions taking intoconsideration the opinions and recommendations of executive bodies and committees. Such responsibilitiesinclude, but are not limited to the following:• Approving the Company’s annual budget and business plans,• Preparing the Company’s annual reports and finalizing the same to be presented to the General Assembly,• Ensuring that the General Assemblies are held in compliance with the legislation and the Company’s articlesof association,• Taking necessary action in relation to General Assembly decisions,• Overseeing the use of substantial amounts that are in excess of 10% of the total assets in the Company’s mostrecent balance sheet,• Approving the executives’ career plans and rewarding provided to them,46Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiAn Assessment of the Board Directors by the Corporate Governance Committee• Determining the Company’s policies about Shareholders, stakeholders and Public Relations,• Determining the Company’s disclosure policy,• Setting the codes of ethics for the Company and its employees,• Establishing the operating principles of committees; ensuring their efficient and productive functioning,• Taking necessary action so as to ensure the Company’s organizational structure responds to currentcircumstances,• Examining the activities of former boards of directors.The Board of Directors consists of nine Directors, which number enables efficient organization of the activities ofthe Board.Since they represent legal entities, the Directors do not have to be shareholders pursuant to the legislation onaccount of their Board of Directors service.The obligation to deliver shares as collateral imposed on the Directors is fulfilled by the legal entities theyrepresent.There are no Directors holding any shares in the Company.Although there are no set rules on the Directors’ undertaking other duties outside the Company, the Directorsdo not have any other duties apart from their natural duties in the entities they represent and from those in theestablishments owned by the entities they represent.When fulfilling its decision-making function, the Board of Directors acts on the basic consideration of:• Maximizing the fair value of the Company,• Pursuing the Company operations so as to ensure long-term and stable earnings for our Shareholders,• Maintaining the delicate balance between the Shareholders and the Company’s need to grow.In the formation of the Board of Directors, care is given to;• Ensure that the nominees are present in the meeting at the time of election to the seats on the Board ofDirectors,• Inform the Shareholders about the nominees,• Allow Shareholders to ask questions to the nominees,• Inform the Shareholders, during the General Assemblies, on other companies on the boards of which Directornominees serve and on the compliance or non-compliance to internal regulations set exclusively on this topic.Directors just starting to serve on the Board are offered an orientation program covering the following at aminimum:• Introduction with our executives and visits to the Company’s units,• The CVs and performance assessments of our executives,• Strategic goals, current status and issues of the Company,• Market share, financial structure and performance indicators of the Company.Pursuant to legislation, general managers of insurance companies must have graduated from a four-yearuniversity minimum, and have at least ten years experience in any one of insurance, banking, economy, businessmanagement, accounting, law, finance, mathematics, statistics or engineering fields. More than half of the BoardDirectors must have graduated from a four-year university minimum, and have knowledge and experience in atleast one of the fields mentioned above.Anadolu Sigorta Annual Report 2009 47

Anadolu Anonim Türk Sigorta ŞirketiAn Assessment of the Board Directors by the Corporate Governance CommitteeThe Directors possess these qualifications and have;• Satisfactory knowledge and skills in banking and insurance business,• The skill to read and analyze financial statements and reports,• Basic knowledge about the legal regulations governing our Company, and about general marketcircumstances,• The will and the opportunity to regularly attend the Board meetings for the period of time for which they areelected to serve.Board Directors allocate sufficient time for the Company affairs, and exercise their authorities cautiously andwithin the framework of good faith and equipped with all necessary knowledge to ensure full satisfaction of theirduties.The Board of Directors adopted the necessary measures for preventing undisclosed information and/or tradesecrets from being disseminated out of the Company.Yaşar İĞDİRSELDeputy Chairman of the Board andMember of theCorporate Governance CommitteeBurhan KARAGÖZChairman of the Board andHead of the CorporateGovernance Committee48Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCommittees Operating within Anadolu SigortaObjectiveOverseeing the Company’s compliance with corporate governance principles, undertaking improvement workthereon and submitting proposals to the Board of Directors.MembersBurhan Karagöz, Board Director (Head)Yaşar İğdirsel, Board Director (Deputy Head)FormationThe Committee is formed, subject to corporate governance principles, by the Board of Directors and primarilyfrom amongst Directors. As and when needed, non-Director individuals who are specialized in their respectivefields can also be assigned to the committee. The CEO does not take place in this Committee.The Committee consists of a minimum of two members. The majority of the Committee members consist of nonexecutiveBoard Directors. The head of the Committee is elected from amongst independent Directors.The term of office for the Corporate Governance Committee is, in essence, parallel to that of the Board ofDirectors; the Committee, however, will remain in office until the completion of the predetermined complianceprocess, when the Board of Directors is succeeded.To the extent possible, the Committee meets consistently with the Board of Directors meetings. Committeedecisions are adopted on the basis of the majority of votes cast.Following the Committee meetings, the head of the Committee provides written reports on the activities of theCommittee to the Board of Directors, and either informs the members of the Board Directors, or provides themto be informed, on the Committee’s meeting minutes.ActivitiesIn essence, the Corporate Governance Committee;• Establishes whether the corporate governance principles are implemented in the Company, as well as thegrounds for non-implementation, if applicable, and the conflicts of interest, if any, arising from failure to fullycomply with these principles, and presents proposals to the Board of Directors for the improvement of thepractices;• Coordinates the tasks of the Investor Relations Unit;• Works to create a transparent system regarding identification, assessment, training and rewarding ofnominees eligible for the Board of Directors, and establishes related policies and strategies;• Formulates recommendations regarding the number of Board Directors and executives (CEO, Deputy ChiefExecutives, Managers, Assistant Managers, personnel directly reporting to Chairman of the Board of Directorsor the CEO, as well as other people such as advisors);• Sets and oversees the approaches, principles and practices regarding performance evaluation, careerplanning and rewarding of Board Directors and executives.AUDIT COMMITTEEObjectiveOverseeing the operation and efficiency of the Company’s accounting system, public disclosure of financialinformation, independent auditing of the Company, and internal control system.MembersEmre Duranlı, Board Director (Chairman)Ömer Karakuş, Board DirectorFormationThe Audit Committee is formed, subject to corporate governance principles, by the Board of Directors fromamongst its Directors.Anadolu Sigorta Annual Report 2009 49

Anadolu Anonim Türk Sigorta ŞirketiCommittees Operating within Anadolu SigortaThe Committee consists of a minimum of two members. The majority of the Committee members consist ofnon-executive Board Directors. The head of the Committee is elected from amongst independent Directors. Twoemployees holding titles are assigned by the Board of Directors for ensuring coordination between the AuditCommittee and the Company.The term of office for the Corporate Governance Committee is, in essence, parallel to that of the Board ofDirectors; the Committee holds at least quarterly meetings. Committee decisions are adopted on the basis of themajority of votes cast.Following the Committee meetings, the head of the Committee provides written reports on the activities of theCommittee to the Board of Directors, and either informs the members of the Board Directors, or provides themto be informed, on the Committee’s meeting minutes.ActivitiesIn essence, the Audit Committee;• Audits the conformity of periodical financial statements and notes to be publicly disclosed to applicablelegislation and international accounting standards, and reports the same to the Board of Directors, byincorporating the opinion of the independent audit firm;• Takes necessary action to ensure sufficient and transparent conduct of any and all internal and independentaudits;• Oversees the operation and efficiency of the Company’s accounting system, public disclosure of financialinformation, independent auditing of the Company, and internal control system. The Committee alsosupervises the selection of the independent audit firm, preparation of audit contracts and initiation ofindependent audit process, and every phase of the work carried out by the independent audit firm;• Gives approval to the selection of, from the independent audit firm and the services to be suppliedfrom them which the Company will obtain service, and submits the same to the Board of Directors. TheCommittee prepares a report as to whether there exists any matter that might impair the independence of theindependent audit firm prior to its submission to the Board of Directors.• Examines the complaints received by the partnership regarding the Company’s accounting, internal controlsystem and independent audit, and ensures examination of related notifications by the Company employeessubject to confidentiality principles;• Oversees compliance with internal regulations and policies aimed at preventing conflicts of interest thatmight arise between the Directors, executives and other employees, and at preventing abuse of trade secretinformation.50Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiAn Assessment of the Operation of the Independent Audit Firm in 2009 Activity Period viathe Audit CommitteeFormation and Independence of the Independent (External) Audit FirmPeriodic financial statements and their footnotes are prepared in a manner to represent the actual financial statusand within the framework of existing legislation and insurance business accounting standards. They are subjectedto independent auditing and publicly disclosed at time intervals stipulated by the legislation.The independent audit firm we work with is alternated at certain intervals, and an independent audit firm isselected for a maximum of 5 fiscal years for regular and/or special audit. At least two years are allowed to passbefore re-signing a regular and/or special audit contract with the same independent audit firm.External auditing of our Company is conducted in a fully independent manner, and the external auditor performsthe relevant tasks adhering strictly to the principles of accuracy, professional integrity and straightforwardness,without being involved in any conflicts of interests that might restrict its independence. The external auditorauditing our Company acts independently and also refrains from any activity that might lead third parties todoubt its independence.No service is obtained, directly or indirectly from the firms we obtain independent audit service, save for theaudit service itself, and no fees are paid to these firms, apart from the reasonable audit fee at current marketconditions.The factors that contribute to the independence of the firms we obtain independent audit service from are theexistence of our Audit Committee, the efficient accounting and internal audit system in place at the Company,and strongly established ethical rules attaching importance to correct public disclosures.Independent conduct of the external auditing of our Company testifies to the accuracy and veracity ofour financial statements in the face of the public, and is perceived as guarantee by our Shareholders. Theindependent opinion of the external auditor further strengthens our Company’s corporate image in that theyenhance the reliability of our financial statements. Having made it a principle to undertake public disclosureand to assure transparency in line with its ethical values, our Company earns the trust of its investors by givingimportance to independence of the external auditor, and therefore, aims to serve the development of nationaleconomy by contributing to accumulation of capital.Ömer KARAKUŞBoard Director and Memberof Audit CommitteeEmre DURANLIBoard Director and Memberof Audit CommitteeAnadolu Sigorta Annual Report 2009 51

Anadolu Anonim Türk Sigorta ŞirketiHuman Resources PolicyOur Company is proud to be the first national insurance company in Turkey, established in 1925 at the directivesof Mustafa Kemal Atatürk. Ever since its establishment, our Company has continuously grown and developed andhas been recognized and acknowledged as the grande école of the Turkish insurance industry.Utmost importance is given to our employees as they are the ones to undertake the biggest duty in carrying outour Company’s key policies. For this reason, the primary goal of our human resources policies and practices isto identify our Company’s needs for personnel in line with its objectives and strategies and assist the creationof human resources that are open to change and are focused on continuous success by recruiting high-qualitypeople, motivating them, evaluating their performance, and encouraging interaction and communication amongindividuals and groups.Career DevelopmentThere are three main career paths at our Company the startup positions of which are clerk, assistant specialist,and assistant inspector respectively. Anyone who starts out in one of these positions has opportunity to advanceto the most senior of management positions in the Company.Employees who start out as an assistant specialist or assistant inspector may advance to full specialist or bepromoted to a managerial position provided they demonstrate the performance required of them within clearlydefined periods of time.Those who start out as clerks become entitled to sit for the assistant superintendent qualifying exam after theyhave worked for a specified period of time and have successfully satisfied performance criteria. Those whosuccessfully pass this exam advance along a career path in line with the Company’s promotion procedures andcan rise to middle or senior management positions.In our awareness that newly recruited personnel are part of our team and that there may be a variety ofcompetencies of which they will be in need in order to develop their careers in addition to the ones they alreadypossess to support their personal development, we provide them with training opportunities.Performance ManagementOur employees are evaluated twice a year in line with specific performance criteria. On the basis of the results ofthese performance evaluations, an employee’s training needs are identified and a career plan is developed.Job SecurityOur employees enjoy a substantial degree of job security within the framework of unionization composed by theUnion and our Company.Compensation PolicyOur employees’ salaries are adjusted in accordance with the terms of a collective bargaining agreement thatis renewed every two years and with annual raises based on current conditions. Employees also receive fourbonuses a year, each equal to their one-month salary, as well as half pay on religious holidays.In addition to their salaries and bonuses, employees receive extensive fringe benefits as well.Social BenefitsOur Company’s employees are entitled to a variety of social rights and benefits in keeping with currentconditions.The healthcare costs of our employees and their dependant family members are covered by our Company underits Healthcare Assistance Regulations. All our personnel are able to fulfill all their healthcare needs free of chargethrough the Company’s outsourced healthcare system.Employees are provided with free transportation services to and from work and with lunches as well.52Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiHuman Resources PolicyRetirement BenefitsOur employees are covered by two private pension funds that have been set up in accordance with theCompany’s special status. The pensions paid by these funds enable former employees to enjoy a good standardof living during their retirement years.TrainingTechnical and personal development trainings required by our employees’ jobs are provided in line with theircareer progression plans in the form of in-house and external practical training sessions.Training has special importance at Anadolu Sigorta owing to the fact that our Company is an organization thatfills managerial positions from within. Therefore, orientation training and basic insurance training are providedto new-hires; the training programs needed at any stage of their careers is identified for all employees so as todevelop and equip them with the competencies called for by their positions.Two primary resources are used for the trainings offered to our employees:1. In-house training programs2. International training programsIn addition, various training programs are given to strengthen the personal development of employees. Whenforming the annual training program, the Human Resources and Training Department has espoused it as aprimary objective to help employees build on their current job competencies while also readying them for theirfuture responsibilities.E-LearningWithin the scope of the e-learning project, the Company’s training portal enabling remote learning online wentlive on 01 September 2008 at the address www.supersigortaciokulu.com. named “Super Sigortacı Okulu ”, thetraining portal offers training modules on insurance that can be accessed by our employees, agencies and İşbankbranches at any time they might need without any time restrictions and from anywhere with internet access.Super Sigortacı Okulu covers screen trainings and personal development trainings, as well as training moduleson all insurance branches. Total number of registered users at the portal is 7,788. The training programs madeavailable on the portal are continually increased in variety in line with the needs of our employees and deliverychannels.Anadolu Sigorta Annual Report 2009 53

Anadolu Anonim Türk Sigorta ŞirketiThe Company’s Transactions with the Risk GroupEvery kind of insurance services to the companies that are in our Company’s risk group are provided with thesame procedure and policies of the services to all other third parties.The details of our Company’s transactions in 2009 with the risk group and related explanations are presented inthe note 45 of the Auditor’s Report.54Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiAgenda of the Annual General Assembly1. Election of the Presiding Board and authorization of the Presiding Board to sign the minutes of the GeneralAssembly2. Presentation of and discussion on the Board of Directors’ and auditors’ reports for 2009 fiscal year3. Examination and ratification of 2009 financial statements and individual acquittal of the Board of Directors andAuditors from their fiduciary responsibilities for the transactions and accounts in 20094. Presentation of information on dividend distribution policy and resolution related to dividend distribution5. Approval of the memberships of individuals elected, as per Article 315 of the Turkish Commercial Code andarticle 18 of the articles of association, to the seats vacated during the reporting period on the Board ofDirectors6. Informing the General Assembly on the changes that occurred with regard to statutory auditors during thereporting period7. Election of the Board Directors and determination of their terms of office8. Election of statutory auditors9. Determination of remuneration for the members of the Board of Directors and for statutory auditors10. Determination of the independent audit company11. Wishes and closingAnadolu Sigorta Annual Report 2009 55

Anadolu Anonim Türk Sigorta ŞirketiBoard of Directors Report SummaryDear Shareholders,Before presenting the 2009 balance sheet and income statement covering the Company’s 84th year of operationfor your reviews and comments, we deem it useful to recap the changes and developments in economic life andthe insurance sector.The impact of the crisis that extended its reach to the whole world from the last quarter of 2008 upon financialmarkets started to wear-off from the third quarter of 2009. 3% in 2008, the global growth figure is anticipatedto drop to 1.1% for 2009 and projected to rise back to 3.1% in 2010. The US economy, which stood at the heartof the global crisis, achieved growth for the first time in the past one year in the third quarter of 2009, whilethe world’s second biggest economy China maintained its high growth percentages in 2009 on the back of theincentive packages introduced. In 2009, emerging countries are expected to outdo the world average and attaina growth level of 1.7%. With the measures adopted and interventions made across the world, the recession cameto an end and global economy thinned down the uncertainties towards the end of last year. Yet, a full recoveryof the global economy will probably take a while due to the fact that the measures adopted by governmentsand central banks are temporary, stringent financial conditions are still ongoing in many countries, and therecuperation in household savings is slow.While the Turkish economy narrowed down by 14.3% year-on in the first quarter of 2009, the shrinkage was downto 7% in the second quarter and dropped to 3.3% in the third quarter.In the Inflation Report published in January 2009, the Central Bank of Turkey (CBT) forecasted a rapid fall ininflation in the first half of the year and estimated that the inflation would be below the target at the end ofthe year; in this frame, the CBRT pursued a series of policy rate cuts. In 2009, the inflation markedly decreasedcompared to the previous year and stood at 6.5%. On the other hand, the uncertainties regarding the impact ofglobal crisis upon total demand and the unpredictable movements in oil and food prices throughout the yeardrove the inflation upward.The worldwide insurance sector suffered shrinkage in real terms in 2008, for the first time since 1980, andpremium production decreased by 3.7% year-on. The decrease was largely due to the life branch, which slimmeddown by 5.8%, whereas premiums on non-life branches were reduced by 0.6% as a result of the declined demandfor insurance, coupled with lower prices.The insurance sector in Turkey performed well in life branch in 2009 but failed to repeat this achievement in nonlifebranches. First hit by the financial crisis that dominated the whole world, the sector took another major blowfrom the flood that occurred in the third quarter of the year. Total premium production on non-life branches grew4% and rose to TL 10,614 million in the twelve months to end-2009. Life branch expanded by 15.6% in the sameperiod, bringing the overall growth in the sector to 5.6% and total premium production to TL 12,436 million.Owing to the effect of the global crisis as well, foreign interest in the national insurance sector weakened in 2009compared with the previous years. Having decided to sell its shares in Güneş Sigorta and Vakıf Hayat, Vakıfbankannounced the change of intentions in 2009. Sold to Holland-based ING, Oyak Hayat started pursuing activitiesunder the name ING Hayat in 2009, while Koç Allianz, whose shares were sold in their entirety to Allianz, startedoperating under the name Allianz last year.In 2009, the Undersecretariat of Treasury increased the upper limit from +20% to +100% of approved tariffs withrespect to the freedom of tariff in compulsory motor third party liability insurance. In addition, the InsuranceArbitration Commission became functional and 44 insurance companies joined the new arbitration mechanismcreated for resolving conflicts between consumers and service providers, using methods without resorting tolitigation.Pursuant to the Communiqué on Drawing-up Consolidated Financial Statements of Insurance, Reinsurance andPension Companies published in the Official Gazette issue 27097 dated 31 December 2008, our company startedemploying the equity method in consolidating Anadolu Hayat Emeklilik A.Ş., in which our Company holds 20%stake, starting from 31 March 2009.56Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiBoard of Directors Report SummaryThe Company’s premium production grew 7% and rose to TL 1,243.5 million in the twelve months to end-2009.Total claims payments amounted to TL 854,890 thousand and combined loss/premium ratio stood at 81.6%.While the Company’s total shareholders’ equity increased 32.63% to TL 806,387 thousand, total assets wereup 13.3% to TL 1,738,919 thousand. Our investment income totaled TL 162,323 thousand, 49% of which wasgenerated on income from financial investments.At year-end 2009, the Company’s technical profit was worth TL 50,142 thousand, whereas gross profit was TL59,217 thousand and net profit amounted to TL 48,164 thousand after deduction of TL 11,053 thousand in taxprovision.Anadolu Sigorta Annual Report 2009 57

Anadolu Anonim Türk Sigorta ŞirketiDividend Distribution ProposalThe Company’s Dividend Distribution Policy has been publicly disclosed in the previous years; it also takesplace within the Corporate Governance Principles Compliance report in the 2009 annual report. Our proposalfor dividend distribution has been formulated in strict compliance with the policy presented in the CorporateGovernance Principles Compliance Report attached hereto.A net profit for the current period of TL 48,164,213 has been posted on our operations during 2009. However,in the Capital Markets Board of Turkey (CMB) meeting of 27 January 2010, it has been resolved that companiesobliged to draw up consolidated financial statements should compute the net distributable profit taking intoaccount the net profit for the period stated in the consolidated financial statements that will be drawn up andpublicly disclosed as per the Communiqué Serial: XI No: 29 on Principles of Financial Reporting in the CapitalMarket, provided that the net distributable profit can be covered from the sources reflected in their legal records.Accordingly, it is proposed that the net profit for the period in the amount of TL 55,380,286 computed afterconsolidation of Anadolu Hayat Emeklilik A.Ş. be distributed as follows so as to enable its covering from legalrecords as per applicable legislation and Article 58 of the articles of association of Anadolu Anonim Türk SigortaŞirketi.TL1- Balance Sheet Profit 66,432,9432- Tax and Financial Liabilities Provision according to article58 of the articles of the association (11,052,657)Net Profit 55,380,2863- Legal Reserves according to article 58/aof the articles of association (2,408,211)Distributable Profit 52,972,075Charitable donations during the period ( + ) 30,000Net distributable profit for the period including donationsbased on which first dividends will be computed *53,002,0754- First Dividend to Shareholders according to article 58/bof the articles of the association (10,600,415)Residue 42,371,6605- Dividends to the Personnel according to article 58/cof the articles of the association (1,271,150)Residue 41,100,5106- Extraordinary Reserves according to article 58/dof the articles of the association (4,110,050)7- Second Dividends according to article 58/eof the articles of association (29,272,272)8- 10% Legal Reserves according to article 58/fof the articles of association (502,115)* The amount of TL 53,002,075 computed by adding the charitable donations during the period to distributableprofit has been used in the calculation of the amount of first dividend to shareholders, and the amount of TL52,972,075, i.e. the distributable profit figure, has been used for the items in the subsequent stages.In the event this proposal is accepted by the General Assembly, profit share in the ratio of 9.38% (TL 39,872,687.-)will be distributed as first and second dividends to the Company’s shareholders out of 2009 profit; of this amount,TL 25,000,000 will be paid in cash, and the balance in the amount of TL 14,872,687 as bonus issue. As per thecommuniqués of the CMB, dividend distribution to be made in cash will be completed by 31 March 2010, andthat in share certificates by 30 June 2010.The Company’s Board of Directors adopted a decision to increase the Company’s issued capital by TL 75,000,000to TL 500,000,000; in the event that our proposals in this meeting are accepted, TL 14,872,687 of the increase willbe covered from bonus issues and TL 60,127,313 from rights issues.58Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report1. STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLESOur Company firmly believes that Corporate Governance Principles are as critical as financial performance, andthat putting these principles into practice bears utmost importance both for the development of national andinternational capital markets and for the best interests of our Company.Our Company aims to achieve compliance with these principles to the highest extent possible, and the work isunderway to attain this goal.Within this scope, our articles of association do not contain any provisions stipulating;• Exercise of the request for appointment of a special auditor as an individual right,• Distribution of advances on dividends,• Participation of stakeholders in the management of the Company,• Implementation of cumulative voting system for the election to the seats on the Board of Directors,• Adoption of resolutions concerning demerger or share exchange that would result in a change in theCompany’s capital and management structure and in its assets, buying/selling, letting or renting tangible/intangible assets or making donations or grants in substantial amounts, and providing guarantee such assuretyship, mortgage in favor of third parties.Minority rights are not represented in our Board of Directors.It is desired that principles of exceptional nature that are not yet in practice are enforced within the frameworkof a plan and as soon as possible, although they have not led to a conflict of interest among the stakeholders todate.The assessment and determinations of the level of compliance achieved by our Company to the corporategovernance principles, and opinions regarding the scope of the compliance level and ideas on its qualitativeimprovement are presented below.2. SHAREHOLDER RELATIONS UNITA “Shareholder Relations Unit” has been set up in the Company in 2005. Fatih Gören, Murat Tetik, Barış HüseyinŞafak and Cem Çözer have been serving in this unit.The head of the unit is Fatih Gören, Deputy Chief Executive Officer.Contact information for our employees working in this unit is as follows.Name & Surname Title Phone No Mail AddressFatih Gören Deputy Chief Executive Officer 90 212 350 00 55 fgoren@anadolusigorta.com.trMurat Tetik Manager 90 212 350 02 55 mtetik@anadolusigorta.com.trBarış H. Şafak Specialist 90 212 350 02 54 bsafak@anadolusigorta.com.trCem Çözer Assistant Specialist 90 212 350 01 64 ccozer@anadolusigorta.com.trIn his position as the head of the unit, Fatih Gören reports directly to the Head of Corporate GovernanceCommittee.This unit is active in the exercise of shareholding rights and establishes the communication between the Board ofDirectors and the Shareholders.In its activities, the unit reports to the Board of Directors.In essence, the Shareholder Relations Unit works to;• Ensure maintenance of the records about Shareholders in a healthy, secure and up-to-date manner,• Respond to the Shareholders’ and potential investors’ written information requests about the Company, apartfrom those that are not publicly disclosed, are of a confidential and/or commercial secret nature,• Ensure that the General Assembly Meetings are convened in accordance with the applicable legislation, thearticles of association and other internal regulations,Anadolu Sigorta Annual Report 2009 59

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report• Prepare the documents the Shareholders could make use of in the General Assembly,• Ensure that the results of the voting are recorded and the reports thereon are sent to the Shareholders,• Observe and comply with all considerations related to public disclosure, including the legislation and theCompany’s disclosure policy,• Ensure representation of our Company in investor relations meetings organized in Turkey or abroad byinternational establishments through participation in such events,• Prepare, and update as necessary, the presentation materials to be used in the meetings.3. SHAREHOLDERS’ EXERCISE OF THEIR RIGHT TO OBTAIN INFORMATIONIn 2009, all verbal information queries received from researchers and our investors in relation to our Companyand/or to publicly disclosed financial statement results were answered. Requests for meetings received during thereporting period from national and international investment companies were accepted and necessary informationwas provided. In total 32 investor meetings were held in 2009, 20 of them with foreign investment companies.In addition, the Company participated in two investors conferences held abroad in the reporting period, duringwhich one-on-one meetings were held with fund managers from various international investment companies.All information queries of our Shareholders are answered, apart from those that are trade secrets or undisclosedinformation.Information queries received from our Shareholders are evaluated by our employees in the Shareholder RelationsUnit and are fully and prudently responded to as soon as possible and in a manner to fairly represent the truth,subject to the limits of trade secrets and confidentiality.Information on the topics our Shareholders frequently need and developments that might affect the exercise oftheir rights are posted in English and Turkish languages on our website accessible at www.anadolusigorta.com.tr.Pursuant to applicable legislation, minority Shareholders are entitled to request the General Assembly to appointa special auditor for examining certain events.In 2009, our Shareholders did not request appointment of a special auditor from the General Assembly ofShareholders.Our articles of association contain no provisions stipulating the request for appointment of a special auditor as anindividual right.Given that the General Assembly must honor the request for appointment of a special auditor pursuant toapplicable legislation and that such request constitutes one of the exceptions to the principle of adherence toagenda, inclusion of a provision in the articles of association stipulating such request as an individual right willbe taken into consideration in the future depending on the developments, based on the concern that problemsmight arise in practice with regard to protection of the confidentiality of such information that is of commercialsecret nature or that is not yet publicly disclosed.It is believed that all information necessary for healthy exercise of Shareholders’ rights is made available toour Shareholders on our website, in our annual report and material event disclosures in general, and throughindividual queries, in particular.The Shareholders’ queries in relation to the legal and commercial relationships between our Company andthe real persons or legal entities with which our Company is directly or indirectly associated in terms of capital,management or auditing are also fulfilled to the extent permitted by the applicable legislation.All information that might affect the Shareholders’ exercise of their rights is made available to the same on theelectronic medium in an updated manner, with a view to expand their right of obtaining information.4. INFORMATION ABOUT GENERAL ASSEMBLY MEETINGSIn 2009, one General Assembly meeting was convened which was the 2008 annual General Assembly meetingheld on 26 March 2009.60Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportThe said meeting was held with the participation of Shareholders representing 60% or a portion of TL 210.2million of our paid-in capital of TL 350 million.While an official from the Independent Audit Company auditing the financial statements of the Company andsome employees participated in the meeting, other stakeholders or media representatives did not attend themeeting.The announcement on the meeting place, date, hour, agenda, including a specimen of a proxy statementwas published at least two weeks prior to the meeting date in the Turkish Trade Registry Gazette, Radikal andReferans daily newspapers, and in the ISE bulletin.Care will be paid to extend this period to three weeks minimum.Information about the meeting was also sent to holders of registered shares by registered mail return receiptrequested within the same period of time.To provide direct access by all Shareholders to the information on the meeting, the same is made available inTurkish and English languages at our Company website at www.anadolusigorta.com.tr.Although the entries into the shareholders register are made based on a Board of Directors resolution, nodeadlines were set for registration in the shareholders register so as to achieve maximum participation of theholders of registered shares to the General Assembly.Financial statements and reports including the annual report, proposal on dividend distribution, the informativedocument prepared on the agenda items necessary for the General Assembly, and other documents forming thebasis of the agenda items, along with the latest version of the articles of association, and the amendment textand grounds if the articles are to be amended, are made available for examination by our Shareholders at ourCompany headquarters and branches from the announcement date of invitation to the General Assembly.The said information and documents are accessible at our website at www.anadolusigorta.com.tr.During the Ordinary General Assembly held in 2009, no Shareholders exercised their right to raise questions.During the meeting, the Shareholders unanimously agreed to the proposals on;• The election of the presiding board and authorizing the presiding board to sign the minutes of the annualGeneral Assembly,• Reading out and deliberation on the 2008 reports of the Board of Directors and of the statutory auditors,• Reviewing and approving the financial statements for 2008 and acquittal of the Board Directors and statutoryauditors,• Providing information on the dividend distribution policy and deciding on dividend distribution,• Approval of the memberships of directors elected to the seats vacated on the Board of Directors during thereporting period, pursuant to Article 315 of the Turkish Commercial Code and article 18 of the Articles ofAssociation,• Presentation of changes that occurred in statutory auditors during the reporting period to the GeneralAssembly,• Election of the Board Directors and determination of their terms of office,• Election of statutory auditors,• Determination of the remuneration to be paid to the Directors and auditors,• Decision about the independent audit firm.According to our articles of association, the Board of Directors is authorized in making material decisions like;• Setting up or disposing of subsidiaries and partnerships,• Buying or selling real property or constructing buildings on behalf of the Company.Anadolu Sigorta Annual Report 2009 61

