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Anadolu Hayat Emeklilik Annual Report 2013
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Contents
General Information and Activities
2 Anadolu Hayat Emeklilik in Brief
3 Our Vision, Our Mission, Our Corporate
Strategy
12Milestones
15Directory
16 Chairman’s Assessment of 2013
18 Message from the CEO
20 An Overview of the World and Turkish
Economies in 2013 and 2014 Outlook
22 Anadolu Hayat Emeklilik by Numbers
24 Organization Chart
26 Board Directors
28 Declarations of Independence by Independent
Members of the Board of Directors
30 Executive Board
31 Managers Responsible for Internal Systems
32 Outside Positions Held by the Board Directors
and Executives
33 Goals and Policies of Anadolu Hayat Emeklilik
34 An Overview of Anadolu Hayat Emeklilik’s
Position in the Industry and its Activities in
2013
40 Research and Development for New Services
and Activities
41İşbank
42 Human Resources Policy
44 Modifications to the Articles of Incorporation
During the Fiscal Year
58 Changes in the Legislation during the Fiscal
Year
60 Other Material Disclosures Concerning the
Reporting Period
61 Transactions Executed with the Risk Group
in Which the Company is Included
63 An Assessment of Independent Audit, Internal
Control System and Internal Audit Activities by
the Board of Directors
64 Independent Auditor’s Compliance Opinion on
the Annual Report
Financial Position
66 Summary Report of the Board of Directors for
the General Assembly of Shareholders
68 Information on Financial Structure
70 Assessment of Financial Standing, Profitability
and Claims Payment Ability
72 5-Year Summary Financial Information
Including the Reporting Period
74 Dividend Payment Policy
Risks and an Assessment by the Board of
Directors
76 Active Committees and an Assessment by the
Board of Directors
79 Risk Management Policies and an Assessment
by the Board of Directors
Information on General Meeting
82 Ordinary General Meeting Agenda
84 2012 Profit Distribution Table
85 2013 Profit Distribution Proposal
Corporate Governance Principles Compliance
Report
87 Corporate Governance Principles Compliance
Report
Corporate Governance Principles Compliance
Report
104 Unconsolidated Financial Statements Together
with Independent Auditors’ Report Thereon
182 Anadolu Hayat Emeklilik 2013 Annual Report
Information on Consolidated Associate
183 Consolidated Financial Statements Together
with Independent Auditors’ Report Thereon
263 Information for Investors
“Shots from Life as Seen by Women” photography competition aims
to contribute to the social and cultural development of the
Turkish women, and offers them a platform where they can
freely express themselves.
1
Anadolu Hayat Emeklilik in Brief
A guide for the sector with its pioneering identity, experience and
vision, Anadolu Hayat Emeklilik is the generator of the highest amount of funds in
the sector on the basis of life insurance and private pension system aggregate.
Generator of the Highest
Amount of Funds
Anadolu Hayat Emeklilik
preserves and further
builds on its identity as the
generator of the highest
amount of funds in the
aggregate of life insurance
and private pension branches.
started operations in
1990 as Turkey’s first life
insurance company.
Upon establishment of the
Private Pension System in
Turkey in 2003, the Company
is reorganized into a private
pension company and began
offering services under the
company name Anadolu
Hayat Emeklilik A.Ş.
2
boasts an extensive and
correctly structured
service network.
provides service via regional
offices in İstanbul (2),
Ankara, İzmir, Adana, Bursa
and Antalya, a branch in the
Turkish Republic of Northern
Cyprus, besides its head office
in İstanbul. The extensive
service delivery capability
of Anadolu Hayat Emeklilik
is defined by its strong
bancassurance network,
direct sales force and nearly
300 agencies, which are
instrumental in bringing high
value-added products and
services to its customers.
A subsidiary of Türkiye İş
Bankası A.Ş. (İşbank), Anadolu
Hayat Emeklilik is the first
and only publicly traded
pension company in Turkey.
The Company’s shares are
quoted on the Borsa İstanbul
(BIST) National Market
under the symbol ANHYT.
Our Vision, Our Mission, Our Corporate Strategy
Our Mission
To develop and to nurture
in people an awareness of
the need to safeguard their
own futures and the futures
of their loved ones; to offer
financial solutions that ease
people’s doubts about the
future and enhance the quality
of their lives; and to contribute
to the development of the
national economy by creating
long-term financial resources.
Our Corporate Strategy
•Contribute to the stable
growth of the industry by
developing and maintaining
a diverse range of products
capable of satisfying
customers’ needs and
demands in terms of life
insurance and private
pensions.
•Increase our market share
by combining our success
in offering innovative
products and creating value
through an extensive service
network.
•Provide our customers
with financial security
and enable them to save
up for their retirement by
taking advantage of the
Company’s experience
and effectiveness in
the industry to achieve
superior performance in the
management of pension
funds.
•Maintain a sustainable level
of profitability that is above
the market average.
Our Vision
To be the leading company
in Turkey in all aspects of
financial planning that are
of concern to the future of
Turkey and the Turkish people.
3
Sector’s
Leader
The Sector’s leader
with Life and Pension
Funds
4
7,114
Most
Admired
Life and Private
Pension Funds 1,2
Turkey’s Most Admired
Private Pension
Company3
(¨ million)
Pension Monitoring Center (PMC) 3 January 2014 (including State Contributions.)
Life Insurance Information and Monitoring Center (HAYMER) (31 December 2013)
3
“Turkey’s Most Admired Companies 2013” survey conducted by Capital Magazine
1
2
Shots from Life as Seen by Women ‘13
Fishing Time
Ayşe Temizel
5
Sector’s
Leader
(¨ million)
Private Pension
Funds *
Private Pension
Funds
5,233
6
*
Pension Monitoring Center (PMC) 3 January 2014 (including State Contributions.)
734
(thousand)
Private Pension
Participants *
Shots from Life as Seen by Women ‘13
Limitless
Seyhan Babal
7
1,881
(¨ million)
Life Insurance
Assets
Life Insurance
Funds *
Sector’s
Leader
8
*
Life Insurance Information and Monitoring Center (HAYMER) 31 December 2013
1.6
(million)
Life Insurance
Policyholders *
Shots From Life As Seen by Women ‘13
The Loop
Cemile Çiğdem Kendir
9
7,902
*
83.2
(¨ million)
(¨ million)
Total Assets *
Shareholders’
Equity *
Net Profit *
10
534
(¨ million)
As of 31 December 2013
Shots From Life As Seen by Women ‘13
Lake Inhabitants
Şadan Genç
11
Milestones
Pioneering the firsts in the sector…
In 2013, Anadolu Hayat Emeklilik became the first pension company to reach five billion in
total funds in the private pension system.
1990
2001
2005
Anadolu Hayat Sigorta A.Ş. was founded
as Turkey’s first life insurance company
taking over the life insurance activities
carried out by Anadolu Anonim Türk
Sigorta Şirketi.
“Life for everyone” policy, Turkey’s firstever insurance coverage without any
age limitation and without requiring any
health conditions was introduced.
Bursa, Adana, İzmir and İstanbul branches
were reorganized as Marmara, South
Anatolia, Aegean, İstanbul 1st and
İstanbul 2nd regional offices.
Bancassurance activities carried out
with the parent company İşbank were
expanded by agency agreements with
Türk Ekonomi Bankası A.Ş. (TEB) and
HSBC Bank A.Ş. (HSBC).
1991
Regional branches were opened in
Ankara, Bursa, Adana and İzmir.
1992
Comprehensive Health Insurance policies
were started to be issued.
1995
First payouts on maturity were made in
the “Insurance of the Future”.
1998
Ankara Branch Office was renamed to
Central Anatolia Regional Office.
1999
Lefkoşa Branch was set up in the Turkish
Republic of Northern Cyprus to conduct
life insurance activities. Sirkeci and
Kadıköy branches were opened.
2000
12
Anadolu Hayat Sigorta A.Ş. became the
first and only life insurance company
whose shares are publicly traded.
The Company was relocated to İş Towers
which also houses İşbank subsidiaries.
2002
Upon publication of the “Private Pension
Savings and Investment System Law”, an
application was filed to be transformed
into a private pension company in order to
operate in this field.
2003
Upon the transformation permission
from the Republic of Turkey Prime
Ministry Undersecretariat of Treasury, the
Company received its license.
The first private pension contract was
issued on October 27.
2004
Undersigning yet another first, the
Company introduced the “Pension Plan
for Housewives” that provides income for
housewives without social security and
supplementary income in older ages.
According to legislation, the Company’s
health insurance portfolio and activities
were transferred to Anadolu Anonim Türk
Sigorta Şirketi.
Online payment of private pension
contributions and life insurance premiums
via the internet was enabled.
2006
With the support of the Ministry of
National Education, the Company initiated
the social responsibility project “Girls: The
Insurance of our Future” in cooperation
with the Association for Supporting
Contemporary Living (ÇYDD).
Bancassurance activities were expanded
through agency agreements with
Anadolubank A.Ş. and TSKB A.Ş.
2007
First pensioners of the private pension
system were entitled to pension benefits.
The Company website was renovated
enabling online transactions for private
pension accounts.
An agency agreement was signed with
Bank Pozitif A.Ş.
A photography contest titled “Shots from
Life as Seen by Women” was organized.
Anadolu Hayat Emeklilik became the first
pension company to hit the 300,000
participants mark under the private
pension system.
The Company exceeded ¨1 billion in total
funds.
PPS+ packages were started to be sold
covering either one of “Life Insurance
with Serious Illness Cover”, “Annual
Life Insurance” or “Life for Everyone
Insurance” products in addition to the
Private Pension Plan.
2009
2010
The Company became a member of the
Insurance Arbitration System.
Volume of the participants’ private
pension funds topped ¨2 billion.
Targeting credit card customers, Credit
Card Support Insurance policy was
launched.
“Shots from Life as Seen by Women”
photography contest has been held for
the fourth time.
“PPS+Support” package was started to
be sold covering private pension plan
contributions.
“PPS+Protection” package was started to
be sold to private pension customers.
The Company became the first pension
company to reach 400,000 participants in
the private pension system (PPS).
“Mobile Signature” implementation
was put into life, making Anadolu Hayat
Emeklilik the first and only insurance and
pension company enabling customers
to get a private pension plan using the
internet or their cell phones.
“PPS+Critical+Support” package was
put on sale, which provides cover for
contribution payments of private pension
customers in the event of serious illness
and disablement. It also provides death
cover.
A new variant was added to life insurance
policies issued in connection with loans,
and Loan Support Insurance incorporating
unemployment cover was added to its
product range.
Private Pension Plans portfolio was
further expanded with “Master’s Pension
Plan”, which incorporates the special
features of “Life-Cycle Fund Exchange
Model” and “Auto Re-Balancing System”, a
first in Turkey.
The competition “Young Ideas by Owner”
was launched, thereby enabling university
students’ idea conception related to the
industry.
the second time.
“Customer Services Center” started
operating in İçerenköy, İstanbul.
the third time.
The Company became the first pension
company to reach 500,000 participants in
the private pension system.
“Life for Everyone” policy was renamed in
Turkish.
An agency agreement was signed
with Albaraka Türk Katılım Bankası A.Ş.
(Albaraka Türk).
Anadolu Hayat Emeklilik was named the
“Most Admired Private Pension Company”
at the “Turkey’s Most Admired Companies
2010” survey conducted by Capital
magazine.
The Company set up “Emerging Markets
Flexible Pension Growth Fund” (BRIC Plus
Fund) and “Alternative Flexible Pension
Income Fund” (Alternative Income Fund)
and started their sales.
“Pension Income Plan” targeting private
pension system participants was put on
sale.
2008
13
Milestones
2011
2012
company to reach ¨3 billion in funds in the
private pension system.
pension company to reach ¨4 billion in
total funds and 600,000 participants in
the private pension system.
Number of participants topped 577,000
people.
the fifth time.
“Personal Accident Insurance” providing
cover for potential risks resulting from
accidents was put on sale for retail
customers.
Agency and cooperation agreements with
Türk Ekonomi Bankası (TEB) expired.
Anadolu Hayat Emeklilik took place
among the companies selected by the
Association of Turkish Notaries for
transfer of savings to the private pension
system.
Number of health risks covered by the
“Life Insurance with Serious Illness Cover”
sold in combination with the Private
Pension Plan rose from 9 to 21.
14
An implementation was introduced
enabling participants holding İşbank
credit cards incorporating Maximum
card features to transfer the MaxiPoints
earned to their private pension accounts
as additional contribution.
in the “Turkey’s Most Admired Companies
magazine.
Antalya Regional Office was established
and started operations.
With the aim of owning the word “future”,
the Company began using the slogan “A
Good Future for Everyone” and further
strengthened the emphasis on the word
“everyone” in line with the Company’s
vision.
the sixth time.
The Company set up and began selling
the “Dynamic Balanced Pension Fund”
(Dynamic Balanced Fund) and the “Income
Oriented Mixed Debt Instruments Pension
Fund” (Mixed Fund).
AHE-Sales section was created to enable
online sales from the Company’s website.
2013
pension company to reach ¨5 billion in
total funds in the private pension system.
in the “Turkey’s Most Admired Companies
magazine.
the seventh time.
Based on a global decision, HSBC Bank
A.Ş., which acted as an agency of Anadolu
Hayat Emeklilik, signed a contract with
another pension company and began
handling most of its new productions
through that company.
“AHE Gold Fund” was introduced.
“Contribution Pension Fund” (Contribution
Fund) and “Alternative Contribution
Pension Fund” (Alternative Contribution
Fund) were set up, whereby state
contributions will be placed in
investments.
Anadolu Hayat Emeklilik participants
received the highest amount of state
contribution in 2013.
The Company began selling four annuity
insurance policies: Insurance for Child,
Planned Future Insurance, Collateralized
Saving Insurance and Standard Saving
Insurance.
The Company introduced the Optional
Annual Life Insurance that also provides
coverage for full and permanent disability
as well as for death and accidental death.
Annuity products were restructured
under the names “Annuity” and
“Retirement Annuity” targeting different
age groups.
Compass and Basic Pension Plans were
introduced, which are directed towards
different customer needs.
Directory
Trade Registration Number:
265737
Website:
anadoluhayat.com.tr
For correspondence:
[email protected]
Head Office
Meltem Sokak No: 10
İş Kuleleri Kule: 2 Kat: 16
Levent 34330 Beşiktaş-İstanbul
Customer Relations
Tel: 444 55 00
Fax: (+90 212) 317 70 77
Customer Relations Center
Değirmenyolu Caddesi No: 6 C Blok Kat: 6
34752 İçerenköy-Kadıköy-İstanbul
Tel: 444 55 00
Fax: (+90 212) 317 70 77
İstanbul District Office 1
Sinanpaşa Mahallesi
Dolmabahçe Caddesi No: 7/A Kat: 6
34353 Beşiktaş-İstanbul
Tel: (+90 212) 244 76 00 pbx
Fax: (+90 212) 243 84 40
Caferağa Mahallesi
Albay Faik Sözdener Caddesi
Güran İş Merkezi No: 11/13 Kat: 1
34710 Kadıköy-İstanbul
Tel: (+90 216) 330 94 84 pbx
Fax: (+90 216) 330 92 54
Central Anatolian District Office
Cumhuriyet Mahallesi
Atatürk Bulvarı No: 75-77 Kat: 6
06442 Çankaya-Ankara
Tel: (+90 312) 468 62 82 pbx
Fax: (+90 312) 468 30 67
Southern Anatolian District Office
Kurtuluş Mahallesi Ziyapaşa Bulvarı Tevfik Bey Apartmanı No: 37/A
01120 Seyhan-Adana
Tel: (+90 322) 458 30 70 pbx
Fax: (+90 322) 458 70 43
Marmara District Office
Odunluk Mahallesi
Akademi Caddesi No: 10/B
Zeno İş Merkezi A Blok Kat: 1 No: 4-5
16130 Nilüfer-Bursa
Tel: (+90 224) 223 71 35 / 223 73 57
Fax: (+90 224) 223 75 08
Aegean District Office
Atatürk Caddesi No: 92 Kat: 3
35210 Konak-İzmir
Tel: (+90 232) 441 23 43 pbx
Fax: (+90 232) 441 82 92
Mediterranean District Office
Şirinyalı Mahallesi
İsmet Gökşen Caddesi No: 64 Kat: 1
07160 Muratpaşa-Antalya
Tel: (+90 242) 316 22 82
Fax: (+90 242) 316 14 42
TRNC Branch Office
Şerif Arzık Sokak No: 25
Köşklüçiftlik Lefkoşa-TRNC
Tel: (+90 392) 227 01 27 / 227 04 08-09
Fax: (+90 392) 227 01 26
Anadolu Hayat Emeklilik A.Ş.
15
Chairman’s Assessment of 2013
A good future…
During 2013, Anadolu Hayat
Emeklilik kept building on its
achievements and working
towards constructing a good
future.
Stepping into 2014…
Although it has been five years into
the global financial crisis of 2008, the
world economy is yet to achieve a new
and sustainable growth balance.
16
The decision of the US Federal Reserve
(Fed) to gradually cut back on its bond
buying program that was introduced
to support the US economy in the
aftermath of the crisis brought the
post-crisis process to a new threshold
in 2013. Once it was firm, US Fed’s
decision to pursue a change in its
policies triggered a period of uncertainty
in global monetary policies and
capital flows, and resulted in capital
outflows from developing countries
and depreciation of their currencies.
While the euro zone gives signals of
improvement and exit from stagnation,
actions to be taken by the European
Central Bank (ECB) at the end of 2014
will be the decisive factor in permanently
overcoming the chronic issues.
It is anticipated that global economic
growth will pick up relatively in
2014 and developed economies
will progressively step up their
contribution to global economy. In
return, structural reform efforts will
need to be increased for restimulating
the growth momentum in emerging
markets in a sustainable manner.
The inflation, which declined as a result
of the downfall in global energy prices,
is anticipated to show a rise, even if
limited, in the US and euro zone. While
the development of the US economy is
expected to gain speed, a more cautious
growth is anticipated in Europe. The
International Monetary Fund (IMF)
revised its forecasts downwards due to
the injured growth rates of emerging
markets. The IMF forecasts a growth
rate of 3.6% in the world, 2.6% in the
US and 1% in the euro zone in 2014.
The Turkish economy is estimated
to have grown 4% in 2013. Despite
negative factors that included
international volatilities, elevated
interest and exchange rates, limited
contribution of exports to growth,
and the continued upward trend in
the current deficit, the expansion
in industrial production and the
positive course of the manufacturing
confidence index indicate that the
recovery in economy persists, as does
Turkey’s growth performance.
Central Bank of the Republic of Turkey
(CBRT) continues with its monetary
tightening policies. On the other
hand, it is anticipated that inflation
indicators will continue to float above
The world economy is in pursuit of a
new balance depending on the policies
to be followed by the Fed. In this scope,
the Turkish economy is expected to
maintain its growth model erected on
domestic market dynamics, keep in
place its cautious control mechanism in
current deficit, and continue growing.
Increased interest in the
Private Pension System (PPS)
helps us hold an optimistic
outlook for the future.
The PPS strengthened its growth
performance in 2013, and the rise in the
number of participants gained significant
momentum with the effect of the state
contribution practice introduced at the
start of the year. Surveys conducted
also show that awareness of PPS
has increased. Having succeeded in
furthering its development, importance
and weight in the financial system in
as short a period of time as ten years,
the PPS began to be associated with
the concept of future protection.
The level reached is a product of
the close collaboration of the public
and private pension sectors.
Legislative arrangements aimed at
improving the legal infrastructure
represent another topic that needs to
be noted with respect to the sector’s
future and ensuring sustainable
performance. Strict coordination
between the companies engaged in
the sector and the public authority with
respect to changes in legislation is vital
to allow all stakeholders and particularly
investors to be able to solidly plan
their activities in the medium and long
term, and to obtain efficient results.
At the point we stand today, we envisage
that the PPS will reach much broader
audiences, and 10-11 million participants,
the number targeted for the overall
sector by 2023, will be easily achieved.
We keep working for
a good future…
During 2013, Anadolu Hayat Emeklilik
kept building on its achievements and
working towards constructing a good
future. We have further cemented our
leadership in PPS funds by becoming
the first company to top 5 billion.
Turkey’s first life insurance company,
Anadolu Hayat Emeklilik sustained its
success in premium production and
life insurance assets also last year, and
remained the leader in the sector.
The growth trend captured in life
insurance, and sustained growth
dynamics of the PPS so as to become
a key instrument of saving will remain
the primary factors that will back the
strong growth strategies of Anadolu
Hayat Emeklilik in the period ahead.
Just as in the past, so too in the future,
Anadolu Hayat Emeklilik is committed
to authoring new achievements.
I would like to extend my thanks, first
and foremost, to our policyholders and
participants, and to our shareholders,
business partners and employees
who accompany us in this journey.
Mahmut Magemizoğlu
Chairman of the Board of Directors
the targets for some more time in
conjunction with the volatility in
exchange rates. The CBRT has begun
implementing policies seeking to restrict
the effects of this trend on pricing.
17
Message from the CEO
We are sustaining
our successful
performance.
Remaining the sector’s leader
in terms of the total funds
accumulated in the Private
Pension System in 2013,
Anadolu Hayat Emeklilik also
preserved its top ranking on
the basis of life insurance
assets in life branch.
Marking the inception of state
contribution, 2013 is a milestone
for us all.
2013 has been a special year for the
Private Pension System (PPS) with the
state contribution implementation that
commenced as of 1 January 2013. Within
this scope, the tax incentive, which was
made available to salaried participants,
has been converted into a new practice
encompassing all participants.
18
The introduction of the state
contribution practice has made 2013
the most successful year in the 10year history of PPS. Effective publicity
activities quickly paid out and the
productions and total number of
participants of all sector players, led by
our Company, grew significantly. Annual
increase in the number of participants
that reached no more than 400-450
thousand people in the earlier years
more than doubled and arrived at 1
million in 2013. While a similar expansion
occurred also in the funds collected,
state contribution transferred to
participants’ accounts were worth ¨1.2
billion as at the end of the year.
While the 10th anniversary of the PPS
has been a year of transformation both
for us, the service providers, and the
participants, confidence in the system
significantly increased, and awareness in
the society got stronger more than ever
before.
In 2013 that marked our 10th year
in PPS…
Anadolu Hayat Emeklilik has completed
a decade in the Private Pension System.
During these ten years, our Company
strongly communicated the shared
goals of achieving enhanced awareness
of private pension and of bringing the
sector to its deserved position as quickly
as possible, and made it to the top with
its pioneering activities that guide the
sector.
Anadolu Hayat Emeklilik remained the
sector’s leader in terms of total funds in
2013, while the number of participants
choosing our Company reached 734
thousand. Contributions amounted to
¨4.3 billion, as the amount of participant
funds topped ¨5 billion. The figures
translated into 17% expansion in the
number of participants and in total funds.
Anadolu Hayat Emeklilik commanded
20% market share in total funds as
at year-end 2013. On the other hand,
with ¨231 million added to participants’
accounts, our Company has been
the private pension company whose
customers received the highest amount
of state contributions.
