Investor Presentation Istanbul, Turkey June 2019 Agenda 1. Turkey - - PowerPoint PPT Presentation

Investor Presentation

Istanbul, Turkey – June 2019

2

Agenda 1. Turkey at a Glance 2. Our Markets

• Private Pension System
• Life Insurance

3. Corporate Profile 4. Financial Results

Turkey at a Glance

4

Turkey at a Glance

A Fast Growing Economy

0% 1% 2% 3% 4% 5% 6% 7%

1990-1999 2000-2009 2010-2018 GDP Average Annual Growth*

Turkey OECD Euro-15

* OECD National Accounts Data, **IMF, ***Turkish Statistics Institute, ****World Bank National Accounts Data

• 6%
• 5%
• 4%
• 3%
• 2%
• 1%

0%

Budget Balance (% of GDP)**

Euro Area EM Turkey 0% 5% 10% 15% 20% 25%

CPI*** and Interest Rates****

CPI Interest Rates

5

• 10%
• 8%
• 6%
• 4%
• 2%

0% 2% 4% 6%

Current Account Balance (% of GDP)*

Euro Area EM Turkey

Turkey at a Glance

Urgent Need to Increase Domestic Savings

* IMF, except for Turkey’s domestic saving rate which is from Ministry of Development. ** CBT Financial Stability Report: All data represents 3rd quarter figures, except for 2012 which shows the year-end figures. *** April 2019 , IMF

0% 1% 2% 3% 4% 5% 6% 7% 250 500 750 1.000 1.250 1.500

2011 2012 2013 2014 2015 2016 2017 2018Q1 2019Q1 Weight of Pension Funds in Household Savings (TRY billion)**

Pension Funds Total Household Savings Weight of Pension Funds

Republic of Turkey – 11th Development Programme Article 222: The main aim of the development programme is to increase the amount of domestic savings and to direct these savings to the prioritized sectors and to financing of productive investments.

11th Development Programme (2019-2023), prepared by the Presidency of Strategy and Budgeting was approved by the Grand National Assembly of Turkey on 18.07.2019, and published in Official Gazette No. 30840 (repeated) on 23.07.2019.

10% 15% 20% 25% 30% 35%

2011 2012 2013 2014 2015 2016 2017 Domestic Saving Rate (% of GDP)*

Euro Area EM Turkey

6

Turkey at a Glance

Demographic Opportunity Window

2018 2080 Population (millions) : 82.4 107.1 Median Age : 32.0 45.0 Fertility : 2.10 1.65* Proportion of Elderly Population : 8.8% 25.6%

2019 April

Population 15 Years And Over (thousands) : 61,261 Labor Force (thousands) : 32,401 Employed (thousands) : 28,199 Labor Force Participation Rate : 52.9% Unemployment Rate : 13.0% Non-Agricultural Unemployment Rate : 15.0%

Source: Turkish Statistics Institute - The World Bank – IMF * As of 2050 Decreasing fertility and increasing longevity means a demographic transition.

• 47 percent of the population is under 30 years old.
• Only 9 percent of the population is over 64 years old.
• The youth dependency ratio is relatively high.
• More people are living off retirement savings, thus a decrease in the saving rate

is a common issue.

• In the interim period when the youth dependency ratio is falling fast and the old-

age dependency ratio is only increasing modestly; larger potential labor force and higher private saving to fund investment is a major demoghraphic advantage.

0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0% 8,0% 9,0%

Population by Age 2018 2080

Our Markets

Private Pension System Life Insurance

8

Our Markets

Private Pension System: Positioned in Pillar III

Three-Pillar System

Pillar I State Pension Mandatory Securing a minimum standard of living Retirement, health, disability and unemployment Pillar II Occupational Pension Workplace Pensions with Auto Enrolment starting by 2017 Maintenance of current living standards in terms of replacement rate Pillar III Private Pension Voluntary Opportunity to increase retirement income Available since 2003

9

Our Markets

Pillar III Private Pension System: Important Features Defined contribution and voluntary participation. Funds are managed by asset management companies. Minimum retirement age: 56 Completion of 10 years. Started in 2003. 18 companies in 2019. Participants can switch funds, pension plans and transfer between companies. Incentives for both participant and employer.