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportOur articles of association contain no provisions on the adoption of resolutions concerning demerger or shareexchange that would result in a change in the Company’s capital and management structure and in its assets,buying/selling, letting or renting tangible/intangible assets or making donations or grants in substantial amounts,,and providing guarantee such as suretyship, mortgage in favor of third parties by the general assembly.It is believed that inclusion of provisions to that effect in the articles of association would:• Decrease the efficiency in management,• Adversely affect the competitive edge and result in missing important opportunities,and therefore would not bring out consequences beneficial to our Company’s stakeholders.To facilitate participation in the General Assemblies, utmost attention is paid to fully comply with the pointsstipulated by the legislation at a minimum, and it is believed that our Shareholders are not faced with anydifficulties with regard to participation in General Assemblies. To date, no notifications to the contrary werereceived from our Shareholders, either.Minutes of the General Assembly are delivered to the Shareholders upon conclusion of the meeting, and aremade available in Turkish and English languages for electronic access at our website at www.anadolusigorta.com.tr, in order to keep non-participating Shareholders informed.Care is taken that General Assembly announcements cover:• The meeting date and hour,• The meeting place in a manner to avoid any confusion,• Agenda,• Necessary information about the agenda items,• Former and current versions of the amended article(s) as approved by the related authorities, if the agendacovers any amendments to the articles of association,• The body making the invitation,• The reason for postponement of the original meeting and the meeting quorum for the current one, if theGeneral Assembly is summoned to reconvene upon postponement of the original one for any reason,• In ordinary meeting announcements, the address at which the annual report, financial statements, and otherdocuments related to the General Assembly can be examined.Prior to the General Assembly, our Company informs our Shareholders on the changes in the management andoperational organization that took place in the previous fiscal year or are planned for the future periods.Within this scope, the following are made available at the General Assembly to be presented for examination byour Shareholders:• The Company’s explanation and grounds for organizational structure change,• Report by the firm, if any, from which consultancy is obtained; in the absence of such a firm, information anddocuments prepared by our Company in relation to this matter,• In the case of organization changes in subsidiaries and affiliates, annual reports and annual financialstatements and proforma financial statements for the latest three fiscal years of all enterprises that are subjectto organizational structure changeIn the preparation of the General Assembly agenda, care is paid to include each proposal under a separateheading, to word the agenda headings clearly and in a manner to avoid different interpretations, and not to insertany agenda items like “others” or “various” as also prohibited by the applicable legislation.For Shareholders who will have themselves represented in the General Assemblies in proxy, a specimen of aproxy statement is publicized along with the meeting announcements, and is also made available to Shareholderson the electronic medium.An authorized person from the Independent Audit Firm auditing the Company’s financial statements is invited tothe General Assemblies.62Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportThe procedures and principles of voting in our Company’s General Assemblies are listed below:• Each Class (A) share is entitled to ten, and each Class (B) share is entitled to one vote.• In the case where one share is held by multiple owners, such votes may be cast only via a joint representative.• Our Shareholders may participate in the General Assemblies personally or have themselves represented inproxy.• Open voting by raise of hands is employed in General Assemblies. However, upon demand by participatingShareholders representing one tenth of the capital, secret voting will be carried out.The procedures and principles of voting are also announced to the Shareholders at the beginning of the meeting.Topics that are communicated by our Shareholders to the Company’s Shareholder Relations Unit, which theywould like to be included in the agenda, are taken into consideration by the Board of Directors in the preparationof the agenda, as much as possible.Pursuant to the applicable legislation and to the articles of association, ordinary general assembly must be heldwithin three months following the end of each fiscal year.Ordinary General Assembly is convened as soon as possible, and within no later than three months following theend of each fiscal year.In line with our articles of association, General Assemblies are held in the place where our Company headquartersis located and at a venue that will enable participation by all our Shareholders.Total number of votes that may be cast during the General Assembly and the privileges enjoyed are classifiedon the basis of Shareholders and are provided to the Shareholders at the beginning of the meeting by means oftheir insertion in the list of attendants.During General Assemblies, our Shareholders are informed on the news and analyses about disputed topics onthe Company that were covered by the media.Questions posed by our Shareholders to the Board of Directors or Auditors are answered, provided that suchquestions are essential for exercise of shareholder rights and are not trade secrets.The General Assembly Chairman chairs the meeting efficiently and in a manner to ensure that Shareholders canexercise their rights.Care is paid to answer every question raised during the General Assembly by the Shareholders during the samemeeting, and to provide written answers within no more than one week, in case the question raised is not relevantto the agenda or is too comprehensive to be answered promptly.Directors, authorized employees responsible for the preparation of financial statements and auditors, and otherrelevant people to offer explanations on the agenda topics that are of specialty spend their best efforts to bepresent in the meeting.In General Assemblies, each agenda item is voted individually, and for the avoidance of doubt in relation tovoting results, the votes are counted and the results are announced to the Shareholders before the GeneralAssembly is concluded.Minutes of the General Assemblies are accessible in electronic medium in Turkish and English languages at thewebsite at www.anadolusigorta.com.tr or in written form.5. VOTING RIGHTS AND MINORITY RIGHTSThe issued capital of our Company as of end-2005 consisted of Class (A) shares with a nominal value of TL 50 andClass (B) shares with a nominal value of TL 500, and by means of granting equal voting rights to shares that didnot have equal nominal values, Class (A) shares were granted privilege in voting. While the articles of associationsection related to capital was amended within the framework of the Law no. 5083 on the Currency of the RepublicAnadolu Sigorta Annual Report 2009 63

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Reportof Turkey and Law no 5274 Concerning the Amendment of the Turkish Commercial Code during the 2005Ordinary General Assembly held on 30 March 2006, nominal values of Class (A) and (B) shares were equalized atKr 1. At the same General Assembly, the articles of association section concerning votes was amended as followsso as to maintain the existing privilege: “Each Class (A) share is entitled to ten, and each Class (B) share is entitledto one vote.” In the present situation, the Company’s issued capital in the amount of TL 425,000,000 consists ofClass (A) shares divided into 150 shares each with a nominal value of Kr 1 and all with a value of TL 1.5, and Class(B) shares divided into 42,499,999,850 shares each with a value of Kr 1 and all with a value of TL 424,999,998.5.Class (A) shares have no privileges other than the voting right privilege mentioned above.In capital increases, new Class (A) shares are not created.There are no cross-shareholding interests between any Shareholder and the Company.Minority shares are not represented in our Board of Directors which is elected under the discretion of the GeneralAssembly.Our articles of association do not cover the cumulative voting method.There are no upper limits with regard to the number of votes that our Shareholders are allowed to cast in theGeneral Assemblies.Voting right arises at the time the share is acquired and there are no provisions stipulating exercise of the votingright after lapse of a certain period of time after the date of acquisition.Our articles of association contain no provisions preventing non-Shareholders from casting votes in proxy in thecapacity of representatives.Shareholders may exercise their voting rights personally in the General Assemblies or via a third party that may ormay not be a Shareholder.Each real person Shareholder is represented in the General Assemblies by one person only; in the case that legalentity Shareholders are represented by several people, only one may cast votes. The person empowered to voteis named in the certificate of authority.6. DIVIDEND DISTRIBUTION POLICY AND TIMINGThe articles of association set the principle of distributing first dividends in the ratio and amount as determinedby the Capital Markets Board (CMB) from out of the attributable profit.The dividend distribution proposals presented by the Board of Directors for the approval of the GeneralAssembly are based on a dividend distribution policy that takes into consideration:• Preserving the delicate balance between the expectations of our Shareholders and the Company’s need togrow,• The profitability of the Company.The dividend policy espoused by the Board of Directors is based on the principle of proposing to the GeneralAssembly the distribution of at least 30% of the attributable profit as bonus shares or in cash.No shares are privileged in terms of getting share from the profit.No founder’s bonus certificates are given, nor are dividends paid to the Board Directors.Pursuant to the articles of association, our employees are paid dividends up to three times of their salariesmaximum from the amount remaining after the first dividend is set aside.64Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportCare is paid to effect the dividend payments as soon as possible, and in any case, until no later than the end ofthe fifth month, as stipulated by the applicable legislation.The articles of association contain no provisions stipulating payment of advances on dividends.There are no material donations or grants made during the reporting period or planned to be made at year-endby our Company. Our Company has made no donations for political causes.7. TRANSFER OF SHARESThe Company’s articles of association contain no provisions restricting the transfer of shareholding interests.All our Shareholders including minority and foreigner Shareholders are treated equally.8. COMPANY DISCLOSURE POLICYThe disclosure policy approved by the Board of Directors is presented below.In case of any changes to the disclosure policy, the matters subject to change and the grounds therefore willbe presented for information to the General Assembly after the approval of the Board of Directors, and will bedisclosed to the public.General FrameworkAnadolu Anonim Türk Sigorta Şirketi makes the announcements and disclosures in relation to all necessaryfinancial information as required primarily by regulations in relation to the Insurance Law no 5684 and anyarrangements in relation thereto, and by the Capital Market Legislation, the Turkish Commercial Code (TCC)and the regulations of the İstanbul Stock Exchange (ISE), where the shares of the Company are traded, whileobserving the generally accepted accounting principles and corporate governance principles; the Companyfollows a detailed public disclosure and information policy within the scope above.The principal purpose of the disclosure policy is to secure that the necessary information and announcementsapart from trade secrets are disclosed to Shareholders, investors, employees, customers, creditors, reinsurersand other related parties on a timely manner and on the principles of being accurate, complete, intelligible,conveniently accessible at low cost and equally available to all.Having an active approach to the adoption and implementation of corporate governance principles, theCompany spends maximum effort to put into life the requirements of applicable legislation and internationalbest practices with regard to public disclosure. Anadolu Anonim Türk Sigorta Şirketi Disclosure Policy hasbeen prepared within the framework described above, approved by the Board of Directors, and put intoimplementation.Authority and ResponsibilityIn our Company, the Board of Directors is authorized and responsible for monitoring, observing and improvingthe public disclosure policy.Executives in charge of financial management and reporting, and the Shareholder Relations Unit have beenassigned with the coordination of disclosure function. The said people fulfill these responsibilities in closecooperation with the Audit Committee and the Board of Directors.Public Disclosure Work and the Methods and Tools UsedThe work carried out in relation to public disclosure and the tools and methods used within the framework ofinsurance legislation, Capital Market Legislation, TCC and other applicable legislation are presented below:• Quarterly financial statements and footnotes and descriptions on related financial statements prepared inaccordance with the legislation along with independent auditors’ report published by the Turkish Treasury,Directorate General of Insurance and by the CMB, along with the independent auditors’ report issued at themiddle and end of the year are submitted to the Public Disclosure Platform (in Turkish: KAP)within the legalperiods stipulated, and also posted on the Company’s website. The Company’s financial statements areAnadolu Sigorta Annual Report 2009 65

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Reportsigned by independent auditors and our executives in charge of financial reporting; furthermore, members ofthe Audit Committee and the Company executives in charge of financial reporting provide written statementof accuracy for relevant financial statements.• Quarterly financial statements and footnotes and descriptions on related financial statements prepared inaccordance with the insurance legislation are provided to reinsurers upon request.• Material event disclosures required to be made under the CMB legislation are submitted to the KAP withinthe prescribed periods of time, and to the CMB, if necessary.• Necessary announcements and promulgations are made in the cases of amendments of articles of association,General Assemblies, capital increases, etc. in the Turkish Trade Registry Gazette and daily newspapers.• Covering the necessary information and explanations in line with insurance regulations, an annual reportis prepared every year before the General Assembly meeting and presented for examination by theShareholders and posted on our website (www.anadolusigorta.com.tr); the related report in hard copy can beobtained from the Company’s Shareholder Relations Unit at any time.• There are no regular contacts or meetings set with the press. Press releases are given to the printed andvisual media when deemed necessary or when responding to the demands from the members of the press isconsidered necessary. Press releases in printed and visual media may be given by the Chairman of the Board,Chief Executive Officer or his deputy and other authorized persons to be named thereby.• Information is provided to Shareholders and other related parties through investor meetings and roadshows in and out of Turkey. Such meetings and road shows carried out by the Shareholder Relations Unitare attended by the CEO, executives in charge of financial management and reporting, and ShareholderRelations Unit managers, depending on their work schedules. In necessary cases, the said contact teams canbe expanded.• Relevant information and primarily the financial statements are provided by the Shareholder Relations Unitvia email to Shareholders, reinsurers, national and international investors, as well as to institutions issuingresearch reports on our Company.• Investor Relations section in our corporate website (www.anadolusigorta.com.tr) covers detailed informationand data. The related website is monitored and updated by the Shareholder Relations Unit. All questionsforwarded by Shareholders and other concerned parties by email, mail, phone, etc. are answered as quickly aspossible, under the coordination of the Shareholder Relations Unit.Other Announcements MadeAnnouncements in addition to those mentioned above are signed within the scope of authorizations set in theCompany’s certificate of authorized signatures and disclosed to the public.Anadolu Sigorta Corporate Website (www.anadolusigorta.com.tr)The Company’s website is actively used in providing information and public disclosure. The website containsthe information and data as required by the Corporate Governance principles and regulatory authorities. Theannouncement for the General Assembly to be held, agenda items and information on methods of participationin the General Assembly are also available on the website, in addition to the Company’s disclosure policy andcodes of ethics. Utmost care is paid to keep the website up-to-date.Other MattersA Corporate Governance Committee is set up in the Company. The members of the committee are BurhanKaragöz, the Chairman of the Board, and Yaşar İğdirsel, Deputy Chairman of the Board. The head of theCommittee is Burhan Karagöz.Shareholder Relations Unit is responsible for the implementation of disclosure policy. Contact details for themembers of this unit are provided on page 59, under the heading “Shareholder Relations Unit”.The basic principle of the Company is to secure timely public disclosure of information that is not of commercialsecret nature and that remains outside the scope of the legislation, to all our Shareholders and other personsand entities that will make use of the disclosures, on the principles of being accurate, complete, intelligible,interpretable, conveniently accessible at low cost, and equally available to all.66Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportThere are no relationships between the Company and the Directors and executives, apart from those arising outof their respective positions. Relationships between the Company and the Shareholders are publicly disclosedunder the provisions of applicable legislation.Periodic financial statements and their footnotes are prepared in a manner to represent the actual financial statusand within the framework of existing legislation and insurance business accounting standards. They are subjectedto independent auditing and publicly disclosed at time intervals stipulated by the legislation.The independent audit firm we work with is alternated at certain intervals and an independent audit firm isselected for a maximum of 7 fiscal years for regular and/or special audits. At least 2 fiscal years are allowed topass before re-signing a constant and/or special audit contract with the same independent audit firm.Care is paid to avoid obtaining consultancy service directly or indirectly from the firms we obtain independentaudit service during the time we receive such audit service.The annual report is prepared in detail so as to ensure the public opinion gains access to all information aboutthe Company’s operations.The annual report is prepared by the Company’s CEO and the executive of the unit responsible for thepreparation of financial statements and reports, and approved by the Board of Directors. The report also includesthe declaration that the financial statements fully represent the Company’s financial status and that the Companyfully complies with applicable legislation.The annual report covers, at a minimum:• The Company’s field of activity,• Information on the sector in which it operates and its position in the sector,• Analysis and assessments on its financial status and operating results,• Degree of actualization of planned activities,• Degree of satisfaction of predetermined strategic goals,• Statement on the internal control system and whether this system operates healthily,• Rating of the credit rating agency, if applicable,• Detailed description on foreseeable risks related to operations,• Analysis of transactions in substantial amount carried out within the past one year with group companies andother affiliated persons and entities,• Commercial and non-commercial tasks and transactions between the Directors, executives, and Shareholdersdirectly or indirectly possessing at least 5% of the Company’s capital with the companies in which they ownmore than 5% of the capital, or irrespective of this ratio, hold the control over or have an influence on themanagement.• CVs, duties and responsibilities of Directors and executives, other duties undertaken thereby outside of theCompany, and whether the rules set by the Company exclusively in relation to this matter are complied with,• Capital market instruments of the Company that are held by the Directors and executives.• Lawsuits filed against the Directors and executives in relation to their activities,• Directors’ and executives’ shareholding ratios and amounts in the capital,• Transactions carried out with the Directors and executives,• Changes in the organization, capital, shareholding structure and administrative structure,• Fines, if any, imposed due to practices contradicting with the provisions of applicable legislation, andexplanation on the grounds therefore,• Amendments to the legislation which might materially affect its operations,• Material lawsuits brought against it, any warnings, notices or administrative fines issued by public authorities,and similar information,• Dividend distribution proposal,• Future expectations with regard to sales, profitability and efficiency level, market share, income generationcapacity, debt/equity ratio and similar subjects,• Access details for texts describing the function of General Assemblies, rights enjoyed by Shareholders and theprinciples regarding the exercise of these rights,• Statistical data and graphs related to operations.Anadolu Sigorta Annual Report 2009 67

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report9. DISCLOSURE OF MATERIAL EVENTSPursuant to CMB regulations, our Company made 27 material event disclosures in 2009.ISE or CMB required no additional explanations, nor are there any material event disclosures not made in duetime.Barış Hüseyin Şafak from Shareholder Relations Unit is assigned with monitoring and observing any matterexclusively related to public disclosure. Investors, financial analysts, members of the press and similar persons arealso referred to this unit.The following are also disclosed to the public:• Accounting policies implemented and the operating results representing the truth, in line with thetransparency principle,• Developments that are likely to affect the value of our Company’s capital market instruments, without delayand within the period of time prescribed by the legislation,• Provisions of relevant regulations being reserved, necessary information in case of any material changes in theCompany’s financial status and/or operations, or in cases where a material change is regarded imminent,• Updates to reflect the subsequent changes and developments in relation to the Company’s publicdisclosures.10. COMPANY INTERNET SITE AND ITS CONTENTThe Company has an internet site prepared in Turkish and English languages, accessible at the address www.anadolusigorta.com.tr. The Company website is actively used in providing information and public disclosure.The Company website basically features information on the Company profile, our products, agencies, onlinetransactions, investor relations, human resources and contact information.The “Investor Relations” section on the website covers the Company’s trade registry data, shareholding andmanagement structure, organization chart, the articles of association, Company history, policies, codes of ethics,corporate governance compliance report, financial statements and independent audit reports, annual reports,General Assemblies, privileged shares, capital increases and dividend amounts, news about our Company andfrequently asked questions. The Investor Relations section is also made available in the English language, so as toallow foreign investors to make use of the same.Attention is paid to comments and suggestions received via our website and are taken into consideration at theCompany.Care is paid to keep the website up-to-date.A substantial part of the information contained on the website prepared in Turkish language is also available inthe website prepared in the English language.The Company’s letterhead contains the website address.11. DISCLOSURE OF NON-CORPORATE ULTIMATE SHAREHOLDERS WHO HAVE A CONTROLLING INTERESTThere are no non-corporate ultimate Shareholders with a controlling interest in the Company.The current shareholding structure of the Company is presented below:Shareholders TL Ratio (%)Türkiye İş Bankası A.Ş. 151,002,594 35.53Millî Reasürans T.A.Ş. 92,564,995 21.78Others 181,432,411 42.69Total 425,000,000 100.0068Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report12. PUBLIC DISCLOSURE OF THOSE WHO MAY HAVE ACCESS TO INSIDER INFORMATIONAll necessary action is taken to prevent the use of insider information. The Company executives who are ina position to have access to information that might affect the value of capital market instruments and otherpersons/entities from which the Company obtains service are identified below:Entity Person Position- Burhan Karagöz ChairmanAnadolu Anonim Türk Sigorta Şirketi Yaşar İğdirsel Deputy Chairman- Mustafa Ali Su Director and CEO- Ahmet Doğan Arıkan DirectorTürkiye İş Bankası A.Ş. Mustafa Nail Yağcı DirectorTürkiye İş Bankası A.Ş. Necati Aksoyoğlu DirectorTürkiye İş Bankası A.Ş. Ömer Karakuş DirectorTürkiye İş Bankası A.Ş. Aziz Ferit Eraslan DirectorTürkiye İş Bankası A.Ş. Emre Duranlı DirectorTürkiye İş Bankası A.Ş. Zeliha İlke Selvi AuditorTürkiye İş Bankası A.Ş. Ayşe Alev Ataç AuditorAnadolu Anonim Türk Sigorta Şirketi Engin Ekşi AuditorAnadolu Anonim Türk Sigorta Şirketi Musa Ülken I. Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi Mehmet Metin Oğuz Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi Efe Gündeş Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi Tahsin Erdoğan Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi Filiz Taşyumruk Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi M. Levent Sönmez Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi Erdinç Gökalp Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi Fatih Gören Deputy Chief Executive OfficerAnadolu Anonim Türk Sigorta Şirketi Ayşen Ayan Board of Directors ReporterAnadolu Anonim Türk Sigorta Şirketi Ufuk Ulualp IT ManagerAnadolu Anonim Türk Sigorta Şirketi Sadi Ufuk Sunal Software Development ManagerAnadolu Anonim Türk Sigorta Şirketi Macit Bal Agencies and Marketing ManagerAnadolu Anonim Türk Sigorta Şirketi Murat Tetik Accounting and Finance ManagerAnadolu Anonim Türk Sigorta Şirketi Ömer Altun Risk Management and InternalControl ManagerAnadolu Anonim Türk Sigorta Şirketi Berna Ergüntan PR ManagerAnadolu Anonim Türk Sigorta Şirketi Barış Hüseyin Şafak Accounting and Finance SpecialistAnadolu Anonim Türk Sigorta Şirketi Cem Çözer Accounting and Finance AssistantSpecialistDRT Bağımsız Denetim ve SMMM A.Ş. Independent Audit FirmBaşaran Nas Yeminli Mali Müşavirlik A.Ş. Tax Consultant13. KEEPING STAKEHOLDERS INFORMEDIn matters concerning our Shareholders, employees, creditors, customers, suppliers, various NGOs, theGovernment and potential investors that might consider investing in our Company, i.e. the stakeholders, care istaken to provide information in writing and to base the relations with such parties on written contracts as much aspossible.In cases where the rights of stakeholders are not regulated by the legislation or contractually, the interests of thestakeholders are protected within the framework of the rules of good faith and to the extent permitted by theCompany’s facilities, observing the Company’s credibility at the same time.14. STAKEHOLDER PARTICIPATION IN MANAGEMENTThe articles of association contain no provisions on the stakeholder participation in the Company’s management.An employee proposal guideline has been formulated. Proposals that are innovative and aimed at improvementare assessed within the framework of this guideline and put into life across the Company.Anadolu Sigorta Annual Report 2009 69

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportAgency Consultancy Council consisting of selected agencies meets several times a year, general agency meetingsare held biannually, and the executive council meetings are held 3 times a year with the participation of alldepartments and regional managers.15. HUMAN RESOURCES POLICYThe basic principles of the Company’s human resources policy are stated below.Job descriptions and distributions, along with the performance criteria are set by the Company management andannounced to the employees.Hiring activities are based on the principle of giving equal opportunities to people of equal qualities. Criteria forhiring are put into writing on the basis of titles and are followed in practice.In decisions on training, transfer and promotion, objective data are used and the Company’s interests areobserved as much as possible.Training plans are formulated aimed at developing our employees’ knowledge and skills.Company employees are members of the Bank and Insurance Employees Union.Safe working environment and conditions are provided for our employees; work is undertaken to improve theseconditions depending on social and technological necessities.Decisions made in relation to our employees or developments concerning them are shared with the employees.Measures are adopted to prevent discrimination on the basis of race, religion, language and sex among theemployees, to ensure human rights are respected and to protect the employees against internal physical, mentaland emotional abuse.There is no exercise of appointing representatives to carry the relationship with the employees.16. RELATIONS WITH CUSTOMERS AND SUPPLIERSThe Company’s quality policy pledges delivering and sustaining high quality products and services withthe expert and experienced people in its organization, drawing upon its solid technological and financialinfrastructure, constant development and improvement philosophy, and experienced and extensive agencynetwork. With the ISO 9001 quality certification obtained in 2004, these pledges are made permanent by theCompany’s General Management.The Company observes permanence of service quality and standard in every phase of insurance service.Customers’ demands are fulfilled quickly and they are informed on any delays at every phase of the service.Utmost care is paid to protect the confidentiality of the customers’ and suppliers’ data that are of commercialsecret nature.17. SOCIAL RESPONSIBILITYAttention is paid that the projects offered with cover are in compliance with the applicable environmental safetyand public health legislation.Various informative, advertising and similar activities are undertaken to develop public awareness on insurance inour country. We hold founding member status in social foundations like the Earthquake Foundation, EconomicResearch Foundation, and memberships with various Chambers of Commerce such as the Chamber of Shippingand İstanbul Chamber of Commerce.Until today, no charges were filed or no sanctions were imposed against our Company on account of anyenvironmental protection infringement.70Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report18. STRUCTURE AND FORMATION OF THE BOARD OF DIRECTORS; INDEPENDENT BOARD DIRECTORSApart from the CEO, the Board of Directors consists of non-executive members.Chairman of the Board and CEO functions are carried out by different individuals.Taking into consideration that there are no non-corporate ultimate Shareholders with a controlling interest in theCompany, it is thought that the Board Directors all naturally possess the advantage to act independently, andtherefore, to be impartial in their decisions, upholding the interests of our Company and the stakeholders aboveeverything else.Information about our Board Directors and CEO is presented below.Education Title Held in ProfessionalName & Surname Title Degree Discipline Entity Worked the Entity ExperienceBurhan Karagöz Chairman Bachelor’s Higher School of Economy - - 57 yearsand CommerceYaşar İğdirsel Deputy Chairman Bachelor’s Faculty of Political - - 37 yearsSciencesMustafa Ali Su Member & CEO Bachelor’s Faculty of Economic and Anadolu Anonim CEO 34 yearsAdministrative Sciences Türk Sigorta ŞirketiA. Doğan Arıkan Member Bachelor’s Faculty of Administrative - - 36 yearsSciencesMustafa Nail Yağcı Member Bachelor’s Faculty of Law - - 36 yearsNecati Aksoyoğlu Member Bachelor’s Faculty of Law Türkiye Legal 25 yearsİş Bankası A.Ş. AdvisorÖmer Karakuş Member Bachelor’s Faculty of Economic and Türkiye Division 22 yearsAdministrative Sciences İş Bankası A.Ş. ManagerAziz Ferit Eraslan Member Master’s Banking and Finance Türkiye Division 18 yearsİş Bankası A.Ş. ManagerEmre Duranlı Member Bachelor’s Faculty of Economic and Türkiye 14 yearsAdministrative Sciences İş Bankası A.Ş. Unit ManagerWhen fulfilling its decision-making function, the Board of Directors acts on the basic considerations of;• Maximizing the fair value of the Company,• Pursuing the Company operations so as to ensure long-term and stable earnings for our Shareholders,• Maintaining the delicate balance between the Shareholders and the Company’s need to grow.In the formation of the Board of Directors, care is given to;• Ensure that the nominees are present in the meeting at the time of election to the seats on the board ofdirectors,• Inform the Shareholders about the nominees,• Allow Shareholders to ask questions to the nominees,• Inform the Shareholders, during the General Assemblies, on other companies on the boards of which Directornominees serve and on the compliance or non-compliance to internal regulations set exclusively on this topic.Our Board of Directors takes care to hold regular monthly meetings.Since they represent legal entities, the Directors do not have to be Shareholders pursuant to the legislation onaccount of their Board of Directors service.The obligation to deliver shares as collateral imposed on the Directors is fulfilled by the legal entities theyrepresent.Anadolu Sigorta Annual Report 2009 71

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportThere are no Directors holding any shares in the Company.The articles of association contain no provisions on the implementation of cumulative voting system in theelection of Board Directors.19. QUALIFICATIONS OF BOARD DIRECTORSBecause it is regulated by the law, the articles of association contain no other provisions in relation to theminimum qualifications required in Board Director elections.Pursuant to legislation, general managers of insurance companies must have graduated from a four-yearuniversity minimum, and have at least ten years experience in any one of insurance, banking, economy, businessmanagement, accounting, law, finance, mathematics, statistics or engineering fields. More than half of the boarddirectors must have graduated from a four-year university minimum, and have knowledge and experience in atleast one of the fields mentioned above.The Directors possess these qualifications and have;• Satisfactory knowledge and skills in banking and insurance business,• The skill to read and analyze financial statements and reports,• Basic knowledge about the legal regulations governing our Company, and about general marketcircumstances,• The will and the opportunity to regularly attend the board meetings for the period of time for which they areelected to serve.The Board of Directors consists of nine Directors, which number enables efficient organization of the activities ofthe Board.Directors just starting to serve on the Board are offered an orientation program covering the following at aminimum:• Introduction with our executives and visits to the Company’s units,• The CVs and performance assessments of our executives,• Strategic goals, current status and issues of the Company,• Market share, financial structure and performance indicators of the Company.Although there are no set rules on the Directors’ undertaking other duties outside the Company, the Directorsdo not have any other duties apart from their natural duties in the entities they represent and from those in theestablishments owned by the entities they represent.20. MISSION, VISION AND STRATEGIC GOALS OF THE COMPANYThe Company’s,• Vision is identified as “to make our Company the insurance brand preferred by everyone who needsinsurance, and to achieve a strength that makes it a reference point in the worldwide insurance industry aswell.”• Mission is identified as “in keeping with the deeply-rooted, pioneering, honest and solid corporate valuesof Anadolu Sigorta, to lead the sector, to help create a broad public awareness of insurance in Turkey,to implement a customer-focused approach to service, to increase our financial strength to internationalstandards, to enhance the value of our Company.”Our Company’s vision and mission are publicly disclosed on our website accessible at ww.anadolusigorta.com.tr.72Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportOur strategic goals are set by our executives with a keen eye on competitive conditions, general economicconjuncture, overall expectations in national and international financial markets, and the Company’s medium andlong term targets.Strategies and targets proposed are negotiated comprehensively by the Board of Directors on a broadperspective.Actualizations in relation to approved strategies and targets are reviewed during Board meetings and monthlywithin the scope of the assessment of Company operations, financial structure and performance level.In principle, the Board of Directors meets monthly in order to efficiently and continuously fulfills its monitoringand supervision function.In the meetings, the basic topics of assessment are the Company activities, approved annual budget andtarget realizations, the Company’s place in the sector, financial structure and performance level, reporting, andcompliance of operations to international standards.21. RISK MANAGEMENT AND INTERNAL CONTROL MECHANISMSet up in 2006 in order to restructure the risk management systems and processes, the Risk ManagementDepartment’s activities were expanded in scope to cover internal control activities within the frame of theprovisions of the “Regulation on the Internal Systems of Insurance, Reinsurance and Pension Companies”published in the Official Gazette issue 26913 dated 21 June 2008. Along the same line, the Department wasrenamed to Risk Management and Internal Control Department.The primary objectives of the Department’s activities are as follows:• Measure and evaluate risks and keep them under control independently from executive units,• Protect the Company’s assets,• Conduct the activities efficiently and effectively while achieving compliance with the Law and other applicablelegislation as well as internal policies and rules and insurance business customs,• Ensure reliability, integrity and time availability of the accounting and financial reporting system.The basic strategy directed towards the ultimate goal is to carefully plan, conduct and manage risk managementand internal control activities independently, impartially, purposefully, effectively and efficiently, employing arisk-focused approach and within the frame of applicable legislation and internationally accepted principles andstandards. The basic principle in achieving this goal is to employ the most advanced tools and methods that areavailable and possible to use.The activities of the Department are administered directly by the CEO. The Board Director responsible forInternal Systems is also responsible toward the Board of Directors for the formation of the Department andensuring, monitoring and coordinating its operability, adequacy and effectiveness.All outcomes obtained by examining the risks independently from executive functions are regularly reported bythe Department to the Board Director responsible for Internal Systems, to the CEO and the Board of Directors.Anadolu Sigorta Annual Report 2009 73