Sustainable performance in life
insurance
Anadolu Hayat Emeklilik undersigned
a successful performance also in
life branch in 2013. With a premium
production of ¨394 million and a market
share of 12%, our Company continues
to be one of the leading companies in
life branch in our country. Preserving its
number one spot in life branch with life
insurance assets worth ¨1.9 billion at the
end of 2013, Anadolu Hayat Emeklilik’s
customer base reached 1.6 million
people. Total coverage provided during
the same period registered in the order
of ¨41 billion.
The progress in credit guarantee
insurance products offering risk coverage
continued also in 2013, resulting in
increased profitability generated on
this product by our Company. On the
other hand, the anticipated premium
production could not be achieved in
annuities and pension revenues due to
the amendments made to the legislation
during the reporting period.
Making effective use of the
bancassurance channel, Anadolu Hayat
Emeklilik secured 7.4% growth in
premium production on life insurance in
2013.
generated positive yields, whereas PPS
funds investing more heavily in stocks
showed a weak performance. This
caused the PPS to underperform in terms
of fund growth as compared with the
forecasts in 2013.
Being the company responsible for the
highest amount of state contributions
secured for its participants in 2013 is
a result of our high quality production
policy. The key drivers behind this
result were our proactive approach that
requires an accurate and productive
match between our customers’
investments and state contributions, and
active communication with customers on
this topic.
We hold a positive outlook for
2014, because;
The reservations regarding the operation
of the state contribution in PPS have
been totally eliminated. The high level
of awareness attained will attract an
increased number of participants to
the system. Up-to-date surveys carried
out reveal that 90% of participants are
familiar with all the details relating to
state contribution. On the other hand,
an allowance of ¨7.7 billion has been
allocated in the government budget for
the 2014-2016 period. All these factors
boost the interest and confidence in PPS.
• Our sector continues with its stable
growth. We are forecasting a repeat of
the successful 2013 performance in
2014. During the reporting period, one
new company joined the sector while
2014 is expected to see yet another
actor’s entry. These developments will
support the growth of production.
Attaching importance to enhancing the
quality of customer communication,
Anadolu Hayat Emeklilik will increase
customer retention efforts in this vein.
We believe that these activities bear
importance with respect to both good
quality production and productivity and
profitability, and we keep making the
necessary investments.
Further reinforcing its image as
Turkey’s most admired private
pension company in 2013, Anadolu
Hayat Emeklilik continued with its
quest for quality service.
In 2013, Anadolu Hayat Emeklilik was
named Turkey’s most admired private
pension company, in a repeat of 2010
and 2012 results. This ranking is based
on the outcomes of a questionnaire
administered with business executives
within the scope of a survey coconducted by Capital magazine and GFK.
Being designated as the “most admired
company” by the Turkish business circle
is a distinct source of pride for us.
Adverse market conditions have
been restrictive on the expansion
of PPS funds in 2013.
Among the factors that affected
our sector in 2013 was the volatility
observed both in global economy and
in domestic markets. The events that
took place have been restrictive on the
expansion of funds available to the
sector. While BIST did not perform well,
exchange rates displayed unexpected
movements. In this process, international
mixed funds and Eurobond funds
• The hesitations related to legislation
have been eliminated in remote sales.
From 2014, alternative distribution
channels such as the Internet, mobile
channels and the call center will present
growing importance with respect to the
performance of the PPS.
• 2014 is expected to witness an increase
in corporate participations as well.
Reservations in relation to certain
regulations have been eliminated
regarding transfers from funds and
foundations. As a result of this, we are
expecting some major foundations and
funds to join the PPS in 2014.
• While the CPI was 7.4% in 2013, the
PPS generated a return of 25% through
the state contribution. This is indicative
of a significant return in real terms.
Based on the assumption that inflation
will decrease in the medium term and
interest rates will follow a controlled
course, the PPS will differentiate as a
highly productive saving instrument.
In brief, 2014 will be a year in which PPS
will transcend its success in 2013.
We are improving our operational
processes and infrastructure to
achieve our future targets.
Anadolu Hayat Emeklilik started
2014 with sure-footed steps. We are
constantly improving our structuring in
the light of amendments made to the
legislation, in an effort to offer better
service, to access more customers, and
to secure more efficient growth. Our
alternative distribution channels make
up our capabilities that we invest in, as
we target these channels to get higher
share of our production in the future.
By mid-2014, we are anticipating some
regulatory amendments, which will
reflect upon the sector’s performance.
Our Company is making the necessary
preparations in this regard.
On the part of our private pension
business line, we are intending to
enhance our efficiency in the Pension
Plan for Housewives, the Compass plan
addressing the upper segment, and
the Master’s Pension Plan. We will keep
effectively using and improving our
private agency channel in 2014. On the
life insurance side, we are forecasting
the banking system to grow in parallel
with credit expansion, and anticipating
significant increase in production in this
business line which we lead.
In brief, we are saying “The future is our
business in 2014”. We will keep moving
ahead with this thought, and we will
further strengthen our solid financial
performance to the satisfaction of
our investors, in particular, and all our
stakeholders in general.
I would like to thank everyone who has
contributed to our 2013 performance.
Mete Uğurlu
CEO and Member of the Board of
Directors
Anadolu Hayat Emeklilik is focused
on high quality production.
Anadolu Hayat Emeklilik is focused
on high quality production, and kept
managing and developing its portfolio
with this perspective also in 2013.
19
An Overview of the World and Turkish Economies in 2013 and
2014 Outlook
The economic recovery in developed economies - mainly in the US - and probable revisions in
the countries’ monetary policies to follow will be influential on the global economic activity in
2014.
20
The temporary nature of the solution for
the debt ceiling in the US, where labor
and housing markets pursued a positive
course, is indicative of potentially similar
issues that might occur in the US in the
first quarter of 2014. Yet, continued
recovery in economic data makes the
2014 inception of tapering by the US Fed
a highly probable item on the agenda.
Likewise, the US Fed announced that
it has cut back its monthly bond buying
to USD 65 billion in the committee
meeting held in January 2014.
The expansionary monetary policy
implemented in Japan seemingly has
a positive effect on economic activity.
The Bank of Japan is expected to sustain
its quantitative easing practices until
2015. However, it is believed that the
tightening expected in the cost policy
in 2014 may exert pressure on growth.
The inflationist pressure created by
the local currencies that depreciated
particularly from the second half of
the year across emerging countries
resulted in a tightening trend adopted
by the monetary policies. Continued
loss of momentum by the Chinese
economy in 2013 is expected to pose
as a risk element with respect to global
economic activity in the period ahead.
The Turkish Economy
During 2013, the growth composition of
the Turkish economy began changing as
compared with that of 2012. During this
process, growth seemingly restarted to
support consumption and investment
outlays. The Turkish economy registered
4% growth year-on-year in the first
three quarters of 2013. The moderate
recovery trend in economic activity
continued also in the last quarter of
the year. However, the CBRT’s current
monetary tightening policy practices
and the BRSA’s precautions adopted in
the last quarter of the year in relation to
consumer loans are believed to have a
somewhat restricting effect on growth.
When considered in this framework, the
Turkish economy is estimated to achieve
a 4% growth in the overall year in 2013.
CPI Inflation
(%)
7.40
It is observed that the weak outlook
of the economic activity in China, as
well as the improvement in the US and
Japanese economies, have an important
share in the performance of the world
economy. On the other hand, with the
US Federal Reserve’s (Fed) intention
to cut back its bond buying program,
the capital flows directed towards
emerging markets showed increased
volatility from the second half of 2013.
While bearing a negative impact on
the economic activity of emerging
countries, this predicament also led
to significant losses in currencies.
Economic activity in euro zone countries
picked up throughout 2013 as compared
with the previous years. After shrinking
for six consecutive quarters, the euro
zone economy got out of stagnation
in the second quarter of 2013.
6.16
The World Economy
During 2013, decoupling in the growth
performances displayed by developed
and emerging economies began fading
away, which resulted in slowdown in
global economic activity. The IMF kept
revising its growth forecasts downwards
in the light of these developments and
most recently, decreased its global
growth estimate in October 2013.
12
13
In 2013, foreign trade deficit expanded
by 18.7% year-on and amounted to
¨99.8 billion in 2013. On the other
hand, it was observed that the central
government budget continued with
its positive performance throughout
2013. In the first 11 months of 2013,
budget revenues and expenditures
went up by 17.3% and 12.7%,
respectively. In this framework, the
budget balance, which produced a
deficit of ¨13.3 billion in the first half
of 2012, registered a gap of ¨1.3 billion
during the same period of 2013. The
course of domestic demand conditions
reflected positively on budget revenues.
Having displayed an upward trend in
the first half of the year in keeping with
the elevated unprocessed food prices
and exchange rates, the annual rise in
CPI declined from July in conjunction
with the base effect. Annual inflation
was 7.40% for CPI and 6.97% for PPI.
An Overview of the Life Insurance
and Private Pension System
in 2013 and 2014 Outlook
During 2013, 24 life insurance
and pension companies realized
production in life insurance in Turkey,
with 18 of them also operating
in the private pension sector.
Based on the December 2013 data
released by the Insurance Association
of Turkey (IAT), premium production
on life insurance grew 26% yearon-year to ¨3,395 million.
Life insurance premium production
accounts for 14% of the total production
by the overall insurance sector, where
the top 10 companies are responsible
for 85% of this production figure.
According to December 2013 data of the
Insurance Information and Monitoring
Center (IIMC), based on the distribution
of premium production on life branch by
distribution channels, the bancassurance
channel increased its share from 75% at
year-end 2012 to 79%. The expansion
in protection insurance is expected
to continue despite implementations
targeting shrank credits, while
bancassurance channel is anticipated
to preserve its weight in this branch.
The Private Pension System has
become the best individual investment
instrument owing to the unique
state contribution advantage and
the performance of pension funds
in terms of generating returns.
Introduced in 2003, the Private
Pension System gained a high
momentum with the launch of the
state contribution practice, and the
number of participants in the system
grew by one million to approximately
4.2 million as of 3 January 2014.
Participants’ funds managed under the
system amounted to ¨25,128 million,
while total contributions reached
¨21,958 million, within which state
contributions were worth ¨1,149 million.
Based on 3 January 2014 data, total
funds under management by the sector’s
top six companies corresponded to 83%
of the total funds available to the sector.
When the PMC data of 3 January 2014 are
reviewed, the PPS grew by 24% in total
funds (¨4,782 million) and by 33% in the
number of participants (1,031,905) yearon-year. The PPS is projected to almost
triple the number of participants over the
next ten years, provided that economic
developments and the state contribution
model persist with their current course.
13
(¨ billion)
3.4
12
12
16.3
2.7
228.5
13
237
12
138.7
153
(¨ billion)
Total Contributions
- Private Pension
System
13
Total Funds Private Pension
System
(¨ billion)
12
13
12
13
*Excluding state contribution
Total Premium
Production Life Insurance
25.1*
(USD billion)
20.5
(USD billion)
22.0
Imports
Exports
21
Anadolu Hayat Emeklilik by Numbers
Shareholder Structure
Shareholder
Share (%)
Share Amount (¨)
Türkiye İş Bankası A.Ş.
Anadolu Anonim Türk Sigorta Şti.
Millî Reasürans T.A.Ş.
Publicly Held
Total
217,000,000
62
70,000,000
20
3,500,000
1
59,500,000
17
350,000,000
100
Türkiye İş Bankası A.Ş.
62%
Holders of Class A shares are not granted any
privileges save for the nomination of the Board
Directors. Seven members of the Board Directors
are elected by the General Assembly from amongst
candidates nominated by Class A shareholders,
and four from amongst those nominated by
Class B shareholders. The Company’s articles of
incorporation do not allow creation of new Class A
shares in capital increases.
Anadolu Anonim
Türk Sigorta Şti..
20%
The Company did not repurchase any of its own
shares in the reporting period. The Company
has only one associate, İş Portföy Yönetimi
A.Ş., in which it holds 20% share in capital. İş
Portföy Yönetimi A.Ş. does not own any share
in our Company. Shares held in the Company by
the members of the Board of Directors and the
Executive Committee are negligible.
Publicly-held
Millî Reasürans T.A.Ş.
1%
At the Board of Directors meeting of Anadolu
Hayat Emeklilik held on 26 April 2013, it has been
decided to raise the Company’s issued capital of
¨300,000,000 by ¨50,000,000 to ¨350,000,000;
of the incremental amount, ¨31,000,000 will
be covered from extraordinary reserves, and
¨19,000,000 from statutory reserves. Along the
line, it has been deemed fit by the Capital Markets
Board of Turkey (CMB) decision dated 21.06.2013
and numbered 22/730 that shares with a nominal
value of ¨50,000,000, which will be issued by
reason of the capital increase, be registered with
the CMB; the registration procedure has been
finalized as of 04 July 2013.
17%
Stock Performance
BIST 100 Index and Anadolu Hayat Emeklilik Market Capitalization (2000-2013, USD)
BIST 100 Index
(USD)
ANHYT Market Capitalization
(USD million)
60,000
1,000
50,000
800
40,000
600
30,000
400
20,000
200
10,000
ANHYT Market Capitalization (USD million)
0
2000 2001
2002
2003 2004 2005 2006 2007 2008 2009
2010
2011
2012
2013
0
BIST 100 Index (USD)
BIST 100 Index and Anadolu Hayat Emeklilik Market Capitalization (2000-2013, ¨)
22
BIST 100 Index
(¨)
ANHYT Market Capitalization
(¨ million)
90,000
2,000
1,750
75,000
1,500
60,000
1,250
45,000
1,000
500
15,000
0
250
2000 2001
2002
2003 2004 2005 2006 2007 2008 2009
2010
2011
2012
2013
0
ANHYT Market Capitalization (¨ million)
BIST 100 Index (¨)
Summary Financial Information
2012
Financial Highlights (¨ thousand)
Total Premium and Contribution Production
2013
1,080,701
(*)
Change (%)
(**)
1,391,454
29
Mathematical Provisions and Profit Sharing Provisions
2,205,674
1,871,476
-15
Pension Funds
4,277,830
5,231,179(***)
22
52,929
52,293
-1
7,222,090
7,902,405
9
Paid-in Capital
300,000
350,000
17
Shareholders’ Equity
524,680
533,869
2
General Technical Profit
Total Assets
63,514
65,436
3
105,675
98,477
-7
79,575
83,167
5
(%)
(%)
Pretax Profit/Shareholders’ Equity
20
18
Premium and Contribution Production/Total Assets
15
18
7
7
Financial Income
Pretax Profit
Net Profit
Key Ratios
Shareholders’ Equity/Total Assets
Total premium figures include premiums from personal accident branch.
Based on the data released by the Pension Monitoring Center (PMC) as of 3 January 2014.
(***)
Including state contributed funds.
(*)
(**)
29% increase in total premium and
contribution production...
13
Total premium and contribution production by Anadolu
Hayat Emeklilik was up 29% to ¨1,391 million in 2013.
300,000
12
(¨ thousand)
13
12
13
12
7,902,405
7,222,090
5,231,179
13
General
Technical Profit
52,293
12
(¨ thousand)
Paid-in
Capital
(¨ thousand)
52,929
13
(¨ thousand)
Total
Assets
350,000
12
1,391,454
1,080,701
(¨ thousand)
Pension
Funds
4,277,830
Total Premium and
Contribution Production
23
Organization Chart
Board of Directors
Corporate Governance Committee
Prof. Mehmet Baha Karan
Recai Semih Nabioğlu
Audit Committee
Prof. Dr. Mehmet Baha Karan
Assoc. Prof. Atakan Yalçın
Early Detection of Risk Committee
CEO
Mete Uğurlu
Deputy Chief Executive Officer
M. Uğur Erkan
Funds Management
Department
Agencies Department
Communications Department
Legal Department
Support Services and Procurement
Department
Human Resources and Training
Department
Accounting Department
Life Insurance Department
Marketing Department
Orhan Bozkurt
Individual Sales Department
Corporate Sales Department
24
O. Haluk Solak
Health Department
Branches and District Offices
Southeastern Anatolian District Office
TRNC Branch
Secretariat to the Board of Directors
Board of Internal Audit
M. Selahattin Bayraktaroğlu
Haldun Aydoğdu
Coordinator
İ. Hakkı Altay
Coordinator
F. Demet Işıksaçan
Alternative Distribution
Channels Department
Customer Relations
Department
Actuarial Department
IT Department
Customer Operations
Department
Reinsurance Department
Change and Project
Management Department
Risk Management &
Internal Control Department
Maturity Payments
Department
Software Development
Department
25
Board Directors
MAHMUT MAGEMİZOĞLU
SALİH KURTULUŞ
METE UĞURLU
1959, Antakya. He holds a degree in Business
Administration from the Middle East Technical
University and a master’s degree in Investment
Analysis from the University of Stirling (UK).
Mr. Magemizoğlu has begun his career at İşbank
in 1982 as an Assistant Inspector, where he
held various positions until 1999 and worked
as the Head of the Equity Participations
Department from 1999 until 2005. Serving as
Deputy Chief Executive of İşbank since 2005,
Mr. Magemizoğlu has also been holding the
position of the Chairman of the Board of Directors
at Anadolu Hayat Emeklilik since 19 June 2009.
1947, Kalkandelen. He graduated from İstanbul
Private School of Journalism. He started his
professional career at İşbank in 1974 as an
officer. After working as a branch manager of
various branches, Mr. Kurtuluş represented
İşbank as a director on the Boards of Directors
of Anadolu Hayat Emeklilik, Anadolu Sigorta,
Paşabahçe Cam Sanayi, as well as some other
equity participations of İşbank. After serving
as a Board Director at İşbank from 2005 until
2008, he retired from İşbank in 2009. Salih
Kurtuluş was reelected as a Board Director at
Anadolu Hayat Emeklilik on 24 October 2008.
1955, Ankara. He received his degree in Business
Administration from the Middle East Technical
University, Faculty of Administrative Sciences.
He has begun his career at İşbank in 1978 as an
Assistant Specialist where he worked as a manager
in various divisions. After serving as a Section
Head in the Organization Department from 1996
until 2002, Mr. Uğurlu was appointed as a Deputy
Chief Executive Officer in 2002. He represented
İşbank as a Board Director at Anadolu Sigorta
(1991-2002), as the Chairman of the Board at
İş Kültür Yayınları (2002-2003) and at İş Girişim
Sermayesi (2003-2006). Serving as the CEO of
Anadolu Hayat Emeklilik since 31 January 2006,
Mr. Uğurlu currently functions in two industrial
associations; he is the Vice Chairman of the
Board of Directors and the Head of the Life and
Pension Management Committee at the Insurance
Association of Turkey, and Member of the Board
of Directors at the Pension Monitoring Center.
DR. A. YAVUZ EGE
TUNCAY ERCENK
PROF. DR. MEHMET BAHA KARAN
1947, Gemlik. He graduated from the Department
of Finance and Economics from Ankara University,
Faculty of Political Sciences. He received his
master’s and Ph.D. degrees from the Department
of Economics at the University of Kent in the UK.
He worked for a long time at the T.R. Ministry
of Development as a specialist, advisor, Head
of Annual Programs and Finance Department,
Head of Economical Planning and Deputy
Undersecretary. Having served as a member of
the Turkish Competition Board in 1997 and as
the Undersecretary of Foreign Trade between
1997-1999, he functioned as the Chairman of
the Boards of Türk Eximbank, Export Promotion
Center and Güven Sigorta (Insurance) at different
times. Between 2000-2001, he administrated
GAP (Southeast Anatolia Project) Development
Plan as Project Director. He taught “Economic
Policy and Planning” and “Monetary Theory and
Policy” at the Faculty of Political Sciences at Ankara
University from 1993 until 2002. After serving
as a Board Director of İşbank between 20032008, Dr. Ege has been elected a Board Director
at Anadolu Hayat Emeklilik on 30 April 2008.
1950, Siverek/Şanlıurfa. He holds a degree in
law from İstanbul University. Mr. Ercenk worked
as a self-employed lawyer registered with the
Bar Association of Antalya from 1978 until 2002
and also served two terms of office as a Board
member at the Bar Association of Antalya between
1984 and 1990. He also served as a member
of the Parliament during the term of the 22nd
government from 2002 until 2007, during which
time he was a member of the Grand National
Assembly of Turkey Committee on Constitution.
Having been a Board Director at İşbank from 2008
to 2011, Mr. Ercenk has been elected a Board
Director of Anadolu Hayat Emeklilik on 24 May 2011.
He got his degree in Business Administration
from the Middle East Technical University in
1978, and his Ph.D. in Business Administration
from Gazi University in 1984. Having worked as
an associate professor at Hacettepe University,
Business Administration Department from 1996
through 2002, he has been a Professor with the
same university since 2003. After functioning as
the founding director of the Hacettepe University
Financial Research Center (1998-2004) and
a vice dean of the Faculty of Economics and
Administrative Sciences at Hacettepe University
(2007-2009), Prof. Karan has become the chair
of Hacettepe University Department of Business
Administration in 2009, a position he still holds. He
also had the positions of chair, member of the board
of directors and manager in various international
professional organizations including, among others,
the Multinational Finance Society and Professional
Risk Managers’ International Association (PRMIA).
Chairman of the Board of Directors
Director
26
Vice Chairman of the Board of Directors
Director
Director and CEO
Director (Independent)
Assoc. Prof. ATAKAN YALÇIN
R. SEMİH NABİOĞLU
MURAT ATALAY
He received his degree in Electrical and Electronics
Engineering from Boğaziçi University in 1994.
He got his MBA from the Southern Methodist
University in 1996 and his Ph.D. in Finance from
the Boston College in 2002. He taught at Brandeis
University (2000), Boston College (2003-2004),
and Koç University (2004-2012). He is currently a
faculty member with Özyeğin University Faculty of
Economics and Administrative Sciences. Teaching
courses on financial management, portfolio
management, and derivative securities, Assoc.
Prof. Yalçın’s research in the field of economics
has appeared in leading journals such as the
Journal of Empirical Finance, Journal of Banking
and Finance, Journal of Financial Research and
Journal of Marketing. He is also a member of the
CFA Institute, as well as various academic councils.
1967, Isparta. After getting his degree in
Business Administration from the Faculty of
Economics and Administrative Sciences at Gazi
University, Mr. Nabioğlu received his master’s
degree in Accounting and Finance from the
same university. He started his career in 1990
as Assistant Specialist at İşbank, where he still
works as Unit Manager at the Equity Participations
Department. He currently holds seats on the
boards of directors of Anadolu Anonim Türk Sigorta
Şirketi, Milli Reasürans T.A.Ş., representing İşbank.
Mr. Nabioğlu has been elected a Board Director
of Anadolu Hayat Emeklilik on 24 August 2012.
1973, Ankara. He graduated from the Department
of Statistics, Faculty of Science at Hacettepe
University. He joined İşbank in 1996 as an Assistant
Specialist and functioned as a Specialist and
Manager in various Head Office divisions. In 2011,
Mr. Atalay has been appointed as the Director of
Retail Banking Marketing Section, a position he still
holds. Mr. Atalay has been elected a Board Director
of Anadolu Hayat Emeklilik on 24 May 2011.