10

Pillar III Private Pension System: Well Designed Structure ✓Pension Monitoring Center (EGM) ✓ISE Settlement and Custody Bank (Takasbank) ✓Capital Markets Board (SPK) ✓Undersecretariat

• f Treasury

✓Ministry of Labor and Social Security ✓Ministry of Finance ✓Pension Accounts Administered by Pension Companies ✓Pension Funds Managed by Asset Management Companies

Our Markets

Regulation Administration Monitoring

11

Our Markets

Pillar III Private Pension System: Incentives

For Participants For Employers

• Contributions with a cap of

annual legal minimum wage is subject to 25% state contribution.

• Vesting Period:

% 15 at the end of 3 years % 35 at the end of 6 years % 60 at the end of 10 years % 100 at retirement date or death/disability cases

• Investment income of

pension funds are tax exempt.

• Transaction of pension

funds are exempt of fees and taxes.

• Withholding tax applies only
• n the investment income:

5% (completion of 10 years in the system & 56 years of age) 10% (completion of 10 years in the system) 15% (before completion of 10 years in the system)

Contribution Stage Investment Stage Benefit Payments Employer contributions are tax deductible up to 15% of gross salary with a cap of annual legal minimum wage.

12

Our Markets

Pillar III Private Pension System: Charging Structure

Management Fee / Entrance Fee Fund Management Fee First 5 years of the contracts No change in fund management fee levels. A new rebate structure will be implemented by 2021.

Maximum limit: 8.5% of the monthly legal minimum wage

• Applicable for the first 5 years of

the contract.

• One common cap for entrance fee

and management fee. Fund Management Fees

• Money market funds: 1.09%
• Fixed income & index funds: 1.91%
• Equity and managed funds: 2.28%
• State contribution funds: 0.36%

Rebate Structure

• Beginning with 2.5% by the 6th

year of the contract.

• 2.5% gradual increase each year.
• Maximum 25% after the 15th year.
• Rebate is not applicable below

1.1% of pension assets.

13

Our Markets

Pillar III Private Pension System: Growth Accelerated with Increased Government Support

Under Discussion Implemented

• 25% State Contribution since 2013
• Withholding tax limited to capital gains
• Pension fund transfers from provident

funds* by the end of 2017

• Fee Structure Efficiency
• Auto-Enrolment started in 2017
• Severance Payments

* Funds from associations, foundations, provident funds and other organizations with retirement provisions. Source: Pension Monitoring Center as of 30.06.2019

20 40 60 80 100 120 AUM State Contribution

Pension AUM Growth

(TRY billion)

1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000

Number of Participants

(Thousands)

14

Our Markets

Pillar III Private Pension System: Big Growth Potential

56% 2% 0% 25% 50% 75% 100% 125% 150% 175% 200%

Netherlands Iceland Switzerland Australia United Kingdom United States Canada Chile Israel OECD Total Finland Denmark Ireland Japan New Zealand Estonia Mexico Slovak Republic Korea Norway Portugal Spain Poland Czech Republic Belgium Italy Germany Austria Slovenia Sweden Hungary Luxembourg Turkey Latvia Greece France Greece

Pension Funds as a Percentage of GDP Big Growth Potential The Turkish pension market has a very low level of GDP penetration compared to other countries with similar GDP per capita. This illustrates a huge growth potential when combined with the demographic opportunity window.

Pension Participants 6.8 Million Social Security Participants 22.1 Million Work Force 31.8 Million Working-Age Population 61.0 Million

Total Population 82 Million

Source: OECD Pension Markets in Focus 2018; Turkish Statistics Institute as of 31.01.2019; Social Security Institution as of 31.12.2018; Pension Monitoring Center as of 30.06.2019

15

Our Markets

Attractive Market

10 9 6 6 5 4 4 4 4 4 13 14 17 18 19 19 18 18 17 17

Life Private Pension

The Number of Companies*

61% 73% 74% 69% 65% 65% 63%

36% 37% 39% 45% 52% 54% 53%

2010 2011 2012 2013 2014 2015 2016

Paid-In Capital GWP

Foreign Investment Share

The pension system started with 11 companies in 2003. Due to strong growth expectations and government support, the system attracted more local and international groups.