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report22. AUTHORITIES AND RESPONSIBILITIES OF BOARD DIRECTORS AND EXECUTIVESThe authorities of the Board of Directors are stated in the articles of association.Pursuant to the articles of association, the Board of Directors is authorized on matters of importance such as:• Establishment, abolition of agencies, branches and representation offices, and determination of the terms andconditions applicable therefor,• Being a proxy, leading insurer, representative or agency of other insurance and reinsurance companies,• Setting the dates for commencing and terminating activities in various insurance branches,• determination of the essential conditions of insurance and reinsurance agreements,• Execution and termination of all kinds of reinsurance agreements,• Entering into financial and industrial undertakings and initiatives, founding companies in relation to insurancebusiness, participating in companies that are or will be established for this purpose,• Buying and selling immovables, and constructing buildings.The Board of Directors may delegate part or all of its authorities to the CEO, save for those that are notpermissible to be delegated by law or due to the nature of the business.The Board of Directors exercises its authorities cautiously and within the framework of good faith and equippedwith all necessary knowledge to ensure full satisfaction of the duty.Pursuant to the articles of association, the CEO is responsible for the execution of the Company’s day-to-daybusiness on the principles and within borders set by the Board of Directors.Delegation of authority to executive bodies for execution of Company activities is made under the certificate ofauthorized signatures.Put into force upon approval by the Collective Bargaining Agreement and the Board of Directors, the PersonnelRegulation states the sanctions to be imposed against transactions violating the procedures and/or thelegislation.Board Directors allocate sufficient time for the Company affairs.The Board of Directors adopted the necessary measures for preventing the information that is not in the publicdomain and/or is of trade secret nature from being disseminated out of the Company.The Board of Directors adopts an individual decision for the approval of periodic financial statements and annualreport.The Board of Directors fulfills its responsibilities remaining outside the scope of its basic functions taking intoconsideration the opinions and recommendations of executive bodies and committees. Such responsibilitiesinclude, but are not limited to the following:• Approving the Company’s annual budget and business plans,• Preparing the Company’s annual reports and finalizing the same to be presented to the General Assembly,• Ensuring that the General Assemblies are held in compliance with the legislation and the Company’s articlesof association,• Taking necessary action in relation to General Assembly decisions,• Overseeing the use of substantial amounts that is in excess of 10% of the total assets in the Company’s mostrecent balance sheet,• Approving the executives’ career plans and rewarding provided to them,• Determining the Company’s policies about Shareholders, stakeholders and public relations,• Determining the Company’s disclosure policy,• Setting the codes of ethics for the Company and its employees,• Establishing the operating principles of committees; ensuring their efficient and productive functioning,• Taking necessary action so as to ensure the Company’s organizational structure responds to currentcircumstances,• Examining the activities of former boards of directors.74Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report23. OPERATING PRINCIPLES OF THE BOARD OF DIRECTORSThe draft Board meeting agenda is prepared by the CEO, and finalized in line with the proposals of the Chairmanand the Board Directors.The Board of Directors met fourteen times in 2009.Care is paid to determine the meeting date so as to allow all Directors to participate. Save for unforeseeableexceptional events, the Board meetings are held with the participation of all Directors.Attention is given to set the Board meeting date during the immediately preceding meeting, followed by writteninvitation.The existing secretariat responsible for execution of the Board activities, keeping the Directors and auditorsinformed, and establishing communication with them was transformed into Board of Directors Reporting Unit in2005.No dissenting votes were cast by any Director against the Board decisions made in the reporting period.All Board Directors spend their best efforts to be personally present in meetings concerning matters ofimportance such as:• Determination of the fields in which the Company will be engaged and approval of business and financingplans,• Matters related to inviting the General Assembly for ordinary/extraordinary meeting and its organization,• Finalization of the annual report to be presented to the General Assembly,• Election of the chairman, deputy chairman of the Board and appointment of new directors,• Formation of administrative units or termination of their activities,• Appointment or discharging of the CEO,• Establishment of committees,• Merger, demerger, restructuring, selling the Company in its entirety or selling 10% of its fixed assets ormaking investments in amounts in excess of 10% of the fixed assets, outlays in excess of 10% of total assets,• Determination of the Company’s dividend policy, the amount to be distributed from the profit for the period,• Increasing or decreasing the capital.The Board of Directors holds its first meeting preferably on the date the same is elected.During the first meeting, the chairman and the deputy chairman of the board are elected, and decisions are madeon the job distribution and establishment of committees.Board Directors, in principle, attend every meeting.The Board of Directors meets regularly and at least monthly as pre-scheduled, and at any time as and whendeemed necessary.Utmost care is paid to ensure that the information and documents about the topics covered in the Board meetingagenda are made available for the examination of the Directors at least five days in advance, and when suchtiming cannot be met, efforts are spent to ensure equal flow of information to the Board Directors.Each Director is entitled to one vote and none has weighted vote or affirmative/negative vetoing rights.Pursuant to the articles of association, the Board of Directors convenes on the basis of absolute majority andmakes decisions with the absolute majority of Directors present in the meeting.Anadolu Sigorta Annual Report 2009 75

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance Report24. PROHIBITION ON DOING BUSINESS OR COMPETING WITH THE COMPANYCompany Directors are not engaged in any transaction or activity that would fall under the prohibition on doingbusiness or competing with the Company, therefore that would require obtaining the approval of the GeneralAssembly.25. CODES OF ETHICS AND IMPLEMENTATION PRINCIPLESThe Association of the Insurance and Reinsurance Companies of Turkey called insurance and reinsurancecompanies to pay attention to conform with the Codes of Ethics adopted by the Association by the decisionmade in its Board of Directors meeting of 18 January 2007, which codes are posted on the Association’s officialwebsite accessible at www.tsrsb.org.tr. In addition to the said, our codes of ethics as approved by the Board ofDirectors are presented below:PurposeThese principles set the codes of professional ethics that Anadolu Anonim Türk Sigorta Şirketi (‘the Company’)and its employees must conform to in their activities within the scope of existing laws and regulations, and formthe grounds for the sanctions applicable by the Company in case of violation of the provisions of these principles.ScopeAll Company employees, executives and Board Directors (‘Employees’) comply with these principles.General PrinciplesWith a view to ensuring trust and stability in the insurance sector and to prevent transactions and practices thatmight harm the economy during the activities, all Company employees will fulfill their duties in line with thefollowing general principles:a) Full compliance with the legislation on insurance businessb) Integrity in relationships with the customers, agencies, and their employees, Shareholders, group companiesand other entities and establishments with which insurance business relationships are establishedc) Providing clear, intelligible and accurate information in all services provided to all parties with which there is arelation, and keeping the parties fully and accurately informed on their rights and obligationsd) Paying attention to pursue operations with an eye on the requirements of economic development, as well asprofitabilitye) Refraining from creating unfair competition conditions, in line with the principles of ensuring the sustainabilityof the trust held in the insurance sector and observing the common interests of the sectorf) Observing social benefit in all activities and paying attention to protecting the environment; ensuring timelyand full implementation of the measures to be adopted in this matterg) Full and timely satisfaction of the requirements of the combat against money laundering; cooperating withauthorized entities and organizations on this under the provisions of international and national legislationProhibitionsThe employees will refrain from the following in their activities:a) Being engaged in activities that are incompatible with the interests and benefits of the sectorb) Using the advantages granted to the sector under the laws for the purpose of drawing advantages forcustomers in activities in a manner that would contradict with the considerations covered in the preamble oflegal regulations on insurance and those that are described under these principles, even if such advantagesconform to the law in appearancec) Acting in a manner to lead to unfair competition in the sectord) Engaging in acts and activities that contradict with the rules that are set by the Company’s authorized bodiesand are binding for all employees and executives76Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiCorporate Governance Principles Compliance ReportObligation of SecrecyAll Employees will treat the information provided by the customers and information created in the Company inconfidence and they may not disclose the confidential information they have about the customers to customersand other third parties to draw an advantage.Work HarmonyAll Employees must act in a manner that befits the Company’s respectability in their relations among themselvesand with the customers. No Employee may utter any words, write anything, and make any announcements,advertisements or implications that would lead to the creation of a negative image about the other companiesoperating in the sector and about their executives.AuditThe Company prepares its accounts in accordance with the principles governing insurance and reinsurancecompanies stipulated by the Turkish Treasury, and the regulations of the CMB, if necessary, and has the sameaudited by an independent audit firm.26. NUMBERS, STRUCTURES AND INDEPENDENCE OF COMMITTEES WITHIN THE BOARD OF DIRECTORSThere is an Audit Committee and a Corporate Governance Committee in our Company.There are two non-executive Board Directors in each one of the Committees.As a matter of principle, Board Directors do not undertake roles in several committees.The structures and operating principles of the committees are formulated in writing.Taking into consideration that there are no non-corporate ultimate Shareholders with a controlling interest in theCompany, it is thought that the Board Directors all naturally possess the advantage to act independently, andtherefore, to be impartial in their decisions.27. FINANCIAL RIGHTS PROVIDED TO THE BOARD OF DIRECTORSApart from the attendance fee, no remunerations are paid to the Board Directors.Amounts of attendance fees are set by the General Assembly in line with the proposals brought by theShareholders.The Board Directors have never utilized, directly or indirectly, cash or non-cash loans from the Company.Anadolu Sigorta Annual Report 2009 77

Financial Information and Assessment on Risk Management79 Summary of Statutory Auditors’ Report80 An Assessment of 2009 by the Board of Inspectors81 2009 Annual Report Compliance Statement82 Independent Auditor’s Report83 The Unconsolidated Financial Report for the Year Ended 31 December 200984 Detailed Balance Sheet89 Detailed Income Statement90 Statement of Changes in Equity92 Cash Flow Statement93 Statement of Profit Distribution94 Detailed Income Statement96 Notes to the Financial Statements as of 31 December 2009157 An Assessment of Financial Standing, Profitability and Solvency159 Information on Financial Structure160 Summary Financial Information for the Last 5 Years Including the Reporting Period161 Risk Management Policies Adhered to by Types of Risks164 Directory78Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiSummary of Statutory Auditors’ ReportTHE GENERAL ASSEMBLY OF THE SHAREHOLDERS OF ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİCompany NameAnadolu Anonim Türk Sigorta ŞirketiHead OfficeİstanbulCapital TL 425,000,000SectorInsurance- Statutory auditors’ names, surnames, Mehmet Şahin Karabilgin (until 26 March 2009)term of office, and nature of association Ali Tolga Ünal (until 27 October 2009)with the company:Zeliha İlke SelviEngin Ekşi (from 26 March 2009)Ayşe Alev Ataç (from 27 October 2009)Auditors are neither a shareholder nor an employee.- Number of Board of Directors meetings The auditors attended all the monthly Board of Directors meetings.attended and Board of Auditorsmeetings held:- Scope, dates and outcome of the As a result of the examination of accounts, books and recordsexamination of Company accounts, conducted every three months (January, April, July and October), nobooks and records:irregularities were established.- Number and results of the cash counts Four cash counts were made. Dates and results of cash counts:held in the Company’s pay desk pursuant 31.03.2009: TL 57.749to article 353, section 1.3 of the 30.06.2009: TL 95.504Turkish Commercial Code: 30.09.2009: TL 74.18631.12.2009: TL 53.278- Dates and results of the examinations as As a result of examinations conducted subsequent to monthly Boardrequired by article 353, section 1.4 of of Directors meetings, no irregularities were established.the Turkish Commercial Code:- Complaints or irregularities brought to None received.the auditors’ attention and actions taken.We have audited the accounts and transactions of Anadolu Anonim Türk Sigorta Şirketi for the period between01 January 2009 and 31 December 2009 with respect to their compliance with the Turkish Commercial Code, theCompany’s articles of association, other applicable legislation and with generally accepted accounting principlesand standards.In our opinion, the attached balance sheet drawn up on 31 December 2009, the contents of which weacknowledge, fairly and accurately presents the Company’s financial status on the date, and the incomestatement for the period 01 January 2009 – 31 December 2009 fairly and accurately presents the operating resultsfor the period. The profit distribution proposal was also found to conform to the laws and the Company’s articlesof association.We propose that the balance sheet and the statement of income be approved and that the members of theBoard of Directors be acquitted of their fiduciary responsibilities for the accounts of 2009.Auditor Auditor AuditorZeliha İlke SELVİ Ayşe Alev ATAÇ Engin EKŞİAnadolu Sigorta Annual Report 2009 79

Anadolu Anonim Türk Sigorta ŞirketiAn Assessment of 2009 by the Board of InspectorsPursuant to the Regulation on the Internal Systems of Insurance and Reinsurance and Pension Companies, theinternal audit activity at our Company is carried out by the Board of Inspectors reporting to our Company’s Boardof Directors.In 2009, 18 headquarters units, 9 regional branches and 1 branch adding up to 28 units in total were audited andtheir results were reported.Auditing of agencies was carried on pursuant to the Regulation on the Internal Systems of Insurance andReinsurance and Pension Companies during 2009, and 465 agencies were audited, exceeding the targeted 459,and their results were reported.On the other hand, based on Articles 16/1 and 17/2 of the Regulation on the Internal Systems of Insurance andReinsurance and Pension Companies, audits were conducted at all of the agencies that remain after eliminatingthose that were dissolved during the reporting period from the 1,376 agencies that were listed in the auditprograms approved by the Board of Directors and planned to be audited in the 2007-2009 period.In 2009, 13 studies were completed: 9 investigations, 3 examinations and one other task that do not fall undereither investigation or examination scope.The Board of Inspectors informs the Board of Directors via monthly activity summaries relating to the reportsprepared after the audits, investigations and examinations conducted. This system enables close follow-up of theactivities of the Board of Inspectors by the Board of Directors.In 2009, the Board of Inspectors was staffed by 19 board members consisting of inspectors, senior assistantinspectors and assistant inspectors. With an aim to support professional development of the Board members andto expand their professional knowledge, their participation in various seminars, meetings and training programsin Turkey and abroad have been facilitated. In this frame, efforts started in 2009 will be ongoing in 2010 so thatthe members of the Board of Inspectors obtain nationally and internationally recognized auditor certificates.Developments are carefully monitored to ensure that the audits conducted and the audit reports subsequentlyissued are in line with “International Standards for Internal Audit”, are risk-based, and contribute added value toour Company, and necessary revisions and changes are made accordingly.In line with the experiences derived from agency audits, agencies were continued to be assessed through scoring,within the frame of efforts to further expand and strengthen the central auditing of agencies and to create earlywarning systems that correctly identify and reveal the risk elements in advance. The future plans cover transitionto the score card system on the basis of agencies.Self-assessment, initiated in 2008 at the audited units, was further improved in 2009, resulting in the assessmentof risk criteria, quantification of these assessments, and creation of risk maps for audited units. Owing to ongoingand future efforts, even more effective results are expected to be attained with respect to risk-based auditing.The Board of Inspectors will keep carrying out the activities within the context of the internal audit programprepared, as well as other activities outside of this scope, based on the fundamental approach for maximizing thebenefits expected from internal auditing.80Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiIndependent Auditor’s ReportTo the Board of Directors of Anadolu Anonim Türk Sigorta Şirketi,Introduction1. We have audited the accompanying financial statements of Anadolu Anonim Türk Sigorta Şirketi, which comprise thebalance sheet as at 31 December 2009, and statement of income, statement of changes in equity and statement of cashflow for the then ended, and a summary of significant accounting policies and other explanatory notes.Management’s Responsibility for the Financial Statements2. Management is responsible for the preparation and fair presentation of these financial statements in accordance withthe applicable accounting principles and standards issued based on insurance laws and regulations. This responsibilityincludes; designing, implementing and maintaining internal control relevant to the preparation and fair presentationof financial statements that are free from material misstatement, whether due to fraud or error; selecting and applyingappropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.Auditor’s Responsibility3. Our responsibility is to express a conclusion on these financial statements based on our audit. We conducted ouraudit in accordance with standards on auditing issued based on insurance laws and regulations. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether thefinancial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as evaluatingthe overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.Basis of Qualified Conclusion4. As of the balance sheet date, in accompanying consolidated financial statements, the Company’s management hasprovided TL 13.702.761 of free provision charged to the prior years’ statement of income as expense for the purpose ofthe precautionary principle to consider any potential risks which may arise from any changes in the economy or marketconditions.Qualified Conclusion5. In our opinion, except for the effects of the matter set out in paragraph 4 above, the accompanying financialstatements give a true and fair view of the financial position of Anadolu Anonim Türk Sigorta Şirketi as of 31 December2009, and of its financial performance and its cash flows for the year then ended in accordance with the applicableaccounting principles and standards issued (Note 2) based on insurance laws and regulations.Additional paragraph for the English translation:The effect of the differences between the accounting principles summarized in Note 2 and the accounting principlesgenerally accepted in countries in which the accompanying financial statements are to be distributed and InternationalFinancial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements.The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS.Accordingly, the accompanying financial statements are not intended to present the Company’s financial position andresults of its operations in accordance with accounting principles generally accepted in such countries of users of thefinancial statements and IFRS.İstanbul, 9 March 2010DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş.Member of DELOITTE TOUCHE TOHMATSUSibel TürkerPartner82Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiThe Unconsolidated Financial Report for the Year Ended 31 December 2009We assure you that our year end unconsolidated financial report and the related disclosures and notes preparedin accordance with the requirements set out by the T.C. Prime Ministry Undersecretariat of the Treasury are incompliance with the provisions of the Decree on “Financial Reporting of Insurance and Reinsurance Companiesand Pension Funds” and our Company’s accounting records.İstanbul, 9 March 2010Mustafa Su Fatih Gören Murat TetikMember of the Board of Deputy Chief Accounting and FinancialDirectors, Chief Executive Officer Executive Officer Affairs ManagerZeliha İlke Selvi Engin Ekşi Ayşe Alev AtaçStatutory Auditor Statutory Auditor Statutory AuditorAnadolu Sigorta Annual Report 2009 83

Anadolu Anonim Türk Sigorta ŞirketiDetailed Balance SheetTLAuditedAuditedASSETS Current Period Prior PeriodI- Current Assets Note 31/12/2009 31/12/2008A- Cash and Cash Equivalents 2.12,14 493,439,595 681,610,1911- Cash 14 53,278 57,1702- Cheques Received 33,740 15,9123- Banks 14 407,927,829 633,357,9434- Cheques Given and Payment Orders (-) (5,925,520) (7,470,138)5- Other Cash and Cash Equivalents 91,350,268 55,649,304B- Financial Assets and Investments with Risks on Policy Holders 11.1 426,821,731 221,022,0271- Financial Assets Available for Sale 11.1 60,074,502 48,262,9482- Financial Assets Held to Maturity 11.1 120,069,630 106,772,5833- Financial Assets Held for Trading 11.1 252,475,211 88,923,6234- Loans - -5- Provision for Loans (-) - -6- Investments with Risks on Policy Holders - -7- Equity Shares - -8- Diminution in Value of Financial Assets (-) 11.1, 11.7 (5,797,612) (22,937,127)C- Receivables from Main Operations 435,410,551 432,563,6711- Receivables from Insurance Operations 4.2.3, 12.1 408,780,788 410,543,1832- Provision for Receivables from Insurance Operations (-) - -3- Receivables from Reinsurance Operations 12.1, 17.16 21,332,124 17,656,8884- Provision for Receivables from Reinsurance Operations (-) - -5- Cash Deposited for Insurance & Reinsurance Companies 12.1, 17.16 5,297,639 4,363,6006- Loans to Policyholders - -7- Provision for Loans to Policyholders (-) - -8- Receivables from Pension Operations - -9- Doubtful Receivables from Main Operations 4.2.3, 12.1, 42 65,129,434 57,499,31410- Provisions for Doubtful Receivables from Main Operations (-) 4.2.3, 12.1, 42 (65,129,434) (57,499,314)D- Due from Related Parties 12.1 937,911 173,2591- Due from Shareholders - -2- Due from Affiliates - 82,0293- Due from Subsidiaries - -4- Due from Joint Ventures - -5- Due from Personnel 47.2 937,911 91,2306- Due from Other Related Parties - -7- Discount on Receivables Due from Related Parties (-) - -8- Doubtful Receivables Due from Related Parties - -9- Provisions for Doubtful Receivables Due from Related Parties (-) - -E- Other Receivables 1,406,279 1,144,9141- Lease Receivables - -2- Unearned Lease Interest Income (-) - -3- Deposits and Guarantees Given 47.2 14,940 14,5444- Other Receivables 47.2 1,391,339 1,130,3705- Discount on Other Receivables (-) - -6- Other Doubtful Receivables - -7- Provisions for Other Doubtful Receivables (-) - -F- Prepaid Expenses and Income Accruals 94,422,524 87,401,3321- Prepaid Expenses 2.1.1.c, 12.1 94,422,524 87,401,3322- Accrued Interest and Rent Income - -3- Income Accruals - -4- Other Prepaid Expenses and Income Accruals - -G- Other Current Assets 644,865 449,2681- Inventories 353,387 313,1752- Prepaid Taxes and Funds - -3- Deferred Tax Assets - -4- Business Advances 78,945 26,0675- Advances Given to Personnel 9,201 6,2256- Stock Count Differences - -7- Other Current Assets 203,332 103,8018- Provision for Other Current Assets (-) - -I- Total Current Assets 1,453,083,456 1,424,364,66284Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiDetailed Balance SheetTLAuditedAuditedASSETS Current Period Prior PeriodII- Non Current Assets Note 31/12/2009 31/12/2008A- 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 & Reinsurance Companies - -6- Loans to Policyholders - -7- Provision for Loans to Policyholders (-) - -8- Receivables from Pension Operations - -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 Affiliates - -3- Due from Subsidiaries - -4- Due from Joint Ventures - -5- Due from Personnel - -6- Due from Other Related Parties - -7- Discount on Receivables Due from Related Parties (-) - -8- Doubtful Receivables Due from Related Parties - -9- Provisions for Doubtful Receivables Due from Related Parties (-) - -C- Other Receivables - -1- Leasing Receivables - -2- Unearned Leasing Interest Income (-) - -3- Guarantees Given - -4- Other Receivables - -5- Discount on Other Receivables (-) - -6- Other Doubtful Receivables - -7- Provisions for Other Doubtful Receivables (-) - -D- Financial Assets 246,999,981 71,999,9941- Investments In Associates - -2- Affiliates 11.4 246,999,981 71,999,9943- Capital Commitments to Affiliates (-) - -4- Subsidiaries - -5- Capital Commitments to Subsidiaries (-) - -6- Joint Ventures - -7- Capital Commitments to Joint Ventures (-) - -8- Financial Assets and Investments with Risks on Policy Holders - -9- Other Financial Assets - -10- Diminution in Value of Financial Assets (-) - -E- Tangible Assets 22,524,994 21,758,4071- Investment Properties 2.6, 6.4, 7 6,982,776 6,831,9912- Diminution in Value for Investment Properties (-) - -3- Owner Occupied Properties 6.4 10,320,840 10,311,5184- Machinery and Equipments 6.4 17,354,801 13,791,8915- Furnitures and Fixtures 6.4 8,412,228 11,929,6146- Vehicles 6.4 972,378 729,7467- Other Tangible Assets (Including Leasehold Improvements) 6.4 11,221,210 9,513,6748- Leased Tangible Assets 6.4 4,339,065 4,339,0659- Accumulated Depreciation (-) 6.4 (37,078,304) (35,689,092)10- Advances Paid for Tangible Assets (Including Construction In Progresses) - -F- Intangible Assets 16,250,000 16,250,0001- Rights - -2- Goodwill 2.7, 8 16,250,000 16,250,0003- Establishment Costs - -4- Research and Development Expenses - -6- Other Intangible Assets - -7- Accumulated Amortization (-) - -8- Advances Regarding Intangible Assets - -G- Prepaid Expenses and Income Accruals 53,572 2,6241- Prepaid Expenses 12.1 53,572 2,6242- Income Accruals - -3- Other Prepaid Expenses and Income Accruals - -H- Other Non-current Assets 7,316 -1- Effective Foreign Currency Accounts - -2- Foreign Currency Accounts - -3- Inventories - -4- Prepaid Taxes and Funds - -5- Deferred Tax Assets 21, 35 7,316 -6- Other Non-current Assets - -7- Other Non-current Assets Amortization (-) - -8- Provision for Other Non-current Assets (-) - -II- Total Non-current Assets 285,835,863 110,011,025TOTAL ASSETS 1,738,919,319 1,534,375,687Anadolu Sigorta Annual Report 2009 85

Anadolu Anonim Türk Sigorta ŞirketiDetailed Balance SheetTLAuditedAuditedLIABILITIES Current Period Prior PeriodIII-Short Term Liabilities Note 31/12/2009 31/12/2008A- Borrowings - 88,0791- Loans to Financial Institutions - -2- Finance Lease Payables 2.22, 32.2 925 1,8503- Deferred Finance Lease Borrowing Costs (-) 2.22, 32.2 (925) (1,850)4- Current Portion of Long Term Borrowings - -5- Principal, Installments and Interests on Issued Bills (Bonds) - -6- Other Issued Financial Assets - -7- Value Differences on Issued Financial Assets (-) - -8- Other Financial Borrowings (Liabilities) - 88,079B- Payables from Main Operations 73,339,698 116,073,7041- Payables Due to Insurance Operations 19.1 48,147,814 96,276,1712- Payables Due to Reinsurance Operations - -3- Cash Deposited by Insurance & Reinsurance Companies 17.16, 19.1 24,846 1,792,5824- Payables Due to Pension Operations - -5- Payables from Other Operations 19.1 25,167,038 18,004,9516- Discount on Other Payables from Main Operations, Notes Payable (-) - -C- Due to Related Parties 11,915 14,1641- Due to Shareholders 11,915 5,6572- Due to Affiliates - -3- Due to Subsidiaries - -4- Due to Joint Ventures - -5- Due to Personnel - -6- Due to Other Related Parties - 8,507D- Other Payables 12,151,406 13,474,3471- Guarantees and Deposits Received 19.1, 47.2 1,524,247 1,326,8742- Other Payables 19.1, 47.2 10,627,159 12,147,4733- Discount on Other Payables (-) - -E- Insurance Technical Reserves 772,263,742 716,655,4721- Unearned Premiums Reserve - Net 2.1.1.c 482,411,460 458,316,4842- Unexpired Risk Reserves - Net 2.1.1.c 8,312,029 8,164,3673- Life Mathematical Reserves - Net - -4- Outstanding Claims Reserve - Net 2.1.1.c, 4.1.2.2 281,540,253 250,174,6215- Provision for Bonus and Discounts - Net - -6- Reserve for Policies Investment Risk of Life Insurance Policyholders - Net - -7- Other Technical Reserves - Net - -F- Taxes and Other Liabilities and Provisions 5,457,128 11,497,6051- Taxes and Dues Payable 9,368,226 9,389,9682- Social Security Premiums Payable 23.1 1,067,177 1,386,9783- Overdue, Deferred or By Installment Taxes and Other Liabilities - -4- Other Taxes and Liabilities - -5- Corporate Tax Liability Provision on Period Profit 35 11,052,657 23,056,4506- Prepaid Taxes and Other Liabilities on Period Profit (-) 35 (16,030,932) (22,335,791)7- Provisions for Other Taxes and Liabilities - -G- Provisions for Other Risks - -1- Provision for Employment Termination Benefits - -2- Pension Fund Deficit Provision - -3- Provisions for Costs - -H- Deferred Income and Expense Accruals 31,404,645 34,782,6691- Deferred Income 2.1.1.c, 19.1 27,304,987 27,558,1112- Expense Accruals - -3- Other Deferred Income and Expense Accruals 19.1 4,099,658 7,224,558I- Other Short Term Liabilities 463,659 345,9771- Deferred Tax Liability - -2- Inventory Count Differences - -3- Other Short Term Liabilities 23.1 463,659 345,977III - Total Current Liabilities 895,092,193 892,932,01786Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiDetailed Balance SheetTLAuditedAuditedLIABILITIES Current Period Prior PeriodIV- Long Term Liabilities Note 31/12/2009 31/12/2008A- Borrowings - -1- Loans to Financial Institutions - -2- Finance Lease Payables - -3- Deferred Finance Lease Borrowing Costs (-) - -4- Bonds Issued - -5- Other Issued Financial Assets - -6- Value Differences on Issued Financial Assets (-) - -7- Other Financial Borrowings (Liabilities) - -B- Payables from Main Operations - -1- Payables Due to Insurance Operations - -2- Payables Due to Reinsurance Operations - -3- Cash Deposited by Insurance & Reinsurance Companies - -4- Payables Due to Pension Operations - -5- Payables from Other Operations - -6- Discount on Other Payables from Main Operations (-) - -C- Due to Related Parties - -1- Due to Shareholders - -2- Due to Affiliates - -3- Due to Subsidiaries - -4- Due to Joint Ventures - -5- Due to Personnel - -6- Due to Other Related Parties - -D- Other Payables - -1- Guarantees and Deposits Received - -2- Other Payables - -3- Discount on Other Payables (-) - -E- Insurance Technical Reserves 33,754,914 29,099,7641- Unearned Premiums Reserve - Net - -2- Unexpired Risk Reserves - Net - -3- Life Mathematical Reserves - Net - -4- Outstanding Claims Reserve - Net - -5- Provision for Bonus and Discounts - Net - -6- Reserve for Policies Investment Risk of Life Insurance Policyholders - Net - -7- Other Technical Reserves - Net 47.2 33,754,914 29,099,764F- Other Liabilities and Provisions - -1- Other Liabilities - -2- Overdue, Deferred or By Installment Other Liabilities - -3- Other Liabilities and Expense Accruals - -G- Provisions for Other Risks 3,685,283 3,154,0411- Provision for Employment Termination Benefits 2.19, 22 3,685,283 3,154,0412- Provisions for Employee 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 - 1,199,1991- Deferred Tax Liability 21, 35 1,199,1992- Other Long Term Liabilities - -IV- Total Non Current Liabilities 37,440,197 33,453,004Anadolu Sigorta Annual Report 2009 87

Anadolu Anonim Türk Sigorta ŞirketiDetailed Balance SheetTLAuditedAuditedLIABILITIES Current Period Prior PeriodV- Shareholders’ Equity Note 31/12/2009 31/12/2008A- Paid in Capital 425,000,000 350,000,0001- (Nominal) Capital 1.1, 2.13, 15 425,000,000 350,000,0002- Unpaid Capital (-) - -3- Positive Inflation Adjustment on Capital - -4- Negative Inflation Adjustment on Capital (-) - -B- Capital Reserves - -1- Equity Share Premiums - -2- Cancellation Profits of Equity Shares - -3- Profit on Sale to be Transferred to Capital - -4- Translation Reserves - -5- Other Capital Reserves - -C- Profit Reserves 333,222,716 129,910,7681- Legal Reserves 26,055,108 16,708,7142- Statutory Reserves - -3- Extraordinary Reserves 8,281,202 16,947,6984- Special Funds (Reserves) - -5- Revaluation of Financial Assets 11.6, 16.1 202,850,249 218,1996- Other Profit Reserves 96,036,157 96,036,157D- Previous Years’ Profits - 18,091,3451- Previous Years’ Profits - 18,091,345E- Previous Years’ Losses (-) - (7,677,723)1- Previous Years’ Losses - (7,677,723)F- Net Profit of the Period 48,164,213 117,666,2761- Net Profit of the Period 37 48,164,213 117,127,8882- Net Loss of the Period - -3- Net Income not subject to distribution - 538,388Total Shareholders’ Equity 806,386,929 607,990,666TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,738,919,319 1,534,375,68788Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiDetailed Income StatementTLAuditedAuditedCurrent PeriodPrior PeriodI-TECHNICAL PART Notes 01/01/2009 31/12/2009 01/01/2008 31/12/2008A- Non-Life Technical Income 1,054,386,706 932,498,1681- Earned Premiums (Net of Reinsurer Share) 902,224,415 822,807,7921.1 - Premiums (Net of Reinsurer Share) 2.1.1.e, 24 926,467,053 872,199,1401.1.1 - Gross Premiums (+) 1,243,477,307 1,161,386,1911.1.2 - Ceded Premiums to Reinsurers (-) 17.16 (317,010,254) (289,187,051)1.2- Change in Unearned Premiums Reserve (Net of ReinsurersShares and Reserves Carried Forward) (+/-) (24,094,976) (42,860,837)1.2.1 - Unearned Premiums Reserve (-) 2.1.1.c (24,883,333) (90,478,681)1.2.2 - Reinsurance Share of Unearned Premiums Reserve (+) 17.16 788,357 47,617,8441.3- Changes in Unexpired Risks Reserve (Net of ReinsurerShare and Reserves Carried Forward)(+/-) (147,662) (6,530,511)1.3.1 - Unexpired Risks Reserve (-) 2.1.1.c 6,624 (7,521,469)1.3.2 - Reinsurance Share of Unexpired Risks Reserve (+) (154,286) 990,9582- Investment Income Transferred from Non-Technical Part 129,967,912 99,397,2663- Other Technical Income (Net of Reinsurer Share) 29 22,194,379 10,293,1103.1 - Gross Other Technical Income (+) 27,076,808 10,389,9003.2 - Reinsurance Share of Other Technical Income (-) (4,882,429) (96,790)B- Non-Life Technical Expense (-) (1,004,244,823) (835,826,669)1- Total Claims (Net of Reinsurer Share) (735,787,294) (647,270,036)1.1- Claims Paid (Net of Reinsurer Share) (704,421,662) (595,760,563)1.1.1 - Gross Claims Paid (-) (854,889,956) (685,304,251)1.1.2 - Reinsurance Share of Claims Paid (+) 17.16 150,468,294 89,543,6881.2- Changes in Outstanding Claims Reserve (Net of ReinsurerShare and Reserves Carried Forward) (+/-) (31,365,632) (51,509,473)1.2.1 - Outstanding Claims Reserve (-) 2.1.1.c (54,293,775) (63,872,437)1.2.2 - Reinsurance Share of Outstanding Claims Reserve (+) 17.16 22,928,143 12,362,9642- Changes in Bonus and Discount Reserve (Net of ReinsurerShare and Reserves Carried Forward) (+/-) - -2.1 - Bonus and Discount Reserve (-) - -2.2 - Reinsurance Share of Bonus and Discount Reserve (+) - -3- Changes in Other Technical Reserves (Net of Reinsurer Shareand Reserves Carried Forward) (+/-) 2.1.1.c, 47.1 (4,655,150) (5,444,952)4- Operating Expenses (-) 31.1, 32.1, 47.1 (263,802,379) (183,111,681)C- Non Life Technical Net Profit (A-B) 50,141,883 96,671,499II-NON TECHNICAL PARTC- Non Life Technical Net Profit (A-B) 50,141,883 96,671,499J- General Technical Net Profit (C) 50,141,883 96,671,499K- Investment Income 162,322,606 176,944,3151- Income from Financial Investments 26 79,902,465 128,088,7222- Income from Sales of Financial Investments 26 42,616,722 16,390,5483- Revaluation of Financial Investments 26 18,235,732 (6,439,850)4- Foreign Exchange Gains 26, 36 11,550,904 19,776,6785- Dividend Income from Participations 26 8,399,999 17,888,2526- Income from Affiliated Companies - -7- Income Received from Land and Building 26 1,076,723 1,199,6238- Income from Derivatives 2.10, 13, 26 540,061 12,8009- Other Investments - 27,54210- Investment Income transferred from Life Technical Part - -L- Investment Expenses (-) (150,423,542) (117,741,481)1- Investment Management Expenses (Including Interest) (-) 34.1 (925) (108,031)2- Valuation Allowance of Investments (-) 26 (3,473,221) (282,743)3- Losses On Sales of Investments (-) 26 (4,191,139) (3,346,990)4- Investment Income Transferred to Life Technical Part (-) (129,967,912) (99,397,266)5- Losses from Derivatives (-) - -6- Foreign Exchange Losses (-) 26, 36 (8,276,790) (9,499,637)7- Depreciation Expenses (-) 6.1, 6.4, 32.1 (4,513,555) (5,106,814)8- Other Investment Expenses (-) - -M- Other Income and Expenses (+/-) (2,824,077) (15,151,607)1- Provisions Account (+/-) 4.2.3 (7,874,018) (13,665,702)2- Discount Account (+/-) 2.1.1.g 5,460,458 3,808,3263- Speciality Insurances Account (+/-) - 57,4474- Inflation Adjustment Account (+/-) - -5- Deferred Tax Asset Accounts(+/-) 35 1,206,515 -6- Deferred Tax Liability Accounts (+/-) 35 - (2,122,323)7- Other Income and Revenues 47.1 911,791 1,123,9808- Other Expense and Losses (-) 47.1 (2,528,823) (4,353,335)9- Prior Period Income - -10- Prior Period Losses (-) - -N- Net Profit/(Loss) 48,164,213 117,666,2761- Profit/(Loss) Before Tax 59,216,870 140,722,7262- Corporate Tax Liability Provision (-) 35 (11,052,657) (23,056,450)3- Net Profit (Loss) 48,164,213 117,666,2764- Inflation Adjustment Account -Anadolu Sigorta Annual Report 2009 89

