Investor Presentation Istanbul, Turkey June 2017 Agenda 1. Turkey - - PowerPoint PPT Presentation

Investor Presentation

Istanbul, Turkey – June 2017

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%

1990-1999 2000-2009 2010-2016 GDP Average Annual Growth*

Turkey OECD Euro-15

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

Over the last decade and half, Turkey successfully stabilized its macro economy. After the 1999–2001 economic crises, Turkey maintained a highly successful policy

• f

macroeconomic stabilization.

• 5%
• 4%
• 3%
• 2%
• 1%

0%

2011 2012 2013 2014 2015 2016 Budget Balance (% of GDP)**

Euro Area EM Turkey 0% 10% 20% 30% 40% 50% 60% 70% 80%

CPI*** and Interest Rates****

CPI Interest Rates

5

• 12%
• 10%
• 8%
• 6%
• 4%
• 2%

0% 2% 4% 6%

2011 2012 2013 2014 2015 2016 Current Account Balance (% of GDP)*

Euro Area EM Turkey

Turkey at a Glance

Urgent Need to Increase Domestic Savings

* 2016 figures are IMF estimates ** All data represents 3rd quarter figures, except for 2012 which shows the year-end figures Source: *IMF and **CBT Financial Stability Report

0% 1% 2% 3% 4% 5% 6% 7% 250 500 750 1,000 1,250

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

Pension Funds Total Household Savings Weight of Pension Funds

Republic of Turkey – Medium Term Programme

Article 81: “Charging ratio will be converged to international levels in the private pension system and “auto enrolment system” will be

• implemented. Life insurance and long-term

(over one year) private health insurance will be developed.”

Medium Term Programme (2016-2018), prepared by Ministry

• f Development was adopted by Cabinet Decree No.

2015/8355, 29.12.2015 and published in Official Gazette No. 29590, 11.01.2016.

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

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

Euro Area EM Turkey

6

Turkey at a Glance

Demographic Opportunity Window

2016 2050

Population (millions) : 79.8 93.5 Median Age : 31,4 43 Fertility : 2.14 1.65 Proportion of Elderly Population : 8.3% 20.8%

2017 April

Population 15 Years And Over (thousands) : 59,709 Labor Force (thousands) : 31,444 Employed (thousands) : 28,157 Labor Force Participation Rate : 52.7% Unemployment Rate : 10.5% Non-Agricultural Unemployment Rate : 12.4%

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

• 48 percent of the population is under 30 years old.
• Only 8 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% 1% 2% 3% 4% 5% 6% 7% 8% 9%

Population By Age

2016 2050

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 started in 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 companies. Minimum retirement age: 56 Completion of 10 years. Started in 2003. 18 companies in 2017. 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% (early leave, 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 starting in 2017
• Severance Payments

* Funds from associations, foundations, provident funds and other organizations with retirement provisions. Source: Pension Monitoring Center as of 30.06.2017

10 20 30 40 50 60 70 80

2009 2010 2011 2012 2013 2014 2015 2016 2017H1

AUM State Contribution

Pension AUM Growth

(TRY billion)

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

2009 2010 2011 2012 2013 2014 2015 2016 2017H1

Number of Participants

(Thousands)

14

Our Markets

Pillar III Private Pension System: Big Growth Potential

123.6% 49.5% 5.5%

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

Netherlands United States Weighted average United Kingdom Finland Ireland Simple Average Japan Spain Portugal Slovak Republic Poland Slovenia Germany Austria Belgium Turkey Hungary

Pension Funds as a Percentage of GDP

Turkey OECD Simple Average OECD Weighted Average

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 6.7 Million Social Security Participants 21.7 Million Work Force 31.4 Million Working-Age Population 59.7 Million

Total Population 79.8 Million

Source: OECD; Turkish Statistics Institute as of 30.04.2017; Social Security Institution as of 30.04.2017; Pension Monitoring Center as of 31.03.2017

15

Our Markets

Attractive Market

10 9 6 6 5 4 4 13 14 17 18 19 19 18 2010 2011 2012 2013 2014 2015 2016

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 : 60.7 Billion TRY State Contribution Funds : 9 Billion TRY Assets Under Management : 69.7 Billion TRY Intermediaries : 42,047 Pension Companies : 18 5.9% 28.8% 34.0% 22.9% 8.5%

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

Individual 75%

Non- Sponsored Groups 21% Employer Sponsored Groups 4%

Contributions Total Amount by Contract Type

Bank 72% Other 2% Direct Sales 11% Corporate Sales 4% Agent 11%

Distribution of Contributions by Marketing Channel

(2016 total)