Source: Undersecretariat of Treasury, Insurance and Private Pensions Annual Reports * Active companies

16

Our Markets

Pillar III Private Pension System: Key Highlights

Key Figures

Participants : 6.8 Million Participant Funds : TRY 87.0 Billion State Contribution Funds : TRY 13.1 Billion Assets Under Management : TRY 100.1 Billion Intermediaries : 49,599 Pension Companies : 17 4,9% 25,1% 33,3% 25,6% 11,1%

0-25 25-34 35-44 45-55 56+ Participant Age Distribution*

Individual 75,7%

Non- Sponsored Groups 19,5% Employer Sponsored Groups 4,8%

Total Amount of Contributions by Contract Type

Bank 71% Other 3% Direct Sales 10% Corporate Sales 5% Agent 11%

Distribution of Contributions by Marketing Channel

(2017 total)

1.000 1.500 2.000 2.500 3.000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Average of Total Amount of Regular Contributions per Year (TRY)

Source: Pension Monitoring Center *As of 28.06.2019

17

Our Markets

Private Pension System: Pension Funds*

Equity 10,6% Repo and Money Market Instruments 12,3% International Securities 2,1% Government Bonds 51,0% Corporate Bonds 8,5% Other 15,5% Asset Allocation of Pension Funds Number of Funds : 408 Total AUM : TRY 106.2 Billion Return on Pension Funds (2004-2019Q2) Nominal : 546.1% Real : 62.6%

23,9% 19,6% 11,1% 18,4% 9,5% 23,3% 9,6% 0,1% 17,9%

• 0,2%

14,5% 3,0% 10,9% 15,4% 12,5% 3,5% 12,00% 13,3% 11,0% 1,3% 9,2%

• 0,5%

15,8% 3,0%

• 9,4%

11,0%

• 7,1%

5,9%

• 5,4%

2,2% 3,1%

• 6,5%

1,20% 6,70%

Nominal & Real Investment Return of Pension Funds

Nominal Return Real Return

As of 30.06.2019 * Includes Auto Enrolment Funds

18

Our Markets

Private Pension System: New Frontiers

Auto Enrolment Integration of Severance Payments with Auto Enrolment Withdrawing Some of the Funds from Pension Account

19

Our Markets

Auto Enrolment: Basic Features*

Automatic enrolment of current and new employees under age 45 Gradual implementation based on company scale Minimum contribution amount set as %3 of monthly wage State contribution:

• 25% on contributions
• 1,000 TRY initial bonus
• 5% of assets at

annuity phase

Simplified fund menu Simplified and automated enrolment and collection process 2 months of initiation period**. Voluntary opt-out at any time Law enacted in 2016, in force by 2017. All six phases were completed.

Structural changes in marketing, sales and service model SME & Corporate

*Based on the Law enacted in August 2016 and the complementary legislation. ** The statement of 'Initiation period' was brought instead of "Call Back Period" based on the legislation change made as of 5 December 2018

No employer contribution

20

Our Markets

Auto Enrolment System: Incentives

For Participants

• Contributions with a cap of annual legal

minimum wage is subject to 25% state

• contribution. This limit is set independently
• f Pillar III contracts.
• Initial 1,000 TRY bonus if the employee

stays in the system.

• Vesting Period For State Contribution

% 15 at the end of 3 years % 35 at the end of 6 years % 60 at the end of 10 years % 100 at retirement date or death/disability cases

• State contributions are booked in a separate

account as a commitment and will be subject to revaluation indexed to CPI. The accrued amounts will be funded gradually according to the vesting schedule.

• Investment income of auto enrolment funds

are tax exempt.

• Additional state contribution equal to 5% of

savings at retirement date is provided in case of transfer into an annuity contract with a minimum term of ten years.

• Additional state contribution has a limit of

multiplication of number of months remained in the system and the monthly minimum wage at the retirement date.*

Contribution Stage Investment Stage Retirement Stage

*In force through the legislation change made on 5 December 2018.

21

Our Markets

Auto Enrolment System: Charging Structure

Management Fee / Entrance Fee Fund Management Fee No management or entrance fee. Fund management fee level is capped.

According to the Law enacted in August 2016, no management or entrance fee is allowed in Auto Enrolment System. Fund Management Fee is capped at a maximum of 0.85%.