Anadolu Anonim Türk Sigorta ŞirketiStatement of Changes in EquityAuditedEquity Shares Revaluation ofOwned by FinancialCapital Company (-) AssetsCURRENT PERIODI - Opening Balance of Prior Period (31/12/2008) 350,000,000 218,199A- Capital increase (A1 + A2) 75,000,000 - -1- Cash - -2- Internal sources 75,000,000 - -B- Equity shares purchased by the company - -C- Income/(expense) recognized directly in the equity - - -D- Revaluation of financial assets - - 202,632,050E- Translation reserves - - -F- Other income/(expenses) - - -G- Inflation adjustment differences - - -H- Period net profit - - -I- Dividends distributed - - -J- Transfer - - -II - Closing Balance at 31/12/2009 (I+A+B+C+D+E+F+G+H+I+J) 425,000,000 - 202,850,249PRIOR PERIODI - Opening Balance of Prior Period (31/12/2007) 275,000,000 - 142,581,854II - Effects of Changes In Accounting Policy - - -III - As Restated (I + II) (01/01/2008) 275,000,000 - 142,581,854A- Capital increase (A1 + A2) 75,000,000 - -1- Cash - - -2- Internal sources 75,000,000 - -B- Equity shares purchased by the company - - -C- Income/(expense) recognized directly in the equity - - -D- Revaluation of Financial Assets - - (142,363,655)E- Translation reserves - - -F- Other income/(expenses) - - -G- Inflation adjustment differences - - -H- Period net profit - - -I- Dividends distributed - - -J-Transfer - - -IV - Closing Balance at 31/12/2008 (III+A+B+C+D+E+F+G+H+I+J) 350,000,000 - 218,19990Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiStatement of Changes in EquityOtherInflationReserves andAdjustment of Translation Legal Statutory Retained Net Profit (Loss) Previous Years’Capital Reserves Reserves Reserves Earnings for the Period Profits/Losses Total16,708,714 112,983,855 - 128,079,898 607,990,666- - - - (16,908,655) - (58,091,345) -- - - - - - - -- - - - (16,908,655) - (58,091,345) -- - - - - - - -- - - - - - - -- - - - - - - 202,632,050- - - - - - -- - - - - - -- - - - - - -- - - - 48,164,213 - 48,164,213- - - - - - (52,400,000) (52,400,000)- - 9,346,394 - 8,242,159 - (17,588,553) -- - 26,055,108 - 104,317,359 48,164,213 - 806,386,929- - 13,207,066 - 159,090,661 - 54,208,548 644,088,129- - - - (539,332) - 10,952,954 10,413,622- - 13,207,066 - 158,551,329 - 65,161,502 654,501,751- - - - (51,460,668) - (23,539,332) -- - - - - - - -- - - - (51,460,668) - (23,539,332) -- - - - - - - -- - - - - - - -- - - - - - - (142,363,655)- - - - - - - -- - - - - - - -- - - - - - - -- - - - - 117,666,276 - 117,666,276- - - - - - (21,813,706) (21,813,706)- - 3,501,648 - 5,893,194 - (9,394,842) -- - 16,708,714 - 112,983,855 117,666,276 10,413,622 607,990,666Anadolu Sigorta Annual Report 2009 91

Anadolu Anonim Türk Sigorta ŞirketiCash Flow StatementTLAuditedAuditedCurrent PeriodPrior PeriodNote (01/01/2009-31/12/2009) (01/01/2008-31/12/2008)A. CASH FLOWS FROM THE OPERATING ACTIVITIES1. Cash inflows from the insurance operations 1,062,671,992 1,107,622,0862. Cash inflows from the reinsurance operations - 354,7873. Cash inflows from the pension operations - -4. Cash outflows due to the insurance operations (-) (1,000,446,509) (921,013,429)5. Cash outflows due to the reinsurance operations (-) (6,377,011) (6,790,724)6. Cash outflows due to the pension operations (-) - -7. Cash generated from the operating activities (A1+A2+A3-A4-A5-A6) 55,848,472 180,172,7208. Interest payments (-) - -9. Income tax payments (-) (16,751,591) (27,793,974)10. Other cash inflows 14,742,315 40,124,62011. Other cash outflows (-) (14,311,147) (54,329,127)12. Net cash generated from the operating activities 39,528,049 138,174,239B. CASH FLOWS FROM THE INVESTING ACTIVITIES1. Sale of tangible assets 6 1,567,924 387,6362. Purchase of tangible assets (-) 6 (6,848,066) (6,678,733)3. Acquisition of financial assets (-) (230,588,682) 89,728,4964. Sale of financial assets - -5. Interest received 191,370,729 76,278,0396. Dividends received 10,082,554 3,692,1727. Other cash inflows 6,500,715 15,085,9948. Other cash outflows (-) (146,192,730) (112,724,838)9. Net cash generated from the investing activities (174,107,556) 65,768,766C. CASH FLOWS FROM THE FINANCING ACTIVITIES1. Issue of equity shares - -2. Cash inflows from the loans to policyholders - -3. Payments of financial leases (-) - (401,412)4. Dividends paid (-) (52,400,000) (21,813,706)5. Other cash inflows - -6. Other cash outflows (-) - -7. Cash generated from the financing activities (52,400,000) (22,215,118)D. EFFECTS OF EXCHANGE RATE DIFFERENCES ON CASHAND CASH EQUIVALENTSE. Net increase/(decrease) in cash and cash equivalents (A12+B9+C7+D) (186,979,507) 181,727,887F. Cash and cash equivalents at the beginning of the period 677,604,271 495,876,384G. Cash and cash equivalents at the end of the period (E+F) 14 490,624,764 677,604,27192Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiStatement of Profit DistributionTLAuditedAuditedCurrent PeriodPrior PeriodNote 01/01/2009-31/12/2009 (*) 01/01/2008-31/12/2008I. DISTRIBUTION OF PROFIT FOR THE PERIOD1.1. PROFIT FOR THE PERIOD (**) 66,432,942 140,184,3381.2. TAXES PAYABLE AND LEGAL LIABILITIES (11,052,657) (23,056,450)1.2.1. Corporate Tax (Income Tax) (11,052,657) (23,056,450)1.2.2. Income Tax Deduction - -1.2.3. Other Taxes and Legal Liabilities - -A NET PROFIT FOR THE PERIOD (1.1 – 1.2) 55,380,285 117,127,8881.3. PREVIOUS YEARS’ LOSSES (-) -1.4. FIRST LEGAL RESERVE (5,856,394)1.5. LEGAL RESERVES KEPT IN THE COMPANY (-) -B NET DISTRIBUTABLE PROFIT FOR THE PERIOD [ (A - (1.3 + 1.4 + 1.5) ] 111,271,4941.6. FIRST DIVIDENDS TO SHAREHOLDERS (-) (20,795,532)1.6.1. To Common Shareholders (***) (20,795,531)1.6.2. To Preferred Shareholders (1)1.6.3 To Owners of Participating Redeemed Shares1.6.4 To Owners of Profit-sharing Securities1.6.5 To Owners of Profit and Loss Sharing Securities1.7. DIVIDENDS TO PERSONNEL (-) (***) (2,400,000)1.8. DIVIDENDS TO FOUNDERS (-) -1.9. DIVIDENDS TO BOARD OF DIRECTORS (-) -1.10. SECOND DIVIDENDS TO SHAREHOLDERS (-) (***) (69,204,468)1.10.1. To Common Shareholders (69,204,467)1.10.2. To Preferred Shareholders (1)1.10.3. To Owners of Participating Redeemed Shares -1.10.4. To Owners of Profit-sharing Securities -1.10.5. To Owners of Profit and Loss Sharing Securities -1.11. SECOND LEGAL RESERVE (-) (3,490,000)1.12. STATUTORY RESERVES (-)1.13. EXTRAORDINARY RESERVES (8,087,657)1.14 OTHER RESERVES -1.15 SPECIAL FUNDS -II. DISTRIBUTION FROM RESERVES -2.1. DISTRIBUTED RESERVES -2.2. SECOND LEGAL RESERVE (-) -2.3. DIVIDENDS TO SHAREHOLDERS (-) -2.3.1. To Common Shareholders -2.3.2 To Preferred Shareholders -2.3.3. To Owners of Participating Redeemed Shares -2.3.4 To Owners of Profit-sharing Securities -2.3.5 To Owners of Profit and Loss Sharing Securities -2.4. DIVIDENDS TO EMPLOYEES (-) -2.5. DIVIDENDS TO BOARD OF DIRECTORS (-) -III. PROFIT PER SHARE -3.1. TO COMMON SHAREHOLDERS 0.33463.2. TO COMMON SHAREHOLDERS (%) 33.463.3. TO PREFERRED SHAREHOLDERS 0.33463.4. TO PREFERRED SHAREHOLDERS (%) 33.46IV. DIVIDENDS PER SHARE -4.1. TO COMMON SHAREHOLDERS 0.25714.2. TO COMMON SHAREHOLDERS (%) 25.714.3. TO PREFERRED SHAREHOLDERS 0.25714.4. TO PREFERRED SHAREHOLDERS (%) 25.71(*) Since 2009 profit distribution proposal has not been approved by the General Assembly, just net profit available for distribution is shown on theprofit distribution table.(**) Current period : As per the Capital Markets Board 27 January 2010 dated resolution, it has been resolved that for companies, required toprepare consolidated financial statements, the consolidated profit for the period will be used in the calculations of distributable profit for theperiod.Prior period: As per No. 5520 Corporate Tax Law Article 5 of the first paragraph (e), 75 % of the sales income from subsidiaries and real estate,is exempted from corporate tax. Because of the fact, TL 538.388 sales income from subsidiaries and real estate, presented in “”Net Income notsubject to distribution”” line of balance sheet, deducted from the Period Profit.(***) TL 40.000.000 amount of the dividend has been distributed to shareholders as bonus shares.Anadolu Sigorta Annual Report 2009 93

Anadolu Anonim Türk Sigorta ŞirketiDetailed Income StatementMOTOR THIRD LEGAL PERSONALPARTY LIABILITY ENGINEERING AGRICULTURE PROTECTION ACCIDENT HEALTH CREDIT TOTAL264,916,907 17,386,860 7,436,129 7,875,561 64,761,555 150,106,963 12,918 1,054,386,706225,115,822 16,187,510 5,420,355 5,060,609 44,782,868 138,762,219 9,186 902,224,415235,074,024 14,182,335 7,074,527 4,896,627 41,960,364 145,579,853 6,443 926,467,053-10,864,789 2,065,364 -1,692,596 163,982 2,822,503 -6,059,238 2,743 -24,094,976906,586 -60,188 38,424 0 0 -758,395 0 -147,66237,476,629 1,168,556 2,003,978 2,814,949 19,336,011 11,075,093 3,733 129,967,9122,324,457 30,794 11,796 3 642,676 269,650 0 22,194,379-243,884,631 -19,353,390 -5,026,966 -3,972,776 -28,100,835 -171,676,900 -8,146 -1,004,244,823-184,483,703 -13,353,822 -2,945,254 -20,738 -10,002,821 -133,634,450 0 -735,787,294-170,384,243 -13,554,218 -3,615,386 -37,640 -8,583,768 -126,462,730 0 -704,421,662-14,099,460 200,396 670,132 16,902 -1,419,053 -7,171,720 0 -31,365,6320 0 0 0 0 0 0 0-204,357 0 -715,447 0 -13,750 -4,655,150-59,400,928 -5,795,211 -2,081,712 -3,952,038 -17,382,567 -38,042,450 5,604 -263,802,37921,032,276 -1,966,530 2,409,163 3,902,785 36,660,719 -21,569,938 4,772 50,141,88350,141,88350,141,883162,322,60679,902,46542,616,72218,235,73211,550,9048,399,99901,076,723540,06100-150,423,542-925-3,473,221-4,191,139-129,967,9120-8,276,790-4,513,5550-2,824,077-7,874,0185,460,458001,206,5150911,791-2,528,8230048,164,21359,216,870-11,052,65748,164,2130Anadolu Sigorta Annual Report 2009 95

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).1. General Information1.1 Parent Company and the ultimate owner of the GroupAnadolu Anonim Türk Sigorta Şirketi (“the Company”), operating since 1 April 1925, is the subsidiary of Türkiye İşBankası A.Ş. and its ultimate shareholding structure is detailed below:31 December 2009 31 December 2008Participation Participation Participation ParticipationAmount TL rate% Amount TL rate%Türkiye İş Bankası A.Ş. 151.002.594 35,53 124.355.077 35,53Millî Reasürans T.A.Ş. 92.564.995 21,78 76.229.997 21,78Other 181.432.411 42,69 149.414.926 42,69425.000.000 100,00 350.000.000 100,001.2 The Company’s address and legal structure and address of its registered country and registered office (or, ifthe Company’s address is different from its registered office, the original location where the Company’s actualoperations are performed)The Company is a corporation, which was established in accordance with the requirements of Turkish CommercialCode, is located at İş Kuleleri Kule 2 Kat: 23-26 34330, 4.Levent, İstanbul. The Company operates in accordancewith the principles determined by Insurance Law No: 5684.1.3 Main operations of the CompanyThe Company’s main operation is insurance business on non-life insurance branches.1.4 Details of the Company’s operations and nature of field of activitiesIn accordance with Article 50(a) in Section VII of the Capital Markets Law, insurance companies have to complywith their own specific laws and regulations in matters of establishment, auditing, supervision/oversight,accounting and financial reporting; therefore, the Company performs its operations accordingly.Principles of operations are determined based on the Insurance Law No: 5684 and standards and policies set outin applicable regulations.1.5 Average number of the Company’s personnel based on their categories31 December 2009 31 December 2008NumberNumberKey management personnel 9 8Directors 110 76Intermediate Director 329 298Officers 238 251Contracted Personnel 133 87Total 819 7201.6 Remuneration and fringe benefits provided to top managementAs of 31 December 2009, remuneration and fringe benefits provided to top management such as; chairman andmembers of the board of directors, managing director and assistant managing director (including operationalleasing, depreciation and other expenses in addition to monetary rights, such as; compensation, bonuses,premiums, and other charges) in total amount to TL 4.354.521 (31 December 2008: TL 3.678.169).1.7 Distribution keys used in the distribution of investment income and operating expenses in the financialstatements (personnel expenses, administration expenses, research and development expenses, marketing andselling expenses and other operating expenses)The Company’s distribution of indirect general administrative, research and development, marketing, selling andadvertising expenses to technical accounts by the number of policies based on each branch, gross amount ofpremiums written and numbers of claim reports is made based on the standards and policies set out in relation96Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).to distribution keys used in the financial statements prepared in accordance with the Undersecretariat of theTreasury’s Circular on the Insurance Uniformed Chart of Accounts issued on 4 January 2008.The Company’s distribution of investment income to technical branches by the rates calculated by dividing the“net cash flow” amount into the “total net cash flow” amount, less any reinsurance share for each branch is madebased on the standards and policies set out in relation to the distribution keys used in the financial statementsprepared in accordance with the Undersecretariat of the Treasury’s circular on the Insurance Uniformed Chart ofAccounts issued on 4 January 2008.1.8 Stand-alone or consolidated financial statementsAccording to the Decree on “Financial Reporting of Insurance and Reinsurance Companies and Pension Funds”,published in the Official Gazette No: 26852 on 14 July 2007; the accompanying financial statements comprise theunconsolidated financial statements.1.9 Name and other information of the reporting company and subsequent changes to the prior balance sheetdateName/Trade name Anadolu Anonim Türk Sigorta ŞirketiHeadquarter address İş Kuleleri Kule 2 Kat: 22-26 34330, 4. Levent/İstanbulPhone (212) 350 03 50Fax (212) 350 03 55Web page address www.anadolusigorta.com.trE-mail addressbilgi@anadolusigorta.com.trThere has been no change in the above information as of the prior balance sheet date.1.10 Subsequent EventsThere has been no change in the Company’s operations, documentation and records or Company’s policiessubsequent to the balance sheet date.2. Summary of the Accounting Policies2.1 Basis of Preparation2.1.1 Basis of Preparation of Financial Statements and Specific Accounting Policies UsedAccounting StandardsIn accordance with Article 50(a) of Section VII of the Capital Markets Law, insurance companies have to complywith their own specific laws and regulations in matters of establishment, auditing, supervision/oversight,accounting and financial reporting. Therefore, the Company’s financial statements are prepared in accordancewith the prevailing accounting principles and standards for Insurance and Reinsurance Companies and PensionFunds set out by the Undersecretariat of the Treasury.The Decree on “Financial Reporting of Insurance and Reinsurance Companies and Pension Funds” was publishedin the Official Gazette No: 26852 on 14 July 2007 and has become effective as of 1 January 2008.Article 4(1) of the Decree on “Financial Reporting of Insurance and Reinsurance Companies and Pension Funds”requires the recognition of company operations in accordance with the preparation and presentation of financialstatements requirements in the Decree and TASB, except for any Decrees issued by the Undersecretariat ofthe Treasury in relation to the matters specified in 4(2), and Article 4(2) of the Decree on “Financial Reportingof Insurance and Reinsurance Companies and Pension Funds” requires the determination of principles andprocedures on insurance contracts, accounting of affiliates, associates and entities under common control,consolidated financial statements, publicly available financial statements and the related disclosures and notes inaccordance with the decrees issued by the Undersecretariat of the Treasury.Anadolu Sigorta Annual Report 2009 97

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Within this respect, the below requirements are set out in regards to Article 4(2) of the Decree in the SectorAnnouncement No: 2008/9 issued on 18 February 2008, which are valid as of balance sheet date:TFRS 4 (Turkish Financial Reporting Standards) “Insurance Contracts” is applicable for the annual periodsbeginning on or after 31 December 2005. The Standard is effective as of 25 March 2006; however, it is notapplicable for the current period since International Accounting Standards Board has not yet completed thesecond phase of its project. Principles and procedures on the preparation of notes and disclosures in relation toinsurance contracts will be set out by a decree that will be issued by the Undersecretariat of the Treasury in caseof need.According to the Communique on Consolidated Financial Reporting of Insurance and Reinsurance Companiesand Pension Funds, published in the Official Gazette No: 27097 (4. Bis) on 31 December 2008, the Companyprepares consolidated financial statements starting from 2009. According to the Decree on “Financial Reportingof Insurance and Reinsurance Companies and Pension Funds”, published in the Official Gazette No: 26852 on 14July 2007; the accompanying financial statements comprise the unconsolidated financial statements.a. Preparation of Financial Statements in Hyperinflationary PeriodsIn accordance with the Undersecretariat of the Treasury’s statement no: 19387 issued on 4 April 2005, theCompany’s financial statements as of 31 December 2004 are adjusted and its 2005 openings are prepared basedon the requirements set out in “the preparation of financial statements in hyperinflationary periods” specifiedin the CMB’s Decree Volume: XI, No: 25 “Accounting Standards in Capital Markets” which was published inthe Official Gazette No: 25290 on 15 November 2003. In addition, the preparation of financial statements inhyperinflationary periods has not been applied in accordance with the statement of the Undersecretariat of theTreasury.b. Comparative Information and Restatement of Prior Period Financial StatementsThe Company’s balance sheet as of 31 December 2009 is presented in comparison with its balance sheet as of31 December 2008. The Company’s income statement, statement of changes in equity and cash flow statementfor 2009 are presented in comparison with its income statement, statement of changes in equity and cash flowstatement for the period ended as of 31 December 2008.c. Technical ReservesUnearned premiums reserve, outstanding claims reserve and their reinsurance shares included under technicalreserves in the financial statements are recognized based on the below principles in accordance with theInsurance Law No: 5684 effective at 14 June 2007 and the requirements set out in the Decree “TechnicalProvisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions”issued in the Official Gazette No: 26606 on 7 August 2007.Unearned premiums reserve is the carried forward portion of unearned gross premiums written in the currentperiod and is calculated on a daily pro-rata basis. Net-of-commissions application has been ceased in thecalculation of unearned premium reserve of the insurance policies prepared after 1 January 2008 in accordancewith the Decree “Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and AssetsHeld For Such Provisions”. In accordance with the related Decree, for marine (commodity) policies issued after 1January 2008 with indefinite expiration dates, 50% of the remaining portion of the premiums accrued in the lastthree months, less any commissions is also provided as unearned premium reserves.According to the Sectoral Announcement No: 2009/9 on Application of Principles of Technical Reserves, eventhere is a clause on a policy about the beginning time of the policy, it has to be to assumed as the policy starts at12.00 pm on noon time and ends at 12.00 pm on noon time, as common practice. Therefore, the day the policy isissued and the last day of the policy is accepted as half day.In addition, the Circular no: 2007/25 issued by the Prime Ministry Undersecretariat of the Treasury of the TurkishRepublic on 28 December 2007 requires the recognition of carried forward portions of commissions paid tointermediaries, commissions received due to the premiums ceded to reinsurers, acquisition costs and theamounts paid for the non-proportional reinsurance treaty agreements under new account codes, while therelated income and expenses in the current period should be recognized under the old account codes.98Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).As of 31 December 2009, the Company has calculated and recorded TL 628.029.518 of unearned premium reserve(31 December 2008: TL 603.146.185) and TL 145.618.058 of reinsurer share of the unearned premium reserve (31December 2008: TL 144.829.701).Following the above-mentioned amendments, the Company has calculated a deferred commission expenseamounting to TL 91.519.320 (31 December 2008: TL 85.249.553) and deferred commission income amounting toTL 27.304.987 as of 31 December 2009 (31 December 2008: TL 27.558.111) and presented as Prepaid Expensesand Deferred Income respectively in accompanying financial statements.Insurance companies are required to provide unexpired risk reserves for insurance branches of which areinconsistent with the risk level assumed over the insurance period and the distribution of premiums earnedover time in accordance with the Decree “Technical Provisions of Insurance and Reinsurance Companies andPension Funds and Assets Held for Such Provisions”. Insurance companies are also required to provide unexpiredrisk reserves if unearned premium reserve is inadequate for the Company’s risks and estimated expenses. Inaccordance with the Decree, insurance companies should apply an adequacy test covering the last 12 months foreach period for the possibility of exceeding claim compensations from existing insurance contracts against theunearned premium reserves provided for these contracts.The related Decree, which was published in the Official Gazette No: 26674 on 18 October 2007, requires themultiplication of unearned premium reserves by the estimated claim premium ratio in adequacy test application.Estimated claim premium ratio is calculated by dividing the occurred claims (outstanding claims (net) + claimspaid (net) – outstanding claims reversal (net)) into earned premiums (premiums written (net) + carried forwardunearned premiums reserve (net) – unearned premiums reserve (net)). In addition, if the estimated claim premiumratio exceeds 95% in future periods for the estimated claim premium ratio of insurance branches that will bedetermined by the Undersecretariat of the Treasury, the amount calculated subsequent to the multiplication ofthe exceeding rate by unearned premiums reserve will be used in the calculation of unexpired risks reserve of therelated branch. In accordance with the Circular issued by the Undersecretariat of the Treasury on 6 November2007, unexpired risks reserve should be calculated for each sub-branches specified in the Insurance UniformedChart of Accounts.As a result of the adequacy test mentioned above, the Company has calculated and recorded TL 9.549.519 ofunexpired risk reserve (31 December 2008: TL 9.556.144) and TL 1.237.490 of reinsurance share of unexpired riskreserve (31 December 2008: TL 1.391.777).Outstanding claims reserve is provided for the outstanding claims reported but not paid as of the period-end. Ifthe amount of claims paid is below or above the amount of reserves provided, the resulting difference is reflectedto the accounts at the payment date. Reinsurance shares of outstanding claims are offset under the outstandingclaims reserve.In accordance with the Decree on “Technical Provisions of Insurance and Reinsurance Companies and PensionFunds and Assets Held For Such Provisions” published in the Official Gazette No: 26606 on 7 August 2007,insurance companies are required to provide outstanding claims reserve for both occurred and calculated but notactually paid claims and, if such claims could not be calculated, required to provide estimated amounts and notreported but incurred claims, net of subrogation, salvage and other related income, in the prior or current period.For outstanding claim files opened in the last 5 or over 5 years, weighted average ratio is considered in thecalculation of subrogation, salvage and the other related incomes to be deducted from the occurred outstandingclaims reserve. Weighted average ratio is calculated by dividing the subrogation, salvage and other relatedincome received following the period in which the claims are incurred into the occurred outstanding claimsreserve. Subrogation, salvage and other related income to be deducted from the related branch’s outstandingclaims reserve for the current period is calculated by multiplying the calculated weighted average ratio of thebranch by the related branch’s occurred outstanding claims reserve of the current period.Based on the calculations mentioned above, the Company’s subrogation, salvage and other related incomesto be deducted from outstanding claims reserve amounts to TL 15.046.207 (31 December 2008: TL 20.850.812)and the reduced amount from its reinsurance share for outstanding claims reserve amounts to TL 1.017.983 (31December 2008: TL 1.175.217) for the first 6 month period in 2009.Anadolu Sigorta Annual Report 2009 99

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).In accordance with the Decree “Technical Provisions of Insurance and Reinsurance Companies and PensionFunds and Assets Held For Such Provisions” published in the Official Gazette No: 26606 on 7 August 2007,insurance companies should consider the weighted average ratio calculated by dividing the claims incurred priorto the related periods but reported after the related period for the last 5 years or over, after the deduction ofsubrogation, salvage and other related incomes, to the related periods’ premium, in the calculation of incurredbut not reported claims. The current period’s incurred but not reported claim should be measured by multiplyingthe weighted average ratio by the total premium production for 12 months prior to the current period.Based on the calculations mentioned in detail above, as of 31 December 2009, the Company’s net incurred butnot reported claim amount presented under the outstanding claims reserve in the financial statements amountsto TL 72.774.792 (31 December 2008: TL 53.567.224)In accordance with Article 7(6) of the Decree “Technical Provisions of Insurance and Reinsurance Companies andPension Funds and Assets Held For Such Provisions” published in the Official Gazette No: 26606 on 7 August2007, outstanding claim reserve provided for the current period cannot be below the amount calculated by usingthe actuarial chain ladder method developed by the Undersecretariat of the Treasury. Actuarial chain laddermethod is used for the statistical calculation of minimum outstanding claim reserves provided for the periodendbased on historic claims data. If the provision amount calculated as a result of the method is higher than theoutstanding claims reserve, the difference should have been booked as an additional reserve.As of 13 August 2009, a circular No: 2009/12; “Circular related with the change on the Circulars of Actuarial ChainLadder Method No: 2007/24 and 2007/11”, is published by Undersecretariat of the Treasury. Additionally, in thesector announcement No: 2009/9, the periods that will be considered in case of the reduction of subrogation,salvage and other income items in the application of actuarial chain ladder method is explained. Nonetheless,it is observed that the new calculation method give abnormal results changing from one company to anothercompany and it is also observed that this method give results that are not consistent with the real data of thecompany. Consequently, the application should be applied as explained below until 1 January 2010, including 31December 2009.1. Firstly, companies could use both the circulars numbered 2007/24 (old formulation) and 2009/11 (newformulation) in the application of actuarial chain ladder method. The companies will choose the method to use inthe branch-basis.2. In the application of these methods (old and new one) in the actuarial chain ladder method, the collectionperiod will be considered for the reduction of subrogation, salvage and other related items from the claims paid.3. In clean-cut treaty insurance branches, in the contracts that have abnormal deviations in the calculation ofactuarial chain ladder method, the calculation will be performed over the gross amounts and the net amounts willbe found according to the conditions of the contract.As of 31 December 2009, the Company uses the new calculation in aircrafts liability branch and the old method inother branches in the calculation of the actuarial chain ladder method.According to the calculation method explained above, there is additional outstanding claim reserve TL 552.649and the reinsurer’s share for the outstanding claims reserves TL 439.603 as calculated based on the actuarial chainladder method presented under the outstanding claims reserve in the accompanying financial statements (31December 2008: Gross: TL 1.199.319, reinsurance share: TL 31.206).As of 31 December 2009, the Company has calculated and recorded total outstanding claim reserve amounts toTL 387.934.087 (31 December 2008: TL 333.640.312) and total reinsurer’s share for the outstanding claims reservesamounts to TL 106.393.834 (31 December 2008: TL 83.465.691).Insurance companies are required to provide an outstanding claim reserve adequacy table at the end of eachyear using the format designated by the Undersecretariat of the Treasury and such companies are also requiredto present the tables to the Undersecretariat of the Treasury. This table presents the outstanding claim reserveadequacy ratio, which is the proportion of outstanding claim reserves provided for the last 5 years to the total ofclaims paid including all expense shares in relation to the related claims. Within the framework determined bythe Undersecretariat, if the average of the last five years’ outstanding claim adequacy ratio, except for the current100Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).period, is below 95%, in order to calculate the adequacy ratio, the difference is multiplied by the current year’soutstanding claim reserve. Final outstanding claims reserve of the period is calculated by adding every branchesadequacy ratio difference amount separately. During the preparation of the adequacy table and outstandingclaims reserve, incurred but not reported outstanding claims and all expense shares are considered.Based on the calculations mentioned in detail above, as of 31 December 2009, the Company’s net outstandingclaim adequacy difference calculated and presented under the outstanding claims reserve in the financialstatements amounts to TL 3.901.275 (31 December 2008: TL 6.057.043).In accordance with Article 9 of the Decree “Technical Provisions of Insurance and Reinsurance Companies andPension Funds and Assets Held For Such Provisions” published in the Official Gazette No: 26606 on 7 August2007, insurance companies are required to provide equalization reserves for earthquake and credit insurances inorder to equalize the possible fluctuations in the claims compensation rates and to cover the catastrophic risksin subsequent periods. Also, in accordance with the related article, equalization reserves should be calculated as12% of the earthquake and credit net premiums of each year and amounts paid for non-proportional reinsurancecontracts should be considered as premiums ceded in the calculation of net premium, and companies shouldcontinue to provide reserves to the extent that reserves exceed 150% of the maximum amount of net premiumsreceived in the last five financial periods.As of 31 December 2009, the Company has provided TL 10.100.102 equalization reserve on the calculationexplained above (31 December 2008: TL 5.444.952)d. Subrogation Income AccrualsThe Undersecretariat of the Treasury made some disclosures on accounting for subrogation income accrualsin order to establish the uniformity considering various applications in the sector under the statement no:B.02.1.HM.0.SGM.0.3.1.1-3534 published on 18 January 2005 and under the supplementary Article No: 2005/24of the related statement. In accordance with the requirements set out in the related statements, insurancecompanies should recognize the subrogation amounts from insurance companies as income, irrespective ofhaving furnished the certificate of release from the counter insurance companies, as long as the insurancecompany settles the claim payment to the policyholder and receives the relevant payment document from thepolicyholder.The Company has determined the amount of its subrogation receivables in accordance with the recent statementmade by the Undersecretariat of the Treasury through the Union of the Turkish Insurance and ReinsuranceCompanies as of 3 February 2005 and has calculated the total subrogation receivable from the insurancecompanies amounting to TL 32.648.842 (31 December 2008: TL 20.247.019) and the reinsurance share of TL1.893.594 (31 December 2008: TL 1.118.698) and presented these amounts in receivables and payables fromoperating activities and technical income accounts, respectively. The Company also presented the retentionamount of subrogation receivables under litigation and execution amounting to TL 62.019.935 (31 December2008: TL 51.498.650) and TL 12.488.568 (31 December 2008: TL 8.522.315) of their reinsurance share in doubtfulreceivables from operating activities and technical income accounts, respectively.e. Premium Income and ClaimsPremium income represents premiums on policies written during the year. Unearned premium reserves aredetermined from premiums written during the year on a daily basis.Claims are recognized as expense as they are paid. Outstanding claims provision is provided for both reportedunpaid claims at period-end and incurred but not reported claims. Reinsurer’s shares of claims paid andoutstanding loss provisions are off-set against these reserves.f. Receivables from Insurance ActivitiesFor allowance for doubtful receivables, the Company has provided provision for receivables that are subject toadministrative and legal follow-up, considering the nature and extent of such receivables, in accordance withArticle 323 of the Tax Procedure Law. As of 31 December 2009, the amount of doubtful receivables that aresubject to administrative and legal follow-up amounts to TL 65.129.434 (31 December 2008: TL 57.499.314), TL49.531.367 (31 December 2008: TL 42.976.335) of this provision includes subrogation transactions under litigation.Anadolu Sigorta Annual Report 2009 101