EBRU ÖZŞUCA
RECEP HAKİ
1971, Ankara. After getting her degree in economics
from the Middle East Technical University, Faculty
of Economic and Administrative Sciences in 1992,
Ms. Özşuca received a master’s degree from METU
Graduate School of Social Sciences, Department
of Economics in 1996. She graduated from
the University of Southampton, International
Banking and Financial Studies in 1998. She
joined İşbank in 1993 as an assistant specialist
in the Asset Management Department, where
she served as Department Head in Corporate
Banking Product Department from 2007 until
2011. Ms. Özşuca has been functioning as the
Department Manager in Treasury Department
since 2011. She was a member on the boards of
directors of İş Portföy Yönetimi (2006‑2009),
İş Yatırım Menkul Değerler A.Ş. (2009‑2012),
and İşbank AG (2011-2012). Serving as a Board
Director at CJSC İşbank (Russia) since 2013,
Ms. Ebru Özşuca has been elected a Board Director
of Anadolu Hayat Emeklilik on 26 March 2013.
1963, Ankara. Recep Haki graduated from the
Department of Public Administration at the Middle
East Technical University in 1988. The same year,
he joined İşbank as an assistant training specialist
trainee in the Training Department, where he
rose to the position of Assistant Manager in the
same department in 1997. Mr. Haki worked as
Assistant Branch Manager in İşbank Başkent branch
from 2000 until 2002 and in Yenişehir branch
from 2002 until 2004. In 2004, he worked in the
Corporate Marketing Department where he was
involved in the Customer-Centric Transformation
Program launched by İşbank. He was a Group
Manager in the Change Management Division
in 2006. Recep Haki became the Retail Banking
Sales Manager in 2008, and was appointed as the
Retail Loans Manager on 28 June 2012, a position
he currently holds. He functioned as an auditor
at Camtaş Düzcam Pazarlama A.Ş. (1998‑2002),
Beğendik Mağaza İşletmeleri A.Ş. (2001‑2002),
Gözlük Sanayi A.Ş. (2003), and Tuba‑Sim İnş.
Konsorsiyumu A.Ş. (2005‑2006), and as a Board
director at Camiş Elektrik Üretim A.Ş. (2011‑2013).
Mr. Haki has been elected a Board Director of
Anadolu Hayat Emeklilik on 26 March 2013.
Director
Director
Director
Director
Board Directors who Resigned during the Reporting
Period
None.
Information on Board of Directors Meetings
During 2013, Anadolu Hayat Emeklilik Board of
Directors held 12 meetings, 10 of which were
convened with full participation of the members.
In two other meetings, full participation could not
be achieved due to justified excuses of the Board
Directors. These two meetings that was held
without full participation was convened in the
absence of one Director.
Other Information
During 2013, there were no transactions performed
by our Board Directors under the authorization
received from the General Assembly so that they
can perform the transactions specified under
Articles 395 and 396 of the Turkish Commercial
Code.
Director (Independent)
27
Declarations of Independence by Independent Members of the Board
of Directors
Ankara, 25 February 2013
To: Anadolu Hayat Emeklilik A.Ş.
I hereby declare that I satisfy the criteria of independence pursuant to applicable legislation within the
framework of the criteria covered in the Communiqué on the Determination and Implementation of
Corporate Governance Principles, and submit my candidacy as an independent member of the Board
of Directors for your consideration at the General Assembly to be convened in March 2013.
Yours sincerely,
28
İstanbul, 25 February 2013
To: Anadolu Hayat Emeklilik A.Ş.
I hereby declare that I satisfy the criteria of independence pursuant to applicable legislation within the
framework of the criteria covered in the Communiqué on the Determination and Implementation of
Corporate Governance Principles, and submit my candidacy as an independent member of the Board
of Directors for your consideration at the General Assembly to be convened in March 2013.
Yours sincerely,
29
Executive Board *
METE UĞURLU
MEHMET UĞUR ERKAN
OĞUZ HALUK SOLAK
Please refer to page 26 for the
resumé of Mete Uğurlu.
1964, Ankara. He holds a degree in Economics
from the Middle East Technical University, Faculty
of Economic and Administrative Sciences. He
started his business life as an Assistant Inspector
on the Board of Inspectors of İşbank in 1986.
Mr. Erkan has been serving as a Deputy Chief
Executive Officer at Anadolu Hayat Emeklilik
since 14 July 2003.
1963, Balıkesir. He holds a degree in Business
Administration from the Middle East
Technical University, Faculty of Economic and
Administrative Sciences. He started his career as
an Assistant Inspector on the Board of Inspectors
of İşbank in 1986. Mr. Solak has been serving as a
Deputy Chief Executive Officer at Anadolu Hayat
Emeklilik since 15 November 2006.
ORHAN BOZKURT
HALDUN AYDOĞDU
İSMAİL HAKKI ALTAY
1956, Rize. He is a graduate of Galatasaray School
of Economics and Business Administration
of İstanbul Academy of Economic and
Commercial Sciences. He started working as
an Assistant Inspector at Anadolu Sigorta
in 1982. Mr. Bozkurt has been serving as a
Deputy Chief Executive Officer at Anadolu
Hayat Emeklilik since 12 June 2007.
1973, Ankara. He holds a degree in electrical and
electronics engineering from the Middle East
Technical University. He started working as a
Software Specialist at İşbank in 1995, where he
functioned as the Software Team Leader (19992003), Project Leader (2003-2006), assistant
manager in the Operational Solutions Division
(2007-2010), and Head of the Operational
Solutions Division (2010-2011). He joined
Anadolu Hayat Emeklilik as Coordinator on 1 July
2011. Mr. Aydoğdu has been serving as a Deputy
Chief Executive Officer since 1 February 2013.
1970, Trabzon. He got his degree in economics
from the Economic and Administrative Sciences
Department at Hacettepe University. He
began his career as an assistant inspector at
Anadolu Hayat Emelilik on 04 August 1997.
He was appointed as grade 2 inspector at
Marmara Regional Branch on 05 April 2004
and as Assistant Manager at the same branch
on 01 April 2006. Having been assigned
to the Customer Relations and Operations
Department on 01 May 2007 and as Manager
on 01 April 2009, Mr. Altay has been serving
as Coordinator since 09 October 2013.
Director and CEO
30
FATMA DEMET IŞIKSAÇAN
Coordinator
1973, Ankara. She got her graduate degree
in business administration from the Faculty
of Economic and Administrative Sciences at
the Middle East Technical University and her
master’s degree in actuary from Hacettepe
University. She has been appointed as
assistant specialist at Anadolu Hayat Emeklilik
on 09 August 1999, as actuary on 15 July
2003, and as manager on 01 March 2010.
Ms. Işıksaçan was appointed as Coordinator on
09 October 2013, a position she still holds.
(*) Mr. Engin Murat Yüksel, Deputy Chief
Executive Officer, retired as of 31 January
2013, and Mr. Ayhan Sincek, Deputy Chief
Executive Officer resigned from his position
in our Company as of 31 July 2013.
Coordinator
Managers Responsible for Internal Systems
MEHMET SELAHATTİN BAYRAKTAROĞLU
NİLGÜN KILIÇUZAR
1969, Artvin. He holds a degree in Public
Administration from the Middle East
Technical University, Faculty of Economic and
Administrative Sciences. He started working
as an Assistant Internal Auditor at Anadolu
Hayat Sigorta in 1994. At the İstanbul 2nd
Regional Directorate, he functioned as an
Assistant Manager between 2001-2006
and then as a Manager from 2006 onwards.
Mr. Bayraktaroğlu has been appointed as
the Head of the Board of Internal Audit on
12 June 2007, a position he still holds.
1968, Eskişehir. She holds a degree in
Business Administration from the Middle East
Technical University, Faculty of Economic
and Administrative Sciences. She started
her career at Anadolu Hayat Sigorta as an
Assistant Specialist in 1990. After functioning
as a Specialist and a Manager in various
divisions, Ms. Kılıçuzar has been serving as
a Manager at the Risk Management and
Internal Control Department since 2011.
Risk Management and Internal Control Department
Head of the Board of Internal Audit
31
Outside Positions Held by the Board Directors and Executives
Information is presented below on the positions held outside of the Company by the members of the Board Directors
and Executive Board
Name
Position in the
Company
Outside Positions Held
Chairman of the Board
of Directors
Deputy Chief Executive at İşbank
Chairman at Milli Re
Mete Uğurlu
Board Director and CEO
Vice Chairman of the Board of Directors at the Insurance
Association of Turkey
Head of the Life and Pension Management Committee at the
Insurance Association of Turkey
Member of the Board of Directors at the Pension Monitoring Center
Murat Atalay
Board Director
Section Director at İşbank
Board Director
Unit Manager at İşbank
Board Director at Anadolu Sigorta
Board Director at Milli Re
Board Director
Chair of Business Administration Department at Hacettepe
University, Faculty of Economic and Administrative Sciences
Board Director
Faculty Member in the Business Administration Department at Özyeğin
University, Faculty of Economics and Administrative Sciences
Ebru Özşuca
Board Director
Member of the Board of Directors at CJSC İşbank (Russia)
Recep Haki
Board Director
Oğuz Haluk Solak
Deputy Chief Executive
Officer
President at the Association of İşbank Employees
Coordinator
Member of the Actuarial Society of Turkey
Member of Haymer Data Glossary Committee
Member of the Insurance Association of Turkey Life Technical
Committee
Mahmut Magemizoğlu
32
Goals and Policies of Anadolu Hayat Emeklilik
A company identified with trust...
The primary goal of Anadolu Hayat
Emeklilik is to be the sector’s leading
company in life insurance and private
pension branches. The Company’s
approach to service focused on customer
satisfaction, in-depth know-how and
deep-rooted corporate culture, combined
with the financial strength of its parent
İşbank Group are the key strengths of
Anadolu Hayat Emeklilik.
As one of the strong and reliable
companies in the Turkish insurance
industry, Anadolu Hayat Emeklilik
sets its goals and policies based on
its commitment to further leverage
its sustainable success. Anadolu
Hayat Emeklilik targets to improve its
performance in productivity, profitability,
and growth by making optimum use of
its know-how, experience and capital
accumulation.
Anadolu Hayat Emeklilik remains loyal
to its mission to develop and nurture
in people an awareness of the need to
safeguard their futures, offer financial
solutions that satisfy their needs, and
contribute to the development of the
national economy by creating long-term,
stable funds.
The Company’s vision is to be Turkey’s
top and most preferred life insurance
and pension company in all aspects and
to take place among the world’s leading
companies in terms of quantity and
quality, as the degree of globalization
and integration, particularly in economy,
constantly increases.
Along these lines, Anadolu Hayat
Emeklilik formulated its primary
goals as follows:
•It will remain a priority for Anadolu
Hayat Emeklilik to effectively capitalize
on the country’s potential and
opportunities presented by economic
developments, extend the reach of
service delivery, and achieve constant
improvement in the added value
created. The trust held in the Company,
investors, its business partners, and
products are the key drivers behind the
sustainable success of Anadolu Hayat
Emeklilik.
•Maintaining the long-going sectoral
leadership in the private pension
system captured in all of the sector’s
rankings including total funds,
contributions, and number of contracts
will remain among the Company’s
priorities.
•Anadolu Hayat Emeklilik targets to
maintain its long-going title as the
sector’s top company in terms of the
financial assets of its life policyholders,
and to achieve growth in insurance
linked to individual loans, in particular.
•In view of the expected increased
attraction of the system owing to the
25% state contribution subsidy that
replaced the tax advantage in the
private pension system, the Company
aims at making optimum use of
marketing and sales strategies in an
effort to claim the maximum share out
of the anticipated surge in total funds.
•The Company aims to improve the
capacity and synergy in bancassurance
created by the cooperation
predominantly with İşbank and other
banks in the network.
•With nearly 300 agencies as at yearend 2013, Anadolu Hayat Emeklilik
controls a powerful and active private
agency network. The Company will
keep effectively and efficiently
increasing the synergy created with
the agency network, which has been
contributing value to the Company.
•Based on the fact that Turkey offers
a high potential for the insurance and
pension sectors owing to her young
and dynamic population, combined
with the low percentage of insurance
ownership, the Company intends to
create new sales opportunities to tap
this potential, employing alternative
distribution channels (ADC) such as
the Internet, call center and mobile
applications, in addition to bank and
agency channels.
•The Company will continue to sustain
its pioneering position in the sector on
the back of innovative products and
practices, and to steer the products
and practices through efficient
positioning, constant differentiation
and improvement in keeping with the
needs of customer segments and sales
channels. In recognition of customer
satisfaction, Anadolu Hayat Emeklilik
set delivering the best in service to
its existing customer portfolio and
constantly upgrading the capacity and
service quality of the call center that
serves as a vital channel with respect
to customer relations among its key
priorities.
•Named the “Most Admired Company in
the Private Pension Sector” in “Turkey’s
Most Admired Companies 2013”
survey conducted by Capital magazine,
Anadolu Hayat Emeklilik will continue
to give importance to maintaining
its status as the most trusted and
respected PPS company in the business
field.
•Continuity will be achieved in keeping
the employees and distributions
channels informed about new practices
and needs and trained about the rapidly
changing regulatory requirements, in
an attempt to perpetuate and further
build the interest and trust in the
Company and the sector.
The key driver behind the sustainable success of Anadolu Hayat Emeklilik is the trust held in
the Company, investors, its business partners, and products.
33
An Overview of Anadolu Hayat Emeklilik’s Position
in the Industry and its Activities in 2013
Differentiated product and service delivery, high quality in service and
enhanced customer satisfaction...
During 2013, Anadolu Hayat
Emeklilik continued to enhance its
service delivery in life insurance and
private pension on the axes of:
- differentiated product
and service delivery,
- high quality in service, and
- enhanced customer satisfaction.
Having completed 23 years in operation,
Anadolu Hayat Emeklilik strengthened
its leadership in total funds in the
Private Pension System with the
results obtained in life insurance and
private pension branches, and ranked
second in premium production among
life insurance service providers.
34
2013 highlights:
•Controlling 12% market share with
¨394 million in premium production in
life insurance branch, Anadolu Hayat
Emeklilik remained the leader by a large
margin also with total mathematical
provisions that topped ¨1,881 million.
•Based on the Pension Monitoring
Center (PMC) data released on
3 January 2014, Anadolu Hayat
Emeklilik achieved 17% growth in
the number of participants and in
total funds in 2013. The Company
reached ¨5,233 million in total funds
under management (including state
contributions) and 734,015 people in
the number of participants. Anadolu
Hayat Emeklilik is the sector’s leader in
total funds with a market share of 20%.
•By year-end 2013, total assets of
Anadolu Hayat Emeklilik increased
9% compared to last year and
reached ¨7,902 million.
•With ¨83.2 million posted in net
profit, the Company once again
exhibited its capability in producing
sustainable and permanent value.
•Addressing channel management
in bancassurance implementations
targeting high efficiency and
effectiveness, Anadolu Hayat
Emeklilik continued to make optimum
use of distribution channels.
•Anadolu Hayat Emeklilik is
uncompromising on achieving full
compliance with corporate governance
principles and applicable legislation
that governs its operations, and
continued to prudently exercise
the principles of transparency.
The first company exceeding
¨5 billion in total funds in the
Private Pension System
According to PMC data released
on 3 January 2014, Anadolu Hayat
Emeklilik exceeded ¨5 billion in total
funds, strengthened its performance
in the amount of funds and sustained
its leadership in the sector.
Customized products and services
based on high customer perception
Anadolu Hayat Emeklilik takes a proactive
approach in the development of its
private pension products and services
so as to satisfy the expectations of
customers from different segments.
During 2013, the Company offered
service with a rich portfolio covering
27 individual, 191 group pension plans
and 24 pension funds with different
content and fees and encompassing
various alternatives that respond to the
investment and risk expectations of
individual and corporate participants.
In the management of its pension
funds, Anadolu Hayat Emeklilik works
in synergic cooperation predominantly
with İş Portföy Yönetimi, as well as
other leading asset management
companies in the sector.
Extensive customer reach through
solid channel management
Anadolu Hayat Emeklilik carries out
solid channel management based
on its efficiency- and effectivenessoriented strategy for its comprehensive
distribution network. The Company
ensures an extensive customer reach via:
•regional offices in İstanbul (2),
Ankara, İzmir, Adana, Bursa and
Antalya, and a branch in the Turkish
Republic of Northern Cyprus,
•direct sales force,
•bank branches that serve as
the Company’s agencies,
•private agencies network, and
•alternative distribution channels
(call center and the internet).
An efficient and exemplary
company in the implementation
of bancassurance
One of the most efficient users
of the bancassurance channel in
Turkey, Anadolu Hayat Emeklilik
also possesses the most extensive
delivery channel in this respect.
In this field, Anadolu Hayat Emeklilik
continued its cooperation with
İşbank, HSBC Bank, Anadolubank,
and Albaraka Türk in 2013, thereby
capturing the ability to more easily
present the products and services
designed for its policyholders.
İşbank, the Company’s principal
shareholder, presents Anadolu Hayat
Emeklilik with a unique competitive
advantage in channel diversity with its
1,289 branches, superior technology
and alternative distribution channels.
The Company actively used the
bancassurance channel, which was
produced 86% of the Company’s
new contracts acquired for private
pension and 57% of its premium
production on life insurance in 2013.
Direct Sales Team: direct sales
team of 353 people in 55 cities
Preserving its top spot in total
funds in the Private Pension
System, Anadolu Hayat Emeklilik’s
direct sales team consisted of 353
people as of 31 December 2013.
The direct sales team establishes a
mutual relation between the customers
and the Company. Maintaining oneto-one contact with the customers,
the team is the best expression of the
Company’s resource capability and
undertakes the marketing of private
pension and life insurance products.
Offering service to the customers in
İşbank’s branches in 55 provinces, the
team produced 65% of the private
pension products sold in 2013.
300 agencies across the country
Anadolu Hayat Emeklilik’s strong network
of nearly 300 agencies displayed a
successful sales performance also
in 2013. The agency network got
25% share in total contributions and
premium collections in endowment
policies and private pension contracts
inclusive of contributions on
contracts sold jointly with banks.
Higher sales, more customers
by means of campaigns
Maintaining a high level of success on
the axis of “responding to customer
needs/customer satisfaction”, Anadolu
Hayat Emeklilik considers campaigns
as an important tool for strengthening
the cooperation among marketing
channels and for achieving sales targets.
During 2013, the Company continued
to carry out an increased number of
campaigns in private pension and life
insurance branches via agency, bank and
direct sales team distribution channels.
Constantly growing importance
of digital channels…
Anadolu Hayat Emeklilik, in 2013, kept
a close eye on the advancements in the
digital world and expanded its services
and activities in digital media, in keeping
with its mission of leading the sector.
Due to the fast-paced increase of
digital interaction and intensive use
of digital channels by individuals
independent from place and time, it has
become essential to position products
and services also on these media.
Putting this awareness into life with
a proactive strategy, Anadolu Hayat
Emeklilik set up the Alternative
Distribution Channels Department in
2011 in an effort to create a dedicated
expertise and capability for the
management of digital channels. Also
in 2013, the unit attached utmost
importance to activities aimed at
increasing the efficiency of digital
channels and customer interaction
thereon in line with the corporate goals.
Sales opportunities
6,647 sales leads received via digital
channels and referred to the direct
sales team resulted in the sales of 498
products as of 31 December 2013.
The conversion ratio of leads to sales
stood at 7%. It is targeted to bring this
figure up to the order of 10% in 2014.
Through the bancassurance channel
covering a network of more than
1,800 branches, Anadolu Hayat
Emeklilik delivers its private pension
and life insurance products to a
wide-range customer base.
35
Powerful interaction in
customer relations
Within the scope of Customer Relations
Department activities carried out in
2013, approximately 821 thousand
inbound calls and 76 thousand e-mails
have been responded to, while 573
thousand outbound calls were placed.
The Internet Branch
Anadolu Hayat Emeklilik has initiated
work to develop a new Internet branch
that will provide an environment of
easier and faster access, querying
and transaction to its policyholders.
The project is slated for completion
and introduction during 2014.
Sales management and
optimization through
search engine
Efforts continued in 2013 to create
sales leads from Google Search Network
and Google Display Network. As a
result of search engine optimization
efforts, Anadolu Hayat Emeklilik
corporate website remained the most
visited address among the websites
of companies operating in private
pension and life insurance sectors, thus
fortifying its leadership in this respect.
36
The Company preserves its goal of being
the company with the corporate website
that receives the highest number of
visitors in the sector also in 2014.
AHEPad©
AHEPad©, a mobile application, has
been put into service so as to enable
the direct sales team to perform their
promotion and sales activities more
efficiently. Efforts are ongoing to equip
the application with new functions
such as sales leads management.
The content of AHEPad© application
will be further enriched in line with
the needs in the years coming.
Social media campaigns
The Company carried out activities
directed towards increasing the
rate of interaction and the number
of followers on social media and
organized campaigns during 2013.
Projects and activities will continue at a
growing extent in line with the primary
goals relating to digital channels in 2014.
Other projects planned for 2014
Key initiatives intended to be launched
in 2014 include mobile applications,
applications that support the IVR
system, projects aimed at using
“mega data”, projects for creation and
utilization of authorized database,
development of microsites for remote
sales, use of the new social media
and customized messaging service.
Also in 2013, the Company realized
campaigns aimed at the intermediaries,
in an effort to increase the sales
of group pension plans, especially
employer-sponsored ones.
Private Pension
Intermediaries Exam
Agencies and sales representatives
offering service as intermediaries in the
Private Pension System are required
to pass the e-BEAS (Electronic Private
Pension Intermediaries) exam.
Anadolu Hayat Emeklilik made sure
that all of its new private pension
intermediaries across all distribution
channels took the e-BEAS exam during
the reporting period. Consequently,
the number of Anadolu Hayat Emeklilik
private pension intermediaries with
permanent licenses reached 2,848
people by the end of the year.
The greatest asset of Anadolu
Hayat Emeklilik: Human Resource
The key driver behind the successful
performance of Anadolu Hayat
Emeklilik is its experienced, creative and
dynamic human resource espousing
the corporate culture and guided by
common sense in their actions.
In 2013, total number of Anadolu Hayat
Emeklilik employees including the direct
sales team reached 851. Boasting a
young team, 71% of the Company’s
human resource consists of employees in
the 18-34 age interval.
One of the most preferred employers
in the sector for its corporate qualities,
brand equity and HR implementations,
Anadolu Hayat Emeklilik is differentiated
with value attached to its employees,
and the contemporary training and
career opportunities offered.
Aiming to provide its employees with
the opportunity to keep abreast of new
practices and achieve self-development,
and seeking to further raise the bar in its
services to policyholders, Anadolu Hayat
Emeklilik provided a total of 2,452 hours
of training to its employees in 2013.
While the programs focused mostly
on the private pension system, and
professional and personal development,
average training time per person was
19,28 hours in the reporting period.
Contribution to the improvement
of the system through activities
addressing corporate customers
Believing that corporate participants
will play a major role in the development
of the Private Pension System,
Anadolu Hayat Emeklilik actively and
uninterruptedly continues with its
activities targeting this segment.
37
Social responsibility projects
Anadolu Hayat Emeklilik believes that
women play a significant role in the
economic and social development of
our country. Accordingly, the Company
designs its long-lived social responsibility
projects based on this notion so as
to support their improvement.