22

Our Markets

Auto Enrolment - New Target Market

Date Private Sector Public Sector Number of Employees*** %

2017 January 1,000+

• 0.7 Million

5.2 2017 April 250 – 999

Public administrations

4.7 Million 33.2 2017 July 100 – 249

• 1.6 Million

11.0 2018 January 50 – 99

Public enterprises + local administrations

1.5 Million 10.4 2018 July 10 – 49

• 3.6 Million

25.9 2019 January 5 - 9

• 2.0 Million

14.3

Total 14.1 Million 100

WORKFORCE*

* Social Security Institution December 2018, Turkish Statistics Institute, January 2019 ** Estimated as 75% of the 4a and 4c participants *** Social Security Institution and State Personnel Presidency as of March 2018

Eligible Employees (age less than 45)** 13 Million Social Security Participants (4a&4c) 17.2 Million Social Security Participants 22.1 Million Employed 27.2 Million Work Force 31.8 Million 3.0 Million (4c public sector) 12.6 Million

(4a private sector)

1.6 Million

(4a public sector)

SOCIAL SECURITY PARTICIPANTS (4A&4C)

Staging Process Staging process defined in the complementary legislation Public sector in 2017 Gradual staging for private sector beginning with large scale companies (+1,000 employees)

23

Our Markets

Auto Enrolment – Market Preview

Market Size*

Number of Employees 5,079,077 Number of Certificates 5,745,565 Total Funds (TRY) 6,365,079,646

*Source: Pension Monitoring Center as of 30.06.2019

Staging Process Sixth phase of Auto Enrolment has been started as at January 1st 2019. The employees of private companies over 5 employees have been enrolled in one of the auto enrolment plans.

Date Target get

2017 7 Janu nuary ry Priva vate te compa mpani nies with 1,000+ 000+ emplo ploye yees 2017 7 April Priva vate te compa mpani nies with 250 250-999 999 emplo ploye yees Public admi dmini nistra stratio tions ns 2017 7 July Priva vate te compa panies with 100 100-249 249 empl ploye yees 2018 8 Janu nuary ry Priva vate te compa mpani nies with 50 50-99 99 emp mploye yees Public ente nterprise prises and loca cal admi mini nistra stratio tions ns 2018 8 July Priva vate te compa mpani nies with 10 10-49 49 emp mploye yees 2019 9 Janu nuary ry Priva vate te compa mpani nies with 5-9 9 empl mploye yees

24

Our Markets

Life Insurance: Underpenetrated Market

17 110 127

1.978 1.298 3.276 370 312 682 Life Insurance Non Life Insurance Total Insurance Turkey Advanced EMEA World Insurance Premium per Capita (USD) Global Comparison (2018) Source: Sigma, SwissRe

Country / Region Life GWP (in % of GDP) Share of World Market (in %) Turkey 0.2 0.05 Advanced EMEA 4.6 33.1

World 3.3

• Life insurance market has great potentials in Turkey.

Turkey’s life insurance market is extremely underpenetrated as life premiums’ weight in GDP is only 1/20 of OECD average. Low penetration level - when combined with favorable demographics and strong government support for saving and annuity products - demonstrates high growth potential.

25

Our Markets

Life Insurance Total GWP

(TRY million)

3.229 3.701 4.963 6.766 6.835 3.252 3.930

15% 34% 36% 1%

• 50%
• 40%
• 30%
• 20%
• 10%

• 100,00

Life Total GWP (million TRY) Growth Rate

2014 2015 2016 2017 2018 2018/05 2019/05

Term Life Endowment / Saving Annuity

Life Insurance GWP

(by Product Category) Life Insurance Market in Turkey is dominated by credit linked products. Term life market is dependant on consumer loan cycles. To offset this dependancy there is an increasing emphasis on stand alone products. The saving product market is under pressure of expanding private pension products. Annuity market is in a regulatory transition phase. New generation products will be launched after legal framework is finalized. Source: Life Insurance Information and Monitoring Center

Life Insurance

YoY (TOTAL) : 22% Term Life : 15% Endowmen ment / / Saving : : 100 100% Annuity : : 9%

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Anadolu Hayat Emeklilik

Corporate Profile

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Anadolu Hayat Emeklilik

At a Glance

Free Float 15% İşbank 64% Anadolu Sigorta 20% Milli Reasürans 1% Ownership Structure*

❖ Established in 1990 as a subsidiary of İşbank

❖ First life insurance company in Turkey

❖ The first publicly traded Life & Pension Company since 2000

❖ Operating in pension business since 2003

❖ Strong market position in life insurance and private pension businesses

❖ Strong shareholder structure ❖ Sector’s leader in total assets with TRY 22.8 billion

SECTOR’S LEADER

Life and Private Pension Funds TRY 19.8** Billion

SECTOR’S LEADER

Private Pension Contracts 2 Million *The rate of publicly traded shares is 17%. As at 23 February 2017, İşbank owns the 1.89% of the publicly traded shares. **As of 31.05.2019.