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).g. Discount of Receivables and PayablesReceivables and payables are carried at book values in the financial statements. Receivables and payables aresubject to discount. As of the balance sheet date, 11% of discount rate is used to discount receivables andpayables in TL. The rates used to discount receivables and payables in foreign currencies vary on the currencytype.h. Earnings per ShareEarnings per share presented in the income statement is calculated by dividing the net profit into the weightedaverage number of the outstanding shares throughout the financial year.Companies in Turkey can increase their capital by distributing “bonus shares” to shareholders from the priorperiods’ profit. Such “bonus share” distributions are considered as issued shares in the earnings per sharecalculations. Accordingly, weighted average number of equity shares used in the calculations is calculated byconsidering the retrospective effects of share distributions.i. Subsequent EventsSubsequent events cover the events between the balance sheet date and the issuance of the financial statements,even if they are occurred subsequent to the disclosures made on profit or other selected financial information.The Company adjusts its financial statements in the occurrence of any subsequent events.j. Provisions, Contingent Liabilities and AssetsProvisions are recognized when the Company has a present obligation as a result of a past event, and it isprobable that the Company will be required to settle that obligation, and a reliable estimate can be made of theamount of the obligation.The amount recognized as provision is the best estimate of the consideration required to settle the presentobligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation.If provision is measured using the cash flows estimated to settle the present obligation, its carrying amount will beequal to the present value of such cash flows.When some or all of the economic benefits required to settle a provision are expected to be recovered from athird party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received andthe amount of the receivable can be measured reliably.k. Change in Accounting Policies, Accounting Estimates and ErrorsChanges in accounting policies or accounting errors are applied retrospectively and prior year financialstatements are adjusted accordingly. If estimated changes in accounting policies are only for one period, changesare applied on the current year but if estimated changes are for the following periods, changes are applied bothon the current and following years prospectively.l. Taxation and deferred taxTaxation and deferred tax are explained in Note 2.18.2.1.2 Other related accounting policies for the understanding of financial statementsAll accounting policies are explained in Note 2.1.1.2.1.3. Functional currencyThe Company’s financial statements are presented in the currency of the primary economic environment in whichthe Company operates (its functional currency). The results and financial position of the Company are expressedin Turkish Lira, which is the functional and presentation currency of the Company.2.1.4. Rounding degree used in the financial statementsAll the balances presented in the financial statements are expressed in full in Turkish Lira (TL).102Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Standards and Interpretations that are effective in 2009 with no impact on the 2009 financial statementsThe following new and revised Standards and Interpretations have also been adopted in these financialstatements. Their adoption has not had any significant impact on the amounts reported in these financialstatements but may impact the accounting for future transactions or arrangements.Amendments to IFRS 1 First-time Adoption The amendments deal with the measurement of the cost ofof International Financial Reporting investments in subsidiaries, jointly controlled entities and associatesStandards and IAS 27 Consolidated and when adopting IFRSs for the first time and with the recognition ofSeparate Financial Statements – Cost of an dividend income from subsidiaries in a parent’s separate financialInvestment in a Subsidiary, Jointly statements.Controlled Entity or AssociateAmendments to IFRS 2 Share-based The amendments clarify the definition of vesting conditions for thePayment - Vesting Conditions and purposes of IFRS 2, introduce the concept of ‘non-vestingCancellations’conditions, and clarify the accounting treatment for cancellations.IAS 23 (as revised in 2007) Borrowing Costs The principal change to the Standard was to eliminate the optionto expense all borrowing costs when incurred. This change has hadno impact on these financial statements because it has always beenthe Group’s accounting policy to capitalize borrowing costs incurredon qualifying assets.IAS 32 ‘Financial Instruments: Presentation’ IAS 32 standard in the changes made, certain criteria are metand IAS 1 ‘Presentation of Financial in accordance with certain marketable financial instruments andStatements - Financial Instruments for sale business net assets liquidated only in a proportional distributionin liquidation status and Liabilities’ in accordance with any other party to give you must bring theChange in standards.intermediaries (or intermediaries elements) as resources andclassification facilities by providing debt/equity classification for thecriteria has led to the change.Amendments to IAS 39 FinancialThe amendments provide clarification on two aspects of hedgeInstruments: Recognition andaccounting: identifying inflation as a hedged risk or portion, andMeasurement – Eligible Hedged Items hedging with options.Embedded Derivatives (Amendments to The amendments clarify the accounting for embedded derivatives inIFRIC 9 and IAS 39)the case of a reclassification of a financial asset out of the ‘fair valuethrough profit or loss’ category as permitted by the October 2008amendments to IAS 39 Financial Instruments: Recognition andMeasurement (see above).104Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).IFRIC 15 Agreements for the Construction The Interpretation addresses how entities should determine whetherof Real Estatean agreement for the construction of real estate is within the scopeof IAS 11 Construction Contracts or IAS 18 Revenue and whenrevenue from the construction of real estate should be recognized.IFRIC 16 Hedges of a Net Investment in The Interpretation provides guidance on the detailed requirementsa Foreign Operationfor net investment hedging for certain hedge accountingdesignations.IFRIC 18 Transfers of Assets fromThe Interpretation addresses the accounting by recipients forCustomers (adopted in advance of effective transfers of property, plant and equipment from ‘customers’ anddate of transfers of assets from customers concludes that when the item of property, plant and equipmentreceived on or after 1 July 2009)transferred meets the definition of an asset from the perspective ofthe recipient, the recipient should recognize the asset at its fairvalue on the date of the transfer, with the credit recognized asrevenue in accordance with IAS 18 Revenue.Improvements to IFRSs (2008)In addition to the changes affecting amounts reported in thefinancial statements described above, the Improvements haveled to a number of changes in the detail of the Company’saccounting policies – some of which are changes in terminologyonly, and some of which are substantive but have had no materialeffect on amounts reported. The majority of these amendments areeffective from 1 January 2009.Standards and Interpretations that are issued but not yet effective in 2009 and have not been early adoptedIFRS 3 (as revised in 2008) Business CombinationsIFRS 3(2008) is effective for business combinations where the acquisition date is on or after the beginning of thefirst annual period beginning on or after 1 July 2009. The main impact of the adoption will be as follows:a) to allow a choice on a transaction-by-transaction basis for the measurement of non-controlling interests(previously referred to as ‘minority’ interests) either at fair value or at the non-controlling interests’ share of the fairvalue of the identifiable net assets of the acquire.b) to change the recognition and subsequent accounting requirements for contingent consideration.c) to require that acquisition-related costs be accounted for separately from the business combination, generallyleading to those costs being recognized as an expense in profit or loss as incurred.The company will apply IFRS 3 (revised) prospectively to all business combinations from 1 January 2010.Anadolu Sigorta Annual Report 2009 105

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).IFRS 9 Financial Instruments: Classification and MeasurementIn November 2009, the first part of IFRS 9 relating to the classification and measurement of financial assets wasissued. IFRS 9 will ultimately replace IAS 39 Financial Instruments: Recognition and Measurement. The standardrequires an entity to classify its financial assets on the basis of the entity’s business model for managing thefinancial assets and the contractual cash flow characteristics of the financial asset, and subsequently measurethe financial assets as either at amortized cost or at fair value. The new standard is mandatory for annual periodsbeginning on or after 1 January 2013.The Company has not had an opportunity to consider the potential impact of the adoption of this standard.IAS 24(Revised 2009) Related Party DisclosuresIn November 2009, IAS 24 Related Party Disclosures was revised. The revision to the standard providesgovernment-related entities with a partial exemption from the disclosure requirements of IAS 24. The revisedstandard is mandatory for annual periods beginning on or after 1 January 2011. The Company has not yet had anopportunity to consider the potential impact of the adoption of this revised standard.IAS 27 (as revised in 2008) Consolidated and Separate Financial StatementsIAS 27 (revised) is effective for annual periods beginning on or after 1 July 2009. The revisions to IAS 27principally affect the accounting for transactions or events that result in a change in the Company’s interests in itssubsidiaries.The revised standard requires that ownership decreases or increases that do not result in change in control to berecorded in equity.Amendments related to Annual Improvements to IFRS (2009)As part of the Annual Improvement project, in addition to the amendments mentioned above, other amendmentswere made to various standards and interpretations. These amendments are effective for annual periodsbeginning on or after 1 January 2010. The Company has not yet had an opportunity to consider the potentialimpact of the adoption of these amendments.2.2 ConsolidationAccording to the Decree on “Financial Reporting of Insurance and Reinsurance Companies and Pension Funds”,published in the Official Gazette No: 26852 on 14 July 2007; the accompanying financial statements comprise theunconsolidated financial statements.2.3 Segment ReportingThe Company has no different operations or geographical segments other than its main line of activity; therefore,no segment reporting is required.2.4 Reserves in Foreign CurrenciesFor the purpose of the financial statements, the results and financial position of each entity are expressed in TL,which is the functional currency of the Company, and the presentation currency for the financial statements.In preparing the financial statements of the Company, transactions in currencies other than TL (foreign currencies)are recognized at exchange rates prevailing at the transaction date. At each balance sheet date, monetary itemsdenominated in foreign currencies are retranslated to Turkish Lira at the rates prevailing on the balance sheetdate. Gains and losses arising from exchange rate transactions are recognized in the income statement. Nonmonetaryitems that are measured in terms of historical cost in a foreign currency are not retranslated.Exchange differences, except for those detailed below, and are recognized in profit and loss in the period inwhich they are incurred:• Exchange differences treated as restatements of interest costs on liabilities associated with assets in foreigncurrencies held for the construction of a future use which are included in the cost of such assets,• Exchange differences treated as restatements of interest costs on liabilities associated with assets in foreigncurrencies held for the construction of a future use which are included in the cost of such assets,106Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).2.7 Intangible AssetsGoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the netidentifiable assets of the acquired subsidiary/associate at the date of the acquisition. Goodwill on acquisitionsof associates is included in ‘investments in associates’ and is tested for impairment as part of the overallbalance. Separately recognized goodwill is tested annually for impairment and carried at cost less accumulatedimpairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entityinclude the carrying amount of goodwill relating to the entity disposed of.Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocations made tothose cash-generating units or groups of cash-generating units that are expected to benefit from the businesscombination in which the goodwill arises.The Company has acquired the health portfolio of Anadolu Hayat Emeklilik A.Ş. at 31 August 2004 with all of itsrights and liabilities. The value at acquisition of the portfolio amounting to TL 16.250.000 is capitalized as goodwillby the Company.2.8 Financial AssetsInvestments are recognized and derecognized on a trade date where the purchase or sale of an investmentsunder a contract whose terms require delivery of the investment within the timeframe established by the marketconcerned, and are initially measured at fair value, net of transaction costs except for those financial assetsclassified as at fair value through profit or loss, which are initially measured at fair value.Financial assets are classified into the following specified categories: financial assets as “at fair value throughprofit or loss”, “held-to-maturity investments”, “available-for-sale financial assets” and “loans and receivables”.Effective interest methodEffective interest method is a method of calculating the amortized cost of a financial asset and of allocatinginterest income over the relevant period. The effective interest rate is the rate that exactly discounts estimatedfuture cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.Financial assets at fair value through profit and loss (Held-for-trading financial assets)Income related to the financial assets except for the financial assets at fair value through profit and loss iscalculated by using the effective interest method.Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset can beclassified as financial asset at fair value through profit and loss, if it is acquired principally for the purpose ofselling in the short-term. Derivatives are also classified as held for trading unless they are designated as hedginginstruments. Financial assets at fair value through profit and loss are classified as current assets.Held-to-maturity investmentsInvestments in debt securities with fixed or determinable payments and fixed maturity dates that the Companyhas the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-tomaturityinvestments are recorded at amortized cost using the effective interest method less impairment, withrevenue recognized on an effective yield basis.108Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Available-for-sale financial assetsInvestments other than held-to-maturity debt securities are classified as either investments held for tradingor as available-for-sale, and are measured at subsequent reporting dates at fair value except available-forsaleinvestments that do not have quoted prices in an active market and their fair values cannot be reliablymeasured are stated at cost and restated to the equivalent purchasing power. Where securities are held fortrading purposes, gains and losses arising from changes in fair value are included in profit or loss for the period.For available-for-sale investments, gains and losses arising from changes in fair value are recognized directly inequity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or losspreviously recognized in equity is included in the profit or loss for the period. Impairment losses recognized inprofit or loss for equity investments classified as available-for-sale are not subsequently reversed through profitor loss. Impairment losses recognized in profit or loss for debt instruments classified as available-for-sale aresubsequently reversed if an increase in the fair value of the instrument can be objectively related to an eventoccurring after the recognition of the impairment loss.Loans and receivablesTrade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted inan active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortized costusing the effective interest method, less any impairmentAssociatesAn associate is an entity that retains at the shares of voting rights or has significant power over another entity.The difference between carrying value and fair value (to the extent that it is measured reliably) of such assets arerecognized in shareholders’ equity and assets that have fair value are carried at fair value while the other assetsare carried at book value.2.9 Impairment of AssetsImpairment of non-financial assetsAssets that have an indefinite useful life, for example goodwill, are not subject to amortization and are testedannually for impairment. Assets that are subject to amortization are reviewed for impairment whenever eventsor changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss isrecognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverableamount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessingimpairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cashgeneratingunits). Non-financial assets other than goodwill that suffered impairment are reviewed for possiblereversal of the impairment at each reporting date.The Company assesses its financial assets, other than those at FVTPL, at each balance sheet date whether thereis any objective evidence that a financial asset or group of financial assets classified as held-to-maturity, availablefor-saleor loans and receivables is impaired. A financial asset or portfolio of financial assets is impaired and animpairment loss incurred if there is objective evidence that an event or events since initial recognition of theasset have adversely affected the amount or timing of future cash flows from the asset. For loans and receivables,the amount of the impairment is the difference between the asset’s carrying amount and the present value ofestimated future cash flows, discounted at the original effective interest rate.Anadolu Sigorta Annual Report 2009 109

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).The carrying amount of the financial asset is reduced by the impairment loss directly for all financial except fortrade receivables where the carrying amount is reduced through the use of an allowance account. When a tradereceivable is uncollectible, it is written off against the allowance account. Changes in the carrying amount of theallowance account are recognized in profit or loss.With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairmentloss decreases and the decrease can be related objectively to an event occurring after the impairment wasrecognized, the previously recognized impairment loss is reversed through profit or loss to the extent that thecarrying amount of the investment at the date the impairment is reversed does not exceed what the amortizedcost would have been had the impairment not been recognized.For AFS equity securities, any increase in fair value subsequent to an impairment loss is recognized directly inequity.2.10 Derivative Financial InstrumentsDerivatives are initially recognized at fair value at the date a derivative contract is entered into and aresubsequently remeasured to their fair value at the end of each reporting period.2.11 OffsettingFinancial assets and liabilities are offset and the net amount reported in the consolidated balance sheet whenthere is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a netbasis, or realize the asset and settle the liability simultaneously.2.12 Cash and Cash EquivalentsCash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquidinvestments which their maturities are three months or less from date of acquisition and that are readilyconvertible to a known amount of cash and are subject to an insignificant risk of changes in value.2.13 Share CapitalAs of 31 December 2009, the Company’s nominal capital is TL425.000.000. Share capital of the Company iscomposed of Group A and Group B shares. TL 1,50 of Group A share is represented by 150 of equity shareshaving a nominal amount of TL 0,01 each. TL 424.999.998,5 of Group B share is represented by 42.499.999.850shares having a nominal amount of TL 0,01 each. In accordance with the Article “Voting rights” specified in theArticles of Association of the Company, Group A shares have 10 voting rights whereas Group B shares have 1voting right.31 December 2009 31 December 2008Participation Participation Participation ParticipationAmount TL rate% Amount TL rate%Türkiye İş Bankası A.Ş. 151.002.594 35,53 124.355.077 35,53Millî Reasürans T.A.Ş. 92.564.995 21,78 76.229.997 21,78Other 181.432.411 42,69 149.414.926 42,69425.000.000 100,00 350.000.000 100,00As of 31 December 2009, the Company’s registered capital is TL 500.000.000 (31 December 2008: TL 500.000.000)110Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).In the Board of Directors meeting No: 6060 held on 6 March 2009, it has been resolved that, paid-in capital of theCompany will be increased from TL 350.000.000 to TL 425.000.000 by TL 75.000.000. In respect of the resolution ofthe Board of Directors, TL 40.000.000 of this increase will be incorporated from the profit of the year 2008 and TL16.370.267 from extraordinary reserves, TL 538.388 from profit on sale to be transferred to capital, TL 18.091.345from previous year’s profit. The increase in paid-in capital was recorded by Capital Market Board on 29 June 2009.(31 December 2008: TL 275.000.000 paid capital which is increased by TL 75.000.000 amounted to TL 350.000.000.TL 23.000.000 of this increase will be incorporated from the profit of the previous year 2007, TL 51.460.668 fromextraordinary reserves and TL 539.332 from profit on sale to be transferred to capital).Profit reserves consist of legal reserves, statutory reserves, extraordinary reserves and revaluation of financialassets. The legal reserves are recorded according to the clauses of Law and statutory reserves are recordedaccording to the clauses of the main contract. Extraordinary reserves are the reserves that are recorded with theresolution of General Assembly, in order to add to capital, to distribute as dividend and for similar purposes. Therevaluation of financial assets account consists of the difference between the fair value and amortized cost of theavailable for sale financial assets and the associates.2.14 Insurance and Investment Contracts - ClassificationThe Company issues insurance contracts that provide insurance risk transfer.Insurance Contracts:Insurance contracts are contracts in which one part accepts a significant insurance risk and pays compensation(insurer) to the other part (insure) when any uncertain case affects the insure. The Company makes reinsuranceagreements in which the Company (ceding company) is compensated by the insurer (reinsurer company) for oneor more claims. Insurance contracts entered into by the Company under which the contract holder is anotherinsurer (reinsurance) are included with insurance contracts.Insurance contracts are accounted when the insurance risk is transferred, and classified as an insurance contract asof the maturity date and/or amortization of the all contractual rights and liabilities.Investment Contracts:Investment contracts are those that transfer financial risks, excluding significant insurance risks. The Company hasno investment contracts.2.15 Insurance and Investment Contracts With Discretionary Participation FeaturesThe Company neither has investment contracts nor investment contracts with discretionary participation feature.2.16 Investment Contracts Without Discretionary Participation FeaturesThe Company has no investment contracts.2.17 BorrowingsThe Company has no short-term or long-term borrowings.2.18 Income TaxIncome tax expense represents the sum of the current tax payable and deferred tax.Current taxThe current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported inthe income statement because it excludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. The Company’s liability for current tax iscalculated using tax rates that have been enacted or substantively enacted by the balance sheet date.Anadolu Sigorta Annual Report 2009 111

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Deferred taxDeferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases which is used in the computation of taxable profit, and is accountedfor using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxabletemporary differences and deferred tax assets are recognized for all deductible temporary differences tothe extent that it is probable that taxable profits will be available against which those deductible temporarydifferences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises fromgoodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in atransaction that affects neither the taxable profit nor the accounting profit.Deferred tax liabilities are recognized for taxable temporary differences associated with investments in affiliatesand associates, and interests in joint ventures, except where the Group is able to control the reversal of thetemporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.Deferred tax assets arising from deductible temporary differences associated with such investments and interestsare only recognized to the extent that it is probable that there will be sufficient taxable profits against which toutilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extentthat it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to berecovered.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period inwhich the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted orsubstantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflectsthe tax consequences that would follow from the manner in which the Company expects, at the reporting date, torecover or settle the carrying amount of its assets and liabilities.Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when they relate to income taxes levied by the same taxation authority and theCompany intends to settle its current tax assets and liabilities on a net basis.Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate toitems credited or debited directly to equity, in which case the tax is also recognized directly in equity, or wherethey arise from the initial accounting for a business combination. In the case of a business combination, the taxeffect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the netfair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.2.19 Employee BenefitsUnder the Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarilyleaving the Group. Such payments are considered as being part of defined retirement benefit plan in accordancewith TAS 19 “Employee Benefits”.The retirement benefit obligation recognized in the balance sheet represents the present value of the definedbenefit obligation as adjusted for unrecognized actuarial gains and losses.2.20 ProvisionsProvisions are explained in Note 2.1.1 j.112Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).2.21 Accounting of IncomePremium and Commission IncomePremium income represents premiums on policies written during the year. Unearned premiums, set aside toprovide for the period of risk extending beyond the end of the financial year, are determined from premiumswritten during the year on a daily basis.Commissions received in the current period but relate to subsequent financial periods in return for the premiumsceded to the reinsurance companies are accounted as deferred commission income.Interest income and expenseInterest income and expense are accounted in the income statement in the related period on an accrual basis.Interest income includes income gains from the coupons of the fixed return investment instruments and valuationof discounted government bonds based on internal rate of return method.Dividend incomeDividend income from the equity share investments are recognized when the shareholder has the right to receivedividends.2.22 LeasingLeasing – the Company as lesseeLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks andrewards of ownership to the lessee. All other leases are classified as operating leases.Assets held under finance leases are recognized as assets of the Company at their fair value at the inception ofthe lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to thelesser is included in the balance sheet as a finance lease obligation. Lease payments are apportioned betweenfinance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remainingbalance of the liability. Finance charges are charged to profit or loss, unless they are directly attributableto qualifying assets, in which case they are capitalized in accordance with the Company’s general policy onborrowing costs.Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of therelevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spreadon a straight-line basis over the lease term.2.23 Profit Share DistributionBased on the guidelines and principals issued by the Capital Markets Board (the Board) dated 27 January 2010for the distribution of dividends from the profit generated from operating activities in 2009, concerning publicentities, the shares of which are quoted in public equity markets, it has been agreed upon not to set a mandatoryminimum dividend payment quota (31 December 2008: 20%). Furthermore, it has been agreed upon to let publicentities perform dividend distributions as stated within the “Communique Concerning Principal Matters onDividend Advances Distributed by Public Entities Under the Regulation of the Capital Markets Law” (Serial: IV,No: 27), as stated within the principal agreement of the companies and as stated within the policies on dividenddistribution that have been shared with the public.Additionally, as stated within the aforementioned Board Decision, for entities required to prepare consolidatedfinancial statements, it has been agreed upon to require the net distributed profit calculations to be performedon the net profit for the period as stated on the consolidated financial statements, so long that the distributioncan be funded through statutory resources.The Company has no announced profit share distribution after the balance sheet date.Anadolu Sigorta Annual Report 2009 113

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).3. Significant Accounting Estimates and RequirementsThe Company has no significant accounting estimates or requirements.4. Insurance and Financial Risk Management4.1 Insurance RiskInsurance risk is defined as coverage for exposures that exhibit a possibility of financial loss due to applyinginappropriate and insufficient insurance techniques. Main reasons of insurance risk exposure result from therisk selection and inaccurate calculation of insurance coverage, policy terms and fee or inaccurate calculationof coverage portion kept within the company and coverage portion transfers to policyholders and transferconditions.4.1.1 Objective of managing risks arising from insurance contracts and policies used to minimize such risksPotential risks that may be exposed in transactions are managed based on the requirements set out in theCompany’s “Risk Management Policies” issued by the approval of the Board of Directors. The main objectiveof risk management policies is to determine the risk measurement, assessment, and control proceduresand maintain consistency between the Company’s asset quality and limitations allowed by the insurancestandards together with the Company’s risk tolerance of the accepted risk level assumed in return for a specificconsideration. In this respect, instruments that are related to risk transfer, such as; insurance risk selection, riskquality follow-up by providing accurate and complete information, effective monitoring of level of claims by usingrisk portfolio claim frequency, treaties, facultative reinsurance contracts and coinsurance agreements, and riskmanagement instruments, such as; risk limitations, are used in achieving the related objective.Risk tolerance is determined by the Company’s Board of Directors by considering the Company’s long-termstrategies, equity resources, potential returns and economical expectations, and it is presented by risk limitations.Authorization limitations during policy issuing include authorizations for risk acceptances granted based ongeographical regions in relation to unacceptable special risks or pre-approved acceptable special risks, insurancecoverage to agencies, district offices, technical offices, assistant general managers and top management inthe policy issuance period and authorizations for claim payment granted to district offices, claim managementadministration, automobile claims administration and Claim Committee established by the managing directorand assistant managing director in the claim payment period.Whatsoever, risk acceptance is based on technical income expectations under the precautionary principle. Indetermining insurance coverage, policy terms and fee, these expectations are based accordingly.It is essential that all the authorized personnel in charge of executing policy issuance transactions, which is theinitial phase of insurance process, should ensure to gather or provide all the accurate and complete informationto issue policies in order to obtain evidence on the acceptable risks that the Company can tolerate from therelated insurance transactions. On the other hand, decision to be made on risk acceptance will be possible bytransferring the coverage to the reinsurers and/or coinsurers and considering the terms of the insurance policy.In order to avoid destructive losses over company’s financial structure, company transfers the exceeding portionof risks assumed over the Company’s risk tolerance and equity resources through treaties, facultative reinsurancecontracts and coinsurance agreements to reinsurance and coinsurance companies. Insurance coverage and policyterms of reinsurance are determined by assessing the nature of each insurance branch.114Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).4.1.1.1 Sensitivity to insurance riskInsurance risks do not generally have significant unrecoverable losses in the course of ordinary transactions,except for risks associated with earthquake and other catastrophic risks. Therefore, there is a high sensitivity toearthquake and catastrophic risks.The case of potential claims’ arising from earthquake and other catastrophic risks exceeding the maximum limitof the excess of loss agreements, such risks are treated as the primary insurance risks and are managed basedon the precautionary principle. Maximum limit of excess of loss agreements is determined based on the worstcase scenario on the possibility of an earthquake that İstanbul might be exposed to in terms of its severity andany potential losses incurred in accordance with the generally accepted international earthquake models. In 2009,maximum limit of excess of loss agreement is calculated as EUR 400 million including the retention amount ofEUR 5 million. (2008: maximum limit of excess of loss agreement is calculated as EUR 400 million including theretention amount of EUR 5 million).4.1.1.2 Insurance risk concentrationsThe Company’s gross and net insurance risk concentrations (after reinsurance) in terms of insurance branches aresummarized as below:Total Claims Liability (*) Gross Total Reinsurance Share Net Total31 December 2009 Claims Liability of Total Claims Liability Claims LiabilityAccident 5.837.514 (1.594.707) 4.242.807Health 25.084.634 (1.190.636) 23.893.998Motor vehicles 58.590.495 (3.232.968) 55.357.527Air crafts 2.443.593 (727.763) 1.715.830Water crafts 15.568.284 (10.897.032) 4.671.252Marine 9.508.637 (880.426) 8.628.211Fire and natural disasters 82.770.332 (46.948.351) 35.821.981General losses 45.603.868 (30.799.349) 14.804.519Motor vehicles liability 105.529.621 (4.714.819) 100.814.802Aircrafts liability 46.176 - 46.176General liability 36.316.561 (4.998.812) 31.317.749Financial losses 516.720 (408.971) 107.749Legal protection 117.652 - 117.652Total 387.934.087 (106.393.834) 281.540.253(*) Total claims liability includes outstanding claims reserve, incurred but not reported claims, additional reservesfrom the actuarial chain ladder method, subrogation reduction and outstanding claims reserve adequacydifference.Anadolu Sigorta Annual Report 2009 115