“Girls: The Insurance of
our Future” Project
The project “Girls: The Insurance of
our Future” which was conducted
with the support of the Ministry of
National Education and in cooperation
with The Association to Support
Contemporary Living and dedicated
to support girls who are financially
unable to continue their education
began its ninth year in 2013. The project
initially started with 500 girls in 2005
and had many graduates during the
38
past eight years. Furthermore, 100 new
high school students became part of the
project in 2010-2011 academic year.
Students that are part of the project
study in the insurance departments
that were opened by the Ministry of
National Education at Trade Vocational
High Schools on scholarship from
Anadolu Hayat Emeklilik. For further
studies, they attend the Vocation
School of Banking and Insurance.
Since 2008, female employees
of Anadolu Hayat Emeklilik offer
mentoring to “Girls: The Insurance of
our Future”, under the name of “Life
Volunteers”. Through mentoring, Life
Volunteers help the students to have
a better understanding about their
future professions, and additionally,
support them any time they need.
“Shots from Life as Seen by
Women” photography competition
photography competition aims to
contribute to the social and cultural
development of the Turkish women,
and offers them a platform where
they can freely express themselves.
Initiated in 2007 and held for the
seventh time in 2013, Competition
was once again themed “About Life”.
In this context, the jury assessed
5,143 photographs submitted by 1,134
participants, upon which top 44 photos
elected were exhibited in various
cities. Photographs that won a prize
and deemed worthy of being exhibited
were collected in a special catalogue.
••Designed to highlight the benefits
made available to housewives under
the revisions made to the Private
Pension System, the advertising
campaign themed “Housewives
also Have a Right to Retirement”
aired on TV channels, radio stations,
and published in newspapers,
magazines, digital and mobile media,
as well as in movie theaters.
••Various below-the-line activities
were carried out which were
aimed at publicizing the state
contribution implementation that
went into force and at winning
new customers for the system.
••The campaign “Provinces Reaching
out to the Future” took place in
local media (TV channels, radio
stations, newspapers, magazines).
••The campaign “Sweet Life for Cyprus”,
which is intended to increase the
awareness and prevalence of life
insurance products in the Turkish
Republic of Northern Cyprus, took
place in local TV channels, radio
stations, newspapers, magazines
and on outdoor advertising media.
••Sponsored the TV show “Sunay Akın ile
Hayat Deyince” (About Life with Sunay
Akın) aired on SKY Türk 360 Channel.
••Commercials aired at Cinemaximum
movie theaters and displays which
promoted the Private Pension
System were set up in foyers.
••Various internal communication
activities took place and aimed to
promote internal communication
and corporate awareness.
••Giving the Company employees the
chance to express the way they
see life and seeking to promote
intracompany communication,
“Shots from Life As Seen by
Employees” photography competition
was held for the sixth time.
Communication activities
carried out advertising and public
relations activities aimed at upkeeping its
powerful image before the stakeholders,
and publicizing the Private Pension
System based on its responsibility
coming from its sector’s leader position.
39
Research and Development for New Services and Activities
Radical changes in services and activities...
During 2013, Anadolu Hayat Emeklilik undertook radical changes in its services and activities
for achieving compliance with new regulations.
kept a close eye on the regulations
governing life insurance and the
private pension system and took on
radical changes in its services and
activities for achieving compliance
with the new requirements.
Efforts for achieving compliance
with new regulations were regarded
also as an opportunity for new
product development or for radical
revisions to product features,
as well as for improvements to
points of service and adapting new
technologies. Hence, a series of
programs and projects was launched
to materialize these opportunities.
Within the frame of the project-based
transformation and management
concept espoused by Anadolu Hayat
Emeklilik, effective improvements were
made to project and requirements
management, and revisions were
introduced to resource, capacity, priority
setting and monitoring activities on the
back of the infrastructures designed.
40
In 2013, Anadolu Hayat Emeklilik
allocated significant project resources
for achieving compliance with the
legislation, and also carried out projects
with the following objectives:
• Modification of the main software,
which will result in a radical
change in the management and
operation of life insurance and
private pension processes,
• Efficiency in bancassurance operation,
• Improving financial work flows
and IT software and data
infrastructure supporting them,
• Designing and introducing products
incorporating new features,
• Determining and implementing
customer retention actions,
• Defining work flows at
international standards,
• Enhancing data analysis and
reporting capabilities,
• Upgrading the quality of
customer service,
• Achieving efficiency in
certain basic operations,
• Increasing the efficiency of
alternative distribution channels,
• Ensuring process-based operation
that support COBIT (Control
Objectives for Information and
Related Technology) framework
in IT management.
Anadolu Hayat Emeklilik recognizes
the importance of flexibility and
agility for quickly responding
to requirements resulting from
macroeconomic developments, and
competitive competitions, as well as
for anticipating and proactively taking
position for opportunities and risks.
The Company is convinced that such
agility can only be enabled through
efficient workflows and reliable, easily
accessible, manageable and integrated
technological infrastructure. In this
frame, the Company finalized its search
for a basic insurance application in
2013, and thus laid the foundations
of a major transformation program
in its IT infrastructure. Analyses and
implementation work are planned to
be commenced in the first quarter
of 2014 following the conclusion of
an agreement with the contractor.
Through ground-breaking
implementations to be introduced and
new projects to be launched in 2014,
innovations will be introduced in the
fields of online/tele-marketing, mobile
applications, smartpen applications,
process automations and information
technology service quality.
The projects that will be conducted
in 2014 in line with the strategic
needs identified will play an important
part in sustaining Anadolu Hayat
Emeklilik’s leadership in the sector.
İşbank
As the largest bank of Turkey in terms of
total assets, total loans and shareholders’
equity, İşbank provides its customers
quick access to financial services
through its extensive branch network
and alternative distribution channels.
İşbank’s superior scale and its
competence of service delivery
are defined by its excellent and
extensive network that consists of:
• 24,129 employees
• 1,289 domestic and 20
international branches
• 5,673 ATMs
Having pioneered the establishment
and growth of many new industries in
the country with its corporate identity
championing innovation in every aspect,
İşbank controls a portfolio of equity
stakes in leading companies that are
active in a wide range of endeavors.
The financial participations operating
in a variety of business lines from
investment banking to portfolio
management and from leasing to
private pension make İşbank unique.
Having crowned its trusted company
image with its achievements, İşbank
continued to build on product and service
diversity offered through alternative
distribution channels, and to consistently
augment its transaction volumes.
As of 2013 year-end, 31.75% of İşbank’s
shares are on free float and they are
publicly traded on Borsa İstanbul.
İşbank, the first national bank of Turkish
Republic, was founded on 26 August
1924 at the initiative of Atatürk,
consequent to the decisions made in the
First Economy Congress in İzmir. İşbank,
which has taken a leading stance at
every stage of economic and commercial
life, assumed various roles in a number
of fields, mainly in industry and trade,
and made significant contributions
through 89 years since its foundation.
41
Human Resources Policy
Our Company defines and conducts its
human resources policy in light of our
country’s social, cultural, and economic
conditions and the following principles:
42
1.In recruitment, the Company espoused
the principle that individuals are to
be given equal opportunity under
identical conditions. Hiring criteria
are set forth in writing for each job
position and are strictly complied with
in practice.
2.Job descriptions and assignments and
performance criteria are determined
by the Company management and
announced to employees.
3.When making training, assignment,
and promotion decisions, particular
care is taken to making use of objective
data and to observing the Company’s
best interests, to the maximum extent
possible.
4.Training plans are developed and
training policies are formulated in an
effort to help our employees improve
their knowledge and skills.
5.Our Company’s employees are
members of the Bank and Insurance
Employees’ Union. Any decisions or
developments concerning them are
communicated to the employees or
their representatives, and the opinion
of the said union is sought in such
decisions.
6.The Company provides a working
environment and working conditions
that are safe and efforts are
undertaken to improve these
conditions depending on social and
technological requirements.
7.Our employees are kept informed on
decisions made or developments that
occur concerning them.
8.Measures are taken to prevent
discrimination among employees
based on race, religion, language, or
sex; create a working environment
that is respectful of human rights;
and prevent all physical, mental, and
emotional abuse within the Company.
9.It is not deemed appropriate to appoint
a representative to handle relations
with our employees.
HIRING PRACTICES
The general principles and criteria
adhered to by Anadolu Hayat Emeklilik
in all its hiring practices are summarized
below. To be hired by the Company, a
person must:
•Be a citizen of Turkey.
•Be at least 18 and not more than 30
years of age.
•Have completed any active military
service obligations if applicable or have
obtained a deferment.
•Not have been deprived of their civil
rights.
•Never have been convicted of any of
the offenses specified in insurance and
private pension system law, whether or
not officially pardoned.
•Be healthy enough to work and travel
anywhere in Turkey.
•For janitorial positions, hold at least a
high-school diploma. For white-collar
positions, be a graduate of at least a
two-year vocational school as defined
in the applicable legislation, or of fouryear faculties.
•Be under no service obligation to any
government agency or private concern.
•Successfully pass the qualifying
examination and/or interview for the
position being hired into.
JOB APPLICATIONS
Whenever vacant positions are available,
they are announced on the Company’s
internet website and in newspapers.
Applications for such positions may be
submitted by mail, by fax, in person, and
from the website. All applications that
are received are placed in a single pool.
The Company’s Human Resources and
Training Department is responsible for
receiving all job applications, conducting
written and/or oral exams, announcing
exam results, and all other recruitmentrelated matters.
PROGRESSION
Advancement to positions in our
Company’s organizational structure
(manager, assistant manager, 2nd
manager, service chief, assistant
service chief, clerk, specialist,
assistant specialist, internal audit, and
assistant internal audit) is governed
by the Company’s related bylaws. The
following general principles apply to all
advancements.
To be promoted to a higher position:
•the employee must have served for the
minimum periods of time specified by
headquarters in his current position;
•the employee must have earned a good
performance score substantiating his
promotion;
•there must be a vacancy to which the
employee can be promoted.
•the employee must have successfully
completed whatever course,
examination, thesis, project, or similar
qualifying requirements that the
Company requires for the position.
PERFORMANCE MANAGEMENT
TRAINING
Performance appraisal system is in place
at the Company in order to measure the
individual contribution of each employee
in supporting the Company towards
achievement of its corporate objectives.
In this frame, all company employees are
evaluated once a year.
AHE Academy
The Company set up the AHE Academy
in order to systematize the training and
development activities directed towards
our employees, by incorporating the
cultural aspect as well.
JOB SECURITY
Job security for our employees is
provided under a collective bargaining
agreement arrangement between the
Company and BASİSEN (Banking and
Insurance Employees’ Union).
COMPENSATION POLICY
Employees’ salaries are adjusted
annually in accordance with current
conditions and as specified in a collective
bargaining agreement that is renewed
every other year. Salaries are paid on the
last day of each month. In addition to
their regular monthly salaries, employees
receive an annual bonus equal to five
monthly salaries. In addition to salary
and bonuses, personnel are entitled to
a broad range of fringe benefits such as
health insurance coverage, healthcare
assistance, employer’s contributions
to the Private Pension System on
the employee’s behalf, personal life
insurance, and company-provided
transportation and lunchtime meals.
Through the AHE Academy, the Company
invests in its human capital and aims
to make the customer-focused culture
permanent.
Anadolu Hayat Emeklilik supports its
employees’ professional and personal
development, offers various activities
that are aligned with their career paths
and aim to equip its employees so as
to enable them to look from different
perspectives.
When preparing the annual training
programs, the Human Resources and
Training Department’s primary goal is
to develop employees’ competencies
in their current positions while also
readying them for higher positions in the
future.
Training Programs
Company employees are provided
with in-house and extramural training
opportunities to foster their professional
and personal development. National and
international resources are made use of
for these training programs.
As a company that fills management
position vacancies from within its own
ranks, special attention and importance
are given to employee training.
The performance appraisal system aims
to establish objective criteria for the
employees’ career progressions and to
determine their training needs.
When personnel are first hired, they are
put through an orientation program and
given training in basic insurance and
Private Pension System issues. After this
and for the rest of their careers, training
is provided so that they have all the
knowledge and skills they may need for
whatever position they may be filling.
43
Modifications to the Articles of Incorporation During the Fiscal Year
Under the Communiqué Serial: IV No: 56 on the Determination and Implementation of Corporate Governance Principles that went
into force upon its publication in the Official Gazette issue 28158 dated 30 December 2011 and other applicable Capital Markets
Board of Turkey (CMB) legislation, the Turkish Commercial Code no. 6102 that was published in the Official Gazette issue 27846
dated 14 February 2011 and came into force on 1 July 2012, and the Law no. 6327 Amending the Private Pension Savings and
Investment Law and Certain Other Laws and Statutory Decrees, the Ordinary General Assembly decision for amending the below
mentioned articles of the Company’s Articles of Incorporation has been registered on 16 April 2013.
ARTICLE 1 – FORMER VERSION
ARTICLE 1 - NEW VERSION
Incorporation
Article 1 - A joint stock company is herewith incorporated by and
among the founders whose names and domiciles are given below, in
accordance with the provisions of the Turkish Commercial Code and
the Insurance Supervision Law.
Incorporation
Article 1 - A joint stock company is herewith incorporated by and
among the founders whose company names, nationalities and
domiciles are given below, in accordance with the provisions of the
Turkish Commercial Code and the Insurance Supervision Law.
1- Anadolu Anonim Türk Sigorta Şirketi
Rıhtım Caddesi Anadolu Sigorta Han No.57 Karaköy / İSTANBUL
Citizen of Turkey
1- Anadolu Anonim Türk Sigorta Şirketi
Rıhtım Caddesi Anadolu Sigorta Han No.57 Karaköy / İSTANBUL
Citizen of Turkey
2- Türkiye İş Bankası Anonim Şirketi
Atatürk Bulvarı No.191 Kavaklıdere / ANKARA
Citizen of Turkey
2- Türkiye İş Bankası Anonim Şirketi
Atatürk Bulvarı No.191 Kavaklıdere / ANKARA
Citizen of Turkey
3- Destek Reasürans Türk Anonim Şirketi
3- Destek Reasürans Türk Anonim Şirketi
Abdi İpekçi Caddesi No.75 Maçka / ISTANBUL
Citizen of Turkey
44
Abdi İpekçi Caddesi No.75 Maçka / ISTANBUL
Citizen of Turkey
4- Türkiye Şişe ve Cam Fabrikaları Anonim Şirketi
Barbaros Bulvarı No.125 Camhan Beşiktaş / İSTANBUL
Citizen of Turkey
4- Türkiye Şişe ve Cam Fabrikaları Anonim Şirketi
Barbaros Bulvarı No.125 Camhan Beşiktaş / İSTANBUL
Citizen of Turkey
5- Mensa Mensucat Sanayi ve Ticaret Anonim Şirketi
Mersin Asfaltı 14. Km. / ADANA
Citizen of Turkey
5- Mensa Mensucat Sanayi ve Ticaret Anonim Şirketi
Mersin Asfaltı 14. Km. / ADANA
Citizen of Turkey
6- Türk Dış Ticaret Bankası Anonim Şirketi
Yıldız Posta Caddesi No.54 Gayrettepe / İSTANBUL
Citizen of Turkey
6- Türk Dış Ticaret Bankası Anonim Şirketi
Yıldız Posta Caddesi No.54 Gayrettepe / İSTANBUL
Citizen of Turkey
The joint stock company incorporated by the founders whose company names and head offices at the time are written hereinabove
was, through amendments subsequently made to its articles of
association, transformed into a “company whose shares are publicly
offered” in the sense of the Capital Market Law, and into a “Private
Pension Company” in the sense of the Private Pension Savings and
Investment System Law.
The joint stock company incorporated by the founders whose company names and domiciles at the time are written hereinabove was,
through amendments subsequently made to its articles of incorporation, transformed into a “company whose shares are publicly
offered” in the sense of the Capital Market Law, and into a “Pension
Company” in the sense of the Private Pension Savings and Investment System Law.
ARTICLE 3 – NEW VERSION
Purpose and Scope of the Company
Purpose and Scope of the Company
Article 3 - Purpose and scope of the company:
Article 3 - Purpose and scope of the company:
a) Engage in individual or group private pension activities; set up
pension funds in this framework; create fund bylaws for the funds
to be set up; execute pension contracts, annuity contracts, portfolio
management contracts, custody agreements with the custodian for
safekeeping of fund assets; execute other agreements in relation to
its fields of activity;
When performing the activities subject to the Private Pension Law,
the Company acts in compliance with the principles and guidelines set
forth therein, and specifically:
-- May obtain service for the pension contract from the bank and its
branches and private pension intermediaries,
-- Invests the contributions collected from participants in funds within
the period of time stipulated by the Law,
-- Constantly updates private pension accounts and other records
related thereto, and takes necessary action for the safekeeping of
these records and fund assets,
-- Enables access of participants to daily information on their private
pension accounts,
-- Regularly informs participants on the assets contained in their fund
portfolios, fund performances and financial statements,
-- Ensures management of funds in accordance with the general
strategies and decisions adopted by the company,
-- Timely provides the custodian with required information for their
incorporation in the custody accounts as necessary,
-- Appraises the funds portfolio and ensures accurate calculation of
the unit share price,
-- Gets the pension plan changed upon request by participants,
-- Facilitates transfer of contributions to another fund or pension
company, upon request by the participant, subject to the provisions
of applicable legislation.
b) Provide individual or group life or whole life insurance, accident
insurance in connection therewith, as well as individual or group illness
insurance and all sorts of life insurance limited to the period of time
allowed by the private pension legislation, and carry out reinsurance
transactions related to all kinds of insurance mentioned above;
Carry out any and all insurance and reinsurance operations such as types
of life insurance, accident insurance, illness insurance permitted by the
legislation, engage in private pension activities and obtain intermediary
services in relation thereto, provided that compliance is achieved in these
acts and activities with the principles and guidelines set out in the Private
Pension Savings and Investment System Law, the Turkish Commercial
Code, the Capital Market Law and other applicable legislation.
The Company may also;
Be engaged in such matters as setting up, managing, merging,
transferring and participating in pension funds, provided that the
obligations specified in the legislation governing pension funds are
fulfilled;
Assume agency, lead insurer and representation services for other
national or international insurance and reinsurance companies engaged
in the life branch and for pension companies;
Purchase and sell movables or immovables, construct buildings, create
and lift mortgage and all sorts of real rights for the purpose of achieving
the Company’s purpose and investing its capital and reserves in interestbearing instruments, trade in all kinds of domestic and overseas money,
financial and capital market instruments allowed by the legislation for the
same purpose, provided that such activities shall not be in the nature of
brokerage and portfolio management activities;
The Company may carry out all kinds of acts and actions in relation to the
Company’s scope; establish companies to be engaged in the same scope
or participate in existing or future enterprises active in the same scope,
and may conduct acts, actions and transactions deemed necessary,
provided that the legislation is not contradicted with.
The Company may grant donations within the scope of social
responsibility and in accordance with the procedures and principles set by
the Capital Markets Board.
c) Assume agency, lead insurer and representation services for
other national or international insurance and reinsurance companies
engaged in the life branch and for pension companies;
d) Carry out all kinds of acts and actions in relation to the Company’s
scope; establish companies to be engaged in the same scope or
participate in existing or future enterprises active in the same scope;
f) Purchase and sell movables or immovables, construct buildings,
create and lift mortgage and all sorts of real rights for the purpose of
achieving the Company’s purpose and investing its capital and reserves
in interest-bearing instruments, trade in all kinds of domestic and
overseas money, financial and capital market instruments allowed by
the legislation for the same purpose, provided that such activities shall
not be in the nature of brokerage and portfolio management activities;
g) Set up, manage and participate in pension funds and real estate
investment trusts, investment participations and all kinds of funds
allowed to be set up for advancing life and health insurance; merge/
transfer Pension Funds set up by the Company under the Private
Pension Savings and Investment System Law.
h) The Company may grant donations within the scope of social
responsibility and in accordance with the procedures and principles set
by the Capital Markets Board.
Other business activities to be deemed necessary or useful for the
Company in the future other than those listed above may also be
incorporated in the Company’s scope through amendment of these
articles of association.
e) Participate in healthcare institutions;
45
ARTICLE 4 - FORMER VERSION
The Company’s Headquarters and Branches
The Company’s Headquarters and Branches
Article 4 - The Company is headquartered in Şişli, İstanbul. The Company’s
address is İş Kuleleri Kule 2 Kat 17-20 34330 4. Levent - İstanbul.
Article 4- The Company is headquartered in Beşiktaş, İstanbul. The
Company’s address is Meltem Sokak No:10 İş Kuleleri Kule:2 Kat:16 Levent
34330 Beşiktaş/İSTANBUL.
In the event of a change of address, the new address must be registered
with the trade registry, announced in the Turkish Trade Registry Gazette,
and also notified to the Ministry of Industry and Commerce and Capital
Markets Board. Failure to have a new address registered and announced in
due time after having departed from an existing registered and announced
address shall be deemed cause for dissolution of the company.
The company may open branches and establish agencies, representation
offices, and correspondent offices in Turkey, and abroad subject to the
permission of the Undersecretariat of Treasury.
46
In the event of a change of address, the new address must be registered
with the trade registry, and announced in the Turkish Trade Registry, and
posted on the Company website. Such new address shall also be notified
to the Ministry of Customs and Trade, Undersecretariat of Treasury and
Capital Markets Board. If the new address remains in the same registration
precinct, then it shall not be mandatory to amend the articles of
incorporation solely by reason of change of address.
The company may open branches and establish agencies, representation
offices, and correspondent offices in Turkey, upon fulfillment of the
required legal procedures, and abroad, subject to the permission of the
Undersecretariat of Treasury.
Capital and Shares
Capital and Shares
Article 6 - The Company has adopted the registered capital system
in accordance with the provisions of the Law no. 2499, and switched
to the aforementioned system based on the Capital Markets Board of
Turkey (CMB) permission dated 15.06.2000 and numbered 67/1039. The
Company’s registered capital is TL 450,000,000 (four hundred and fifty
million), divided into 45,000,000,000 (forty-five billion) shares each with a
nominal value of TL 0.01.
Article 6 - The Company has adopted the registered capital system in
accordance with the provisions of the Capital Market Law, and switched
The Company’s issued capital is TL 300,000,000.- (three hundred million).
Of this amount, which is fully paid-up, TL 1,000,000 (one million) is
represented by 100,000,000 (one hundred million) Class A shares each
with a nominal value of TL 0.01, and TL 299,000,000 (two hundred ninetynine million) is represented by 29,900,000,000 (twenty-nine billion nine
hundred million) Class B shares each with a nominal value of TL 0.01, issued
on various dates. All shares are registered shares.
The Company’s issued capital is TL 300,000,000.-(three hundred million).
with a nominal value of TL 0.01, and TL 299,000,000 (two hundred ninetynine million) is represented by 29,900,000,000 (twenty-nine billion nine
hundred million) Class B shares each with a nominal value of TL 0.01, issued
on various dates.
New Class A shares may not be issued in capital increases.
Permission granted by the CMB for authorized capital is valid from 2011
through 2015 (5 years). Even if the authorized capital so permitted is not
reached by the end of 2015, in order for the Board of Directors to pass a
capital increase decision after 2015, it is mandatory to get authorization
from the General Assembly of Shareholders for a new period of time upon
getting permission from the CMB for the previously permitted or a new
maximum capital amount. The Company will be deemed to have exited the
registered capital system in case of failure to obtain the said authorization.