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Anadolu Hayat Emeklilik

At a Glance I

Organization

Headquartered in Istanbul Customer Service Center in İstanbul 11 District Sales Offices Branch Office in TRNC

II

Human Resources

HQ and Regions : Direct Sales Team : Total : 569 513 1,082

III

Financial Metrics

Total Assets : Shareholders’ Equity : Gross Profit : Market Value : TRY 22,801 million TRY 956 million TRY 194 million TRY 2,163 million

IV

Brand Value

Top of Mind Brand 46*

V

Market Position

Private Pension Contracts : Participants : Assets Under Management : #1 – 16% #2 – 16% #2 – 19% Life Insurance AUM (Mathematical Reserves) : Gross Written Premium : #1 – 24% ** #4– 8% *** * Source: TNS, as of March 2019 ** As of May 2019 *** As of June 2019

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Anadolu Hayat Emeklilik

Financial Highlights

(Million TRY) 2017 2018 Change 2018H1 2019H1 Change Total GWP and Net Contributions 2,203.7 2,019.0

• 9%

1,158.9 1,143.0

• 1%

Life Mathematical Provisions 1,725.7 1,740.3 1% 1,659.8 1,843.6 11% Pension AUM 14,712.8 16,937.6 15% 15,380.1 19,288.9 26% Total Assets 17,877.2 20,221.5 13% 18,447.4 22,801.9 24% Shareholders Equity 926.6 940.6 2% 815.4 956.1 17% Total Technical Profit 199.2 237.6 19% 125.5 133.8 7% Non Life

• 0.55
• 1.1

96%

• 0.5
• 0.4
• 25%

Life 132.6 151.1 14% 80.0 89.9 12% Private Pension 67.1 87.6 30% 46.0 44.3

• 4%

Financial Income 124.3 133.7 8% 66.6 81.1 22% Profit for the Period 279.8 322.2 15% 166.5 194.1 17% Net Profit 224.7 253.6 13% 136.8 142.4 4% Key Financial Metrics 2017 2018 ROAE 25% 27% Expense Ratio 16.0% 21.8% P/E Ratio 15.8 10.2 P/B Ratio 3.8 2.7 Earnings per Share 0.52 0.59 2018H1 2019H1 29% 29% 18.3% 21.9% 15.0 8.3 4.6 2.3 0.57 0.60

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Anadolu Hayat Emeklilik

Lines of Business

Private Pension Individual Plans Non- Sponsored Group Plans Employer Sponsored Group Plans Income Drawdown Plans Life Insurance Annuities Term Life Savings & Endowment Personal Accident Insurance Group Accident Insurance Personal Accident Insurance Conservative Balanced Dynamic

• Money Market
• Conservative

Flexible

• Participation

Standard

• Private Sector

Debt Instruments

• Group

Conservative

• Initial
• Initial

Participation

• Auto Enrolment

Conservative

• Auto Enrolment

Standard

• Auto Enrolment

Participation Standard

• Bond
• Balanced

Flexible

• Group Bond
• Group Debt

Instruments

• Debt Instruments
• Standard
• Auto Enrolment

Balanced

• First Debt

Instruments

• Second Debt

Instruments

• Developed

Countries Flexible

• Dynamic Flexible
• Auto Enrolment

Dynamic

• Auto Enrolment

Dynamic Participation

Lines of Business Pension Funds

Auto Enrolment Auto Enrolment Plans Aggressive

• Equity Fund
• BRIC Plus
• Aggressive

Flexible

• Gold
• Group Equity
• Second Equity
• Isbank

Subsidiaries Index

• Auto Enrolment

Aggressive

• Auto Enrolment

Aggressive Participation

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Anadolu Hayat Emeklilik

Distribution Network

26 District Sales Offices 1,306 Branches 2.430 Licensed Intermediaries 68 Licensed Tele-Sales Agents 11 District Sales Offices Branch in Northern Cyprus 11 Regional Sales Managers 49 Regional Sales Supervisor 513 Direct Sales Team 231 Agencies 384 Licensed Intermediaries 113 Branches 3 Branches 1 Branch