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Total Claims Liability (*) Gross Total Reinsurance Share Net Total31 December 2008 Claims Liability of Total Claims Liability Claims LiabilityAccident 2.978.002 (423.840) 2.554.162Health 17.358.304 (636.027) 16.722.277Motor vehicles 71.935.659 (3.446.490) 68.489.169Air crafts 617.105 - 617.105Water crafts 6.543.755 (4.433.401) 2.110.354Marine 9.339.500 (564.223) 8.775.277Fire and natural disasters 54.654.269 (32.450.406) 22.203.863General losses 47.552.193 (31.732.616) 15.819.577Motor vehicles liability 89.515.469 (2.800.127) 86.715.342Aircrafts liability 136.752 - 136.752General liability 31.735.664 (6.947.355) 24.788.309Financial losses 1.139.086 (31.206) 1.107.880Legal protection 134.554 - 134.554Total 333.640.312 (83.465.691) 250.174.621(*) Total claims liability includes outstanding claims reserve, incurred but not reported claims, additional reservesfrom the actuarial chain ladder method, subrogation reduction and outstanding claims reserve adequacydifference.Gross and net insurance risk concentrations of the insurance contracts (after reinsurance) based on geographicalregions are summarized as below:Total Claims Liability (*) Gross Total Reinsurance Share Net Total31 December 2009 Claims Liability of Total Claims Liability Claims LiabilityTurkey 291.871.913 (92.471.931) 199.399.982Europe 5.745.238 (814.818) 4.930.420America 11.831 - 11.831Africa 1.054.104 (673.654) 380.450Asia 273.796 (106.100) 167.696Total 298.956.882 (94.066.503) 204.890.379Total Claims Liability Gross Total Reinsurance Share Net Total31 December 2009 Claims Liability of Total Claims Liability Claims LiabilityMediterranean Region 18.439.912 (4.024.533) 14.415.379East Anatolian Region 8.534.277 (2.086.673) 6.447.604Aegean Region 22.244.301 (2.944.076) 19.300.225South East Anatolian Region 8.122.786 (2.795.751) 5.327.035Middle Anatolian Region 24.614.636 (2.543.345) 22.071.291Black Sea Region 31.573.898 (20.786.614) 10.787.284Marmara Region 178.342.103 (57.290.939) 121.051.164Total 291.871.913 (92.471.931) 199.399.982(*) Total claims liability includes the actual estimated compensation amounts. Net incurred but not reportedclaims amounting to TL (72.774.792), additions of net actuarial chain ladder method calculations amounting toTL (113.046), net outstanding claim reserve adequacy difference amounting to TL (3.901.275), net subrogationreduction amounting to TL 14.028.224, and outstanding claims of treaty activities which could not be distributedto geographical regions amounting to TL (13.888.985) are excluded from the calculation.116Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Gross and net (reinsurance deducted) insurance risk concentrations of the company based on the type of currencyare summarized as below:Total Claims Liability (*) Gross Total Reinsurance Share Net Total31 December 2009 Claims Liability of Total Claims Liability Claims LiabilityTurkish Lira 213.867.433 (67.293.188) 146.574.245U.S. Dollar 68.888.500 (21.675.702) 47.212.798Euro 9.371.970 (2.948.882) 6.423.088CHF 29.701 (9.345) 20.356Great Britain Pound 6.650.502 (2.092.574) 4.557.928Japanese Yen 144.241 (45.385) 98.856Swedish Krona 4.535 (1.427) 3.108Total 298.956.882 (94.066.503) 204.890.379Total Claims Liability (**) Gross Total Reinsurance Share Net Total31 December 2008 Claims Liability of Total Claims Liability Claims LiabilityTurkish Lira 197.999.838 (60.410.433) 137.589.405U.S. Dollar 68.732.519 (20.970.529) 47.761.990Euro 9.397.766 (2.867.291) 6.530.475Great Britain Pound 593.926 (181.209) 412.717Japanese Yen 590.357 (180.120) 410.237Swedish Krona 391 (119) 272Total 277.314.797 (84.609.701) 192.705.096(*) Total claims liability includes the actual estimated compensation amounts. Net incurred but not reportedclaims amounting to TL (72.774.792), additions of net actuarial chain ladder method calculations amounting toTL (113.046), net outstanding claim reserve adequacy difference amounting to TL (3.901.275), net subrogationreduction amounting to TL 14.028.224, and outstanding claims of treaty activities which could not be distributedto geographical regions amounting to TL (13.888.985) are excluded from the calculation.(**) Total claims liability includes the actual estimated compensation amounts. Net incurred but not reportedclaims amounting to TL (53.567.224), additions of net Actuarial Chain Ladder Method calculations amounting toTL (1.168.113), net subrogation reduction amounting to TL 19.675.595, net outstanding claim reserve adequacydifference amounting to TL (6.057.043) and outstanding claims of treaty activities which could not distributed togeographical regions amounting to TL (16.352.740) are excluded from the calculation.The insurance guarantees given for insurance branches of the entity is explained in note 17.3.4.1.1.3 Comparison of incurred claims with past estimationsOutstanding claims reserve adequacy table in terms of branches is presented below. The table shows outstandingclaims reserve adequacy rate which is the proportion of total outstanding claims reserve that the Companyprovided in the last 5 years to total compensation amount actually paid including all expenses related to theclaims. When the arithmetical average of the last 5 years of the separately calculated outstanding claims reserveadequacy rate, excluding the current financial year, is below 95%, the amount of adequacy rate difference iscalculated by multiplying the difference between the related rate and 95% by the current year’s outstandingclaims reserve. The final outstanding claims amount of the current year is calculated by adding adequacy ratedifference for each branch separately.118Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).As of 31 December 2009, outstanding claims reserve adequacy table is presented as below:31 December 2009 31 December 2008Incurred butIncurred butnot reportednot reportedAccrual claim and Accrual claim andRate compensation Rate compensationOutstanding claims adequacy rates % amount % % amount %Accident 158 103 158 104Illness-Health 100 85 100 82Motor vehicles 146 59 134 90Air crafts 119 52 119 39Water crafts 170 283 166 427Marine 223 90 207 97Fire and natural disasters 144 35 140 92General losses 160 101 158 137Motor vehicles liability 125 102 121 85Aircrafts liability - 875 107.723 825General liability 234 398 189 66Financial losses 105 - 105 -Legal protection 652 119 773 55The claims development table is assessed based on the claims paid in accordance with the Technical ReservesRegulations. As of 31 December 2009, the Company’s claims development table prepared based on the claims inretention is summarized below:31 December 2009Paid in after Paid in after Paid in after Paid in after Paid in after1 period 2 period 3 period 4 period 5 periodPaid in following following following following followingthe incurred the incurred the incurred the incurred the incurred the incurred TotalPeriod of Claims Incurred period period period period period period Payment1 January 2004 -31 December 2004 242.623.123 44.102.525 (172.764) (258.625) 1.235.340 642.494 288.172.0931 January 2005 -31 December 2005 355.811.827 53.393.739 (447.592) 756.025 2.322.792 - 411.836.7911 January 2006 -31 December 2006 450.947.171 74.180.660 1.731.403 3.426.601 - - 530.285.8351 January 2007 -31 December 2007 514.276.877 94.151.869 5.444.004 - - - 613.872.7501 January 2008 -31 December 2008 496.311.631 108.428.102 - - - - 604.739.7331 January 2009 -31 December 2009 582.490.195 - - - - - 582.490.195Total Payment 2.642.460.824 374.256.895 6.555.051 3.924.001 3.558.132 642.494 3.031.397.39731 December 2008Paid in after Paid in after Paid in after Paid in after Paid in after1 period 2 period 3 period 4 period 5 periodPaid in following following following following followingthe incurred the incurred the incurred the incurred the incurred the incurred TotalPeriod of Claims Incurred period period period period period period Payment1 January 2003 - 31 December 2003 180.429.019 32.779.511 (445.191) (53.569) (498.441) 222.258 212.433.5871 January 2004 - 31 December 2004 243.398.163 44.047.662 (209.316) (258.625) 1.235.340 288.213.2241 January 2005 - 31 December 2005 357.393.586 53.223.053 (470.753) 755.309 410.901.1951 January 2006 - 31 December 2006 452.657.156 74.155.181 1.721.895 528.534.2321 January 2007 - 31 December 2007 515.744.779 94.002.390 609.747.1691 January 2008 - 31 December 2008 496.795.435 496.795.435Total Payment 2.246.418.138 298.207.797 596.635 443.115 736.899 222.258 2.546.624.842Anadolu Sigorta Annual Report 2009 119

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).As of the balance sheet date, an additional provision amounting to TL 113.046 has been booked based onthe actuarial chain ladder method (31 December 2008: Upon the Technical Reserves Regulations, insurancecompanies should consider 80% of the outstanding claim amount calculated based on the actuarial chain methodin their 2008 calculations; therefore, the Company has provided net TL 1.168.113 of additional reserve for theaircraft vehicle liability, financial loss and legal protection branches as the Company considers 100% of theoutstanding claim amount calculated based on the actuarial chain method as of the balance sheet date).4.1.1.4 Effects of the changes in assumptions used in the measurement of insurance assets and liabilities showingthe effect of each change separately that has significant effect on financial statementsNone.4.2 Financial Risk4.2.1 Capital structure and managementThe Company’s capital structure consists of equity items which include issued shares, reserves and retainedearnings, respectively. While the Company maintains to continue its capital management on a going concernbasis, it expects to boost its earnings by optimizing its technical reserve and equity balance.The Company’s capital structure is reviewed by the Board of Directors annually in order to determine the amountof dividends paid to shareholders and the value of shares to be issued.4.2.2 Capital requirementIn accordance with the Decree “Measurement and Assessment of Capital Adequacy of Insurance and ReinsuranceCompanies and Pension Funds” published in the Official Gazette No: 26761 on 19 January 2008, all insurance andreinsurance companies and pension funds should provide adequate equity for their current liabilities and possiblelosses that may arise from their potential risks. Based on the requirements of the above-mentioned Decree, theCompany prepares capital adequacy tables within the format and content requirements of the Undersecretariatof the Treasury’s twice a year for June and December period end. The Company’s recent capital adequacy tableprepared as of the report date for December 2009 is summarized below. As of 31 December 2009, the Company’scurrent equity exceeds its capital requirement calculated for the same period by TL 398.205.713 (31 December2008: TL 238.808.816)31 December 2009 31 December 20081. According to premium base 169.214.565 155.064.4502. According to claim base 155.545.739 141.456.865Required capital based on the first method 169.214.565 155.064.4501. Asset risk 170.631.763 155.048.9772. Reinsurance risk 22.263.796 10.573.2553. Excessive premium increase risk 6.225.545 -4. Outstanding claims risk 20.206.383 19.328.9875. Underwriting risk 146.450.813 135.457.3186. Exchange rate risk 2.503.022 4.218.269Required capital based on the second method 368.281.322 324.626.806Required capital amount for the Company 368.281.322 324.626.806Capital (*) 816.487.031 613.435.618Amount of associates deducted from capital 49.999.996 49.999.996Capital adequacy result 398.205.713 238.808.816(*) As the capital adequacy table requirement, the equalization reserve amount of TL 10.100.102 (31 December2008: TL 5.444.952) has been added to capital amount.120Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).4.2.3 Financial risk factorsThe Company is exposed to market risk (exchange rate risk, interest rate risk, and equity shares price risk), creditrisk, liquidity risk and operational risk due to its assets and liabilities at a specific time. These risks are managed,as part of the risk management policies, through considering the quality of the Company’s receivables byproviding detailed information about the debtors and their operations, using risk minimizing factors by receivingguarantees for receivables, measuring periodically market risks arising from the Company’s marketable securityportfolio, reliability testing of measurement results, assessing and monitoring carefully all risk factors inherent tothe Company, and assessing and reporting different scenario trends. The Company’s risk exposure is graduallyreported to the Board of Directors through the independent review of Risk Management and Internal ControlDepartment.Credit RiskCredit risk is the risk that the debtor defaults on its obligations under the terms of the transaction. Riskmanagement under this group is maintained by considering the due receivables, doubtful receivables,guarantees received for receivables, technical performances of the debtors and related parties with deposit andpartnership relations.It is essential to identify and define credit risks on an early basis for the effective risk management. Therefore,information should be provided and shared timely with the respective departments. Factors that may have anadverse effect on the credit risk and create credit risks on the Company’s risk tolerance such as; disruption incollection rates of insurance intermediaries, decreases in production performance, violations in compliance withthe Company policies, other informative data, and any negative ratings or developments inquired by reinsurancecompanies and other counterparties are considered as indicators of credit risk.As of 31 December 2009, The Company has classified TL 65.129.434 (31 December 2008: TL 57.499.314) of itstrade receivables as doubtful receivables. TL 9.319.456 (31 December 2008: TL 8.382.883) of the related amountis under guarantee, whereas provision for doubtful receivable is provided for the total amount including theguaranteed portion based on the precautionary principle.31 December 2009 31 December 2008Total Guaranteed Total GuaranteedProvision for Doubtful Receivables Receivable Portion Receivable PortionAgency receivables under litigation 15.253.468 9.319.456 14.173.799 8.382.883Other receivables under litigation 344.599 - 349.180 -Subrogation receivables underlitigation and execution 49.531.367 - 42.976.335 -Total 65.129.434 9.319.456 57.499.314 8.382.883Movement table of provision for doubtful receivables is below:31 December 31 DecemberMovement table of provision for doubtful receivable 2009 2008Opening balance (57.499.314) (40.156.927)Charge for the period (*) (8.064.278) (17.755.538)Collections 284.196 413.151Write-off 149.962 -Closing balance (65.129.434) (57.499.314)(*) TL 8.064.278 of total doubtful receivable period charge includes TL 7.874.018, which is presented under theProvisions Account in the income statement, and the remaining amount, which is recognized as non-deductibleexpenses under the Other Expense and Losses account. (31 December 2008: TL 17.755.538 of total doubtfulreceivable period charge includes TL 13.665.702, which is presented under the Provisions Account in the incomestatement, and the remaining amount, which is recognized as non-deductible expenses under the Other Expenseand Losses account.)Company has TL 9.319.456 collateral for doubtful receivables (31 December 2008: TL 8.382.833).Anadolu Sigorta Annual Report 2009 121

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Aging table of due receivables as of 31 December 2009 is presented below. TL 9.952.052 of premium receivableprovision, which was provided in prior periods for the portion of uncollectible receivables overdue for two months(+61 days), is not compulsory to provide for the current year because the accounting of the related amount isout scoped from the Insurance Law No: 5684 effective on 14 June 2007 and the related amount’s accounting leftat discretion of the companies and has been classified under other long-term technical provisions based on theprecautionary principle (31 December 2008: TL 9.952.052).31 December 2009 31 December 20080-30 days 31.914.340 37.168.74231-60 days 11.631.111 13.614.71561-90 days 4.825.852 5.780.46290+ 23.859.763 16.150.422Due Receivables 72.231.066 72.714.341Not Due Receivables 244.717.660 270.988.356Total(*) 316.948.726 343.702.697(*) Except for TL 316.948.726 presented under receivables from insurance operations in the financial statements,this amount also includes TL 48.763.623 of untransferred amount collected by intermediaries and TL 43.068.439of subrogation – salvage receivables. (31 December 2008: Except for TL 343.702.697 presented under receivablesfrom insurance operations in the financial statements, this amount also includes TL 36.583.000 of untransferredamount collected by intermediaries and TL 30.257.486 of subrogation – salvage receivables.)The details of guarantees for undue and not due receivables of the Company are presented in the below table;Types of Guarantees 31 December 2009 31 December 2008Letters of guarantees 41.363.155 39.367.798Government bonds and equity shares 3.193.952 3.199.759Real estate pledges 75.075.287 72.194.511Blocked deposits 2.904.298 3.307.633Total 122.536.692 118.269.701Market riskMarket risk is defined as the risk exposed due to fluctuations in the financial markets and changes in interest,exchange rates, price changes in bills-bonds and equity shares in the Company’s financial position.Generally accepted international Value at Risk Method (“VAR”) is used in the calculation of market risk. Becausethe calculations include estimations for the following days, reliability of the estimations is reviewed on a dailybasis by comparing the actual figures. Under regular market conditions, the Company performs scenario analysissupporting the VAR method used in measuring inclines in the market prices of the Company’s marketable securityportfolio and reports the results gradually to the Board of Directors.As part of Risk Management Policies, VAR limits determined for Fund Management Unit Risk and limits relatedto the proportion of each financial asset group to total portfolio and shareholders’ equity are reviewed on a dailybasis and assessed by considering the market conditions.122Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).As of 31 December 2009, the Company’s total Value Subjected to Risk is TL 1.519.041 (31 December 2008: TL1.732.125) and presented based on the financial asset group in the below table:Value At Risk 31 December 2009 31 December 2008Total TL marketable securities 1.014.456 2.266.641TL marketable securities 1.014.456 2.266.641Repo and repurchase agreements - 4TL money marketEffect of portfolio diversity - (4)Total FC/TL transactions 184.555 1.061.566Foreign currency position 184.555 1.061.566Forward - -Effect of portfolio diversity - -Total equity shares 1.036.997 592.907Held-for-trading securities 1.389.388 760.317Effect of portfolio diversity (352.391) (167.410)Total precious metal - -Total effect of portfolio diversity (716.967) (2.188.989)Total 1.519.041 1.732.125Interest rate riskInterest rate risk represents the potential for losses in the value of interest sensitive assets or liabilities arising fromchanges in interest rates. Interest rate risk is managed through the diversification of marketable security portfolioas marketable securities with fixed and variable interest rates.Sensitivity to interest rateIf the Company’s government bonds classified as held-for-trading and held-to-maturity investment securitiesincrease by +1, +3, +5 and +10 points and other variables remain constant, negative changes that would occur inthe market value of the Company’s sensitive financial assets for interest rate and net profit and loss are presentedin the below table.31 December 2009Change in Interest Rates Change in Portfolio Value Change in Net Profit and Loss+1 point (2.721.575) (1.343.602)+3 point (7.970.215) (3.956.125)+5 point (12.975.686) (6.474.074)+10 point (24.536.670) (12.390.240)31 December 2008Change in Interest Rates Change in Portfolio Value Change in Net Profit and Loss+1 point (2.366.544) (723.627)+3 point (6.928.137) (2.129.809)+5 point (11.273.825) (3.483.704)+10 point (21.283.681) (6.657.524)Exchange rate riskExchange rate risk is defined as the loss risk exposure due to changes from exchange rates based on thedifferences between the Company’s foreign currency denominated assets and liabilities. On the other hand, valuechanges of different currency types compared to each other is another aspect of an exchange rate risk. Exchangerate risk is managed by keeping the net foreign currency position without any deficits.Anadolu Sigorta Annual Report 2009 123

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).The details of foreign currency denominated assets and liabilities as of 31 December 2009 are presented below:31 December 2009 31 December 2008A. Foreign currency denominated assets 90.659.840 114.009.400B. Foreign currency denominated liabilities 57.286.234 57.765.816Net foreign currency position (A-B) 33.373.606 56.243.584Foreign currency position detailed in terms of currency types is as follows:31 December 2009 31 December 2008Amount inAmount inCurrency Original Amount in Original Amount inTypes Currency TL Currency TLCash and banks USD 8.659.248 13.038.230 19.217.173 29.062.131EUR 1.593.991 3.443.499 3.392.997 7.263.728GBP 7.834 18.718 33.309 73.027CHF 611.916 886.789 588.683 841.817JPY 17.038.865 277.767 33.696 564Total 17.665.003 37.241.267Receivables USD 36.328.392 54.699.660 34.842.614 52.692.485EUR 7.966.268 17.209.528 10.713.667 22.935.818GBP 435.763 1.041.124 494.619 1.084.403CHF 22.480 32.578 23.727 33.930JPY 377.596 6.156 279.685 4.680DKK 19.522 5.666 14.589 4.191SEK 145 30 64.530 12.552AUD 71 95 71 74Total 72.994.837 76.768.133Liabilities USD 29.814.904 44.892.301 27.021.435 40.864.516EUR 5.577.637 12.049.369 7.699.692 16.483.501GBP 130.172 311.008 176.224 386.353CHF 20.715 30.021 18.472 26.415JPY 107.100 1.746 - -SEK - - 17.855 3.473DKK 6.165 1.789 5.425 1.558Total 57.286.234 57.765.816Sensitivity to exchange rate riskIf all exchange rates decrease by 1%, 3%, 5% and 10%, market value decreases due to the foreign currencydenominated deposits and negative changes in profit and loss are presented in the below table:31 December 2009Change in Market Value Net Change in Profit and Loss Change in Exchange Rates-1% (333.736) (333.736)-3% (1.001.208) (1.001.208)-5% (1.668.680) (1.668.680)-10% (3.337.361) (3.337.361)124Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).31 December 2008Change in Market Value Net Change in Profit and Loss Change in Exchange Rates-1% (562.436) (562.436)-3% (1.687.308) (1.687.308)-5% (2.812.179) (2.812.179)-10% (5.624.358) (5.624.358)Other price risksPrice risks are the loss risks due to the price fluctuations in the Company’s equity share positions. Other price riskis managed by diversifying the equity share portfolio and limits designated for the equity share investments.Sensitivity to equity share priceIf equity shares held by the Company decrease by 1%, 3%, 5% and 10% and all other variables remain constant,negative changes that would occur in the market values of such equity shares and profit and loss are presented inthe below table.31 December 2009Change in Market Value Net Change in Profit and Loss Change in Prices of Equity Shares-1% (3.689.987) (705.623)-3% (11.069.961) (2.116.869)-5% (18.449.935) (3.528.115)-10% (36.899.869) (7.056.230)31 December 2008Change in Market Value Net Change in Profit and Loss Change in Prices of Equity Shares-1% (1.082.342) (144.561)-3% (3.247.027) (433.683)-5% (5.411.712) (722.805)-10% (10.823.425) (1.445.609)Liquidity riskLiquidity risk is the possibility of non-performance of the Company’s due liabilities. Liquidity risk includes riskssuch as; failure in converting the Company’s assets at an appropriate price at short notice because of somedifficulties and inconsistencies in markets, inconsistencies in cash inflows and outflows and failure to perform itsfunding liability at reasonable cost and potential due to inconsistencies in maturities of cash flows.Liquidity risk assessments are performed based on deferrals in collections or possible inconsistencies betweenthe compensation maturities and maturities of reinsurance shares of compensations and gradually reported tothe Board of Directors when the types and maturities of assets and liabilities are due, and/or any insurance risksassociated with economical crisis, earthquake or other catastrophic events occur. Since insurance agreementscover the prospective liabilities, there is an uncertainty about the timing and amount of such liabilities. Therefore,the Company’s ability to pay claims is highly related with the liquidity of the financials assets held. Liquidity risk ismanaged through arranging the maturity structure of cash and marketable security portfolio with the current andpossible liabilities and creating the portfolio with highly liquid public sector borrowing securities.Anadolu Sigorta Annual Report 2009 125

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).As of 31 December 2009, the distribution of the Company’s assets and liabilities with known maturities in terms ofremaining maturities are presented in the below table:Up to 3 months- 1 year31 December 2009 1 month 1-3 months 1 year and over No maturity TotalCash and cash equivalents 200.821.239 196.700.778 - - 95.917.578 493.439.595Financial assets 52.972.599 37.509.389 140.670.521 105.788.061 336.881.142 673.821.712Receivables 96.126.202 105.616.415 160.658.196 2.292.619 73.061.309 437.754.741Other assets 553.947 4.029.141 81.781.455 625.586 46.913.142 133.903.271Total assets 350.473.987 343.855.723 383.110.172 108.706.266 552.773.171 1.738.919.319Payables/Technical reserves 29.233.213 15.246.231 99.973.189 1.629.230 745.439.812 891.521.675Other liabilities - - - - 41.010.715 41.010.715Shareholders’ equity 806.386.929 806.386.929Total liabilities 29.233.213 15.246.231 99.973.189 1.629.230 1.592.837.456 1.738.919.319Net liquidity surplus/(deficit) 321.240.774 328.609.492 283.136.983 107.077.036 (1.040.064.285) --Up to 3 months- 1 year31 December 2008 1 month 1-3 months 1 year and over No maturity TotalCash and cash equivalents 510.387.751 171.222.440 - - - 681.610.191Financial assets 85.102 - 18.984.284 161.906.335 112.046.300 293.022.021Receivables 90.880.088 129.968.585 150.548.084 1.545.227 60.939.860 433.881.844Other assets 6.681.214 3.430.448 72.000.843 - 43.749.126 125.861.631Total assets 608.034.155 304.621.473 241.533.211 163.451.562 216.735.286 1.534.375.687Payables/Technical reserves 32.780.847 14.519.537 67.961.056 - 760.144.090 875.405.530Other liabilities - - - - 50.979.491 50.979.491Shareholders’ equity - - - - 607.990.666 607.990.666Total liabilities 32.780.847 14.519.537 67.961.056 - 1.419.114.247 1.534.375.687Net liquidity surplus/(deficit) 575.253.308 290.101.936 173.572.155 163.451.562 (1.202.378.961) --The fair value of financial assets shown in the following table in terms of valuation methods is shown divided intothree categories. “Category 1”, was organized market obtained from fair values (market data), the “Category2” precedent that has truth according to processes and “Category 3” is the future cash flows to their presentreduced according to the values that are valued financial assets represents.126Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Categories of Financial Instruments:Financial assets31 December 2009Book Value Category 1 Category 2 Category 3Held for trading financial assets(Fair value through profit or loss) 252.475.211 252.475.211 - -Government bonds 175.338.551 175.338.551 - -Equity instruments (publicly traded in stock market) 35.604.273 35.604.273 - -Investment funds 34.753.589 34.753.589 - -Repurchase agreement 6.778.798 6.778.798 - -Available-for-sale financial assets (*) 54.276.890 54.276.890 - -Equity instruments (publicly traded in stock market) 54.276.890 54.276.890 - -Held-to-maturity financial assets 120.069.630 128.928.018 - -Government bonds 120.069.630 128.928.018 - -Trade receivables 435.410.551 - - 435.410.551Other receivables 2.344.190 - - 2.344.190Financial liabilitiesTrade payables 73.339.698 - - 73.339.698Other payables 12.163.321 - - 12.163.321(*) TL 5.797.612 provision for impairment of financial assets has been deducted from the available for sale financialassets balance.Anadolu Sigorta Annual Report 2009 127

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Financial assets31 December 2008Book Value Category 1 Category 2 Category 3Held for trading financial assets(Fair value through profit or loss) 88.640.881 88.640.881 - -Government bonds 74.118.036 74.118.036 - -Equity instruments (publicly traded in stock market) 6.358.679 6.358.679 - -Investment funds 8.079.064 8.079.064 - -Repurchase agreement 85.102 85.102 - -Available-for-sale financial assets (*) 25.603.563 25.603.563 - -Equity instruments (publicly traded in stock market) 25.603.563 25.603.563 - -Held-to-maturity financial assets 106.772.583 109.022.025 - -Government bonds 106.772.583 109.022.025 - -Trade receivables 432.563.671 - - 432.563.671Other receivables 1.318.173 - - 1.318.173Financial liabilitiesTrade payables 116.073.704 - - 116.073.704Other payables 13.488.511 - - 13.488.511(*) Amounting to TL 22.654.235 for impairment of financial assets are reduced from available for sale financialassets.Fair value of financial assetsFair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable,willing parties in an arm’s length transaction.The Company determines the estimated fair value of its financial instruments by using the current marketinformation and appropriate valuation methods. Additionally, ability to estimate the market values throughassessing the market information requires interpretation and judgment. As a result, the estimations presentedherein cannot be an indicator of the amounts obtained by the Company in a current market transaction.The following methods and assumptions are used in fair value estimations for financial instruments of which theirfair value cannot be practically measured:Financial assetsIt is anticipated that fair value of the financial assets including cash and cash equivalents and other financial assetscarried at cost will approximate to their book value based on their short term nature and having insignificantpotential losses.Market value is taken as a basis in the measurement of fair value of government bonds and equity shares.Financial liabilitiesIt is anticipated that fair value of monetary liabilities will approximate to their carrying value based on their shortterm nature.128Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).A unit-linking feature embedded in a host financial instrument or host insurance contract is closely related tothe host instrument or host contract if the unit-denominated payments are measured at current unit values thatreflect the fair values of the assets of the fund. A unit-linking feature is a contractual term that requires paymentsdenominated in units of an internal or external investment fund. A derivative embedded in an insurance contractis closely related to the host insurance contract. In those types, embedded derivative instrument is not beingaccounted independent from the host contract.There are no subsequent events after the balance sheet date.5. Segment InformationThe Company has no operational or geographical segments in order to present information on segmentalreporting.6. Tangible Assets6.1 Total amount of all depreciation and amortization expenses for the period is TL 4.513.555 (31 December 2008:TL 5.106.814).6.1.1. Amount of depreciation expenses is TL 4.513.555 (31 December 2008: TL 5.106.814).6.1.1.1 Amount of normal depreciation expenses is TL 4.513.555 (31 December 2008: TL 5.106.814).6.1.2. There is no amortization expense.6.2 Costs of tangible fixed assets, except for land and construction in progress, are amortized based on theirestimated useful lives. Estimated useful life, residual value, and amortization method are reviewed at the end ofeach annual reporting period, with the effect of any changes in estimate being accounted for on a prospectivebasis.(%)Buildings 2Leasehold Improvements 20Vehicles 20Furniture and Office Equipments 2-256.3 Movements of tangible fixed assets in the current period:6.3.1 Cost of acquired or constructed tangible fixed assets: TL 6.848.066 (31 December 2008: TL 6.678.733).6.3.2 Cost of tangible fixed assets disposed of or become scrap: TL 4.692.267 (31 December 2008: TL 387.636)6.3.3. Revaluation in the current period: None (31 December 2008: None).6.3.3.1 In the cost of assets (+): None.6.3.3.2 In the accumulated depreciations (-): None.6.3.4 There is no construction in progress (31 December 2008: None).Anadolu Sigorta Annual Report 2009 129

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).6.4 Tangible Fixed AssetsCurrent Period:31 December 2009Cost Values: Opening Balance Additions Disposals ClosingBalance TL TL TL TLHeld-for-use properties 10.311.518 9.322 - 10.320.840Investment properties 6.831.991 150.785 - 6.982.776Machinery and equipments 13.791.891 4.125.718 (562.808) 17.354.801Furniture and fixtures 11.929.614 612.073 (4.129.459) 8.412.228Vehicles 729.746 242.632 - 972.378Other tangible assets 9.513.674 1.707.536 - 11.221.210Tangible assets acquired under leasing transactions 4.339.065 - - 4.339.065Total 57.447.499 6.848.066 (4.692.267) 59.603.29831 December 2009Accumulated Depreciation: Opening Balance Additions Disposals ClosingBalance TL TL TL TLDepreciation of held-for-use properties 2.515.081 162.662 - 2.677.743Depreciation of investment properties 2.882.536 137.395 - 3.019.931Depreciation of machinery and equipments 11.429.220 1.176.372 (562.808) 12.042.784Depreciation of furniture and fixtures 9.305.727 400.958 (2.561.535) 7.145.150Depreciation of vehicles 278.615 148.462 - 427.077Depreciation of other tangible assets 5.925.623 1.971.191 - 7.896.814Depreciation of tangible assets acquired underleasing transactions 3.352.290 516.515 - 3.868.805Total 35.689.092 4.513.555 (3.124.343) 37.078.304Net Book Value 22.524.994Prior period:31 December 2008Cost Values: Opening Balance Additions Disposals ClosingBalance TL TL TL TLHeld-for-use properties 9.669.274 642.244 - 10.311.518Investment properties 7.094.216 - (262.225) 6.831.991Machinery and equipments 12.136.378 1.655.513 - 13.791.891Furniture and fixtures 9.821.086 2.108.528 - 11.929.614Vehicles 622.530 232.627 (125.411) 729.746Other tangible assets 7.473.853 2.039.821 - 9.513.674Tangible assets acquired under leasing transactions 4.339.065 - - 4.339.065Total 51.156.402 6.678.733 (387.636) 57.447.499130Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).31 December 2008Accumulated Depreciation: Opening Balance Additions Disposals ClosingBalance TL TL TL TLDepreciation of held-for-use properties 2.354.705 160.376 - 2.515.081Depreciation of investment properties 2.864.603 136.639 (118.706) 2.882.536Depreciation of machinery and equipments 10.830.816 598.404 - 11.429.220Depreciation of furniture and fixtures 7.799.513 1.506.214 - 9.305.727Depreciation of vehicles 251.208 113.107 (85.700) 278.615Depreciation of other tangible assets 4.188.077 1.737.546 - 5.925.623Depreciation of tangible assets acquired underleasing transactions 2.497.762 854.528 - 3.352.290Total 30.786.684 5.106.814 (204.406) 35.689.092Net Book Value 21.758.407Tangible fixed assets are not subject to revaluation.The Company has no tangible fixed assets given as guarantees for liabilities and there are no mortgages orpledges on tangible fixed assets.Total operational lease payments in the current period are amounting to TL 5.920.771 (31 December 2008: TL5.057.900).7. Investment PropertiesThe Company chose the cost method under TAS 40 Investment Property.31 December 2009 31 December 2008Cost Values Buildings BuildingsOpening balance as of 1 January 6.831.991 7.094.216Additions 150.785 -Disposals - (262.225)Closing balance as of 31 December 6.982.776 6.831.991Accumulated DepreciationOpening balance as of 1 January 2.882.536 2.864.603Charge for the period 137.395 136.639Disposals - (118.706)Closing balance as of 31 December 3.019.931 2.882.536Net book value as of 31 December 3.962.845 3.949.455The Company’s rent income from its investment properties leased under operational lease is amounting to TL1.076.723 (31 December 2008: TL 1.093.141). The Company has no direct expenses associated with the investmentproperties in the current period.The Company’s fair value of investment properties is TL 27.000.252 as of 31 December 2009. Fair value of thereal estate is measured based on the valuation study made by an independent valuation company in 2008. Thevaluation company, which was authorized by the Turkish Capital Market Board, is an independent valuationcompany having the necessary qualifications and experience in the valuation of the related real estate. Valuationstudy, which was undertaken in accordance with International Valuation Standards, is performed based on by thereference prices of similar real estate transactions in the market.Anadolu Sigorta Annual Report 2009 131