1,000 1,500 2,000 2,500 3,000

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

Source: Pension Monitoring Center As of 30.06.2017

17

Our Markets

Private Pension System: Pension Funds*

Equity 11.7% Repo and Money Market Instruments 6.5% International Securities 2.8% Government Bonds 49.6% Corporate Bonds 10.5% Time Deposits 18.9%

Asset Allocation of Pension Funds Number of Funds : 292 Total AUM : 70.3 Billion TRY Return on Pension Funds (2004-2017H1) Nominal : 383.8% 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% 9.0% 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% 2.9%

Nominal & Real Investment Return of Pension Funds

Nominal Return Real Return

As of 30.06.2017 * Includes Auto Enrolment funds

18

Our Markets

Private Pension System: New Frontiers

Auto Enrolment Severance Payments Simplification

• f Fund

Choices

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 call back period. Voluntary opt-out at any time Law enacted in August 2016; in force by 2017.

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

* Based on the Law enacted in August 2016 and the complementary legislation.

Automatic re- enrolment of employees that withdraw

• r leave the system

in every two years

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.

Contribution Stage Investment Stage Retirement Stage

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+

• 2.2 Million

15 2017 April 250 – 999

Public administrations

4.0 Million 28 2017 July 100 – 249

• 1.5 Million

11 2018 January 50 – 99

Public enterprises + local administrations

1.3 Million 9 2018 July 10 – 49

• 2.7 Million

19 2019 January 5 - 9

• 2.5 Million

17

Total 14.2 Million 100

WORKFORCE*

* Social Security Institution, Turkish Statistics Institute, April 2017 ** Estimated as 75% of the 4a and 4c participants *** Target market estimated by Undersecretariat of Treasury

Eligible Employees (age less than 45)** 12.6 Million Social Security Participants (4a&4c) 16.8 Million Social Security Participants 21.7 Million Employed 28.1 Million Work Force 31.1 Million 3.0 Million

(4c public sector)

12.9 Million

(4a private sector)

0.9 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 2,515.627 Number of Certificates 2,537,218 Total Funds (TRY) 600,136,238

*Source: Pension Monitoring Center as of 30.06.2017

Staging Process Second phase of Auto Enrolment has been completed. The employees of private companies over 250 employees and public administrations has been enrolled in one of auto enrolment plans.

Date Target

2017 January Private companies with 1,000+ employees 2017 April Private companies with 250-999 employees Public administrations 2017 July Private companies with 100-249 employees 2018 January Private companies with 50-99 employees Public enterprises and local administrations 2018 July Private companies with 10-49 employees 2019 January Private companies with 5-9 employees

24

Our Markets

Life Insurance: Underpenetrated Market

21 144 164

962 658 1,620 353 285 638 Life Insurance Non Life Insurance Total Insurance Turkey Europe World Insurance Premium per Capita (USD) Global Comparison (2016) Source: Sigma, SwissRe

Country / Region Life GWP (in % of GDP) Share of World Market (in %) Turkey 0.2 0.06 Europe 4.0 32.8 OECD 4.0 75.7

World 3.5 100 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

Life Insurance Total GWP

(TRY million)

2,679 3,350 3,229 3,701 4,963 2,245 3,314

1% 25%

• 4%

15% 34%

• 50%
• 40%
• 30%
• 20%
• 10%

• 500.00

2012 2013 2014 2015 2016 2016H12017H1

Life Total GWP (million TRY) Growth Rate

2012 2013 2014 2015 2016

Term Life Endowment / Saving Annuity

CAGR 17%

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

Anadolu Hayat Emeklilik

Corporate Profile

27

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 16.1 Billion TRY

SECTOR’S LEADER

Life and Private Pension Funds 14.7 Billion TRY

SECTOR’S LEADER

Private Pension Contracts 1.3 Million * The rate of publicly traded shares is 17%. As at 23 February 2017, İşbank owns the 1.89% of the publicly traded shares.

28

Anadolu Hayat Emeklilik

At a Glance* I

Organization

Headquartered in Istanbul 11 District Sales Offices Branch Office in TRNC

II

Human Resources

HQ and Regions : Direct Sales Team : Total : 525 500 1,025

III

Financial Metrics

Total Assets : Shareholders’ Equity : Gross Profit : Market Value : 16,103 million TRY 840 million TRY 141 million TRY 2,382 million TRY

IV

Brand Value

Highest brand value in the sector First remembered private pension company Private Pension NPS 38 (sector benchmark 5)** 38% ***