Private Pensions New Business Channel Mix (Contributions) – 2019Q2 İşbank

(Branch+DS+TS)

85,4% Tele Sales 3,3% Agency 11,4% Others 3,3% İşbank

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Anadolu Hayat Emeklilik

Deep Bench with Lots of Talent

Total Number

• f Employees:1,082

6% 26% 33% 21% 9% 3% 2% 18-24 25-29 30-34 35-39 40-44 45-49 50+

Young & Energetic

0,4% 2,1% 89,4% 8,1%

Primary Level High School University Graduate

Educated

61% 39% Female Male

Diverse

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Anadolu Hayat Emeklilik

Corporate Strategy

Finance Become the market leader among private pension and life insurance companies Customer Optimize customer and product portfolio to make the best use of sales potential Process Design cost oriented simple processes for top-notch customer experience Improvement and Learning Continuously develop business model and human resources to become the leader in all arenas

Become both the private pension and life insurance market leader Optimize operational profitability and efficiency Optimize ROE and risk portfolio Utilize the Bancassurance channel in the most effective way Make the best use of up and cross selling

• pportunities

Extend quality customer base Develop integrated, agile and solution focused systems Optimize acquisition and service related costs by digitalization Become a superb service provider Differentiate through new infrastructure and business model Enhance collaboration and interaction within teams Become the first choice for employees through high performance teams

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Anadolu Hayat Emeklilik

Strong Infrastructure

Core System Transformation Project The first phase of the transformation project to serve private pension operations established in February 2017 including a huge migration from the old legacy system. Second phase of the Project, covering life insurance operations has started in 2017 and its first delivery is aimed to go live by the end of 2019. New IT infrastructure is flexible, modular and state of the art which will reduce reliance on IT resources, reduce the time to market for new products, gain process efficiencies with automation for a unique customer experience, reduce

• perational risk, increase the

ability to deal with regulatory change.

CRM

(Microsoft Dynamics)

Hardware Architecture Transformation

(Exadata)

Payment and Collection Processes Module

(Payment HUB)

Commission and Intermediary Campaigns Rule Engine

Operational Excellence Digital Corporate Identity

(AHEŞUBE, AHEMOBİL, AHEPAD)

Financial Systems Transformation

(GL / FAH)

Insurance Applications Transformation

Integrated BI and Reporting Platform

(Atlas)

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Anadolu Hayat Emeklilik

Perfect Customer Experience

Internet Branch anadoluhayat.com.tr Mobile App Chat Bot Brand Language Robo Advisor Operational Excellence

Customer Experience Projects & Operational Excellence Among the vision of ‘Perfection in Customer Experience’, there are 7 ongoing projects. Our new web site has been served in June 2019; our Brand Language Manual has been completed and ready to be posted.

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Anadolu Hayat Emeklilik

Focus on Customer Retention

97 98 99 100

Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19

Continuity Index (%)

AHE System Sector Average

* Pension Monitoring Center data as of May 2019 (last 12 months’ average)

• Key account management
• Consultancy through investment managers
• Exclusive customer service on call center
• Special customer loyalty programs
• Premium gifts for special days

Lowest churn rate in peer group

• 1.4% monthly churn rate* (1.4% sector

average) Extensive use of CRM

• Campaign, lead and customer

complaints management, key account management Predictive Modeling

• Churn risk ratios based warning & action

processes

• Customer profiling
• Offers based on customer behaviors
• Churn analysis

VIP segment focus

• Reduce churns, increase cross-selling,

improve customer interaction and keep it alive, inform, raise regular contributions, avoid non payment

• Emphasis of benefits in outbound calls
• Differentiation of target audience according

to customer profiling Outbound retention calls

• Customer experience program
• Customer satisfaction surveys & researches
• Customer journeys based on different

personas Customer Experience Management Outbound retention calls

• Reduce churns, increase cross-selling, improve

customer interaction and keep it alive, inform, raise regular contributions, avoid non payment

• Emphasis of benefits in outbound calls
• Offer for increasing the contribution amount to

get maximum state subsidy by incoming call

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Anadolu Hayat Emeklilik

A Strong Brand Name

*SocialBrands Data Analytics Awards evaluate brands’ performance according to the SocialBrands social media brand index which is consolidated from independent data

The first and only UNEP-FI member of Turkish insurance sector Became Women’s Empowerment Principles (WEPs) signatory. Offset its carbon footprint resulting from its operations through financial support to renewable energy projects and became a carbon neutral company. Received golden prize in 2019 SocialBrands Data Analytics Awards among private pension and life insurance firms.* Received «Customers’ Friend» award by international certification association ICERTIAS Awarded as best-in-class private pension company at customer experience in 2019 at A.L.F.A awards .