From 2011 through 2015, the Board of Directors is authorized to increase
the issued capital up to the authorized capital through issuing registered
shares in accordance with the provisions of the Capital Market Law, as and
when it deems necessary.
While the nominal value of each share was TL 1,000.-, the same was
first changed to 1 New Kuruş pursuant to the Law Amending the Turkish
Commercial Code no. 5274, and then to 1 Kuruş due to the elimination of
the word “New” from the phrases “New Turkish Lira” and “New Turkish
Kuruş” effective from 01 January 2009, based on the Council of Ministers
Decision numbered 2007/11963 dated 04 April 2007. Due to this change,
total number of shares decreased; accordingly, 10 shares with a value of
TL 1,000 have been exchanged with one share with a nominal value of 1
(New) Kuruş. The shareholders’ rights arising from the shares they hold in
relation to the said exchange are reserved.
TL 1,000 have been exchanged with one share with a nominal value of 1
The phrases “Turkish Lira” herein are phrases that have been inserted
pursuant to the Council of Ministers Decision mentioned above.
Shares representing the capital are followed-up in dematerialized form
within the frame of dematerialization principles.
Decisions for increasing the capital are publicly disclosed within the frame
of public disclosure of material events.
The capital may not be increased unless cash values of the shares are fully
paid, save for increases made from internal funds.
Share Certificates
Shares and Transfer of Shares
Article 7- Rescinded.
Article 7- All of the shares are registered shares.
Transfer of shares is governed by the provisions of the Turkish Commercial
Code and of the CMB legislation. Provisions of the Insurance Law and Private
Pension Savings and Investment System Law and other applicable legislation
are reserved. Over-the-counter acquisition concept shall be determined in
accordance with ISE (Istanbul Stock Exchange) regulations.
The provisions of Article 379 and subsequent articles of the Turkish
Commercial Code governing the Company’s repurchase of its own shares are
reserved.
Issuing Bonds, Debt Instruments and Profit/Loss Sharing Certificates.
Issuing Debt Instruments and Convertibles.
Article 8 - The Company may issue bonds, debt instruments and profit/loss
sharing certificates subject to the provisions of the Turkish Commercial
Code, the Capital Market Law, Private Pension Savings and Investment
System Law, insurance legislation and other applicable legislation.
Article 8 - The Company may issue bonds, debt instruments and convertibles
subject to the provisions of the Turkish Commercial Code, the Capital Market
Law, Private Pension Savings and Investment System Law, insurance
legislation and other applicable legislation.
The General Assembly is authorized with respect to bonds issue.
The General Assembly is authorized with respect to issuing bonds, debt
instruments and convertibles.
The General Assembly may set out the details concerning the issue of
bonds, debt instruments and profit/loss sharing certificates and it may also
authorize the Board of Directors in this matter, if it so wishes.
The provisions of the Capital Market Law and applicable legislation will
be abided by with respect to the limit of the bonds, debt instruments and
convertibles.
The values of debt instruments must be cash and must be paid in full upon
delivery.
New bonds and other debt instruments in the nature of capital market
instruments and convertibles may not be issued, unless the bonds and other
debt instruments in the nature of capital market instruments and convertibles
that have been issued are fully sold or until the unsold ones have been
rescinded.
Board of Directors
Board of Directors
Article 9 - The Company is managed by a Board of Directors consisting of
nine members possessing the qualifications as described in the Private
Pension, Capital Market and Insurance legislation.
Article 9- The Company is represented and managed by a Board of Directors
consisting of 11 members possessing the qualifications as described in the
Private Pension, Capital Market and Insurance legislation, who will be elected
by the General Assembly pursuant to the provisions of the Turkish Commercial
Code.
In the absence of the Company’s CEO, his deputy with highest seniority
shall serve as the natural member of the Board of Directors.
Members of the Board of Directors shall be elected by the General Assembly,
seven of them from among nominations made by Class A shareholders, and
four from among nominations made by Class B shareholders. A candidate
nominated by certain share classes must be elected as a member by the
General Assembly, unless there is justified reason to do otherwise.
In the absence of the Company’s CEO, the deputy CEO with highest seniority
shall serve as the natural member of the Board of Directors.
Legal entities can be elected to the seats on the Board of Directors. In such a
case, a real person designated by such legal entity and materializing the legal
entity in his person shall be registered and promulgated along with the legal
entity member of the Board. Any proposals submitted and votes cast by such
real person before the Board of Directors shall be deemed submitted/cast by
the legal entity. The responsibility rests with the legal entity only. Such real
person can be substituted at any time at the unilateral will of the legal entity.
Discharge from the office shall not be necessary in such a case. The legal
entity’s representative may not be elected in lieu of the legal entity as Board
member.
The provisions of the applicable legislation of the Capital Markets Board are
reserved regarding independent Board Directors.
Members of the Board of Directors shall be elected by the General
Assembly, six of them from among nominations made by Class A
shareholders, and three from among nominations made by Class B
shareholders.
47
Duration of the Board of Directors
Duration of the Board of Directors
Article 10- Members of the Board of Directors shall be elected for a
maximum term of office of three years. Any member whose term of office
expires may be re-elected.
Article 10- Members of the Board of Directors shall be elected for a
maximum term of office of three years. Any member whose term of office
expires may be re-elected.
The General Assembly may replace the Board membership body, in full or in
part, at any time, if it so deems necessary.
The General Assembly may replace the Board members at any time, if the
agenda covers an item concerning the discharge of the Board members
or in the absence of such an item, in the event there is a justified reason
therefor.
If a seat on the Board of Directors is vacated by reason of resignation,
death or any other cause, then the Board of Directors shall temporarily
elect an individual possessing the required qualifications from amongst
nominations made by the Class entitled to nominate for such vacated
membership, and lay it down for approval by the General Assembly in the
immediately following meeting. The individual elected as a Board member
as such shall serve until the first General Assembly meeting. If his election
is approved by the General Assembly, he shall serve until the expiration of
the term of office of the member he is succeeding.
ARTICLE 11- NEW VERSION
Board of Directors Meeting and Decision Quorum
Board of Directors Meeting and Decision Quorum
Article 11 - The Board of Directors shall convene upon invitation by the
chairman as the Company’s affairs dictate, but at least once a month.
Article 11 - The Board of Directors shall convene upon invitation by the
chairman, and in his absence, by the vice chairman, as the Company’s affairs
dictate, but at least once a month. In addition, every Board Director may
request in writing from the Chairman, and in his absence from the Vice
Chairman, to convene the Board for a meeting. The Chairman or the Vice
Chairman shall take care to fulfill the meeting request by a Board Director
depending on the need and to the extent possible.
The invitation letter shall incorporate the agenda and the meeting date and
hour.
Board of Directors meeting shall be held at the Company headquarters.
Meetings may also be held elsewhere by a majority decision of the Board.
The Board shall convene with a simple majority of its membership.
Decisions shall be passed by a simple majority of Board Directors who are
present in the meeting.
Board of Directors decisions on a particular issue proposed by one of the
Board Directors may also be passed with the written approval of the other
members unless a Board Director requests that a meeting be held and the
matter be discussed. Board decisions shall only be valid if they have been
put into writing and signed.
48
If a seat on the Board of Directors is vacated by reason of resignation,
death or any other cause, then the Board of Directors shall temporarily
elect an individual possessing the required qualifications from amongst
nominations made by the Class entitled to nominate for such vacated
membership, and lay it down for approval by the General Assembly in the
immediately following meeting. The individual elected as a Board member
as such shall serve until the first General Assembly meeting. If his election
is approved by the General Assembly, he shall serve until the expiration of
the term of office of the member he is succeeding. The applicable provision
of the Turkish Commercial Code is reserved..
The invitation letter shall incorporate the agenda and the meeting date and
hour.
Board of Directors meeting shall be held at the Company headquarters.
Meetings may also be held elsewhere by a majority decision of the Board.
Those who are entitled to attend the Company’s Board of Directors
meetings may do so electronically, pursuant to Article 1527 of the Turkish
Commercial Code. Pursuant to the provisions of the Communiqué on
Electronic General Assembly Meetings of Business Corporations Save for
Joint Stock General Assembly Meetings, the Company may either set up
the Electronic Meeting System that will allow eligible individuals to attend
and cast votes in these meetings on electronic medium, or may purchase
service from systems created for this purpose. In the meetings to be held,
it will be provided that eligible individuals exercise their rights specified in
the applicable legislation subject to the provisions of the said Communiqué
using the system set up pursuant to this provision of the Company’s charter
or using the system from which support service will be obtained.
The Board shall convene with a simple majority of its full membership.
Decisions shall be passed by a simple majority of Board Directors who
are present. In the event that votes are tied, the issue shall be held over
to the next meeting. If votes are again tied at that meeting, the motion
shall be considered to have been declined. Board of Directors decisions
on a particular issue proposed by one of the Board Directors to all of
the Directors may also be passed with the written approval of at least
the majority of full membership, unless a Board Director requests that a
meeting be held and the matter be discussed.
Board decisions shall only be valid if they have been put into writing and
signed. However, decisions may also be passed and stored electronically
within the frame of the procedures and principles set out in the applicable
legislation.
Division of Authority
Division of Authority
Article 12 - At the first session following an ordinary or an extraordinary
general meeting which also includes renewal of elections, the Board of
Directors shall each year elect from among its members a chairman and,
to stand in for him in his absence, a vice chairman. The Board of Directors
may set up committees and commissions from among its membership as
circumstances dictate and may also elect a managing director.
Article 12 - At the first session following an ordinary or an extraordinary
general meeting which also includes renewal of elections, the Board of
Directors shall each year elect from among its members a Chairman and,
to stand in for him in his absence, at least one vice chairman. A secretary
may be chosen from among the members or non-members. The Board
of Directors may set up committees and commissions from among its
membership as circumstances dictate and may also elect a managing
director.
The duties, rights and powers assigned to the independent Board
Directors in the Capital Market Law and relevant regulations of the Capital
Markets Board are reserved. In addition to the ones stipulated by the
Capital Markets Board regulations, the Board of Directors may set up other
commissions and committees charged with the execution or supervision
of the implementation of the Company affairs and relevant decisions and
policies. The requirements of the Capital Markets Board are observed when
setting up these committees.
In addition to its powers specified in the Turkish Commercial Code, capital
market legislation and other applicable legislation, the Board of Directors
is obliged to set up, drive and develop a specialist committee for early
detection and management of risk pursuant to Article 378 of the Turkish
Commercial Code. The said committee shall fulfill the goals and duties set
out under Article 378. Members of the Board of Directors may take on
duties in this committee to be set up.
Members’ Non-participation in Meetings
Members’ Non-participation in Meetings
Article 13 – Any member of the Board of Directors who fails to participate in
three consecutive meetings without a just cause shall be deemed to have
resigned.
Duties and Authorities of the Board of Directors
Duties and Authorities of the Board of Directors
Article 14 – The Company is managed and represented by the Board
of Directors. This authority is absolute and the Board has full power to
pass decisions in any matter that is not prohibited by these articles of
association and do not require a prior General Assembly resolution, as
well as to dispose of the Company’s properties, and to undertake any
transaction related to the Company’s scope. Accordingly, the Board is
authorized, among others, to:
a) Establish and revoke agencies, branches, and representation offices
and determine the conditions thereof; assume agency, lead insurer and
representation services for other insurance and reinsurance companies; set
out the terms of collaboration with private pension intermediaries;
b) Appoint and remove from the office the Funds Committee and Funds
Supervisor within the frame of Private Pension legislation, as well as the
Company’s CEO and other senior executives;
c) Set the dates of inception and termination of operations in private
pension and other insurance branches the Company will be engaged in;
d) Determine the basic elements of pension contracts, annuity contracts,
portfolio management contracts, custody agreements; fund bylaws, and
insurance and reinsurance agreements;
e) Execute and terminate all sorts of reinsurance agreements;
f) Establish companies to be engaged in private pension and insurance
business; participate in existing or future companies active in the same
scope;
g) Buy stocks, bonds, T-bills, profit sharing certificates and similar
securities, and sell the same provided that such activities shall not be in the
nature of brokerage and portfolio management activities for the purpose of
achieving the Company’s purpose and investing its capital and reserves in
interest-bearing instruments;
h) purchase and sell movables or immovables, construct buildings, borrow
money by creating mortgage over the Company’s immovables, creating and
lifting all sorts of real rights for the purpose of achieving the Company’s
purpose and investing its capital and reserves in interest-bearing
instruments;
i) Enter into amicable settlement, resort to acquittal or arbitration;
i) Set up private pension funds.
Article 14 – The Board of Directors is authorized to decide on any matter
and transaction necessary for achieving the Company’s scope, apart from
those in which the General Assembly is authorized to decide pursuant to
the law and the articles of association.
Moreover, the Board of Directors may delegate part or all of its powers and
management duties to one or more managing directors from among its
members or non-member managing directors, pursuant to Article 370(2)
and Article 367 of the Turkish Commercial Code, respectively, save for
nonassignable duties and powers specified in Article 375 of the TCC.
The Board of Directors may delegate management in part or in whole
with an internal directive pursuant to Article 367 of the TCC, save for the
nonassignable duties and powers specified in Article 375 of the TCC.
49
Remuneration of the Board Directors
Remuneration of the Board Directors
Article 15 – The monthly salary to be paid to the chairman and members
of the Board of Directors shall be determined every year by the General
Assembly.
Article 15 – The monthly salary to be paid to the chairman and members
of the Board of Directors shall be determined every year by the General
Assembly in accordance with the provisions of the Turkish Commercial
Code, Capital Market Law and other applicable legislation.
CEO and Other Senior Officers
CEO and Other Senior Officers
Article 16 – The Board of Directors shall appoint a CEO from amongst its
members equipped with the powers the Board deems appropriate for the
execution of the decisions passed and for the conduct of the Company’s
business.
Article 16 – The Board of Directors shall appoint a CEO from amongst its
members equipped with the powers the Board deems appropriate for the
execution of the decisions passed and for the conduct of the Company’s
business.
For the purpose of ensuring supervision of the transactions concerning the
private pension funds to be set up by the Company, the Board of Directors
shall appoint a Funds Committee of at least three members who possess
the qualifications set out in the Private Pension legislation.
For the purpose of ensuring supervision of the transactions concerning the
private pension funds to be set up by the Company, the Board of Directors
shall appoint a Funds Committee of at least three members who possess
the qualifications set out in the Private Pension legislation.
Furthermore, the Board of Directors shall appoint at least one fund
supervisor for each fund.
Furthermore, the Board of Directors shall appoint at least one fund
supervisor for each fund.
Senior officers authorized to represent the Company and have signing
authority shall be appointed, promoted, transferred and dismissed by the
Board of Directors upon proposal by the CEO.
Senior officers authorized to represent the Company and have signing
authority shall be appointed, promoted, transferred and dismissed by the
Board of Directors upon proposal by the CEO.
The CEO, Deputy CEO and Executives who are in equivalent position to
the Deputy CEO with respect to their powers and duties must possess
the qualifications stipulated by the private pension, capital market and
insurance legislation.
Terms of office and signing authorities of the CEO and managers and other
officers with signing authority are not restricted to the terms of office
of the Board Directors. The signing authorities of these individuals shall
remain in force until they are revoked by the Board of Directors.
The CEO, Deputy CEO and Executives who are in equivalent position to
the Deputy CEO with respect to their powers and duties must possess
the qualifications stipulated by the private pension, capital market and
50
Individuals Authorized to Sign on behalf of the Company and Signing
Requirements
Individuals Authorized to Sign on behalf of the Company and Signing
Requirements
Article 18 – The Company will be represented and documents and
agreements to be issued in the name of the Company will be binding upon
the Company, if they are signed by at least two officers, at least one of
whom must have first degree power of signature, and if the signatures are
exercised beneath the Company title. Individuals having signing authority
and the degree of their power shall be determined by a Board of Directors
decision, and then registered and promulgated.
Article 18 – Individuals with signing power so that the Company can be
represented and documents and agreements to be issued in the name of
the Company can be binding upon the Company and signing requirements
shall be determined by a Board of Directors decision, and then registered
and promulgated.
Audit Principles for the Company; Selection and Dismissal of Statutory
Auditors
Audit Principles for the Company
Article 19 – The Company is internally audited within the frame of the
Company’s internal audit guidelines and in accordance with the principles
and procedures to be set by the Undersecretariat of Treasury.
Funds are internally audited within the frame of the Capital Market
legislation and in accordance with the principles and procedures to be set
The Funds Committee monitors and reports on the transactions involving
the funds set up by the Company.
The Company sets up a suitable internal control system to ensure that:
funds operate in compliance with the legislation, pension agreements,
fund bylaws and the prospectus;
funds are lucrative;
data pertaining to funds are reliable and timely accessible;
accounting records are accurate and complete.
Individuals authorized to represent the Company may not undertake
actions that are outside the Company’s purpose and scope specified under
Article 3 and that are contradictory to the law. Otherwise, the Company
shall have recourse to these individuals if the Company is held liable for
such actions. The Company shall not be bound by an action when any
third party knows, or is in a position to know, that such action is outside
the Company’s objective and scope. Any third party who constantly deals
with the Company and receives the Company’s explanatory, cautionary and
other letters and decisions and who is aware of the same may not claim
good faith.
Article 19 – The Company’s General Assembly shall each year designate an
independent audit firm as auditor. After selection, the Board of Directors
shall have the auditor registered before the Trade Registry and promulgate
the same in the Turkish Trade Registry Gazette and on the website. An
audit firm that has been named as auditor for the same company for a
total of seven years in a ten-year period may not be designated as auditor
in earlier than three years. The auditor is dismissed as per the provisions
of the Turkish Commercial Code. Article 399(2) of the Turkish Commercial
Code is reserved.
Funds are internally audited within the frame of the Capital Market
legislation and in accordance with the principles and procedures to be set
The above shall be without prejudice to the CMB arrangements governing
the Company’s audit.
The Fund Supervisor is responsible for ensuring that the fund operations
are executed in compliance with internal control principles and procedures.
The Company shall duly draw up the data, documents, and charts to be
required by the Undersecretariat of Treasury and the Capital Markets Board,
and the private pension recording system.
The General Assembly shall each year elect at most three statutory
auditors from among shareholders or non-shareholders.
Statutory auditors must possess the qualifications set out in the Private
Pension, Capital Market and Insurance legislation, as well as in the Turkish
Commercial Code. Statutory auditors whose terms of office expire may be
re-elected.
Duties and Authorities of Statutory Auditors
Duties and Authorities of Statutory Auditors
Article 20 - Statutory Auditors are obliged to perform the duties specified
in the TCC, Private Pension, Capital Market and Insurance legislation.
Compensation of Statutory Auditors
Compensation of Statutory Auditors
Article 21 - The remuneration of statutory auditors is determined each year
by the General Assembly of Shareholders.
For statutory auditor positions vacated for any reason whatsoever, action
will be taken in accordance with the legislation in force.
51
General Assembly Meetings
General Assembly Meetings
Article 22- The General Assembly Meetings are held ordinarily and
extraordinarily. The annual meeting is held every year within 3 months
following the fiscal year. General Assembly is summoned for extraordinary
meeting, when necessary.
Article 22- The General Assembly Meetings are held ordinarily and
extraordinarily pursuant to the provisions of the Turkish Commercial Code
and other applicable legislation. The annual meeting is held every year
within 3 months following the fiscal year. Extraordinary General Assembly
Meetings are held as and when imposed by the Company’s affairs or in
case of the emergence of the reasons specified under Article 410 and
subsequent articles of the Turkish Commercial Code.
Shareholders exercise their rights in relation to the Company affairs such as
appointment of bodies, approval of accounts and distribution of earnings in
the General Assembly meeting pursuant to the TCC.
Invitation and Agenda
Article 23 - Announcements summoning the General Assembly of
Shareholders for ordinary and extraordinary meetings must be made in
accordance with the provisions of the Communiqué on the Determination
and Implementation of Corporate Governance Principles issued by the
Capital Markets Board and the Corporate Governance Principles attached
thereto, as well as the procedures stipulated by the Turkish Commercial
Code, the Capital Market Law and applicable legislation.
The announcement will also be posted on the Company’s website in a
manner to draw attention to the elements regulated by the Capital Markets
Board Corporate Governance Principles, as well as the general assembly
meeting announcement, and the disclosures and explanations the
Company is required to make pursuant to the legislation.
Invitation and Agenda
Article 23 – The General Assembly shall be summoned for meeting by way
of the announcement that includes the meeting date, place, time and
agenda posted on the Company’s website and published in the Turkish
Trade Registry Gazette. Such announcement must be made at least three
weeks in advance of the General Assembly meeting date, excluding the
dates of announcement and meeting.
Announcements summoning the General Assembly of Shareholders for
ordinary and extraordinary meetings must be made in accordance with the
provisions of the Communiqué on the Determination and Implementation
of Corporate Governance Principles issued by the Capital Markets Board
and the Corporate Governance Principles attached thereto, as well as the
procedures stipulated by the Turkish Commercial Code, the Capital Market
Law and applicable legislation.
The announcement will also be posted on the Company’s website in a
manner to draw attention to the elements regulated by the Capital Markets
Board Corporate Governance Principles, as well as the general assembly
meeting announcement, and the disclosures and explanations the
Company is required to make pursuant to the legislation.
At the Annual General Assembly meetings, matters covered in the agenda,
which are prepared in view of Article 409 of the Turkish Commercial
Code and regulatory arrangements of the Capital Markets Board, shall be
discussed and decided on. Dismissal of Board Directors and election of new
Directors shall be deemed linked to the discussion of year-end financial
statements. Matters not contained in the agenda shall not be brought up
for discussion, without prejudice to Article 438 of the Turkish Commercial
Code.
52
Meeting Place
Meeting Place
Article 24 - The General Assembly meets in the city where the Company’s
headquarters is located or in Ankara.
Article 24 - The General Assembly meets in the city where the Company’s
headquarters is located.
Notification of Meetings to Related Authorities
Notification of Meetings to Related Authorities
Article 25 – Both annual and extraordinary General Assembly meetings are
notified to the Ministry of Industry and Trade at least 20 days prior to the
meeting date and a copy of the meeting agenda and related documents are
sent to the Ministry.
Article 25 – Both annual and extraordinary General Assembly meetings
are notified to the Ministry of Customs and Trade within the period of time
set out in the legislation and a copy of the meeting agenda and related
documents are sent to the Ministry.
In all meetings, the presence of the Ministry of Industry and Trade
commissioner is mandatory. General Assembly meetings to be held in the
absence of the commissioner shall be invalid.
In all meetings, the presence of the Ministry of Customs and Trade
representative is mandatory. General Assembly meetings to be held in the
absence of the Ministry representative shall be invalid.
The Undersecretariat of Treasury may have a representative present in the
General Assembly meeting.
Financial statements, consolidated financial statements, annual activity
report by the Board of Directors, audit reports and the dividend distribution
proposal by the Board of Directors shall be made available for review by
the shareholders at the Company’s headquarters and branches at least
three weeks prior to the General Assembly meeting. From amongst these
documents, financial statements and consolidated statements are kept
available for the information of shareholders for a period of one year at
the headquarters and branches. Provisions of Article 437 of the Turkish
Commercial Code are reserved.