V

Market Position

Private Pension Contracts : Participants : Assets Under Management : #1 – 16% #2 – 17% #2 – 19% Life Insurance AUM (Mathematical Reserves)**** : Gross Written Premium : #1 – 29% #3 – 9% *As of 30.06.2017 **IPSOS ***TNS **** As of 31.05.2017

29

Anadolu Hayat Emeklilik

Financial Highlights

(Million TRY) 2015 2016 Change 2016H1 2017H1 Change Total GWP and Net Contributions 1,736.8 1,859.3 7% 833.4 933.8 12% Life Mathematical Reserves 1,700.2 1,682.4

• 1%

1,695.3 1,713.9 1% Pension AUM 8,933.6 11,359.4 27% 10,233.3 13,078.3 28% Total Assets 11,889.2 14,391.7 21% 13,212.7 16,102.7 22% Shareholders Equity 778.2 860.9 11% 789.1 840.4 7% Total Technical Profit 108.5 133.0 23% 62.7 95.0 51% Life 86.5 112.0 29% 51.5 63.9 24% Private Pension 22.0 21.0

• 5%

11.2 31.1 177% Financial Income 87.5 123.4 41% 56.3 65.7 17% Profit for the Period 175.8 229.8 31% 109.0 141.2 29% Net Profit 145.1 190.3 31% 86.3 114.8 33% Key Financial Metrics ROAE* 20% 23% Expense Ratio 15.6% 17.2% P/E Ratio* 17.1 11.2 P/B Ratio 3.2 2.5 Earnings per Share* 0.35 0.44 20% 27% 17.6% 17.8% 14.6 10.9 2.8 2.8 0.34 0.51 *H1 calculations are based on trailing four quarters’ data.

30

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

Low Risk Medium Risk High Risk

Bond Fund Bond Fund (HSBC) Money Market Fund Conservative Fund Group Bond Fund Group Conservative Fund Standard Fund State Contribution Fund Alternative State Contribution Fund Initial Fund Initial Alternative Fund Eurobond $ Fund Eurobond € Fund International Mixed Fund Balanced Fund Alternative Income Fund Dynamic Flexible Fund Private Sector Bonds Fund Group Mixed Eurobond Fund Gold Fund Equity Fund Equity Fund (HSBC) Aggressive Fund BRIC Plus Fund Group Equity Fund Isbank Subsidiaries Fund

Lines of Business Pension Funds

Auto Enrolment Auto Enrolment Plans

31

Anadolu Hayat Emeklilik

Distribution Network

25 District Sales Offices 1,371 Branches 1,923 Licensed Intermediaries 55 Licensed Tele-Sales Agents 11 District Sales Offices Branch in Northern Cyprus 45 Regional Sales Managers 455 Direct Sales Team 284 Agencies 617 Licensed Intermediaries 111 Branches 3 Branches 1 Branch

Private Pensions New Business Channel Mix (Contributions) – 2017H1

(Branch+DS+TS)

83%

Tele Sales 7%

Agency 12% Others 5% İşbank

Anadolu Hayat Emeklilik

Deep Bench with Lots of Talent Total Number

• f Employees: 1,025

4% 26% 35% 21% 9% 4% 2% 18-24 25-29 30-34 35-39 40-44 45-49 50+

Young & Energetic

0.5% 3% 89% 8% Primary Level High School University Graduate

Educated

61% 39% Female Male

Diverse

33

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 Execute sales-oriented transformation Become the first choice for employees through high performance teams

34

Anadolu Hayat Emeklilik

Strong Infrastructure

Core System Transformation Project The first phase of the transformation project to serve private pension

• perations established in February

2017 including a huge migration from the old legacy system. Second phase of the project covering life insurance operations is scheduled in 2017. 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 Hardware Architecture Transformation

(Exadata)

Payment and Collection Processes Module

(Payment HUB)

Commission and Intermediary Campaigns Rule Engine

Mechanization of Operational Processes Digital Corporate Identity

(AHEŞUBE, AHEMOBİL, AHEPAD)

Financial Systems Transformation

(GL / FAH)

Insurance Applications Transformation

Integrated BI and Reporting Platform

(Atlas)

35

Anadolu Hayat Emeklilik

Focus on Customer Retention

Lowest churn rate in peer group

• 0.9% monthly churn rate* (1.1%

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

VIP segment focus

• Campaigns to raise regular and

additional contributions

• Automated collection warning

mechanisms. Collections Performance

• Key account management
• Consultancy through investment

managers

• Exclusive customer service on call center
• Special customer loyalty programs

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

Continuity Index (%)