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Anadolu Hayat Emeklilik

Strong Market Positioning in Private Pensions

863.365 1.026.593 1.120.505 1.148.956 1.113.878 1.146.723 1.140.805

2014 2015 2016 2017 2018 2018H1 2019H1

17% 17% 17% Market Share

Participants Technical Profit (TRY million)

7.394 8.945 11.366 14.579 16.379 15.104 18.677

2014 2015 2016 2017 2018 2018H1 2019H1

20% 19% 19% 19% Market Share

Assets Under Management (TRY million)

5.497 6.831 8.189 9.652 10.763 10.354 11.420

2014 2015 2016 2017 2018 2018H1 2019H1

Contributions (TRY million)

Source: Pension Monitoring Center

19% 18% 18% 18% Market Share 17% 16% 19% 18%

3,7 22,0 21,1 67,1 87,6 46,0 44,3

2014 2015 2016 2017 2018 2018H1 2019H1

16% 19% 18% 16% 18% 19%

39

364,7 402 500,6 574,7 639,2 322,2 388,9

2014 2015 2016 2017 2018 2018H1 2019H1

Anadolu Hayat Emeklilik

Strong Market Positioning in Life Insurance

11% 11% 10% Market Share

Life Insurance GWP (TRY million) Technical Profit (TRY million)

198,2 259,0 395,0 459,4 449,9 240,9 272,9

2014 2015 2016 2017 2018 2018H1 2019H1

7% 8% 9% Market Share

Term Life GWP (TRY million) Mathematical Reserves – Life Insurance Fund Size

Market Share* AHE 24% Others 76%

Market Leader with 2.0 billion TRY AUM

*As of 31.05.2019

7%

Term Life 70% Saving/ Endowment 28% Annuity 2%

2019 H1

63,8 86,5 112,5 132,6 151,1 80,0 89,9

2014 2015 2016 2017 2018 2018H1 2019H1

9% 7%

Source: Insurance Association of Turkey , Life Insurance Information and Monitoring Center

8% 8%* 8% 7% 7%*

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Anadolu Hayat Emeklilik

Statutory Financials

134,8 175,9 229,8 279,8 322,2 166,5 194,1

2014 2015 2016 2017 2018 2018H1 2019H1

67,5 108,3 133,0 199,2 237,6 125,5 133,8

2014 2015 2016 2017 2018 2018H1 2019H1

Gross Profit for the Period (TRY Million) Technical Profit (TRY Million)

128 184 215 249 268 710 789 877 949 968

2014 2015 2016 2017 2018

Required Capital Total Capital

553% 430% 408% 381% Capital Adequacy Ratio

Shareholders’ Equity and Capital Adequacy Ratio (TRY Million)

2014 2015 2016 2017 2018

ROAE 16% 20% 23% 25% 27%

361%

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Anadolu Hayat Emeklilik

Statutory Financials

Net Distributable Profit / Dividend to Shareholders (TRY Million) Dividend Payout Ratio (%)

90 142 186 221 255 60 100 140 170 130

2014 2015 2016 2017 2018

Net Distributable Profit Dividend to Shareholders

67 70 75 77 51

2014 2015 2016 2017 2018

Cash Dividend / Net Distributable Profit (%)

0.16 0.24 0.33 0.40 0.30 Dividend per Share Gross (TRY)

42

Anadolu Hayat Emeklilik

Statutory Financials

67,5 108,3 133,0 199,2 237,6 125,5 133,8 241,7 270,4 318,9 352,5 440,1 212,1 250,3

2014 2015 2016 2017 2018 2018H1 2019H1

Technical Profit Operating Expenses Technical Profit / Operating Expenses (TRY Million)

Marketing Expenses 6% Employee Benefit Expenses 31% Commission Expenses 40% Administration Expenses 23%

Operating Expenses – 2019 H1

15,8 15,6 17,2 16,0 21,8 18,3 21,9 2014 2015 2016 2017 2018 2018H1 2019H1

Expense Ratio (%) (*)