Three copies of each of the Board of Directors’ and statutory auditors’
reports, balance sheet, minutes of the General Assembly meeting and
the list of attendants shall be sent to the Ministry of Industry and Trade
within one month from the meeting date or delivered to the attending
commissioner.
Financial statements and reports required to be drawn up by the Capital
Markets Board, and independent audit report, if the Company is subject
to independent auditing, shall be sent to the Capital Markets Board and
publicly disclosed subject to the principles and procedures set out by the
Capital Markets Board.
Meeting and Decision Quora
Meeting and Decision Quora
Article 26 – Unless otherwise stipulated in the Turkish Commercial Code,
the General Assembly shall convene with the participation of shareholders
that represent at least one fourth of the Company’s capital.
Article 26 – Unless otherwise stipulated in the Turkish Commercial Code,
the General Assembly shall convene with the participation of shareholders
that represent at least one fourth of the Company’s capital. The said
quorum must be maintained during the course of the meeting. Managing
directors, if any, and at least one Board Directors and independent auditor
must attend the general assembly meeting.
If the said quorum cannot be achieved in the first meeting, shareholder
shall be summoned for meeting for a second time. In the second meeting,
shareholders present in the meeting shall be authorized to discuss and
decide on matters, irrespective of the amount of capital they represent.
Decisions are passed by the majority of votes present, unless otherwise
stipulated in the Turkish Commercial Code.
If the said quorum cannot be achieved in the first meeting, shareholder
shall be summoned for meeting for a second time. In the second meeting,
shareholders present in the meeting shall be authorized to discuss and
decide on matters, irrespective of the amount of capital they represent.
Decisions are passed by the majority of votes present, unless otherwise
stipulated in the Turkish Commercial Code.
Article 421 (5) of the Turkish Commercial Code is reserved.
Those who are entitled to attend the Company’s Board of Directors
meetings may do so electronically, pursuant to Article 1527 of the Turkish
Commercial Code. Pursuant to the provisions of the Communiqué on
Electronic General Assembly Meetings of Business Corporations Save for
Joint Stock General Assembly Meetings, the Company may either set up
the Electronic Meeting System that will allow eligible individuals to attend
these meetings, voice their opinions, submit proposals and cast votes
therein on electronic medium, or may purchase service from systems
created for this purpose. In all General Assembly meetings to be held, it will
be provided that eligible individuals exercise their rights specified in the
provisions of the said Communiqué using the system set up pursuant to
this provision hereof.
53
Voting Right
Voting Right
Article 27- Each share entitles its holder to one vote.
Article 27- Each nominal value of TL 0.01 entitles its holder to one vote
and at General Assembly meetings, shareholders vote pro rata the total
nominal value of the shares they hold, pursuant to Article 434 of the
Turkish Commercial Code. Shareholders may have themselves represented
at the General Assembly meetings pursuant to the provisions of the
relevant article in the Turkish Commercial Code. The Capital Market Board
requirements concerning voting by proxy are complied with in proxy voting.
If one share is held by several owners, the same can cast their vote only via
a joint representative.
Shareholders may be represented at the General Assembly meetings via
a proxy to be appointed from amongst shareholders or non-shareholders.
Proxies who are shareholders in the company shall be authorized to cast
votes for the shareholders they represent, in addition to their own votes.
The format of the proxy form shall be determined by the Board of Directors
subject to the requirements of the Capital Markets Board. The proxy form
must be in writing. The proxy shall be obliged to cast the vote in line with
the assignor’s wish, provided that the shareholder assigning the authority
has specified the same in the proxy form.
Voting Manner
Voting Manner
Article 28 – Open voting is implemented at General Assembly meetings.
However, secret voting can be implemented upon request by those
representing one tenth of those who are present at the meeting.
Article 28 – With respect to voting in the General Assembly meetings,
Capital Markets Board and Turkish Commercial Code requirements are
complied with.
With respect to voting in the General Assembly meetings, Capital Markets
Board requirements are complied with.
Chair
Chair
Article 29 – General Assembly meetings are chaired by the Chairman of the
Board of Directors, and in his absence, by the Vice Chairman of the Board. In
the absence of the latter, the Chair is elected by the General Assembly.
Article 29 – General Assembly meetings are chaired by the Chairman of the
Board of Directors, and in his absence, by the Vice Chairman of the Board. In
the absence of the latter, the Chair is elected by the General Assembly.
The General Assembly shall also elect two people from amongst
shareholders to count and sort the votes, and one person to serve as
secretary from amongst shareholders or non-shareholders.
The General Assembly shall also elect two people from amongst
shareholders to count and sort the votes, and one person to serve as
minutes secretary from amongst shareholders or non-shareholders.
The Chair shall chair the General Assembly in accordance with the
provisions of the “General Assembly Guidelines”.
54
Written Record of the General Assembly Meeting
Written Record of the General Assembly Meeting
Article 30 - Discussions held and decisions passed at the General Assembly
shall be documented in a written record. This written record shall be signed
by the chair, vote collectors, secretary and the shareholders present in the
meeting, as well as the Ministry of Industry and Trade commissioner.
Article 30 - Discussions held and decisions passed at the General Assembly
shall be documented in the minutes. These minutes shall be signed by the
presiding board, and the Ministry representative.
Fiscal Year
Fiscal Year
Article 31 – The Company’s fiscal year is the calendar year. At the end of
each fiscal year, a balance sheet and profit/loss statement are drawn
up that show the Company’s financial standing. Accounting standards
are observed when drawing up the Company’s financial statements and
reports, and the requirements of the Capital Markets Board with respect to
independent audit.
Article 31 – The Company’s fiscal year is the calendar year. Accounting
standards are observed when drawing up the Company’s financial
statements and reports, and the requirements of the Capital Markets Board
with respect to independent audit.
Provisions of Private Pension and Insurance legislation are reserved.
Within the first three months of the fiscal year that follows the date
of the balance sheet, the Board of Directors shall draw up the financial
statements set out in the Turkish Accounting Standards, appendices
thereof, and the annual activity report of the Board of Directors, and
present them to the General Assembly.
Provisions of Private Pension and Insurance legislation are reserved.
Assistance Reserves for the Benefit of Employees
Assistance Reserves for the Benefit of Employees
Article 32 – The Company may set up a pension and assistance fund to
provide social security for its employees, pursuant to Article 468 of the
Turkish Commercial Code. The General Assembly may set aside assistance
reserves to set up or maintain such funds.
Article 32 – Rescinded.
Distribution of Profit
Distribution of Profit
Article 33 – Net profit of the Company is revenues generated during
a balance sheet period less overhead expenses, depreciation costs,
provisions, corporate tax and similar taxes and financial obligations, and
prior period losses, if applicable.
Article 33 – Distribution of the profit at the Company shall be decided by the
General Assembly in line with the proposal of the Board of Directors and in
view of the provisions of the Turkish Commercial Code, Capital Market Law
and other legislation governing the Company.
Net profit shall be distributed as follows:
Advances on dividends may be distributed provided that the principles and
procedures set out in the Capital Market legislation are complied with.
b) Out of the distributable profit calculated as such, first dividends in the
ratio and amount set by the Capital Markets Board shall be set aside.
c) The Company may distribute dividends to its clerks, janitors and workers,
limited maximum to 3% of the remaining amount, and limited to three
times of their respective salaries.
d) 10% of the balance shall be set aside as extraordinary reserves.
The remaining amount shall be utilized as determined by the General
Assembly. (Provision of Article 466/3 of the Turkish Commercial Code is
reserved.)
Unless the reserves that are mandatory to be set aside as per the
provisions of the TCC and Capital Market Law and first dividends in the
percentage set for the shareholders in the articles of association have been
set aside, it may not be decided to set aside other reserves, to carry over
profit to the following year, and also it may not be decided to distribute
share from profit to the Board Directors and to clerks, janitors and workers,
unless first dividends have been distributed.
In calculating second reserves, the basis shall be one tenth of the amount
decided to be distributed to shareholders and other people participating
in the share after deduction of shareholders’ dividends equal to 5% of the
paid-in capital.
Net profit of the Company is revenues generated during a balance sheet
period less overhead expenses, depreciation costs, provisions, corporate
tax and similar taxes and financial obligations, and prior period losses, if
applicable. The resulting net profit shall be set aside and distributed in the
manner, percentages and order set out hereinbelow:
a) 5% of the annual net profit shall be set aside as legal reserves until the
same reaches 20% of the issued capital; once the legal limit is reached, the
amounts stipulated as per Article 519(2) subparagraphs a and b shall be
added to general legal reserves.
b) From the remaining amount, first dividends shall be distributed, which
will be in the ratio to be set by the General Assembly in line with the
requirements of the Capital Markets Board.
c) The Company shall set aside up to 3% of the remaining amount for its
officers, clerks, caretakers and workers limited to 3 times of their respective
salaries.
d) 10% of the amount remaining after the distribution mentioned under
subparagraph (d) shall be set aside as statutory reserves.
e) The General Assembly may decide to distribute the remaining profit
in part or in whole to shareholders as second dividends, to allocate the
same as additional dividends for the Company’s officers, clerks, caretakers
and workers as per subparagraph (d) above, or set the same aside as
extraordinary legal reserves.
Pursuant to Article m.519/2(c) of the Turkish Commercial Code, 10% of the
total amount to be distributed to people who will get share from profit shall
be added to general legal reserves.
Provisions of Article 519 (3) of the Turkish Commercial Code are reserved.
Provisions of the Capital Market legislation are reserved in relation to
dividend distribution.
Unless the reserves that are mandatory to be set aside as per the
provisions of the TCC and Capital Market Law and first dividends have
been set aside, it may not be decided to set aside other reserves, to carry
over profit to the following year, and to distribute share from profit to the
members of the Board of Directors and to employees and workers.
The date and manner of distribution of annual profit to shareholders
shall be decided by the General Assembly upon proposal of the Board of
Directors, and in accordance with the requirements of the Capital Markets
Board. Profit distributed in accordance with the provisions of these articles
of incorporation may not be reclaimed. Provisions of the Turkish Commercial
Code concerning the right to reclaim are reserved.
a) 5% legal reserves shall be set aside.
55
PART TWO HEADING FORMER VERSION
PART TWO HEADING NEW VERSION
SECTION EIGHT
REVISING THE ARTICLES OF ASSOCIATION
SECTION EIGHT
REVISING THE ARTICLES OF ASSOCIATION
Revising the Articles of Association
Revising the Articles of Incorporation
Article 34 – The Company’s articles of association may be revised based
on a General Assembly decision, under the provisions of the Turkish
Commercial Code, and Private Pension, Capital Market and Insurance
legislation. However, no revisions shall be valid unless permission shall have
been obtained from the Ministry of Trade, the Capital Markets Board, and
the Undersecretariat of Treasury therefor, and they have been registered
with the trade registry and duly promulgated.
Article 34 – The Company’s articles of incorporation may be revised based
on a General Assembly decision, under the provisions of the Turkish
Commercial Code, and Private Pension, Capital Market and Insurance
legislation. However, no revisions shall be valid unless permission shall have
been obtained from the Ministry of Customs and Trade, the Capital Markets
Board, and the Undersecretariat of Treasury therefor, and they have been
registered with the trade registry and duly promulgated.
Announcements in relation to the Company
Announcements in relation to the Company
Article 35 – Announcements in relation to the Company, which are
mandatory to be made as per the laws, regulations and these articles of
association, shall be made in the Turkish Trade Registry Gazette and a daily
newspaper published in the city where the Company is headquartered at
least 7 days in advance. Longer periods of time stipulated by the law and
these articles of association are reserved.
Article 35 – Announcements in relation to the Company, which are
mandatory to be made as per the laws, regulations and these articles
of incorporation, shall be made in the Turkish Trade Registry Gazette;
moreover, announcements required to be made by the Company pursuant
to Article 1524 of the Turkish Commercial Code shall be made on the
Company’s website.
The foregoing is without prejudice to announcement and information
provision obligations to be performed as per the Capital Market Law and
announcement and information provision obligations to be made to the
The foregoing is without prejudice to the provisions arising from the
Insurance and Private Pension legislation and the provision of Article 198 of
the Turkish Commercial Code.
Provisions of Articles 474 and 532 of the Turkish Commercial Code shall be
applied to announcements concerning capital decrease and dissolution.
The foregoing is without prejudice to announcement and information
provision obligations to be performed as per the Capital Market Law and
announcement and information provision obligations to be made to the
56
Printing the Articles of Association and Submitting to Relevant Authorities
Printing the Articles of Association and Submitting to Relevant Authorities
Article 36 - These articles of association shall be printed and distributed to
shareholders. 10 copies shall be sent to the Ministry of Industry and Trade,
sufficient number of copies to the Undersecretariat of Treasury, and one
copy to the Capital Markets Board.
Article 36 - Rescinded.
Implementation of Legal Provisions
Implementation of Legal Provisions
Article 38 - In matters where these articles of association remain silent, Turkish
Commercial Code, Private Pension legislation, Insurance legislation, Capital
Market Law, and the provisions of the current communiqués and regulations
and other relevant decisions of the Capital Markets Board shall apply.
Article 38 - In matters where these articles of incorporation remain silent,
Turkish Commercial Code, Private Pension legislation, Insurance legislation,
Capital Market Law, and the provisions of the current communiqués and
regulations and other relevant decisions of the Capital Markets Board shall
apply.
PROVISIONAL ARTICLE 1 – FORMER VERSION
PROVISIONAL ARTICLE 1 – NEW VERSION
Initial Board of Directors
Initial Board of Directors
Provisional Article 1 – The individuals named below have been elected to serve
as members on the initial Board of Directors until the first Annual General
Assembly meeting.
Provisional Article 1 - Rescinded.
Bedii Tümer (representing Anadolu Anonim Türk Sigorta Şirketi)
Onur Özbilen (Representing T. İş Bankası Anonim Şirketi)
Oktay Bekişoğlu (Representing Destek Reasürans T.A.Ş.)
Yaşar İğdirsel (representing Mensa Mensucat San. ve Tic. A.Ş.)
Tuğrul Erden (representing T. Dış Ticaret Bankası A.Ş.)
Initial Statutory Auditors
Provisional Article 2 – The individuals named below have been elected as
statutory auditors to serve until the first Annual General Assembly meeting.
Cüneyt Demren
T. İş Bankası A.Ş. - Zincirlikuyu Branch Manager (Turkish citizen)
Neşe Demir
T. İş Bankası A.Ş. – Assistant Manager at Equity Participations Department
(Turkish citizen)
Capital and Shares
Capital and Shares
Article 6- The Company has adopted the registered capital system in
Article 6- The Company has adopted the registered capital system in
The Company’s issued capital is TL 300,000,000.-(three hundred million).
with a nominal value of TL 0.01, and TRY 299,000,000 (two hundred and
ninety-nine million) is represented by 29,900,000,000 (twenty-nine billion
and nine hundred million) Class B shares each with a nominal value of
TL 0.01, issued on various dates.
The Company’s issued capital is TL 350,000,000.- (three hundred and fifty
million). Of this amount, which is fully paid-up, TL 1,000,000 (one million)
is represented by 100,000,000 (one hundred million) Class A shares each
with a nominal value of TL 0.01, and TRY 349,000,000 (three hundred and
forty-nine million) is represented by 34,900,000,000 (thirty-four billion
and nine hundred million) Class B shares each with a nominal value of
TL 0.01, issued on various dates.
TL 1,000.- have been exchanged with one share with a nominal value of 1
TL 1,000.- have been exchanged with one share with a nominal value of 1
Decisions about capital increases are publicly disclosed by way of material
event disclosures.
Decisions about capital increases are publicly disclosed by way of material
event disclosures.
Save for capital increases covered from internal sources, the capital may
not be increased unless cash prices of shares are paid in full.
Save for capital increases covered from internal sources, the capital may
not be increased unless cash prices of shares are paid in full.
The new version of “Article 6 – Capital and Shares” of the Company’s Articles of Incorporation, which has been revised in conjunction with raising
the Company’s issued capital from ¨300,000,000.- to ¨350,000,000.- within the authorized capital and which has been approved by the CMB,
has been registered on 04 July 2013 and promulgated on 10 July 2013. The relevant amendment is given below.
57
Changes in the Legislation during the Fiscal Year
Laws
• The Law no. 6327 Amending
the Private Pension Savings and
Investment System Law and Certain
Other Laws and Statutory Decrees
introduced significant changes to the
private pension and insurance system
through its provisions that went into
force on 1 January 2013.
A key change introduced by the Law
no. 6327 is the termination of the
practice whereby contributions were
deducted from the tax base, and
revision of the incentive model in the
Private Pension System by way of the
newly defined State Contribution.
Within the scope of the State
Contribution practice that went
into force on 1 January 2013, a
State Contribution began to be
paid, which corresponds to 25%
of the contributions paid into the
private pension account on behalf
of the participant, excluding the
contributions paid by the employer.
Participants are not required to
be taxpayers or to be generating
income in order to be eligible for
State Contribution. All participants
are entitled to State Contribution up
to 25% of the annual gross minimum
wage during one calendar year.
58
• Law no. 6456 Amending the Law on
the Regulation of Public Financing and
Debt Management and Certain Laws
and Decree-Laws was published in
the Official Gazette dated 18.04.2013
and all articles of the law concerning
the Private Pension System went into
force on the date of its publication.
A change introduced by the Law
no.6456 relates to the amounts
transferred from provident funds/
foundations/trusts to the Private
Pension System. Accordingly, 3.75%
tax will be levied on the entire
amount transferred to the system
by participants who drop out of the
system within three years following
the date of transfer, save for those
who drop put due to obligatory
reasons.
• Based on the revised Law no. 4632
on Private Pension Savings and
Investment System, upon establishing
that undeserved State Contribution
payments were made to companies,
the same will not be deducted from
the following payment, but instead,
will be deposited in cash with the tax
offices in line with the principles to
be established by the PMC, which is a
major change.
• The Law no. 6502 on Consumer
Protection was published in the
Official Gazette issue 28835, dated
28 November 2013. The law will come
into force six months after its date of
publication.
The purpose of the law is to take
measures that are aimed at protecting
the consumers’ health and safety and
economic interests, indemnifying their
losses, ensuring protection against
environmental hazards, informing and
raising awareness of the consumers
in line with the public interest, to
promote self-protective actions
among consumers, and to encourage
voluntary organizations regarding the
creation of relevant policies.
Regulations
• Regulation on the Establishment and
Working Principles of Pension Funds
was published in the Official Gazette
issue 28586 dated 13 March 2013.
The assets that can be incorporated
in the pension funds portfolios were
diversified, and accordingly, the
possibility was introduced for setting
up pension funds in new portfolio
structures such as gold funds, sukuk
funds and fund baskets, and also to
allow existing funds to invest in these
products.
• The Regulation on Internet Sites to
be Launched by Equity Companies
was published in the Official Gazette
issue 28663 dated 31 May 2013 and
went into force on 01 July 2013. The
purpose of the Regulation is to set
out the principles and procedures
concerning the opening of internet
sites as per Article 1524 (1) of the
Turkish Commercial Code no. 6102
and allocation of a specific section
of this website for posting the
announcements legally required to
be made by the Company and for
information society services.
• The Regulation on Unclaimed Monies
by Right Holders under Insurance
Policies Governed by the Provisions
of Private Law was published in the
Official Gazette issue 28789 dated
08 October 2013. The regulation
contained provisions setting out that
if amounts unclaimed by right holders
prescribe, then such prescribed
monies and identification and address
information for right holders will be
transferred to the Assurance Account
by insurance and pension companies,
whereas amounts before entities
engaged in insurance activity under
the provisions of private law, which
are not claimed by right holders, will
be entered as income by the said
entities.
a) electronic signing of the disclosures
by trusts, investment trusts, fund
founders and other entities and
organizations determined by the CMB
and their electronic submission to the
Public Disclosure Platform,
b) preparation and signing of the
independent audit reports issued by
independent auditors in electronic
environment and their electronic
delivery to the independently
audited trusts and entities, which are
obligated to make disclosures.
• General Communiqué no. 433 on the
Tax Procedural Law was published in
the Official Gazette (repeated) issue
28867 dated 30 December 2013. The
General Communiqué covers detailed
descriptions about the transition
to E-Archive, E-Book and E-Invoice
implementations and principles.
Circulars
• The Tax Income circular dated
26 November 2013 and numbered
GVK-92/2013-7 covers tax
implementation requirements, which
will be taken as the basis for transfers
from foundations/provident funds/
trusts to the Private Pension System.
• The Circular no. 2013/2 on the
Principles and Procedures for the
Information, Documents and Forms
Submitted by Pension Companies
was enforced upon its publication
by the Undersecretariat of Treasury
on 25 January 2013. The Circular is
intended to describe the principles
and procedures concerning the
information, documents and forms to
be submitted to the participants and
sponsoring entities pursuant to the
Private Pension System Regulation.
• The Circular no. 2013/3 on Pension
Plans was enforced upon its
publication by the Undersecretariat
of Treasury on 26 February 2013.
The Circular is intended to describe
the implementation principles and
procedures concerning pension plans
pursuant to the Private Pension
System Regulation published in
the Official Gazette 28462 dated
09 November 2012.
Technical principles were determined
for pension plans and the funds
offered thereunder, the standard
fund definition was made into which
savings of individuals who do not
make a fund preference at the time
of participation in the system will be
channeled, and Companies were asked
to set up a standard fund with the
specified properties.
• Principles for the State Contribution
transactions were described, which
are performed pursuant to the
Circular no. 2013/10 dated 02 July
2013 on the State Contribution
Transactions in the Private Pension
System, supplementary article 1 of
the Law no. 4632 on the Private
Pension Savings and Investment
System, and the Regulation on the
State Contribution in the Private
Pension System published in the
29 December 2012. Within this scope,
the Circular covers matters relating
to the refundment of unearned
amounts of participants wanting to
drop out of the system accumulated
in the State Contributions account,
excess payments made to the
Undersecretariat of Treasury, and
the undeserved State Contribution
amounts paid to participants.
• Under the Circular no. 2013/14 dated
29 July 2013 on the Implementation
Principles for Pension Annuity
Products, and the Life Insurance
Regulation published in the Official
Gazette issue 28437 dated 10 October
2012, and in view of the retirement
age criterion implemented by the
Private Pension System, it has been
stipulated to offer life insurance
products paying only the so-called
“Pension Annuity”, excluding the
transfers to be made from foundations
and provident funds, to individuals
aged 56 and older. The Circular on
the Implementation Principles for
Pension Annuity Products describes
the technical principles for tariffs
and dividends in relation to pension
annuity products, and the guidelines
to be followed when making revisions
to these principles.
Communiqués
• Public Disclosure Platform
Communiqué no. VII-128.6 was
published in the Official Gazette issue
28864 dated 27 December 2013. The
objective of the Communiqué is to set
out the principles and procedures for:
59
Other Material Disclosures Concerning the Reporting Period
Disclosures on the Special Audit and Public Audit Conducted During the Reporting Period
The audits conducted at the Company during the reporting period are presented below:
Agency Conducting the Audit
Subject of Audit
Audit Dates
T.R. Prime Ministry Capital Markets Board CMB Audit on Pension Funds 2011 Activities
20.09.2012-03.01.2013
T.R. Prime Ministry Capital Markets Board CMB Audit on Pension Funds 2012 Activities
07.02.2013-23.05.2013
T.R. Prime Ministry Undersecretariat of
Treasury Insurance Supervision Board
Audit on Life Insurance Affairs and Transactions
11.03.2013-24.05.2013
T.R. Prime Ministry Undersecretariat of
Treasury Insurance Supervision Board
Process Audit on PPS State Contribution Transactions
06.06.2013-28.06.2013
Major Lawsuits Brought against the Company
There are no major lawsuits brought against the Company during 2013, which might have a potential impact on the Company’s
financial standing and activities.