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).8. Intangible AssetsThe Company has no intangible assets, except for goodwill.GoodwillCurrent Period:31 December2009 31 December2008Cost Values Goodwill GoodwillOpening balance as of 1 January 16.250.000 16.250.000Closing balance as of 31 December 16.250.000 16.250.000Accumulated ImpairmentOpening balance as of 1 January - -Closing balance as of 31 December 16.250.000 16.250.000Net book value as of 31 December 16.250.000 16.250.000The Company has not recognized any impairment loss for its intangible assets in the current period.The Company’s goodwill is amounting to TL 16.250.000 in the financial statements (31 December 2008: TL16.250.000). There is no impairment in goodwill in the current period.The Company has acquired the health portfolio of Anadolu Hayat Emeklilik A.Ş. at 31 August 2004 with all of itsrights and liabilities. The value at acquisition of the portfolio amounting to TL 16.250.000 is capitalized as goodwillby the Company.9. Investments in AffiliatesA subsidiary is an entity, including an unincorporated entity such as a partnership, over which the investor hassignificant influence and that is neither an affiliate nor an interest in a joint venture. Significant influence is thepower to participate in the financial and operating policy decisions of the investee but is not control or jointcontrol over those policies. As of 31 December 2009, the details of the Company’s Affiliates are as follows:Location of Participationfoundation inshareholders’Affiliates and operation equity% Voting rights % Main operationAnadolu Hayat Emeklilik A.Ş. İstanbul 20 20 Life Insurance andPension Funds31 December 2009 31 December 2008Affiliates Cost Fair Book Cost Fair BookListed Value Value Value Value Value ValueAnadolu Hayat Emeklilik A.Ş. 55.031.863 246.999.981 246.999.981 55.031.863 71.999.994 71.999.994As of 31 December 2009, there is no impairment in the Company’s Affiliates (31 December 2008: None).10. Reinsurance AssetsAmounts accounted in profit or loss as a result of various reinsurance agreements are disclosed in Note 17.16.The Company’s income and losses due to its purchased reinsurance agreements as a ceding company are notdeferred and depreciated in the financial statements.132Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).11. Financial Assets11.1 Subcategories of Financial Assets31 December2009 31 December2008Financial assets available-for-sale 252.475.211 88.923.623Financial assets held-to-maturity 60.074.502 48.262.948Financial assets held-for-trading 120.069.630 106.772.583Impairment loss on financial assets (-) (5.797.612) (22.937.127)Total 426.821.731 221.022.027Financial Assets:31 December 2009Financial Assets Held-for-trading Cost Value Fair Value Book ValueGovernment bonds 158.738.975 175.338.551 175.338.551Repurchase agreements 6.774.788 6.778.798 6.778.798Equity shares 30.386.673 35.604.273 35.604.273Investment funds 21.896.611 34.753.589 34.753.589Total 217.797.047 252.475.211 252.475.211Financial Assets Available-for-sale Cost Value Fair Value (*) Book ValueEquity shares 49.192.371 54.276.890 54.276.890(*) Available-for-sale financial assets with market value are carried at their fair value and available-for-sale financialassets with no market value are carried at restated cost adjusted for inflation till 31 December 2004.Financial Assets Held-to-maturity Cost Value Fair Value Book ValueGovernment bonds 119.058.525 128.928.018 120.069.630Total financial assets (current) 386.047.943 435.680.119 426.821.73131 December 2008Held-for-trading Financial Assets Cost Value Fair Value Book ValueGovernment bonds 69.206.743 74.118.036 74.118.036Repurchase agreements 85.037 85.102 85.102Equity shares 5.809.321 6.358.679 6.358.679Investment funds 4.567.893 8.079.064 8.079.064Total 79.668.994 88.640.881 88.640.881Available-for-sale Financial Assets Cost Value Fair Value(*) Book ValueEquity shares 48.156.110 25.608.563 25.608.563(*)Available-for-sale financial assets with market value are carried at their market value and available-for-salefinancial assets with no market value are carried at restated cost adjusted for inflation till 31 December 2004.Held-to-maturity Financial Assets Cost Value Fair Value Book ValueGovernment bonds 98.008.801 109.022.025 106.772.583Total financial assets (current) 225.833.905 223.271.469 221.022.02711.2 Securities issued other than equity shares in the current periodNone.11.3 Securities issued representing the amortized borrowing in the current periodNoneAnadolu Sigorta Annual Report 2009 133

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).11.4 Fair value of securities and long-term financial assets that are carried at cost in the balance sheet and cost ofsecurities and long-term financial assets that are carried at fair value in the balance sheetCost, fair value and book value of marketable securities are presented in Note 11.1, financial non current assetsare presented in Note 9.The Company has no unlisted associates as of the balance sheet date.11.5 Marketable securities issued by the shareholders, affiliates and subsidiaries of the company classified undermarketable securities and associates and their issuersNone. (31 December 2008: None)11.6 Value increases of financial assets in the last three periods31 December 2009 31 December 2008 31 December 2007Diminution in value of financial assetsFinancial assets available-for-sale 10.882.131 (16.749.932) 11.217.647Affiliates 191.968.118 16.968.131 131.364.207Total 202.850.249 218.199 142.581.854Value increases reflect the difference between the carrying value and cost of the financial assets.11.7i) Information that enables the financial statement users to evaluate the financial position and performance ofthe Company is disclosed in Note 11.1.ii) Information on the book value of the financial assets is disclosed in Note 11.1.iii) Comparison of the fair value and book value of financial assets is disclosed in Note 11.1.11.8 The Company does not apply any hedge accounting.11.9 Exchange rate differences arising from the payments of monetary items or different conversion rates used inthe current period or at initial recognition are recognized in profit or loss.12. Receivables and Payables12.1 Details of the Company’s receivables31 December 2009 31 December 2008Receivables from insurance operations 408.780.788 410.543.183Receivables from reinsurance operations 21.332.124 17.656.888Cash deposited for insurance and reinsurance companies 5.297.639 4.363.600Doubtful receivables from operating and insurance operations 65.129.434 57.499.314Provisions for doubtful receivables from operating andinsurance operations (-) (65.129.434) (57.499.314)Due from related parties 937.911 173.259Other receivables 1.406.279 1.144.914Pre-paid expenses and income accruals 94.422.524 87.401.332Non-current pre-paid expenses and income accruals 53.572 2.624Total 532.230.837 521.285.800Detailed information of Company’s receivables are explained in credit risk disclosure in Note 4.2.3.134Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).12.2 Receivable-payable relationship with shareholders, affiliates and subsidiaries of the CompanyThe information about shareholders, subsidiaries and affiliates are disclosed in note 45.12.3 Total amount of pledges and other guarantees received for receivables is TL 122.536.692 (31 December2008: TL 115.130.023).12.4 Details of the Company’s foreign currency denominated receivables without exchange rate guarantees arepresented below:31 December 2009 31 December 2008Amount InAmount InType of Original Amount Originalthe currency Currency (TL) Currency Amount (TL)Receivables USD 36.328.392 54.699.660 34.842.614 52.692.485EUR 7.966.268 17.209.528 10.713.667 22.935.818GBP 435.763 1.041.124 494.619 1.084.403CHF 22.480 32.578 23.727 33.930JPY 377.596 6.156 279.685 4.680DKK 19.522 5.666 14.589 4.191SEK 145 30 64.530 12.552AUD 71 95 71 74Total 72.994.837 76.768.133Liabilities USD 29.814.904 44.892.301 27.021.435 40.864.516EUR 5.577.637 12.049.369 7.699.692 16.483.501GBP 130.172 311.008 176.224 386.353CHF 20.715 30.021 18.472 26.415JPY 107.100 1.746 - -SEK - - 17.855 3.473DKK 6.165 1.789 5.425 1.558Total 57.286.234 57.765.81612.5 Credit risk is disclosed in Note 4.Book value and fair value of the Company’s receivables are the same.13. Derivative Financial InstrumentsAs of 31 December 2009, Company has no derivative financial instruments (31 December 2008: None).Anadolu Sigorta Annual Report 2009 135

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).14. Cash and Cash Equivalents31 December 31 December2009 2008Cash 53.278 57.170Cash at banks 407.927.829 633.357.943Demand deposits 10.405.812 19.668.025Time deposits 397.522.017 613.689.918Other cash and cash equivalents 85.458.488 48.195.078Total 493.439.595 681.610.191Interest accruals on cash and cash equivalents (-) (2.814.831) (4.005.920)Cash flow based grand total 490.624.764 677.604.271Blocked deposits (-) 32.868.686 96.970.963In other cash and cash equivalents; credit card receivables, cheques received, cheques given (-) and paymentorders (-) are presented.15. Share Capital15.1 Transactions between the Company and its shareholders, showing each distribution made to theshareholders separatelyThe Company’s shareholders and its shareholders’ equity structure as of 31 December 2009 is below:31 December 31 DecemberShareholders % 2009 % 2008Türkiye İş Bankası A.Ş. 35,53 151.002.594 35,53 124.355.077Milli Reasürans T.A.Ş. 21,78 92.564.995 21,78 76.229.997Other 42,69 181.432.411 42,69 149.414.926Total 100,00 425.000.000 100,00 350.000.000The details of the transactions between the Company and its shareholders and the related balances as of the endof the period are presented in “Related Parties” note.15.2 Reconciliation of carrying values of each capital account and each reserve as of the beginning and end of theperiod showing each change separatelyThe shareholders’ equity table is presented with the financial statements.15.3 For each class of share capital;15.3.1 The explanation about the number of capital sharesShare capital of the Company is composed of Group A and Group B shares. TL 1,50 of Group A share isrepresented by 150 of equity shares having a nominal amount of TL 0,01 each. TL 424.999.998,5 of Group B shareis represented by 42.499.999.850 shares having a nominal amount of TL 0,01 each.15.3.2 The explanation about the number of issued and fully paid shares and issued but not fully paid sharesThe Company has issued 7.5 billion fully paid equity shares in 2009. All of these shares have been paid (2008: 7.5billion fully paid equity shares has been issued. All of these shares have been paid).136Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).15.3.3 Nominal value of an equity share or equity shares without having nominal valueNominal value of equity shares is TL 0,01 per share.15.3.4. Reconciliation of the number of the equity shares at the beginning and ending of the period31 December 2009 31 December 2008Number of sharesNumber of sharesBeginning of the period, 1 January 35.000.000.000 27.500.000.000Issued in the current period (internal sources) 7.500.000.000 7.500.000.000End of the period, 31 December 42.500.000.000 35.000.000.000End of the period, 31 December 42.500.000.000 42.500.000.00015.3.5 Rights, privileges and limitations on dividend payments and repayment of share capitalGroup A shares having TL 1,5 nominal value each have only voting rights. Group A shares have 10 voting rightsand Group B shares have 1 voting right.15.3.6 Equity shares held by the Company, its associates or its AffiliatesThere is no equity shares held by the Company.There is no equity shares held by the Company’s affiliates or subsidiaries.15.3.7 Equity shares held for future sale for forward transactions and contractsThe Company has no sales of shares in relation to forward transactions or contracts.15.4 Share Based PaymentsNone.15.5 Subsequent EventsThe Company has no share transactions subsequent to the balance sheet date.16. Other Provisions and Capital Component of Discretionary Participation16.1 Each income and expense item and their total amounts accrued under shareholders’ equity in the currentperiod in accordance with other standards and interpretations31 December 31 December2009 2008AffiliatesValuation difference 191.968.118 16.968.131Financial assets available-for-sale 10.882.131 (16.749.932)Valuation differenceTotal 202.850.249 218.19916.2 Net exchange differences classified separately as an equity item and reconciliation of exchange differencesat the beginning and end of the periodThe Company has no exchange differences classified separately as an equity item.16.3 Hedging for forecasted transactions and net investment hedgingNone.16.4 Hedging transactionsNone.Anadolu Sigorta Annual Report 2009 137

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).16.5 Gains and losses from available-for-sale financial assets recognized directly in equity for in the current periodand amounts recognized in the current profit or loss recycled from shareholders’ equity:Increase/decrease in value31 December 2009 31 December 2008Beginning of the period, 1 January (16.749.932) 11.217.648Increase/decrease in value recorded in shareholders’ equity inthe current period 27.632.063 (27.967.580)Increase/decrease in value recycled to income statement fromshareholders’ equity in the current period - -Ending of the period, 31 December 10.882.131 (16.749.932)16.6 Income and loss related to the affiliates recognized directly in equity in the current periodThe amount of increase in value from affiliates recognized in the equity is TL 191.968.118 (31 December 2008: TL16.968.131).16.7 Revaluation increases in tangible fixed assetsAs of 31 December 2009 and 31 December 2008, the Company carries its tangible fixed assets at cost.16.8 Current and deferred tax in relation to debit and credit items directly charged to equityNone.17. Insurance Liabilities and Reinsurance Assets17.1 Guarantees to be provided for life and non-life insurances and guarantees provided for life and non-lifeinsurances based on assetsThe Company’s guarantees to be provided for non-life insurances based on asset are below:31 December 2009 31 December 2008Branches Current Blockage Current BlockageNon lifeGovernment bonds 90.509.668 83.162.241Time deposits 33.535.065 97.925.908Total 124.044.733 181.088.149The Company’s blockage amount to be provided as of 31 December 2009 is TL 122.760.441 and the Companymeets the requirements for its blockage liability (31 December 2008: blockage amount to be provided is TL108.208.935 and the Company meets the requirements for its blockage liability).17.2 Number of life insurance policies, additions, disposals in the current period, and current life insurers and theirmathematical reserves.None (31 December 2008: None).138Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).17.3 Insurance Guarantees given to non-life insurances based on branchesInsurance Branch 31 December 2009 31 December 2008Accident 29.125.395.358 39.044.118.604Health 186.187.322.099 148.562.385.091Motor vehicles 14.181.276.141 14.678.164.249Air crafts 369.827.099 156.704.932Water crafts 7.573.031.245 7.912.772.088Marine 8.864.308.838 10.041.552.155Fire and natural disasters 115.424.219.926 101.700.612.070General losses 22.637.565.426 17.967.524.927Motor vehicles liability 1.774.591.410.330 1.232.202.692.001General liability 10.495.197.978 6.933.270.532Total 2.169.449.554.440 1.579.199.796.64917.4 Pension investment funds established by the Company and their unit pricesNone (31 December 2008: None).17.5 Number and amount of participation certificates in portfolio and circulationNone (31 December 2008: None).17.6 Numbers and portfolio amounts of additions, disposals, reversals and current individual and group pensionparticipantsNone (31 December 2008: None).17.7 Valuation methods used in profit share calculation for life insurances with profit sharesNone (31 December 2008: None).17.8 Number of additions and their group or individual gross and net share participations in the current periodNone (31 December 2008: None).17.9 Number of additions from the other companies and their group or individual gross and net shareparticipations in the current periodNone (31 December 2008: None).17.10 Number of transfers from the Company’s life portfolio to individual pension portfolio and their group orindividual gross and net share participationsNone (31 December 2008: None).Anadolu Sigorta Annual Report 2009 139

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).17.11 Number of transfers from the Company’s individual pension portfolio to other company or not, andtogether their personal and corporate allocation and gross and net share participationsNone (31 December 2008: None).17.12 Number of additions of life insurances and their group or individual allocation and gross and net premiumsNone (31 December 2008: None).17.13 Number of disposals of life insurances and their group or individual allocation and gross net premiums andnet mathematical reservesNone (31 December 2008: None).17.14 Profit share distribution rate of life insurances in the current periodNone (31 December 2008: None).17.15 Amounts from insurance contracts in the financial statementsNone (31 December 2008: None).17.16 Assets, liabilities, income and expense and cash flows from insurance contracts recognized when the insureris a ceding company:As of 31 December 2009, the details of reinsurance receivables and payables are summarized as below;Reinsurance Assets 31 December 2009 31 December 2008Receivables from reinsurance operations 21.332.124 17.656.888Cash deposited for insurance and reinsurance companies 5.297.639 4.363.600Reinsurance share of unearned premiums reserve 145.618.058 144.829.701Reinsurance share of outstanding claims reserve 106.393.834 83.465.691Reinsurance share of unexpired risks reserve 1.237.490 1.391.777Total 279.879.145 251.707.657Reinsurance PayablesPayables due to insurance operations(payables to reinsurers) (22.622.370) (73.242.473)Cash deposited by insurance and reinsurance companies (24.846) (1.792.582)Total (22.647.216) (75.035.055)The details of the amounts recognized in profit or loss due to the various purchased reinsurance agreements arepresented in the below table:1 January – 1 January –Income and Expenses from Reinsurance Agreements 31 December 2009 31 December 2008Ceded premiums to reinsurers (-) (317.010.254) (289.187.051)Reinsurance commissions received 51.572.505 25.295.526Reinsurance share of unearned premiums reserve 145.618.058 144.829.701Reinsurance share of unearned premiums reserve carried forward (-) (144.829.701) (97.211.857)Reinsurance share of unexpired risks reserve 1.237.490 990.958Reinsurance share of unexpired risks reserve carried forward (-) (1.391.776) -Reinsurance share of claims paid 150.468.294 89.543.688Reinsurance share of outstanding claim reserve 106.393.834 83.465.691Reinsurance share of outstanding claim reserve carried forward (-) (83.465.691) (71.102.727)Total (91.407.241) (113.376.071)As of 31 December 2009 the deferred commission income and deferred commission expenses are TL 27.304.987(31 December 2008: TL 27.558.111) and TL 91.519.320 (31 December 2008: TL 85.249.553), respectively andpresented as the deferred income and prepaid expenses at the balance sheet.140Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).17.17 Comparison of the incurred claims with past estimatesDisclosed in Note 4.1.2.3.17.18 Effects of changes in the assumptions used in the measurement of insurance assets and liabilities, showingthe effects of each change that has significant effect on the financial statements separatelyDisclosed in Note 4.1.2.4.17.19 Reconciliation of insurance payables, reinsurance assets and changes in deferred acquisition costs31 December 2009 31 December 2008Insurance Reinsurance Insurance ReinsurancePayables Assets Payables AssetsBeginning of the period 116.073.704 251.707.657 89.060.704 183.945.167Change in the current period (42.734.006) 28.171.488 27.013.000 67.762.490Ending of the period 73.339.698 279.879.145 116.073.704 251.707.65718. Investment Contract LiabilitiesThe Company has no investment contracts.19. Trade and Other Payables, Deferred Income19.1 Sub-classifications of presented items in line with the Company’s operations31 December 2009 31 December 2008Payables from insurance operations 48.147.814 96.276.171Cash deposited by insurance and reinsurance companies 24.846 1.792.582Other payables from main activities 25.167.038 18.004.951Due to shareholders 11.915 14.164Guarantees and deposits received 1.524.247 1.326.874Other payables 10.627.159 12.147.473Deferred income 27.304.987 27.558.111Other deferred income and expense accruals 4.099.658 7.224.558Total 116.907.664 164.344.884Anadolu Sigorta Annual Report 2009 141

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).19.2 Related PartiesTransactions and balances between the Company and its shareholders as of the period-end are presented inNote 45 “Related Parties”.20. PayablesThe Company’s payables are disclosed in Note 19.21. Deferred Income TaxDeferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when they relate to income taxes levied by the same taxation authority and theCompany intends to settle its current tax assets and liabilities on a net basis.The Company has no current or deferred tax debited or credited directly in equity.The Company recognizes deferred tax assets and liabilities based upon temporary differences arising betweenits financial statements as reported for TAS purposes and its statutory tax financial statements. These differencesusually result in the recognition of revenue and expenses in different reporting periods for TAS and tax purposesand they are given below.20% is applied in the calculation of deferred tax asset and liabilities (2008: 20%).1 January- 1 January-31 December 31 DecemberDeferred tax income/(expense) is formed by the items below: 2009 2008Deferred tax income/(expense) related to the occurrence andremoval of temporary differences 1.206.515 (2.122.323)No deferred tax is recognized directly in equity.31 December 31 DecemberDeferred tax assets/(liabilities): 2009 2008Economical life differences of tangible fixed assets 217.978 204.583Retirement pay and unused vacation provisions differences 829.788 700.035Valuation differences of the financial assets (675.678) 166.651Insurance technical reserves (35.768) (2.068.623)Doubtful receivable provision differences - 312.000Other (329.004) (513.845)Deferred tax asset/(liabilities) 7.316 (1.199.199)1 January- 1 January-31 December 31 DecemberMovement of deferred tax asset/(liability): 2009 2008Opening balance at 1 January (1.199.199) 923.124Charge to income 1.206.515 (2.122.323)Closing balance at 31 December 7.316 (1.199.199)22. Retirement BenefitsThe Act No: 5754 “Amendments in Social Securities and General Health Insurance Acts Specific Laws and RelatedRequirements” published in the Official Gazette No: 26870 on 8 May 2008, requires the transfer of participants orbeneficiaries of pension funds to SSI as of the effective date of the Act within 3 years and prescribes the extensionperiod of the transfer as maximum of two years upon the order of Council of Ministers. The Act prescribes that,as of the transfer date, present value of fund liabilities should be measured by considering the fund income andexpense based on the insurance branches presented in the related act using 9,8% of technical interest rate in theactuarial calculation. The Act also specifies that the uncovered other rights and compensations of participants orbeneficiaries of pension funds should be covered by institutions that made the fund transfers.142Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).As the result of the actuarial calculations made in relation to the Pension Fund of Anadolu Anonim Türk SigortaŞirketi established in accordance with Article 20 of the Social Securities Act No: 506, the Company has no deficitsby the end of the current period and no payments have been made in relation to any deficit amount by theCompany. Fund assets are adequate in covering all the funds liabilities; therefore, the Company managementanticipates no liabilities to be assumed in relation to the above-mentioned matter.Retirement pay provisionUnder the Turkish Labor Law, the Company is required to pay employment termination benefits to eachemployee who has qualified for such payment. Also, employees are entitled to retirement pay provisionssubsequent to the completion of their retirement period by gaining a right to receive retirement payments inaccordance with the amended Article 60 of the applicable Social Insurance Law No: 506 and the related DecreesNo: 2422 and 4447 issued on 6 March 1981 and 25 August 1999, respectively. Some transitional provisions relatedto pre-retirement service term was excluded from the law since the related law was amended as of 23 May 2002.The amount payable consists of one month’s salary limited to a maximum of TL 2.365,16 for each period of serviceas of 31 December 2009 (31 December 2008: 2.173,19).The provision has been calculated by estimating the present value of the future probable obligation of theCompany arising from the retirement of employees. TAS 19 (“Employee Benefits”) requires actuarial valuationmethods to be developed to estimate the enterprise’s obligation under defined benefit plans. Accordingly, thefollowing actuarial assumptions were used in the calculation of the total liability:The principal assumption is that the maximum liability for each year of service will increase parallel with inflation.Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects offuture inflation. Consequently, in the accompanying financial statements as at 31 December 2009, the provisionhas been calculated by estimating the present value of the future probable obligation of the Company arisingfrom the retirement of the employees. The provisions at the respective balance sheet dates have been calculatedassuming an annual inflation rate of 4,8% and a discount rate of 11%, resulting in a real discount rate ofapproximately 5,92% (31 December 2008: 5,4%, 12% and 6,26%, respectively). The anticipated rate of forfeituresis considered and estimated rate of the Company’s retirement pay is also taken into account. As the maximumliability is updated semi annually, the maximum amount of TL 2.427,04 effective from 1 January 2010 has beentaken into consideration in calculation of provision from employment termination benefits (As of 1 January 2009,the ceiling on severance pay is TL 2.260,05 per month).1 January- 1 January-31 December 31 December2009 2008Provision at 1 January 3.154.041 3.245.753Service cost 505.185 386.488Interest cost 197.502 185.980Retirement pay paid (171.445) (664.180)Provision at 31 December 3.685.283 3.154.041Anadolu Sigorta Annual Report 2009 143

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).23. Other Liabilities and Expense Accruals23.1 Provisions related to employee benefits and others31 December 31 December2009 2008Unused vacation provision 463.659 346.135Social security premiums payable 1.067.177 1.386.978Unused VacationSocial SecurityProvision Premiums PayableAt 1 January 2009 346.135 1.386.978Charge for the period 117.524 (319.801)At 31 December 2009 463.659 1.067.177Unused VacationSocial SecurityProvision Premiums PayableAt 1 January 2008 96.501 99.435Charge for the period 249.634 1.287.543At 31 December 2008 346.135 1.386.97823.2 Off-balance sheet commitmentsAs of 31 December 2009, Total TL 11.540.888 (31 December 2008: TL 7.782.646) of commitments given consists ofTL 9.596.692 (31 December 2008: TL 7.334.172), TL 1.822.951 of USD amounts (31 December 2008: TL 382.914) andTL 121.245 of EUR amounts (31 December 2008: TL 65.560).The Company does not have any commitments and contingencies that consist of tangible and intangible assets(31 December 2008: None)In addition, the Company’s finance lease liabilities are under the guarantee by the lesser. Carrying value of theseliabilities is TL 925 (31 December 2008: TL 1.850).The Company as lesserLeasing agreements:All operating lease contracts contain market review update clauses in the event that the Company exercises itsrenewal option. The Company has no option to purchase any of the assets leased at the expiry date of the leaseperiod.Total amount of payments recognized as expense in the current period amounts to TL 5.920.771 (31 December2008: TL 5.057.900).The Company has no liabilities recognized in relation to non-reversible operating lease agreements,commitments, and operating activities from non-reversible operating leases.144Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).The Company as lesseeFinancial Lease AgreementsFinancial lease term is for one year. All financial lease contracts contain market review update clauses in the eventthat the lessee exercises its renewal option. The Company has no option to purchase any of the assets leased atthe expiry date of the lease period.The Company recognizes TL 1.076.723 of operating lease income (31 December 2008: TL 1.093.141). TheCompany has no direct operating expenses associated with the related real estate in the current period.The Company has no non-reversible operating lease commitments.23.3 Provisions, Contingent Assets and LiabilitiesAs of the balance sheet date, total amount of litigations filed against the Company amounts to TL 213.609.000(31 December 2008: TL 178.770.000). The Company’s total amount of litigations filed against third parties is TL106.783.000 (31 December 2008: TL 91.487.000). The Company has provided outstanding claims reserve for thelitigations filed against the Company.As of the balance sheet date, the Company has no contingent assets.23.4 Disclosures on goodwill is presented in Note 8.24. Net Insurance Premium Revenue1 January- 1 January-31 December 31 December2009 2008Accident 42.472.390 43.177.547Illness/Health 145.579.853 127.179.863Motor vehicles 314.273.906 331.392.921Air crafts 1.232.109 389.061Water crafts 10.550.870 9.862.051Marine 21.683.671 27.479.433Fire and natural disasters 78.318.340 70.195.789General losses 44.967.121 38.913.857Motor vehicles liability 235.074.024 195.557.458Aircrafts liability 294.078 117.112General liability 27.579.295 20.210.153Credit 6.443 7.587Financial losses (461.674) 2.701.001Legal protection 4.896.627 5.015.307Total 926.467.053 872.199.140Amounts are presented at net gross premiums, less reinsurance shares.25. Fee Income1 January- 1 January-31 December 31 DecemberService Income/(Expense) 2009 2008Commissions received from reinsurers 51.572.505 25.295.526Commissions paid to agencies (-) (185.594.705) (92.782.463)(134.022.200) (67.486.937)Anadolu Sigorta Annual Report 2009 145

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).26. Investment Income/ExpenseFinancial assets held-for-trading (Assets held at fair valuethrough profit or loss)1 January- 1 January -31 December 31 December2009 2008Interest income/(expenses) 23.706.277 (4.842.139)Dividend income 787.334 272.542Gain on sale/(loss) 38.425.583 13.043.558Financial assets available-for-saleDividend income 2.491.730 2.261.788Gain on sale - 692.173Financial assets held-to-maturityInterest income/(expenses) 12.069.474 23.290.397AffiliatesDividend income 8.399.999 17.196.079Investment propertyRent income 1.076.723 1.093.141Interest income/(expenses) 55.610.162 100.383.540Other income/(expenses) 3.814.174 10.423.866Total* 146.381.456 163.814.945(*) TL 3.473.221 of diminution in value of investments, TL 4.191.139 of losses arising from the investmentconversion into cash and TL 8.276.790 of foreign exchange losses are deducted from total investment income(31 December 2008: TL 282.743 of diminution in value of investments, TL 3.346.990 of losses arising from theinvestment conversion into cash and TL 9.499.637 of foreign exchange losses are deducted from total investmentincome).27. Net Income Accrual on Financial AssetsFinancial assets available-for-sale1 January- 1 January-31 December 31 December2009 2008Valuation differences recognized in shareholders’ equity 10.882.131 (16.749.932)Valuation differences recognized in profit and loss - -28. Assets Held At Fair Value Through Profit and LossNet gain/loss of assets held at fair value through profit and loss reflected to the income statement as of thebalance sheet date is TL 62.919.194 (31 December 2008: TL 8.473.961).Real estates classified as investment property in the accompanying financial statements are valued by using thecost method.146Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).29. Insurance Rights and DemandsAmounts of subrogation income/(expense) for the periods between 1 January – 31 December 2009 based oneach branch are presented in the below table:1 January- 1 January-31 December 31 December2009 2008Accident 54.067 57.330Illness-Health 9.343 15.378Motor vehicles 15.010.806 1.575.984Water crafts 683.372 (19.323)Marine 1.523.437 1.442.168Fire and natural disasters 1.005.580 3.577.541General losses 166.999 749.939Motor vehicles liability 2.074.292 1.895.421General liability (15.101) 8.348Total (*) 20.560.782 9.254.799(*) In income statement, various technical income balance TL 1.633.597 (2008: TL 1.038.311) recognized in othertechnical income is not included.30. Investment Agreement RightsThe Company has no investment allowances to be used in current and subsequent periods.31. Other Expenses31.11 January- 1 January-31 December 31 December2009 2008Personnel expenses 55.606.865 46.702.626Administrative expenses 41.932.237 39.027.732Marketing and selling expenses 16.190.641 13.952.212Total (*) 113.729.743 99.682.570(*) In the income statement, TL (185.594.704) (2008: TL (92.782.463)) of production commission expenses,TL (16.050.437) (2008: TL (15.942.174)) of other expenses, TL 51.572.505 (2008: TL 25.295.526) of reinsurancecommission income, recognized in the operating expenses are not included in the table above.31.2 The Company has no agreements with discretionary participation feature that their fair value cannot bemeasured reliably.Anadolu Sigorta Annual Report 2009 147