AHE System Sector Average

* Pension Monitoring Center data as of May 2017

36

Anadolu Hayat Emeklilik

A Strong Brand Name

Turkey’s best life insurance company

• 2nd time -

Turkey’s most admired private pension company *

• 5th time-

Awarded by Middle East Insurance Forum (MEIF) as the best performing insurance company in Levant region **

* «Turkey’s Most Admired Companies 2016» survey conducted by Capital Magazine. ** MEIF Awards takes into account key financial metrics and provides industry participants an objective peer-to-peer ranking. Levant region: Turkey, Cyprus, Egypt, Iraq, Israel, Jordan, Palestine, Syria. *** Voice of the Customer Survey carried out by Turkish Society for Quality and Ipsos in 2016 **** SocialBrands Data Analytics Awards evaluate brands’ performance according to the SocialBrands social media brand index which is consolidated from independent data

The life insurance and private pension company with the highest customer loyalty in Turkey *** Received golden prize in 2017 SocialBrands Data Analytics Awards among private pension and life insurance firms ****

37

Anadolu Hayat Emeklilik

Strong Market Positioning in Private Pensions

629,123 733,137 863,365 1,026,593 1,120,399 1,086,839 1,132,761

2012 2013 2014 2015 2016 2016H1 2017H1

20% 18% 17% 17% 17% Market Share

Participants Technical Profit (mio TRY)

4,278 5,243 7,394 8,945 11,366 10,247 13,061

2012 2013 2014 2015 2016 2016H1 2017H1

21% 20% 20% 19% 19% Market Share

Assets Under Management (mio TRY)

3,340 4,333 5,497 6,831 8,189 7,449 8,843

2012 2013 2014 2015 2016 2016H1 2017H1

Contributions (mio TRY)

Source: Pension Monitoring Center

21% 20% 19% 18% 18% Market Share

19.5

• 11.1

3.7 22.0 21.1 11.2 31.1

• 15.00
• 10.00
• 5.00

2012 2013 2014 2015 2016 2016H1 2017H1

17% 17% 19% 19% 19% 18%

38

367.0 394 364.7 402.1 500.6 215.3 282.6

2012 2013 2014 2015 2016 2016H1 2017H1

Anadolu Hayat Emeklilik»

Strong Market Positioning in Life Insurance

14% 12% 11% 11% 10% Market Share

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

153.3 186.2 198.2 259.0 395.0 165.1 227.8

2012 2013 2014 2015 2016 2016H1 2017H1

7% 6% 7% 8% 9% Market Share

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

Market Share AHE 29% Others 71%

Market Leader with 1.7 bio TRY AUM

Source: Insurance Association of Turkey , Life Insurance Information and Monitoring Center * As of 31.05.2017

33.4 63.4 63.8 86.5 112.5 51.8 63.9

2012 2013 2014 2015 2016 2016H1 2017H1

10% 9% 8% %8*

Term Life 80.6% Saving 15.8% Annuity 3.6%

2017H1

39

Anadolu Hayat Emeklilik

Statutory Financials

105.7 99.0 134.8 175.9 229.8 109.0 141.2

2012 2013 2014 2015 2016 2016H1 2017H1

52.9 52.3 67.5 108.3 133.0 62.7 95.0

2012 2013 2014 2015 2016 2016H1 2017H1

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

121 124 128 184 215 525 620 710 789 877

2012 2013 2014 2015 2016

Required Capital Total Capital

433% 500% 553% 430% 408% Capital Adequacy Ratio

Shareholders’ Equity and Capital Adequacy Ratio (mio TRY)

2012 2013 2014 2015 2016

ROAE 17% 15% 16% 20% 23%

40

Anadolu Hayat Emeklilik

Statutory Financials

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

79 82 90 142 186 40 50 60 100 140

2012 2013 2014 2015 2016

Net Distributable Profit Dividend to Shareholders

51 61 67 70 75

2012 2013 2014 2015 2016

Cash Dividend / Net Distributable Profit (%)

0.13 0.14 0.16 0.24 0.33

Dividend per Share Gross (TRY)

41

Anadolu Hayat Emeklilik

Statutory Financials

52.9 52.3 67.5 108.3 133.0 62.8 95.0 175.4 215.4 241.7 270.4 318.9 147.1 166.0

2012 2013 2014 2015 2016 2016H1 2017H1

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

Marketing Expenses 8% Employee Benefit Expenses 33% Commission Expenses 39% Administration Expenses 20%

Operating Expenses – 2017 H1

16.2 15.5 15.8 15.6 17.2 17.6 17.8 2012 2013 2014 2015 2016 2016H1 2017H1

Expense Ratio (%) (*)

(*) G&A Expenses / Contributions+GWP

42

Anadolu Hayat Emeklilik

Statutory Financials

Summary of Income Statement

(mio TRY)