Penalties and Sanctions against the Company and Board Directors on account of Practices Contradicting with
the Provisions of Legislation
There were no penalties and sanctions of material nature imposed on account of practices contradicting with the provisions of
legislation in 2013.
Grants and Donations, Expenses Incurred within the Frame of Social Responsibility during the Reporting Period
In 2013, the Company’s grants and donations totaled ¨36,595, out of which ¨33,385 was incurred in relation to the social
responsibility project.
Information on General Assembly
All of the resolutions adopted at the Ordinary General Assembly meeting held on 26 March 2013 have been realized.
Rights Provided to Board Directors and Senior Executives
Financial rights and other benefits provided to the Board Directors and senior executives during 2013 are presented below.
Financial Rights
In the fiscal year ended 31 December 2013, wages and similar benefits provided to the chairman and the members of the Board
of Directors amounted to ¨984,300, and to senior executives such as the CEO and Deputy Chief Executive Officers amounted to
¨2,974,078.
Other Means
Under other means including, among others, business trip expenses, entertainment expenses and insurance premium
payments, the Company provided means in kind and in cash worth ¨22,046 to the Board Directors, and ¨761,474 to senior
executives such as the CEO and Deputy Chief Executive Officers.
60
In addition, an insurance coverage of ¨3,501,900 in total has been defined for senior executives within the frame of whole life
insurance.
Transactions Executed with the Risk Group
During the reporting period, the Company collected ¨15,486,007 (31 December 2012: ¨14,316,736) employer contribution for
private pension plans from related parties, and accrued ¨506,769 employer premium for life insurance (31 December 2012:
¨302,422). Other material transactions executed with related parties in the fiscal years that ended on 31 December 2013 and
31 December 2012 are presented below:
31 December 2013
31 December 2012
702,590
917,985
Premiums written, ceded
702,590
917,985
Milli Reasürans TAŞ - commission income from reinsurers
294,309
246,831
Commission income from reinsurers
294,309
246,831
Türkiye İş Bankası AŞ – interest income from deposits
663,404
652,012
663,404
652,012
195,552
187,488
-
20,256
15,750
13,125
Milli Reasürans TAŞ - premiums written, ceded
Investment income
İş Portföy Yönetimi AŞ – investment consultancy fee
İş Portföy Yönetimi AŞ – portfolio management fee
İş Yatırım Menkul Değerler AŞ – MKK service commission
İş Yatırım Menkul Değerler AŞ – portfolio management fee
8,080
İş Portföy Yönetimi AŞ – secondary market operations of marketable securities
-
13,278
İş Yatırım Menkul Değerler AŞ – secondary market operations of marketable
securities
-
10,674
211,302
252,901
Türkiye İş Bankası AŞ – commission of production
51,918,079
45,144,459
İş Portföy Yönetimi AŞ – portfolio management fee of pension funds
Investment expense
12,984,035
12,191,098
İş Merkezleri Yönetim ve İşletim A.Ş. – building administrative expense
4,178,552
3,961,869
İş Gayrimenkul Yatırım Ortaklığı A.Ş. – rent expense
3,131,677
2,917,306
825,064
1,253,519
İş-Net Elektronik Bilgi Üretim Dağ. Tic. ve İletişim A.Ş. - communication expense
Anadolu Anonim Türk Sigorta Şirketi – premium paid
1,649,623
1,020,191
Türkiye İş Bankası AŞ – commission of premium collection and banking services
764,575
839,031
Türkiye İş Bankası A.Ş. – fund operation service expense
664,311
503,624
Türkiye Iş Bankası AŞ – rent expense
588,558
424,717
Anadolu Anonim Türk Sigorta Şirketi – rent expense
Other expenses
157,199
152,082
76,861,673
68,407,896
¨
61
Transactions Executed with the Risk Group
The related party balances as at 31 December 2013 and 2012 are as follows:
31 December 2013
31 December 2012
102,192,002
76,031,154
102,192,002
76,031,154
9,813,038
5,534,597
9,813,038
5,534,597
Anadolu Anonim Türk Sigorta Şirketi – premium receivables
-
-
Receivables from main operations
-
-
5,081,480
4,374,762
¨
Türkiye İş Bankası AŞ – receivables from credit card collections
Cash and cash equivalents
Türkiye İş Bankası AŞ – bank deposits
Cash at banks
Türkiye İş Bankası AŞ – commission payables
Milli Reasürans TAŞ – premium payables
99,454
162,086
5,180,934
4,536,848
Anadolu Anonim Türk Sigorta Şirketi – premium payables
5,014
8,172
Payables to shareholders
5,014
8,172
4,115,797
3,738,711
353,476
198,734
Payable from main operations
İş Portföy Yönetimi AŞ
İş Merkezleri Yönetim ve İşletim AŞ
İş-Net Elektronik Bilgi Üretim Dağıtım Ticaret ve İletişim AŞ
Other payables
96,614
77,092
4,565,887
4,014,537
The conclusion of the Associated Company Report 2013, which is prepared pursuant to Article 199 of the Turkish Commercial
Code no 6102, is copied below:
“Between our Company and our controlling shareholder İşbank or other Group Companies affiliated to İşbank, there is:
• No transfer of receivables, payables or assets,
• No legal transaction creating liability such as providing suretyship, guarantee or endorsement,
• No legal transaction that might result in transfer of profit.
All legal transactions with the controlling company and group companies affiliated thereto during the 2013 operating year
have been carried out on an arm’s length basis, according to the terms and conditions known to us, and necessary counterperformances have been provided, and the Company did not register loss.”
62
An Assessment of Independent Audit, Internal Control System and
Internal Audit Activities by the Board of Directors
The Company’s independent auditor
is rotated at regular intervals. In this
respect, the Company abides by the
provisions of the “Regulation on
Independent Auditing in Insurance,
Reinsurance and Pension Companies”
dated 12 July 2008 and numbered
26934.
External audits at our Company are
performed on an entirely independent
basis and its external auditors operate
completely within the framework of
truthfulness, professional honesty, and
candor and without any involvement
in a conflict of interest whatsoever. No
payments are made to any independent
auditor in our employ other than such
fees as are reasonable in light of existing
market conditions.
The factors that strengthen the
independence of firms from which we
obtain independent auditing services are:
the existence of an Audit Committee, the
possession of an effective accounting
and internal audit system, and adherence
to rules of ethics that give importance
to truthful public disclosure of companyrelated matters.
The Board of Internal Audit
The Board of Internal Audit carries out
its activities within the frame of the
Regulation on the Internal Systems of
Insurance, Reinsurance and Pension
Companies that was published in the
21 June 2008. The Board reports directly
to the Board of Directors and is organized
independently in administrative terms.
Within the frame of the Regulation
on the Internal Systems of Insurance,
Reinsurance and Pension Companies,
the Board of Internal Audit reports on
all Headquarters units, regional offices
and branches at least once a year, and
on all agencies at least once in every
three years. The reports are based on
International Internal Audit Standards
within the scope of the audit plan and
program approved by the Company’s
Board of Directors, and they adopt a riskfocused approach. In addition to these
inspection activities, investigations and
reviews are also conducted.
In 2013, 22 headquarters units, 7
regional offices and 1 branch adding
up to 30 units in total were inspected.
In addition, 1 investigation report was
issued. Inspection of agencies continued
during 2013, and 176 agencies were
inspected in this frame. Reports resulting
from inspections, interrogations and
investigations have been submitted to
the Board of Directors.
In 2013, the Board of Internal Audit was
staffed by 13 inspectors and assistant
inspectors. To support their professional
development and to expand their
professional knowledge, participation
in various training programs was
facilitated for the members of the Board
of Inspectors. Attention is paid to ensure
alignment of the inspection activities
and the resulting inspection reports
with the “International Internal Audit
Standards” and current conditions, and
arrangements, revisions and updates are
made as necessary.
The Board of Internal Audit has made
it a mission to contribute value to the
Company’s activities, while increasing
efficiency and productivity, as well as
to provide independent and objective
assurance to the Company’s Senior
Management that the Company’s
activities are carried out in accordance
with the Law, other applicable
legislation, internal strategies and
policies. In addition, the Board carries
on with its activities in keeping with its
mission of training and gearing up the
managers for the Company in the long
run through investments made into the
human resource.
Risk Management and Internal
Control Department
Risk Management and Internal Control
Department conducts its activities
within the frame of the “Regulation
on the Internal Systems of Insurance,
Reinsurance and Pension Companies”
published in the Official Gazette
issue 26913 dated 21 June 2008. The
Department reports directly to the CEO.
It is intended to have a control system
which enables due and effective
management, mitigation and control
of the risks involved in the Company’s
activities and which is structured to
cover all operations of the Company.
The system is designed to encompass
the principles, standards, legislation,
methods, procedures and guidelines that
all employees at any level are responsible
for fully, accurately and efficiently
abiding by and implementing, as well
as risk mitigating systems, facilities,
mechanisms and all similar elements. In
this framework, operational activities
and risk elements at the Company
are evaluated and priority is given to
compliance efforts. New products and
new implementations put on the market
are reviewed, and subjected to risk
assessments and compliance checks.
Efforts are spent to make sure that the
internal control system that make up
the control functions of the Company
and encompasses all the units is kept
in compliance with the legislation and
standards, and efficient with respect
to its structure and operation. The
basic strategy turned towards these
goals is to conduct internal control
activities independently, productively
and effectively based on a risk-focused
approach and within the frame of
applicable legislation and internationally
accepted principles and standards.
The control system aimed at the
activities carried out by the Company
units basically consists of the following:
compliance and conformity controls,
tangible asset controls, review
of adherence to limits set by the
Company and tracking limit overruns,
controls pertaining to the approval
and authorization system, inquiry and
reconciliation controls, controls for
information and communication systems,
controls for the financial reporting
systems, and controls for communication
channels.
Reports covering internal control
activities and risk monitoring,
assessment and management activities
is submitted to the Board of Directors at
regular intervals.
The Department had 6 members during
2013. The employees were provided with
training opportunities to enhance their
professional development and expand
their knowledge.
Independent Auditor
Periodic financial reports are prepared
within the framework of current
laws and regulations and insurance
accounting standards in such a way as
to show the Company’s true financial
standing. Such reports are independently
audited and publicly disclosed as
prescribed by law.
63
Independent Auditor’s Compliance Opinion on the Annual Report
To the Shareholders of Anadolu Hayat Emeklilik Anonim Şirketi,
We have audited the accuracy and the consistency of the financial information in the annual report of Anadolu Hayat Emeklilik
Anonim Şirketi (“the Company”) with the audited financial statements as of 31 December 2013. The annual report is the
responsibility of the Company’s management. Our responsibility, as independent auditors, is to express an opinion on the annual
report based on the compliance of financial information provided in the annual report with the audited financial statements and
explanatory notes.
Our audit was conducted in accordance with the regulations on preparation and issuance of annual report in “Communiqué on
Individual Retirement Saving and Investment System” (“Communiqué”) issued on 7 August 2007 dated and 26606 numbered.
Those regulations require that we plan and perform the audit to obtain reasonable assurance regarding whether the consistency
of financial information represented in the annual report with the audited financial statements and explanatory notes is free of
material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
In our opinion, the financial information provided in the accompanying annual report prepared in accordance with the
Communiqué is in compliance with the audited financial statements and explanatory notes of Anadolu Hayat Emeklilik Anonim
Şirketi, in all material respects, as at 31 December 2013.
Istanbul,
27 February 2014
Akis Bağımsız Denetim ve
Serbest Muhasebeci Mali Müşavirlik
Anonim Şirketi
Alper Güvenç,
Certified Public Accountant
Partner
64
Financial Position
Contents
Anadolu Hayat Emeklilik 2013 Annual Report
• Summary Report of the Board of Directors for the General Assembly of Shareholders
• Information on Financial Structure
• Assessment of Financial Standing, Profitability and Claims Payment Ability
• 5-Year Summary Financial Information Including the Reporting Period
• Dividend Payment Policy
65
Summary Report of the Board of Directors for the General Assembly of
Shareholders
Dear Shareholders,
It is espoused as the basic philosophy of our Company to offer customer-focused service achieving excellence in every aspect
before its shareholders, investors and customers drawing on its structure encompassing the best practices of modern private
pension and life insurance businesses; on its history, capitalization, transparent organization, and its corporate values giving
the foreground to customer satisfaction, innovation and creativity; the ability to put its resources and new technologies to use
towards increasing productivity; maximum involvement in social activities by a strict commitment to its social responsibilities in
its activities and actions, and belief in and support to entrepreneurial team spirit.
In line with the corporate culture and objectives of the İşbank group, Anadolu Hayat Emeklilik succeeded in carrying its leadership
in life insurance to the private pension segment regarded as a crucial part of the social security system, capitalizing on the knowhow and capital accumulation gained in the life insurance and private pension segments. It is also defined as a key objective
of the Company to maintain its leadership in life insurance in the years to come and to render market leadership in the private
pension segment permanent by fortifying its position among the leading financial services companies of the capital market as
the only publicly-floated private pension company in the system.
During 2013, global economic activity displayed a weaker-than-expected recovery trend. The growth composition of the Turkish
economy began to change as compared with 2012 and seemingly re-started to support consumption and investment outlays.
Regulatory arrangements of significance were introduced concerning the Life Insurance sector and the Private Pension sector, in
particular. The Company’s practices and infrastructure were brought to conformity with these regulatory changes after intense
work in this respect. Activities targeted at new product development catering to customer needs, diversification of distribution
channels and enhancement of service quality remained among the Company’s top priorities, in conjunction with the continued
competitive environment.
Total dividends paid in cash to our shareholders in 2013 amounted to ¨40 million, and all of the resolutions adopted at the
Annual General Assembly Meeting held on 26 March 2013 have been realized.
Carrying out their activities in alignment with the regulatory arrangements and targeting to ensure that our Company’s
overall operation and practices are conducted in a manner that is structured, efficient and transparent, the Board of Directors
Committees continued with their efforts and work during the reporting period. The Risk Management and Internal Control
Department issues quarterly “Risk Assessment Reports”, biannual Internal Control Report and Market Risk Monitoring Report,
and performs “Value at Risk” computations on a daily basis. In addition, annual and quarterly reports are being produced in
accordance with the Financial Crimes Investigation Board (in Turkish: MASAK) legislation. The data derived from the said reports,
which are approved by the Company’s Board of Directors, are used to ensure that potential risk exposure is regularly assessed
and monitored.
Based on the sectoral data for 2013:
• Year-to-year, premium production grew by 25% on life insurance and 22% on non-life insurance. Total premium production
amounted to ¨3,395 million. Of this production figure, which corresponded to approximately 14% of the total premium
production in the overall insurance sector, 85% has been generated by the top 10 companies in the sector.
• As of 3 January 2014, the number of participants in the Private Pension System had went up by one million to 4.2 million
people, while total funds of participants, including state contributions, amounted to ¨26,278 million. The total contributions in
the sector as at the said date are announced as ¨21,958 million.
66
• In 2013, state contributions deposited in participants’ accounts amounted to ¨1.2 billion.
• In view of the Company’s current mission, vision, corporate strategies and primary goals, 2013 has been a period during which
we preserved our pioneering position in the sectors we are engaged in and attained successful financial results.
• Having concluded its activities in 2013 successfully, our Company increased its net profit by 5% to ¨83.2 million and its total
assets by 9% to ¨7,902 million.
• The Company’s existing equity capital was worth approximately ¨534 million as at year-end 2013, the amount of required
equity capital computed according to regulatory requirements governing capital adequacy is ¨124.1 million.
• Our Company derived ¨52.3 million in total technical profit in 2013.
• In 2013, our Company’s premium production in life/non-life insurance amounted to ¨395 million.
• In a repeat of 2010 and 2012 results, our Company was named the most admired company in the private pension sector in the
“Turkey’s Most Admired Companies 2013” survey conducted by Capital magazine.
• 822,920 private pension contracts were issued for 734,015 participants and ¨4,337 million were collected in contributions
according to the Pension Monitoring Center (PMC) data dated 03 January 2014. In 2013, our Company has been the first
pension company to reach the ¨5 billion mark in total funds in the Private Pension System.
• Anadolu Hayat Emeklilik has been the company whose participants were paid the highest amount of state contributions in
2013.
• Remaining the one and only publicly-floated private pension company, Anadolu Hayat Emeklilik retained its title as the highest
funds generator in life insurance and Private Pension System also in 2014.
• The Company offered to the public one pension fund with a view to diversifying fund choices and two pension funds in order
to put the State Contributions into lucrative use during 2013.
• We keep steering our products and practices that create demand through efficient positioning, in line with the needs of
customer segments and sales channels.
• Through Alternative Delivery Channels, our Company concentrates on sales outlets such as online and mobile applications, and
continues and further increases its efforts to tap the high potential our country’s young and dynamic population possesses.
• In order to upgrade the level of service offered to policyholders and sharpen our competitive edge, planning and
implementation processes are carried out on the basis of generally accepted project management principles with a view to
responding to all arising business needs through the most compatible technologies.
• Our efforts will continue uninterruptedly to constantly upgrade the quality of service offered to the participants in the
Private Pension System, which has become the best individual investment instrument owing to its unique State Contribution
advantage and the return generation performance of pension funds, and to achieve compliance with the regulatory
requirements.
• Drawing on its solid shareholding structure, its successful financial performance, its corporate culture and the customerfocused approach to service it has espoused, our Company will continue to create added value for the sector and the national
economy, being Turkey’s one and only publicly-floated pension company.
• Conducted since 2005 and offering girl students the opportunity to pursue their education who are financially unable to
attend school, our social responsibility project “Girls: The Insurance of our Future” went on.
• Our Corporate Governance Principles Compliance Report and the financial statements for 2013 are presented on the following
pages for your information and approval.
Sincerely,
Board of Directors
We would like to take this opportunity to express our gratitude to our founder İşbank and our other shareholders, our
policyholders and participants, who place their trust in our Company, and our agents, all our distribution channels and all our
employees for their contributions that made the results achieved possible.
67
Information on Financial Structure
With its capital backed by its strong shareholding structure since its foundation and its business philosophy focused on
sustainable profitability in the branches in which it is active, Anadolu Hayat Emeklilik always succeeded in taking place among
the industry’s strongest companies with respect to financial structure.
A key indicator of a strong financial structure, the Capital Adequacy Statement is reported at regular intervals in line with the
legal requirements, and as such, it is registered before the public authority that our Company possesses a capital in excess of the
capital amount necessary to cover its liabilities.
Capital Adequacy Statements for the last three years presented hereinbelow show that the Company’s shareholders’ equity with
respect to the relevant fiscal years are above the required shareholders’ equity amounts.
31 December 2013 (¨) 31 December 2012 (¨) 31 December 2011 (¨)
115,435
196,369
186,997
109,078,343
108,496,682
106,373,431
14,952,948
12,569,576
9,450,175
124,146,726
121,262,627
116,010,603
524,679,792
430,162,083
539,790,655(*)
415,643,929
403,417,165
314,151,480
Required Capital for Non-Life Branches
Required Capital for Life Branches
Required Capital for Pension Branch
TOTAL REQUIRED CAPITAL
CURRENT CAPITAL
EXCESSIVE CAPITAL
(*)
As per the legislation, equalization provision was included in the equity capital.
AN ASSESSMENT OF THE OPERATIONS OF THE COMPANY’S SEGMENTS
Anadolu Hayat Emeklilik closed 2013 posting a technical profit of ¨52 million in life insurance, personal accident insurance and
private pension branches in which it is active.
The distribution of balance sheet and income statement items according to branches was based on the distribution key that was
set out in the “Circular on the Principles and Procedures for Keys Used in Financial Statements Drawn Up within the Frame of
Uniform Chart of Accounts in Insurance” dated 04 January 2008 published by the Undersecretariat of Treasury.
The table below shows the contributions of the branches in which the Company is active to our financial structure with respect
to asset sizes.
31 December 2013 (¨)
Segment assets
Total segment assets
Segment liabilities
Total segment liabilities
Other segment information
Depreciation and amortization
31 December 2013
68
Continuing operations:
Technical income
Technical expense
Total of other income and
expense
Income before tax
Income tax expense
Net profit for the period
Life
2,245,556,871
2,245,556,871
(2,251,440,771)
(2,251,440,771)
Private Pension
5,640,484,413
5,640,484,413
(5,634,566,447)
(5,634,566,447)
Personal Accident
16,363,369
16,363,369
(16,397,435)
(16,397,435)
Total
7,902,404,653
7,902,404,653
(7,902,404,653)
(7,902,404,653)
(2,471,797)
(2,445,646)
(18,012)
(4,935,455)
Life
Private Pension
Non-Life
Total
598,513,416
(535,102,109)
132,002,445
(143,137,394)
675,114
(658,719)
731,190,975
(678,898,222)
23,130,004
86,541,311
86,541,311
22,885,286
11,750,337
11,750,337
168,548
184,943
184,943
46,183,838
98,476,591
(15,310,000)
83,166,591
FINANCIAL ASSETS
Life insurance and private pension funds created before our Company are invested within the frame of processes, which are
defined by the provisions of applicable legislation, and are constantly monitored by the public authorities. These invested funds
are recognized in the balance sheet assets in line with the provisions of the International Accounting Standards, which we are
obliged to comply with.
Our primary goal is to ensure maximization of benefits for our Company and for all our shareholders.
The Company manages financial assets into which the funds that belong to our Company and those into which life branch funds
are invested. The Company’s fund management principles are formulated in compliance with the requirements of effective cash
and asset management. These assets are presented hereinbelow in order.