(*) G&A Expenses / Contributions+GWP

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Anadolu Hayat Emeklilik

Statutory Financials

Summary of Income Statement

(mio TRY) 2014 2015 2016 2017 2018 CAGR 2018H1 2019H1 YOY Non-Life Technical Profit / Loss

• 0.03
• 0.24
• 0.57
• 0.54
• 1.08
• 0.53
• 0.40
• 25%

Life Technical Profit / Loss 63.80 86.48 112.49 132.61 151.10 24% 80.04 89.90 12% Pension Technical Profit / Loss 3.69 22.02 21.09 67.12 87.56 121% 46.01 44.32

• 4%

General Technical Profit / Loss 67.46 108.26 133.01 199.19 237.58 37% 125.52 133.82 7% Net Investment Income 69.61 72.07 101.88 98.20 98.28 9% 53.65 52.78

• 2%

Other Income/Expenses

• 2.30
• 4.48
• 5.09
• 17.58
• 13.64

56%

• 12.64

7.47

• Profit Before Taxes

134.77 175.85 229.80 279.81 322.21 24% 166.53 194.07 17%

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Anadolu Hayat Emeklilik

Statutory Financials

Pension Technical Profit

(mio TRY) 2014 2015 2016 2017 2018 CAGR 2018H1 2019H1 YOY Pension Technical Income 166.57 209.06 236.76 300.55 369.19 22% 178.81 203.94 14% 1- Fund Management Income 113.57 144.26 173.82 216.74 256.42 23% 124.40 140.36 13% 2- Management Fee 21.58 26.38 21.20 32.96 46.36 21% 22.72 30.39 34% 3- Entrance Fee Income 26.13 32.05 37.08 42.60 53.89 20% 25.74 25.38

• 1%

4- Other Technical Income 5.29 6.37 4.66 8.25 12.52 24% 5.95 7.81 31% Pension Technical Expense

• 162.88
• 187.04
• 215.67
• 233.43
• 281.63

15%

• 132.80
• 159.62

20% 1- Total Fund Expenses

• 16.99
• 22.34
• 24.57
• 31.08
• 23.57

9%

• 12.76
• 13.51

6% 2- Operating Expenses

• 144.11
• 157.26
• 181.71
• 187.91
• 237.97

13%

• 110.91
• 134.85

22% 3- Other Technical Expenses

• 1.78
• 7.44
• 9.39
• 14.44
• 20.09

83%

• 9.13
• 11.26

23% Pension Technical Profit 3.69 22.02 21.09 67.12 87.56 121% 46.01 44.32

• 4%

45

Anadolu Hayat Emeklilik

Statutory Financials

Life Technical Profit

Technical Margin (Technical Profit / Earned Premiums) 18.1% 22.1% 23.7% 24.4% 24.2% (mio TRY) 2014 2015 2016 2017 2018 CAGR 2018H1 2019H1 YOY Life Technical Income 550.43 602.51 700.85 741.97 1.004.27 16% 500.29 549.09 10% 1- Earned Premiums (Net of Reinsurer Share) 353.32 391.78 475.43 544.07 625.55 15% 316.76 377.12 19% 2- Investment Income 188.62 202.87 214.83 190.80 368.91 18% 178.43 167.77

• 6%

3- Other Technical Income 8.49 7.86 10.59 7.10 9.80 4% 5.10 4.20

• 18%

Life Technical Expense

• 486.63
• 516.03
• 588.36
• 609.36
• 853.17

15%

• 420.25
• 459.19

9% 1- Incurred Losses (Net of Reinsurer Share)

• 542.81
• 426.60
• 448.86
• 403.40
• 491.12
• 2%
• 228.80
• 269.91

18% 2- Change in Provision for Bonus and Discounts

• 0.03
• 0.15
• 0.14

0,16

• 0.12

41%

• 0.24

0.05

• 3- Change in Life Mathematical Provisions

155.52 26.54 2.27

• 36.53
• 155.21
• 88%
• 87.46
• 71.05
• 19%

4- Change in Other Technical Provisions

• 2.19
• 3.11
• 4.96
• 5,81
• 5.67

27%

• 3.01
• 3.44

14% 5- Operating Expenses

• 97.12
• 112.71
• 136.67
• 163.78
• 201.05

20%

• 100.74
• 114.84

14% Life Technical Profit 63.80 86.48 112.49 132.61 151.10 24% 80.04 89.90 12% 25.3% 23.8%

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