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).32 Expense Types32.11 January- 1 January-31 December 31 December2009 2008Personnel wages and expenses 55.606.865 46.702.626Rent expenses 5.920.771 5.057.900Transportation expenses 1.757.222 1.428.690Communication expenses 2.463.915 2.790.592Advertisement expenses 12.112.019 10.788.909Marketing expenses 4.078.622 3.163.303Depreciation expenses 4.513.555 5.106.814Other 31.790.329 29.750.550Total(*) 118.243.298 104.789.384(*) While, TL 51.572.505 (2008: TL 25.295.526) of reinsurance commission and TL 4.513.555 (2008: TL 5.106.814)of depreciation expense in the operating expenses are included, TL (185.594.704) (2008: TL (92.782.463)) ofproduction commission expense and TL (16.050.437) (2008: TL (15.942.174)) of other expenses recognized inoperating expenses are not included.32.2 Leasing TransactionsOther information on financial leasing is disclosed in Note 23.33. Employee Benefit ExpensesEmployee benefit expenses are detailed in Note 22 (Employee Benefits).The Company has no share-based payments in the current period.34. Finance Costs34.1 The current period finance cost include TL 925 of interest expense of finance lease of tangible assets (31December 2008: TL 19.952).34.2 The information about shareholders, subsidiaries and affiliates are disclosed in note 45.34.3 The information about shareholders, subsidiaries and affiliates are disclosed in note 45.34.4 The information about shareholders, subsidiaries and affiliates are disclosed in note 45.34.5 The Company does not apply any hedge accounting (31 December 2008: None).34.6 The Company has no exchange differences, other than those arising from financial assets held at fair valuethrough profit and loss (31 December June 2008: None).148Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).35. Income Tax31 December 31 December2009 2008Current tax provision:Corporate tax liability provision 11.052.657 23.056.450Prepaid taxes and other liabilities on period profit (-) (16.030.932) (22.335.791)Tax expense in the income statement1 January- 1 January-31 December 31 DecemberIncome tax expense/(income) is formed by the items below: 2009 2008Current tax expense/(income) 11.052.657 23.056.450Deferred tax expense/(income) related to the occurrence anddisappearance of the temporary differences (1.206.515) 2.122.323Corporate TaxThe Company is subject to Turkish corporate taxes. Provision is made in the accompanying financial statementsfor the estimated charge based on the Company’s results for the years and periods.Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profitby adding back non-deductible expenses, and by deducting dividends received from resident companies, otherexempt income and investment incentives utilized.The effective tax rate used in 2009 is 20% (2008: 20%).In Turkey, advance tax returns are filed on a quarterly basis. The advance corporate income tax rate used in 2009is 20%. Losses are allowed to be carried 5 years maximum to be deducted from the taxable profit of the followingyears. Tax carry back is not allowed.In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their taxreturns between 1-25 April following the close of the accounting year to which they relate. Tax authorities may,however, examine such returns and the underlying accounting records and may revise assessments within 5 years.Income Withholding TaxesIn addition to corporate taxes, companies should also calculate income withholding taxes and funds surchargeon any dividends distributed, except for companies receiving dividends who are resident companies in Turkeyand Turkish branches of foreign companies. The rate of income withholding tax is 10% starting from 24 April2003 by the end of 22 July 2006. However, this rate was changed to 15% commencing from 22 July 2006 upon theorder no: 2006/10731 of the Council of Ministers. However, the new Council of Minister of the 10% rate will applyuntil there is a replacement for this rate. Undistributed dividends incorporated in share capital are not subject toincome withholding taxes.Withholding tax at the rate of 19,8% is still applied to investment allowances relating to investment incentivecertificates obtained prior to 24 April 2003. Subsequent to this date, companies can deduct 40% of theirinvestments within the scope of the investment incentive certificate and that are directly related to productionfacilities of the Company. Investments without investment incentive certificates do not qualify for tax allowance.Anadolu Sigorta Annual Report 2009 149

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Investment IncentiveInvestment incentive certificates are revoked commencing from 1 January 2006. If companies cannot useinvestment incentive due to inadequate profit as of 31 December 2005, such outstanding investment incentivecan be carried forward to following years so as to be deducted from taxable income of subsequent profitableyears. However, companies can deduct carried forward outstanding allowance from the 2006, 2007 and 2008’staxable income. Investment incentive amount that cannot be deducted from the 2008’s taxable income will not becarried forward to following years.Constitutional Court, meeting at the date 15 October 2009, the acquired rights which removes this legalarrangement, contrary to the Constitution finding canceled so that the investment incentives and restrictionsregarding the time of the date of the reporting has been eliminated. At about this decision was published in theOfficial Gazette dated 8 January 2010.Since the Company has not benefit from investment incentives, it applied 20% of corporate tax rate.Inflation Adjusted Legal Tax CalculationThe Company has adjusted its statutory financial statements as of 31 December 2004 in accordance with LawNo: 5024 published in the Official Gazette No: 25332 on 30 December 2003 which requires the application ofinflation accounting in Turkey in 2005 and future years for tax purposes, if the actual rate of inflation meets certainthresholds, using principles which do not differ substantially from the principles in TAS 29, and inflation adjustedbalances as at 31 December 2004 were taken as opening balances as of 1 January 2005. However, as inflationdid not meet the required thresholds as at 31 December 2005, 2006, 2007, 2008 and 2009 no further inflationadjustment was made to the Company’s statutory financial statements in 2005, 2006, 2007, 2008 and 2009.Deferred TaxDeferred tax is explained in Note 21.Reconciliation of period tax with net income for the period is below:1 January- 1 January-31 December 31 December2009 2008Reconciliation of tax provisionIncome before tax 59.216.870 140.722.726Tax calculated: 20% (11.843.374) (28.144.545)Effect of additions (10.004.351) (4.786.015)Effect of allowances 10.795.068 9.874.110Corporate tax liability provision on period profit (-) (11.052.657) (23.056.450)Deferred tax income/(expense) 1.206.515 (2.122.323)150Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).36. Net Income from the Changes in Foreign Exchange Rates1 January- 1 January-31 December 31 December2009 2008Recognized in profit/lossForeign exchange rate income 11.550.904 19.776.678Foreign exchange rate expense (8.276.790) (9.499.637)Total 3.274.114 10.277.04137. Earnings per ShareFor an equity share having TL 1 of nominal value:31 December 2009 31 December 2008Number of ordinary shares outstandingas of 1 January (total) 350.000.000 275.000.000Number of equity shares issued from internal sources 75.000.000 75.000.000Number of ordinary shares outstandingas of 31 December (total) 425.000.000 350.000.000Weighted average number of ordinary shares outstanding 425.000.000 425.000.000Net profit for the period (TL) 48.164.213 117.666.276Earnings per share (TL) 0,11 0,2838. Dividends per ShareIn 2009, the Company paid TL 0,142857 of gross cash dividend having TL 1 nominal value each (total cashdividend to shareholders is TL 50.000.000, total cash dividend to personnel is TL 2.400.000) and TL 0,0114285 ofbonus share (total bonus share is TL 40.000.000) to shareholders (31 December 2008: TL 20.000.000 cash dividendto shareholders, total cash dividend to personnel is TL 1.813.706 and TL 23.000.000 bonus share).39. Cash Generated from the OperationsThe cash flow statement is presented with the financial statements.40. Equity Share Convertible BondsNone (31 December 2008: None).Anadolu Sigorta Annual Report 2009 151

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).41. Preferred Stocks can be convertible into CashNone (31 December 2008: None).42. RisksIn accordance with Article 323 of the Tax Legislation, the Company provides provision for doubtful receivablesunder the legal and management follow up considering the nature and amount of its receivables. As of 31December 2009, the amount of doubtful receivables under legal and management follow up is TL 65.129.434 (31December 2008: TL 57.499.314) TL 49.531.367 of the related provision amount (31 December 2008: TL 42.976.335)includes subrogation transactions under litigation.Information on the provisions provided in the financial statements is presented in Note 2.1.1.43. CommitmentsTotal amount of commitments not included in liabilities:The Company has given TL 11.540.888 (31 December 2008: TL 7.782.646) of commitments in total as of 31December 2009. Total amount consists of TL 9.596.692 of TL amounts (31 December 2008: TL 7.334.172), TL1.822.951 of USD amounts (31 December 2008: TL 382.914) and TL 121.245 of EUR amounts (31 December 2008:TL 65.560).The Company has no tangible and intangible assets held for commitment (31 December 2008: None).The Company’s TL 925 of finance lease payable has a maturity period having less than one year (31 December2008: TL 1.850).44. Business CombinationsThe Company has no business combinations in the current period.45. Related PartiesThe details of receivable and payable relationships between the Company and its shareholders and affiliates arepresented below.The related party transactions in terms of business relations (agents, reinsurance companies) as receivables andpayables are presented below:Due from shareholders (*) 31 December 2009 31 December 2008Türkiye İş Bankası A.Ş. 32.827.540 33.482.477Milli Reasürans T.A.Ş. 7.167.546 1.077.68039.995.086 34.560.157Due from affiliates (*)Anadolu Hayat Emeklilik A.Ş 557.000 155.912557.000 155.912Due to shareholders (*)Türkiye İş Bankası A.Ş. 4.464.927 4.984.903Milli Reasürans T.A.Ş. 7.728.544 14.764.95812.193.471 19.749.861Due to affiliates (*)Anadolu Hayat Emeklilik A.Ş - 8.998- 8.998(*) Receivables from associates and subsidiaries related to insurance activities have been shown in receivablesdue from insurance activities in the accompanying financial statements. Payables from associates and subsidiariesrelated to insurance activities have been shown payables due to insurance activities in the accompanying financialstatements.152Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).The related party transactions of insurance payables are presented below.Related Party Customers 31 December 2009 31 December 2008Türkiye İş Bankası A.Ş. 3.253.793 3.509.068İş Gayrimenkul Yatırım Ort. A.Ş. 671.315 852.147Nemtaş Nemrut Liman İşl. A .Ş. 610.735 -İş Finansal Kiralama A.Ş. 605.213 495.297Trakya Cam San A.Ş. 465.922 508.284Camiş Elektrik Üretim A.Ş. 459.297 7.966Şişecam Dış Ticaret A.Ş. 228.110 332.872Gemport Gemlik Liman ve Depolama İşl. A.Ş. 217.177 1.407.234Avea İletişim Hizmetleri A.Ş. 216.907 981.074Ode Yalıtım Sanayi ve Ticaret A.Ş. 208.605 200.610TSKB Gayrimenkul Yatırım Ortaklığı A.Ş. 160.067 -Türkiye Sınai Kalkınma Bankası A.Ş. 139.133 169.270Soda Sanayi A.Ş. 128.486 77.350Asmaş Ağır Sanayi Makinaları A.Ş. 109.599 129.234Other 173.482 519.816Total 7.647.841 9.190.222The details of technical income and technical expense relationships between the Company and its shareholdersand affiliates are presented below.The related party transactions in terms of business relations (agents, reinsurance companies) as technical incomeand expense are presented below:Technical Income 31 December 2009 31 December 2008Türkiye İş Bankası A.Ş. 101.990.851 92.645.380Milli Reasürans T.A.Ş. 55.668.393 55.037.670157.659.244 147.683.050Technical Expense 31 December 2009 31 December 2008Türkiye İş Bankası A.Ş. 71.442.355 68.111.838Milli Reasürans T.A.Ş. 71.503.668 68.778.141142.946.023 136.889.979(*) The technical income and expenses balances of associates are presented in the table below.Anadolu Sigorta Annual Report 2009 153

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).The related party transactions arising from other income and other expense are presented below:Related Parties 31 December 2009 31 December 2008Income Expense Income Expense DescriptionTürkiye İş Bankası A.Ş. 33.994.229 - 80.039.449 - Interestİş Gayrimen. Yat. Ort. A.Ş - 3.574.792 - 3.250.588 Rentİş Portföy Yönetimi A.Ş. - 349.601 - 278.229 Commissionİş Finansal Kir. A.Ş. - 925 - 19.950 Leasing33.994.229 3.925.318 80.039.449 3.548.767The related party transactions arising from technical income and expense are presented below:Related Party Customers 31 December 2009 31 December 2008Technical Technical Technical TechnicalIncome Expense Income ExpenseTürkiye İş Bankası A.Ş. 7.296.932 2.738.502 7.606.505 1.427.220Trakya Cam San. A.Ş. 6.432.136 1.029.963 5.315.462 2.756.658Avea İletişim Hiz. A.Ş. 3.490.145 2.322.961 3.954.815 1.766.791Anadolu Cam Sanayi A.Ş. 3.275.971 170.170 2.763.553 410.635Paşabahçe Cam San. ve Tic. A.Ş. 3.256.370 1.105.913 2.748.438 264.672Şişecam Dış Ticaret A.Ş. 2.511.618 1.377.497 2.985.398 136.828Soda Sanayi A.Ş. 1.874.475 285.824 1.413.492 151.211İş Gayrimenkul Yatırım Ort. A.Ş. 1.511.998 47.085 1.632.362 34.513Camiş Elektrik Üretim A.Ş. 1.357.916 1.034.497 432.868 8.807Cam Elyaf Sanayi A.Ş. 1.279.301 56.668 1.177.796 92.360İş Finansal Kiralama A.Ş. 1.221.069 2.778.628 1.551.093 2.683.293Türk Telekomünikasyon A.Ş. 922.920 57.646 6.747 1.474İş Yatırım Menkul Değerler A.Ş. 738.787 514.573 526.876 12.302Camiş Ambalaj Sanayi A.Ş. 725.449 192.685 663.598 126.276Nemtaş Nemrut Liman İşl. A.Ş. 715.073 - 1.431.066 251.563Anadolu Hayat Emeklilik A.Ş. (*) 695.734 562.557 571.632 395.958İş Merkezleri Yön. ve İşletim A.Ş. 557.954 374.204 465.251 249.653Bayek Tedavi Sağ. Hiz. ve İşl. A.Ş. 530.641 331.545 468.639 302.721Türkiye Sınai Kalk. Bankası A.Ş. 528.717 328.929 1.081.940 97.239Türkiye Şişecam Fabrikaları A.Ş. 442.607 640.976 922.354 704.701İşnet Ele. Üret. Tic ve İlet. Hiz.A.Ş. 387.751 387.640 291.311 188.149Gemport Gem. Lim. ve Dep İşl. A.Ş. 361.079 458.486 2.031.729 662.920Camiş Madencilik A.Ş. 320.168 27.965 216.531 92.881Milli Reasürans Türk A.Ş. 279.755 4.791 238.732 20.897Paşabahçe Mağazaları A.Ş. 264.639 16.162 238.144 46.485Other 1.808.904 593.018 1.579.531 344.133Total 42.788.109 17.438.885 42.315.863 13.230.340(*) Technical income and expense arising from the transactions with the associate.No provision for doubtful receivables is provided for due from shareholders, affiliates and subsidiaries.There is no bonus share amount obtained due to the Anadolu Hayat Emeklilik A.Ş.’s capital increase from itsinternal sources (31 December 2008: TL 14.196.079)The Company has no liabilities, such as; guarantees, commitments, advances given to shareholders or affiliates.154Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).Remuneration, fringe benefits provided to top management in the financial year is as follows:As of 31 December 2009, remuneration and fringe benefits provided to top management such as; chairman andmembers of the board of directors, managing director and assistant managing director (including operationalleasing, depreciation and other expenses in addition to monetary rights, such as; compensation, bonuses,premiums, ...etc) in total amount to TL 3.941.258 (31 December 2008: TL 3.332.918).46. Subsequent EventsThere has been no change in the Company’s operations, documentation and records or Company’s policiessubsequent to the balance sheet date.47. Other47.1 Items and amounts classified under the “other” account in financial statements either exceeding 20% of thetotal amount of the group to which they relate or 5% of the total assets in the balance sheet1 January- 1 January-Technical Division – Changes in Other Technical Reserves 31 December 2009 31 December 2008Change in equalization reserve 4.655.150 5.444.952Technical Division – Operating ExpensesCommissions (Net) 134.022.199 67.486.937Personnel expenses 55.606.865 46.702.626Administration expenses 41.932.237 39.027.732Marketing and selling expenses 16.190.641 13.952.212Other expenses 16.050.437 15.942.174263.802.379 183.111.681Other Operations– Other Income and RevenuesIncome from the collections of doubtful receivables 284.196 413.151Other Income and Revenues 627.595 710.829911.791 1.123.980Other Operations – Other Expense and LossesNon-deductible expenses 959.181 4.344.596Other 1.569.642 8.7392.528.823 4.353.335Anadolu Sigorta Annual Report 2009 155

Anadolu Anonim Türk Sigorta ŞirketiNotes to the Financial Statements as of 31 December 2009(Amounts expressed in Turkish Lira (TL) unless otherwise stated).47.2 Total amount of each due to/from personnel items classified under “Other Receivables” and “Other Shortand Long Term Payables” exceeding one percent of total assets in the balance sheetCurrent Assets – Other Receivables And Due From Related Parties 31 December 2009 31 December 2008Deposits and guarantees given 14.940 14.544Agency receivables from compulsory earthquake insurance 847.163 760.955Agency receivables from agriculture insurance 544.176 369.415Due from personnel 937.911 91.230Other - 82.029Total 2.344.190 1.318.173Current Liabilities – Other Payables 31 December 2009 31 December 2008Institution of natural disaster insurances 2.722.692 2.527.291Deposits and guarantees received 1.524.247 1.326.874Invoices payable 3.467.509 5.531.039Tarım Sigortaları A.Ş. 76.505 69.179Agency payables for compulsory earthquake insurance 396.115 149.175Agency commissions payable for agriculture insurances 14.946 70.946Temporary collection account 602.923 492.106Payables to personnel 2.750.000 2.650.000Other payables 596.469 657.737Total 12.151.406 13.474.347Non Current Liabilities – Other Technical Reserves 31 December 2009 31 December 2008Free provision 13.702.761 13.702.761Premium receivable reserves booked as per revoked decree 9.952.051 9.952.051Equalization reserve 10.100.102 5.444.952Total 33.754.914 29.099.76447.3 Subrogation receivables followed under the off-balance sheet accountsSubrogation receivables followed under the off-balance sheet accounts is amounting to TL 1.753.827 (31December 2008: TL 681.147).47.4 Descriptive disclosure in relation to amounts and resources of income, expenses, and losses for the priorperiodsNone.156Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiAn Assessment of Financial Standing, Profitability and SolvencyPremium ProductionPremium Production(TL thousand)1,192,5871,161,3861,243,47707 08 09Anadolu Sigorta registered TL 1,243.5 million in premium production in 2009. The greatest contributors topremium production were accident, motor TPL, fire and health branches.A portion in the amount of TL 317,010 thousand of premiums were ceded through reinsurance in 2009, thussignificantly reducing retained risk in branches likely to present high claim settlements in particular, such as fireand engineering.Solvency and solvency performanceClaims Paid(TL thousand)Conservation Share(TL thousand)Combined Loss Premium Ratio(%)708,006685,304854,890588,381595,761704,42274798207 08 0907 08 0907 08 09Having adopted it as a duty to make claim payments fully and timely to its policyholders, Anadolu Sigortaattained this goal once again in 2009 drawing on its solid asset structure and balanced liquidity ratio. A bigpart of the risk was ceded through reinsurance contracts made in branches under which high-amount coverageis provided such as fire and engineering, thus making it possible for the Company’s asset structure to remainunaffected by claims paid in big amounts.Up 24.7% in 2009, claims paid stood at TL 854,890 thousand. A significant portion of the claims paid arose, inorder, from losses in accident, motor third party liability, health and fire branches. Combined loss/premium ratiowas 82%, 3 points higher than its value in 2008.Anadolu Sigorta Annual Report 2009 157

Anadolu Anonim Türk Sigorta ŞirketiAn Assessment of Financial Standing, Profitability and SolvencyAssessment of ProfitabilityGross Profit(TL thousand)Gross Profit/Premiums Received(%)77,22559,2176.484.76140,72312.1207 08 0907 08 09Gross profit for 2009 amounted to TL 59,217 thousand. Return on equity and return on assets stood at 6.0% and2.8% respectively.158Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiInformation on Financial StructureAssets PerformanceTotal Assets(TL thousand)1,401,5381,534,3761,738,91907 08 09As of year-end 2009, total assets reached TL 1,738,919 thousand, corresponding to a year-on rise by 13.3%.Representing the largest item in total assets, total cash and financial assets grew 2% year-on to TL 920,261thousand, instilling confidence in policyholders with respect to payment of their possible losses with this largevolume.Capital PerformanceNominal Capital(TL thousand)275,000350,000425,00007 08 09At the end of 2009, the Company’s nominal capital augmented by 21.4% year-on and rose to TL 425,000thousand. Expanded nominal capital is an indication of the Company’s financial strength.Anadolu Sigorta Annual Report 2009 159

Anadolu Anonim Türk Sigorta ŞirketiSummary Financial Information for the Last 5 Years Including the Reporting Period(TL thousand) 2005 2006 2007 2008 2009Gross Premiums 825,932 1,060,160 1,192,587 1,161,386 1,243,477Technical Division Balance 21,413 -15,151 21,653 96,671 50,142Investment Income 86,891 102,576 127,880 176,944 162,323Investment Expenses -35,343 -44,274 -56,895 -117,741 -150,424Other Income and Expenses -17,038 -12,069 -15,412 -15,151 -2,824Period Gross Income (Loss) 55,922 31,081 77,225 140,723 59,217Taxation -15,649 -5,882 -23,017 -23,056 -11,053Period Net Income (Loss) 40,273 25,199 54,209 117,666 48,164Shareholders’ Equity 466,405 506,457 644,088 607,990 806,387Total Assets 1,028,147 1,229,093 1,401,538 1,534,376 1,738,919160Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiRisk Management Policies Adhered to by Types of RisksThe Company’s risk policies and related implementation procedures include written standards devised andenforced by the Board of Directors and implemented by senior management. Determined and enforced bythe Board of Directors in parallel with international practices on the basis of insurance underwriting risk, creditrisk, market risk, operational risk and the risk of use of the Company’s services for laundering proceeds fromcrime and for financing terrorism, these are general standards that define the organization and scope of the riskmanagement function, risk measurement procedures, the duties and responsibilities of the Board of Directors,senior management and all employees, as well as the procedures for determining risk limits, actions to be takenin possible limit violations, and the compulsory approvals and confirmations that are required to be given invarious cases and circumstances.In setting the Company’s risk tolerance, the Board of Directors takes into account long-term strategies, theCompany’s equity capabilities, returns to be derived and general economic expectations, and then risk toleranceis expressed in terms of risk limits. In line with the procedures set in the Policies and in view of the marketconditions in the relevant period, the Risk Management and Internal Control Department reports violations oflimits submitted to the CEO and the Board of Directors.Senior Management is responsible for implementation of Risk Management Policies. For purposes of ensuringcompliance with policies, Senior Management means the CEO, Deputy Chief Executive Officers, and relevantUnit Managers and Regional Managers. On the other hand, all authorized employees performing the transactionsregarded as a part of risk management processes are individually responsible for the accuracy and reliability of allkinds of data and information they provide in relation to their respective jobs within the process, which form thebasis of the making of decisions.1- Insurance Underwriting Risk PolicyInsurance underwriting risk is defined as a risk that might arise from failure to correctly and effectively implementthe insurance technique within the process of turning coverage provision for natural risks which are not knowncertainly if they will occur and for risks which are known for sure to occur but are unknown time-wise intosustainable commercial earnings. The scope of Insurance Underwriting Risk Policies consists of the conditions andprice of the coverage to be provided for the risk; the principles applied in determining which of the coveragesprovided will be ceded up to what amounts and to whom in the case of risks decided to be transferred;conducting effective monitoring of risk portfolio loss frequency so as to allow formulation of fitting reinsurancestrategies at sufficient frequency, and related monitoring and reporting system.Management of insurance underwriting risk is based on the principle of forming the risk portfolio with risks thatrepresent a low potential to cause loss. In order to avoid poor risk selection and incorrect pricing of insurancepolicies and to create accurate reinsurance policies, effective monitoring is carried out on loss frequency and lossseverity of the risk portfolio. The risk portfolio is separately overseen on the basis of agents, industry, branches,regions, brands, models, tariffs, products, customers and other parameters.A comprehensive insurance underwriting risk reporting system is used to ensure measurement of lossperformance, oversee compliance with applicable legislation and ensure reporting on the effectiveness ofinsurance underwriting risk controls. The risk of the portfolio is regularly reported by executive departments andthe Risk Management and Internal Control Department to the CEO and the Board of Directors.2- Credit Risk PolicyCredit risk means the possibility of the Company’s sustaining loss due to failure on the part of policyholders,agents, reinsurers, fronting companies, coinsurers, and other parties to partially or totally fulfill their obligationstowards the Company. It also indicates to the loss of market capitalization caused by the deterioration in thefinancial standing of companies with which there are subsidiary or affiliate relationships. The Credit Risk Policysets out the procedures and responsibilities related to the management, control and monitoring of credit risk, aswell as matters in relation to credit risk limits.Anadolu Sigorta Annual Report 2009 161

Anadolu Anonim Türk Sigorta ŞirketiRisk Management Policies Adhered to by Types of RisksEarly identification and definition of issues are of the essence for effective management of credit risk. For thispurpose early warning signals are determined; these are indicators pointing at cases that will adversely influencethe credit risk and lead to a credit risk that is above the Company’s risk tolerance. For insurance brokers, theseare declined collection ratios, reduced production performances, slackened discipline in conforming to Companyguidelines, and other data from intelligence. For reinsurance companies and other counterparts, these coverall kinds of data and information obtained in relation to negative ratings and developments. It is the duty andresponsibility of executive units to obtain data and information in relation to credit risk. All kinds of informationobtained are urgently considered within the frame of decision-making, monitoring, reporting and auditingprocesses.A credit risk scoring system used, which has the capability to be made use of in the management of credit riskand decision-making, to enable monitoring risk on the basis of counterparties, to take notice of expected andunexpected losses, and to allow for making the decisions based not only on the return derived or anticipatedto be derived from the counterparty at any time, but also on the risk underwritten. The risks of counterpartiesare regularly reported by the Risk Management and Internal Control Department to the CEO and the Board ofDirectors. The Risk Management and Internal Control Department is also responsible for undertaking daily followupof regional, sectoral and market trends that have an actual or possible impact on the Company’s credit risk,and for reporting the results to the CEO and the Board of Directors.3- Market Risk PolicyMarket Risk means the risk of loss in the value of the Company’s placements in financial borrowing instrumentswhose return is linked to interest rate; stock, other investment securities, all FX or FX-indexed assets and liabilitiesin or off the balance sheet, derivative agreements based on the said instruments, which loss might result from thevolatilities in interest rates, stock prices and exchange rates.The basic and ultimate purpose of the Company’s activities in money and capital markets is to generate returns.The basis of Market Risk policies is to measure, report and keep under control the risk that the Company isexposed to by reason of such activity. The top priority is to ensure that the Market Risk the Company exposedto is within the limits stipulated by applicable legislation and is compliant with the company’s risk appetite. Inmarket risk management, risk appetite is expressed in terms of market risk limits assigned to the executive fundmanagement unit and the contracted asset management companies. Market risk limits are categorized into twogroups: limits set employing the value at risk method, and limits determined based on the ratio of each group ofinvestment securities to the total portfolio and shareholders’ equity. The Risk Management and Internal ControlDepartment and executive fund management unit closely and constantly monitor limit violations. In case limitsare exceeded, the amount at which a limit is exceeded and its reasons are reported to the CEO and the Board ofDirectors, along with the assessments of the executive body. If limit violations are above the ratios or durationsset by the Board of Directors, necessary action is determined by the Board of Directors.Market risk is calculated employing internationally accepted statistical methods. Since these calculations coverrisk prediction for the following days, the accuracy of predictions are compared subsequently with actualvalues and monitored on a daily basis. On the other hand, the portfolio is tested under different scenarios fordetermining the effects of occurrences which pose a low probability in terms of occurrence, but big volumein terms of loss. The assessments, which include the possible mismatches among types and maturities of theCompany’s assets and liabilities, are regularly reported in detail to the CEO and the Board of Directors.4- Operational Risk PolicyOperational risk is defined as any risk other than absolute insurance underwriting, credit and market risks whichmight occur in the organization, business continuity, insufficient or inoperative business processes, technology,human resource, underperformance by individuals, administrative mistakes, unfortunate events, misconduct,accident and fraud, systems or external factors, legislation, management and business environment, and whichmight cause physical or reputational loss to the Company.162Anadolu Sigorta Annual Report 2009

Anadolu Anonim Türk Sigorta ŞirketiRisk Management Policies Adhered to by Types of RisksOperational risks that might be faced during the activities are classified based on the “Company Risk Catalogue,”which is the basic document used in defining and classifying all risks that may be faced with. The Risk Catalogue isupdated in parallel with the changing conditions. “Self-Assessment Methodology” is used in the identification ofoperational risks. In this method, the risks in relation to activities conducted are exposed with the involvement ofthe personnel performing the job.Qualitative and quantitative methods are used jointly in the measurement and evaluation of operational risk. Themeasurement process uses data obtained from “impact - likelihood analysis”, “control culture profile surveys”and internal and external “loss database.” When managing operational risk, efforts are spent to develop controlsto eliminate or mitigate the possibility of sustaining loss due to risks that the Company may be exposed to inrelation to its activities. Effectiveness and adequacy of existing or subsequently developed controls, and theimplementation of action plans adopted in this regard are evaluated in coordination with the Risk Managementand Internal Control Department and the Board of Inspectors. The Risk Management and Internal ControlDepartment monitors all operational risks that the Company may be exposed to during the course of its activities,and regularly reports on the same to the CEO and the Board of Directors.5- Policy for Combating the Legalization (Laundering) of Proceeds from Crime and Financing of TerrorismThese policies are intended to define, rate, monitor, assess and mitigate the risks the Company is exposed towith respect to the use of the insurance service offered by the Company in laundering proceeds from crime orfinancing of terrorism. The ultimate goal can be achieved by effectively monitoring and supervising customersand transactions in full compliance with the applicable legislation and regulations.The overall scope of the Policy covers the activities centrally executed for defining, measuring, monitoring,controlling and reporting the risks that the Company is exposed to for reasons of the use of the insurance serviceoffered by the Company in laundering proceeds from crime or in financing of terrorism, or the Company’s failureto fully comply with the liabilities imposed by the Law no 5549 on Prevention of Laundering Proceeds from Crimeand by related regulations and communiqués.The basic strategy of the Company to achieve the ultimate goal is to carefully plan, conduct and manage riskmanagement activities independently, impartially, purposefully, productively and efficiently, employing a riskfocusedapproach and in line with applicable legislation and internationally accepted principles and standards.The basic principle in achieving this goal is to employ the most advanced tools and methods that are availableand possible to be used. Findings from risk management, monitoring and control activities are regularly reportedto the Board of Directors by the Board Director who is delegated by the Board of Directors in respect of thismatter.Anadolu Sigorta Annual Report 2009 163

Anadolu Anonim Türk Sigorta ŞirketiDirectoryHeadquartersBüyükdere Caddesi İş Kuleleri Kule 2 Kat: 23-26 343304. Levent/İSTANBULPhone: (90 212) 350 0 350Fax: (90 212) 350 0 355E-mail: bilgi@anadolusigorta.com.trCorporate Insurance DepartmentBeytem Plaza Büyükdere Caddesi No: 20-B 34394Şişli/İSTANBULPhone: (90 212) 368 38 68Fax: (90 212) 350 01 80E-mail: ksm@anadolusigorta.com.trİstanbul Regional BranchMerter İş Merkezi 2/22 General Ali Rıza GürcanCaddesi 34173 Merter/İSTANBULPhone: (90 212) 484 24 24Fax: (90 212) 350 0 120E-mail: bolge11@anadolusigorta.com.trKadıköy Regional BranchK2 Plaza Sarıkanarya Sokak No: 14 34742Kozyatağı/İSTANBULPhone: (90 216) 571 88 00Fax: (90 216) 571 88 48E-mail: bolge12@anadolusigorta.com.trMediterranean Regional BranchKonyaaltı Caddesi No: 78 07050 ANTALYAPhone: (90 242) 248 26 80Fax: (90 242) 241 42 80E-mail: bolge08@anadolusigorta.com.trWestern Anatolia Regional BranchAtatürk Caddesi 92 Anadolu Sigorta Binası 2 35210İZMİRPhone: (90 232) 455 33 33Fax: (90 232) 455 33 43E-mail: bolge03@anadolusigorta.com.trWestern Black Sea Regional Branchİlhami Soysal Caddesi 44/4 Ervaksan Binası Kat: 367320 Kdz. Ereğli/ZONGULDAKPhone: (90 372) 322 72 40Fax: (90 372) 312 11 00E-mail: bolge06@anadolusigorta.com.trSouthern Anatolia Regional BranchReşatbey Mah. 62029. Sokak 16/A 01120Seyhan/ADANAPhone: (90 322) 455 32 00Fax: (90 322) 455 32 32E-mail: bolge02@anadolusigorta.com.trCentral Anatolia Regional BranchCinnah Caddesi Farabi Sok. No: 43 06690Kavaklıdere/ANKARAPhone: (90 312) 457 17 17Fax: (90 312) 457 17 49E-mail: bolge05@anadolusigorta.com.trBlack Sea Regional BranchKarşıyaka Mah. 4 Nolu Sok. No: 479 61040 TRABZONPhone: (90 462) 230 61 61Fax: (90 462) 230 70 20E-mail: bolge07@anadolusigorta.com.trMarmara Regional BranchAdres: Yalova Caddesi 424 Buttim Plaza Kat: 8Kapı: 1617-20 16350 BURSAPhone: (90 224) 270 05 55Fax: (90 224) 270 05 88E-mail: bolge04@anadolusigorta.com.trTurkish Republic of Northern Cyprus BranchMemduh Asaf Sokak 8 Köşklüçiftlik Lefkoşa/TRNCPhone: (90 392) 227 95 95Fax: (90 392) 227 95 96E-mail: bolge50@anadolusigorta.com.tr164Anadolu Sigorta Annual Report 2009

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