2012 2013 2014 2015 2016 CAGR 2016 H1 2017 H1 YOY

Non-Life Technical Profit / Loss 0.01 0.02

• 0.03
• 0.24
• 0.57
• 0.27
• 0.02
• 93%

Life Technical Profit / Loss 33.42 63.41 63.80 86.48 112.49 35% 51.75 63.87 23% Pension Technical Profit / Loss 19.50

• 11.14

3.69 22.02 21.09 2% 11.26 31.15 177% General Technical Profit / Loss 52.93 52.29 67.46 108.26 133.01 26% 62.74 95.00 51% Net Investment Income 56.33 48.39 69.61 72.07 101.88 16% 45.21 52.57 16% Other Income/Expenses

• 3.58
• 2.20
• 2.30
• 4.48
• 5.09

9% 1.07

• 6.40
• Profit Before Taxes

105.68 98.48 134.77 175.85 229.80 21% 109.02 141.17 29%

43

Anadolu Hayat Emeklilik

Statutory Financials

Pension Technical Profit

(mio TRY)

2012 2013 2014 2015 2016 CAGR 2016 H1 2017 H1 YOY

Pension Technical Income 139.03 132.00 166.57 209.06 236.76 14% 113.33 140.95 24% 1- Fund Management Income 88.47 90.76 113.57 144.26 173.82 18% 82.03 101.75 24% 2- Management Fee 33.95 17.77 21.58 26.38 21.20

• 11%

9.62 15.22 58% 3- Entrance Fee Income 16.12 20.24 26.13 32.05 37.08 23% 19.54 20.86 7% 4- Other Technical Income 0.49 3.23 5.29 6.37 4.66 76% 2.14 3.12 46% Pension Technical Expense

• 119.53
• 143.14
• 162.88
• 187.04
• 215.67

16%

• 102.07
• 109.80

8% 1- Total Fund Expenses

• 15.07
• 16.30
• 16.99
• 22.34
• 24.57

13%

• 12.26
• 14.24

16% 2- Operating Expenses

• 102.99
• 125.96
• 144.11
• 157.26
• 181.71

15%

• 85.99
• 89.54

4% 3- Other Technical Expenses

• 1.47
• 0.88
• 1.78
• 7.44
• 9.39

59%

• 3.82
• 6.02

58% Pension Technical Profit 19.50

• 11.14

3.69 22.02 21.09 2% 11.26 31.15 177%

44

Anadolu Hayat Emeklilik

Statutory Financials

Life Technical Profit

(mio TRY)

2012 2013 2014 2015 2016 CAGR 2016 H1 2017 H1 YOY

Life Technical Income 502.68 598.51 550.43 602.51 700.85 9% 275.26 345.90 20% 1- Earned Premiums (Net of Reinsurer Share) 346.81 382.88 353.32 391.78 475.43 8% 202.81 261.50 22% 2- Investment Income 149.64 206.89 188.62 202.87 214.83 9% 68.61 80.54 15% 3- Other Technical Income 6.23 8.74 8.49 7.86 10.59 14% 3.84 3.86 1% Life Technical Expense

• 469.26
• 535.10
• 486.63
• 516.03
• 588.36

6%

• 223.51
• 282.03

21% 1- Incurred Losses (Net of Reinsurer Share)

• 454.75
• 527.63
• 542.81
• 426.60
• 448.86
• 0,33%
• 245.67
• 213.34
• 15%

2- Change in Provision for Bonus and Discounts

• 0.26

0.13

• 0.03
• 0.15
• 0.14
• 0.04
• 0.08

47% 3- Change in Life Mathematical Provisions 59.54 83.43 155.52 26.54 2.27

• 85.09

10.43

• 4- Change in Other Technical Reserves
• 1.71
• 2.00
• 2.19
• 3.11
• 4.96
• 2.03
• 2.88

29% 5- Operating Expenses

• 72.08
• 89.03
• 97.12
• 112.71
• 136.67

17%

• 60.86
• 76.16

20% Life Technical Profit 33.42 63.41 63.80 86.48 112.49 35% 51.75 63.87 19% Technical Margin (Technical Profit / Earned Premiums) 9.6% 16.6% 18.1% 22.1% 23.7% 25.5% 24.4%

45

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• material. Anadolu Hayat Emeklilik A.Ş. does not accept any liability whatsoever for any direct
• r consequential loss arising from any use of this document or its contents due to the

misleading information in this document. All estimations contained in this document are

• pinions of Anadolu Hayat Emeklilik A.Ş. and can be subject to change without notice. This

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