Financial Assets (¨)
Financial Assets Held for Trading Purpose
Loans (receivables from reverse repo transactions)
Available-for-Sale Financial Assets
TOTAL
Financial Investments with Risks on Saving Life
Policyholders
TOTAL
Cost Value
27,545,521
11,400,000
557,079,500
596,025,021
Fair Value
36,388,883
11,401,986
571,445,937
619,236,806
Book Value
36,388,883
11,401,986
571,445,937
619,236,806
1,748,096,167
2,344,121,188
1,787,655,851
2,406,892,657
1,787,655,851
2,406,892,657
Private Pension Funds
AH1 Bond Fund
AH2 Liquid Fund
AH3 Eurobond Dollar Fund
AH4 Eurobond Euro Fund
AH5 Equity Fund
AH6 International Mixed Fund
AH8 Conservative Fund
AH9 Balanced Fund
AH0 Aggressive Fund
AGE Alternative Gain Fund
ABE BRIC Plus Fund
AHL Dynamic Flexible Fund
AHC Mixed Fund (¨)
AG1 Group Bond Fund
AG2 Group Eurobond Fund
AG3 Group Equity Fund
AG4 Group Conservative Fund
HS1 Bond - Bill Fund
AHB White Equity Fund
ATK Standard Fund (*)
ATE Orange Balanced Fund
AET Contribution Fund (**)
AER Alternative Contribution Fund (**)
AEA Gold Fund (**)
Total
(*)
Number
38,294,022,156.01
4,585,072,946.63
4,560,450,091.56
4,119,971,344.87
3,488,537,052.92
2,276,433,080.72
4,468,009,325.79
24,428,037,174.32
8,961,780,267.35
6,639,861,442.46
2,922,204,366.22
2,018,248,514.43
3,133,028,631.87
5,561,805,321.32
436,337,123.02
773,259,624.18
2,539,158,903.61
11,277,987,267.19
2,100,959,453.72
1,089,957,724.29
532,193,862.27
23,587,324,029.54
489,145,045.72
2,301,993,477.32
160,585,778,227.33
Amount (¨)
1,620,028,607.31
138,551,734.30
128,942,165.89
116,479,829.86
226,395,589.12
60,646,453.70
157,559,880.86
1,065,721,977.80
560,756,514.89
78,781,956.01
34,753,776.53
23,306,733.84
36,656,434.99
215,742,428.41
9,646,541.12
32,401,898.03
86,224,758.05
299,960,627.35
52,171,025.15
22,763,767.07
11,136,688.76
225,942,976.88
4,852,808.00
21,753,838.36
5,231,179,012.28
Based on a modification to its bylaws and prospectus, the ATK Orange Bond - Bill Fund was renamed ATK Standard Fund effective 25 April 2013.
(**)
The initial price making date of the AET Contribution Fund and AER Alternative Contribution Fund is 30 April 2013, which is the IPO date. The initial price making
day for AEA Gold Fund, on the other hand, is 15 April 2013, which is the portfolio formation date.
Private Pension funds, on the other hand, are managed by İş Portföy Yönetimi and HSBC Portföy Yönetimi, companies in line with
the decisions passed by the relevant Fund Committees.
69
Assessment of Financial Standing, Profitability and
Claims Payment Ability
2013 was earmarked by weaker-than-expected recovery in global economic activity. Preserving its pioneering position in the
sector in its relevant branches despite increased competition, Anadolu Hayat Emeklilik completed 2013 with successful results
and maintained its stable and profitable growth. The Company kept creating added value for the sector and for the national
economy owing to its strong shareholding structure, sound financial structure, and corporate culture.
Along these lines, the Company posted ¨52.3 million in technical profit at year-end 2013, and increased its net profit by 4.5%
year-on to ¨83.2 million. The Company’s gross profit was worth ¨98.5 million.
ASSET PERFORMANCE
The Company increased its total assets by 9% and reached an asset size of ¨7,902 million.
Within asset items, “Receivables from Main Operations” and “Financial Assets and Investments with Risks on Policyholders” items
take the top places in terms of size. Financial investments with risks on policyholders, which make up 74% of the latter, refer
to the amount of financial assets into which the policyholders’ funds under the Company’s management are invested. In 2013,
the Company posted ¨395 million in premium production; translating into a year-on rise by 7%, this performance is expected to
continue in the coming period.
Receivables from pension operations, which mostly refer to the total amount of accumulation in Private Pension Funds reached
by the contributions deposited by our participants with the Company under the Private Pension System, grew 22% year-on and
rose from ¨4,286 million to ¨5,239 million.
In 2013, private pension funds made up 74% of the total funds managed by our Company that were worth ¨7,114 million.
Taking place among our asset items, FX assets amounting to ¨351 million cover 100% of our existing FX liabilities.
LIABILITY PERFORMANCE
In Anadolu Hayat Emeklilik’s balance sheet, liabilities consist of payables due to pension operations by 68%, technical provisions
by 25%, and shareholders’ equity and other liability items by 7%.
Running in reciprocation with the receivables from pension operations under assets with respect to the private pension
portfolio, the payables due to pension operations item registered 23% year-on growth, driven by the performance displayed in
the valorization of savings of existing participants as well as in new productions.
Expressing our liabilities towards our policyholders, life mathematical provisions decreased 15 % year-on and went down from
¨2.2 billion to ¨1.9 billion.
As of 31 December 2013, the minimum amount of shareholders’ equity necessary for the Company as calculated on the
principles set by the Turkish Treasury was ¨124 million; the Company’s equity capital as of the said date stood at ¨540 million,
including the equalization provision. Carrying on its activities in life insurance and private pension branches as the sectoral
leader, our Company has maintained its strong shareholders’ equity ever since its foundation.
70
CLAIMS PAYMENT ABILITY
Claims paid in life insurance branch by the Company in 2013 totaled ¨290 million. There was 52% increase in this amount when
compared with 2012.
Our claim payments consist of policy maturity and death benefit payments in relation to our life insurance and accumulationbased products from the prior periods, and our production covering both aspects.
The amount paid by the Company on accumulating products at the expiration of the insurance period was ¨258 million, up 53%
year-on.
These disbursements are basically covered through disposal of marketable securities that belong to our policyholders and
registered under the Company’s assets.
71
5-Year Summary Financial Information Including the Reporting Period
Financial Highlights and Key Ratios
Financial Highlights (¨ thousand)
Total Premium and Contribution Production*
Total Technical Profit
Total Assets
Nominal Capital
Financial Income
Pretax Profit
2009
844,155
18,820
4,480,463
250,000
429,892
87,869
97,993
2010
888,384
26,839
5,298,991
250,000
450,646
70,034
86,832
2011
1,004,546
34,445
5,647,734
300,000
430,162
57,222
78,085
2012
1,080,701
52,929
7,222,090
300,000
524,680
63,514
105,675
2013
1,391,454**
52,293
7,902,405
350,000
533,869
65,436
98,477
(%)
23
19
10
(%)
19
17
9
(%)
18
18
8
(%)
20
15
7
(%)
18
18
7
Key Ratios
Pretax Profit/Shareholders’ Equity
Premium and Contribution Production/Total Assets
Shareholders’ Equity/Total Assets
*
Total premium figures include premiums from non-life branch.
**
As per the data released by the Pension Monitoring Center as of 3 January 2014.
Premium and Private Pension Contribution Production (¨ thousand)
Private Pension Contribution Production
2009
2010 Change (%)
344,107
530,774
54
2011 Change (%)
667,103
26
2012 Change (%)
712,733
7
2013 Change (%)
996,445
40
Life /Non-Life Premium Production
2009
2010 Change (%)
500,048
357,610
-28
2011 Change (%)
348,436
-3
2012 Change (%)
367,968
6
2013 Change (%)
395,009
7
Premium and Private Pension Contribution Production
2009
2010
2011
844,155
888,384
5
1,015,539
14
2012
1,080,701
6
2013
1,391,454
29
Mathematical Reserves and Profit Share Reserves
2009
2010
2011
1,976,486
2,090,760
6
2,027,283
-3
2012
2,205,674
9
2013
1,871,476
-15
Pension Funds
2009
2010
1,952,892
2,619,960
16
2012
4,277,830
41
2013
5,231,179
22
34
2011
3,030,070
Policy Maturity and Death Benefit Payments (¨ thousand)
72
Policy Maturity
2009
132,531
2010 Change (%)
117,124
-12
Death Benefit Payments
2009
2010 Change (%)
12,067
12,548
4
Total
2009
2010 Change (%)
144,598
129,672
-10
2011 Change (%)
147,320
26
2012 Change (%)
168,239
14
2013 Change (%)
257,875
53
2011 Change (%)
15,445
23
2012 Change (%)
23,111
50
2013 Change (%)
32,154
39
2011 Change (%)
162,765
26
2012 Change (%)
191,350
18
2013 Change (%)
290,029
52
Technical Results (¨ thousand)
Life Insurance
2009
7,250
2010 Change (%)
13,945
92
2011 Change (%)
34,447
147
2012 Change (%)
33,416
-3
2013 Change (%)
63,412
90
Non-Life Insurance
2009
2010 Change (%)
56
-226
-
2011 Change (%)
-7
+
2012 Change (%)
18
-
2013 Change (%)
16
-11
Private Pension
2009
11,514
2010 Change (%)
13,120
14
2011 Change (%)
5
-
2012 Change (%)
19,496
+
2013 Change (%)
-11,135
-
2010 Change (%)
26,839
43
2011 Change (%)
34,445
28
2012 Change (%)
52,929
54
2013 Change (%)
52,293
-1
2010 Change (%)
70,034
-20
2011 Change (%)
57,222
-18
2012 Change (%)
63,514
11
2013 Change (%)
65,436
3
Financial Expenses and Other Expenses
2009
2010 Change (%)
-8,695
-10,041
15
2011 Change (%)
-13,582
35
2012 Change (%)
-10,768
-21
2013 Change (%)
-19,252
79
Pretax Profit
2009
97,993
2010 Change (%)
86,832
-11
2011 Change (%)
78,085
-10
2012 Change (%)
105,675
35
2013 Change (%)
98,477
-7
2009
2010 Change (%)
429,892
450,646
5
2011 Change (%)
430,162
-5
2012 Change (%)
524,680
22
2013 Change (%)
533,869
2
2011 Change (%)
5,647,734
7
2012 Change (%)
7,222,090
28
2013 Change (%)
7,902,405
9
Total
2009
18,820
2009
87,868
Total Assets
2009
4,480,463
2010 Change (%)
5,298,991
18
Financial Income(¨ thousand)
73
Dividend Payment Policy
According to our Articles of Incorporation, a portion of the Company’s distributable profit is paid out as a first dividend at rates
and in amounts which are no less than those determined by the Capital Markets Board.
The dividend payment proposals that the Board of Directors submits to the General Assembly of Shareholders are prepared
according to a policy that;
a) avoids disturbing the delicate balance between shareholders’ expectations and the Company’s need to grow, and
b) takes the Company’s profitability into account.
The Board of Directors has adopted a dividend payment policy that is based on proposing to the General Assembly of
Shareholders that at least 30% of net income subject to profit be paid out as free shares of stock or in cash.
There are no preferred stocks in the Company’s profit distribution.
There are no founder’s shares nor is it a Company practice to give shares of profits to members of the Board of Directors.
As required by our Articles of Incorporation, a maximum of 3% of the total amount remaining after the first dividend has been
set aside is paid out to our employees as their share of the profits, subject to a cap of three monthly salaries.
The Company’s dividends are paid within the legally prescribed periods of time.
The Articles of Incorporation contain no provisions governing the payment of advances on dividends.
74
Risks and an Assessment by the Board of Directors
Contents
• Active Committees and an Assessment by the Board of Directors
• Risk Management Policies and an Assessment by the Board of Directors
75
Active Committees and an Assessment by the Board of Directors
Corporate Governance Committee, Audit Committee and Early Detection of Risk Committee have been set up to facilitate
effective and transparent execution of the Board of Directors’ duties and responsibilities, in alignment with the obligations
imposed by applicable legislation.
Pursuant to Article 4.5.1 of the Communiqué Serial: IV No: 56 on Determination and Implementation of Corporate Governance
Principles enforced upon its publication in the Official Gazette issue 28158 dated 30 December 2011, the Corporate Governance
Committee, which has been set up based on the Board of Directors decision no 353/1 dated 14 March 2005, also functions as the
Nomination Committee and the Remuneration Committee.
Our committees carry out their activities in line with regulatory requirements, target to ensure that the Company’s overall
conduct and practices are executed in a fashion that is structured, efficient and transparent, keep the Board of Directors
informed on material developments in a timely manner and as necessary, and observe strict harmony and coordination with the
executive officers of the Company in their activities. Information on the objectives, members, structures and activities of the
committees is presented below.
CORPORATE GOVERNANCE COMMITTEE
Objectives
To monitor the Company’s compliance with corporate governance principles and to engage in activities and make
recommendations to the Board of Directors to improve such compliance.
Members
Prof. Mehmet Baha Karan, Independent Director (Committee Head)
Recai Semih Nabioğlu, Director (Committee Member)
Structure
The Corporate Governance Committee is formed by the Board of Directors within the framework of corporate governance
principles, with priority given to members selected from within its own body. When deemed to be necessary, individuals who
are not company directors but who have expertise in particular matters may be given duties on the committee. No CEO may be a
member of this committee.
The Corporate Governance Committee must consist of at least two members. Committee members must be non-executive
directors. Head of the committee is elected from amongst independent Board Directors.
In principal, the term of office of the Corporate Governance Committee is coeval with that of the Board of Directors except that if
any changes take place in the latter, the committee remains constituted until the completion of its existing term.
Insofar as is possible, the committee convenes in parallel with the Board of Directors. Committee decisions are taken by a
majority vote. The head of the committee keeps the board of directors informed about the committee’s activities.
Activities
• Establishes whether the corporate governance principles are implemented in the Company, as well as the grounds for nonimplementation, if applicable, and the conflicts of interest, if any, arising from failure to fully comply with these principles, and
presents proposals to the Board of Directors for the improvement of corporate governance practices;
76
• Oversees the activities of the Shareholder Relations Unit;
• Works to create a transparent system regarding identification, assessment, and training of nominees eligible for the Board of
Directors, and to establish related policies and strategies;
• Regularly assesses the formation and efficiency of the Board of Directors, and submits relevant recommended alterations to
the Board of Directors;
• Sets and oversees the approaches, principles and practices regarding performance evaluation and career planning of Board
Directors and senior executives;
• Prepares its recommendations regarding the remuneration principles for Board Directors and senior executives in view of the
Company’s long-term goals;
• Sets the measures that can be used in remuneration which will be linked to the Company’s and the Director’s performance;
• Presents its suggestions to the Board of Directors regarding the remunerations to be paid to Board Directors and senior
executives, which suggestions will pay regard to the extent at which the criteria have been fulfilled.
EARLY DETECTION OF RISK COMMITTEE
Objectives
To early detect the risks that might endanger the existence, progress and survival of the Company, implement necessary
measures and remedies in relation to the identified risks, and manage the risk. The Committee presents an assessment of the
situation in its bimonthly report to the Board of Directors, pointing at the perils, if any, and indicating the remedies. The report is
also sent to the statutory auditor. The Committee will also review the risk management systems at least on an annual basis.
Members
Assoc. Prof. Atakan Yalçın, Independent Director (Committee Head)
Recai Semih Nabioğlu, Director (Committee Member)
Structure
The Committee is formed by the Corporate Governance Committee giving priority to members selected from within its own body,
within the framework of Corporate Governance Principles. When deemed necessary, individuals who are not Board Directors but
who have expertise in particular matters may be assigned to the committee. The CEO may not be a member on this committee.
The Committee must consist of at least two members. Committee members must be non-executive Directors. Head of the
committee is elected from amongst independent Board Directors.
In principal, the term of office of the Early Detection of Risk Committee is coeval with that of the Board of Directors except that
if any changes take place in the latter, the committee remains in office until the completion of the predetermined adjustment
period.
Committee decisions are taken by a majority vote. The Head of the Committee keeps the Board of Directors informed about the
Committee’s activities.
Activities
Pursuant to Article 4.5.1 of the Communiqué Serial: IV No: 56 on Determination and Implementation of Corporate Governance
Principles enforced upon its publication in the Official Gazette issue 28158 dated 30 December 2011, the Early Detection of Risk
Committee carries out the following activities in order to function within the principles mentioned hereinbelow:
• Works to early detect the risks that might endanger the existence, progress and survival of the Company, to implement
necessary measures and remedies in relation to the identified risks, and to manage the risk;
• Presents an assessment of the situation in its bimonthly report to the Board of Directors, pointing at the perils, if any, and
indicating the remedies. The report is also sent to the statutory auditor.
AUDIT COMMITTEE
Objectives
To monitor the operation and effectiveness of the Company’s accounting system, public disclosure of financial information, and
independent auditing.
Members
Prof. Mehmet Baha Karan, Independent Director (Committee Head)
Assoc. Prof. Atakan Yalçın, Independent Director (Committee Member)
• Reviews the risk management systems at least on an annual basis.
77
Active Committees and an Assessment by the Board of Directors ...continued
Structure
The Audit Committee is formed by the Board of Directors within the framework of corporate governance principles from among
members of its own body.
The Audit Committee must consist of at least two non-executive directors. Two company officers designated by the Board of
Directors are responsible for coordinating activities between the committee and the Company.
The term of office of the Corporate Governance Committee is coeval with that of the Board of Directors. The committee meets at
least once every three months. Committee decisions are taken by a majority vote.
The Board of Directors is kept regularly informed about the committee’s activities
Activities
The principal activities of the Audit Committee consist of the following:
• Checks periodic financial reports that are to be publicly disclosed for their compliance with the requirements of applicable laws
and regulations and with international accounting standards and reports its findings to the Board of Directors along with the
opinions of the independent auditor.
• Takes measures as necessary to ensure that all internal and external auditing is conducted adequately and transparently.
• Monitors the functioning and effectiveness of the Company’s accounting system, of the public disclosure of financial
information, of independent auditing, and of the Company’s internal control system; monitors the selection of an independent
auditor, the preparation of independent auditing agreements, the initiation of the independent auditing process, and all
aspects of the activities of the independent auditor.
• After having determined that there is no issue impairing the independence of a potential independent auditor and so stated
in a report, gives its preliminary approval for the selection of independent auditors and for the services to be obtained by the
Company from them and submits this recommendation and report to the Board of Directors.
• Examines and finalizes any complaints made to the Company concerning its accounts, its internal control system, or its
independent auditing; ensures that company employees examine such complaints within the framework of the principle of
confidentiality.
78
Risk Management Policies and an Assessment by the Board of
Directors
Risk management policies describe the key principles and norms related to the risk management system and processes. The
requirements under the policy are set by the Board of Directors, the approval of which is required for any revisions. At a minimum,
the risk management system and processes must be introduced and the risk limits set must be adhered to.
The Board of Directors is responsible for setting the risk management principles and norms that will be implemented across the
Company; updating the risk policies in connection with the changes in the circumstances governing operations; establishing
and operating effective risk management system and processes; monitoring the Company’s risk level; establishing risk limits and
checking actualizations versus these limits, and introducing necessary measures.
Risk limits that are set for the purpose of measuring, evaluating and monitoring the risk levels are enforced based on a Board of
Directors decision as and when deemed necessary and important.
The key considerations in setting the risk limits are the risk measurement results and the Company’s risk appetite.
Separate from risk limits, indicators of developments and occurrences that will negatively impact the risk level are detected and
monitored as early warning signals.
Risk Management Policies Implemented on the Basis of Types of Risks
The Risk Management Policy is pivotal for supporting and developing the Company’s corporate structure. The policy is, in essence,
intended to set the key principles and norms related to the risk management system and processes; to introduce the risk
management system and processes specified in the policy, and to achieve conformity with the risk limits set.
The activities falling under the Risk Management Policy are carried out within the framework set by the insurance and private
pension legislation, and other legislation governing the Company. The Company’s risk exposure is individually monitored, assessed
and controlled under the following categories: insurance underwriting and pension branch risk, credit risk, market risk, operational
risk, assets and liabilities management risk, structural interest rate risk, liquidity risk, property investment risk and capital
investment risk.
Risk Management and Internal Control Department is responsible for describing, measuring, analyzing, monitoring and reporting
risks. Other responsibilities of the department include following up the developments in risk management, improving the methods
employed, and submitting reports to the Board of Directors on required legal reporting, notification and follow-up activities. In
addition, the department also acts as the Compliance Unit with regard to the enforcement of the Law no 5549 on Prevention of
Laundering Proceeds from Crime and related regulations.
Insurance Underwriting and Pension Branch Risk Policy
Insurance underwriting and pension branch risk refers, with respect to the insurance branch, to the risk that might arise from
failure to correctly and effectively employ the underwriting technique while providing coverage for probable incidents; and with
respect to the private pension branch, to the risk of sustaining loss due to the generated revenues that fall short of the costs
incurred.
In insurance and pension branch products, the basic principle is to establish the actuarial structure in line with technical profit
forecasts within the frame of precautionary principle. Along this line, technical income and expenses for insurance and pension
branches are set within the frame of the principles defined in insurance and private pension legislation, taking into consideration
the Company’s risk appetite.
Assets and Liabilities Risk Policy
Under the assets and liabilities risk that expresses all financial risks apart from the credit risk which stem from the Company’s assets
and liabilities, structural interest rate risk, liquidity risk, capital investment risk and real estate investment risk are considered.
In the composition of the Company’s assets and liabilities, return on asset items and cost of liability items, cashing-in and
reinvestment times are taken into account. The Company’s needs, alternative borrowing sources, profitability of the lending and
lending facilities are taken into account when identifying and utilizing the sources for funding assets.
The basic principle is to ensure that the transactions carried out in the money and capital markets are “well diversified” so as to
avoid any concentration in any investment instrument, maturity, currency, interest type and other similar parameters and in view
of the risk level created thereby.
When managing the liquidity risk, the Company composes its portfolio in a structure that is compatible with the functions of
deriving profit on the portfolio and of market risk management. Hence, key considerations include the maturity distribution of the
portfolio composed as such, its having a profit-focus while uncompromising from liquidity requirements, and the risk versus return
balance.
The management of insurance underwriting risk is based on the principle of composing a low-risk portfolio of policyholders. To
this end, the policyholder portfolio is effectively monitored. The Company’s income and risk limits are regularly followed-up to
determine whether they are at the level to cover the risk underwritten by the Company.
79
Risk Management Policies and an Assessment by the Board of Directors ...continued
Market risk limits are set by the Board of Directors in accordance with the Company’s risk appetite. Adherence to limits is constantly
monitored by the Risk Management and Internal Control Department and related executive units. In the event of limit overruns, the
violation and the reasons therefor are reported to the Board of Directors, accompanied by the executive units’ comments. Action
to be taken in the event of a limit overrun is decided by the Board of Directors.
Careful consideration is given to the creditworthiness of those issuing financial instruments that pose a market risk. Basically, the
issuer of the financial instrument should have been assigned an “investment grade” in terms of credit risk rating.
Within the frame of structural interest rate risk, the exposure stemming from the interest sensitivity of all of the Company’s assets,
liabilities, income and expenses are followed up separately from the interest risk that is addressed under the market risk.
Decisions on capital investments (new investments, increasing/decreasing the investment level or withdrawal from an investment)
are made by the Company’s Board of Directors. Capital investments are managed based on a portfolio approach, observing the
balance between the risk undertaken and the return generated.
Credit Risk Policy
Credit Risk refers to the probability of loss the Company might sustain due to the failure of indebted parties (agencies, reinsurers,
etc.) to the Company to fulfill the contractual requirements and their failure to satisfy their obligations in part or in whole.
The basic principle is to manage counterparty transactions, which are of a nature to give rise to credit risk, so as not to create
concentration, and in a well-diversified manner by keeping an eye on the risk level created. To this end, the credit risk exposure is
monitored by way of various criteria including counterparty, collateral, sector, maturity and currency.
Under the Credit Risk evaluation process, the following are monitored at a minimum and are reported:
• Risk level of insurance brokers,
• Risk level of reinsurers,
• Risk level of companies in which shareholding stakes are acquired,
• Risk level of banks/financial institutions from which financial services are obtained.
Early detection and definition of the issues are essential for effective credit risk management.
Operational Risk Policy
Operational risk is the risk of loss that might result from inadequate or inoperational internal processes, people, systems or external
factors. The basic principle is to consider operational risks with respect to their likelihood and the impact they would create in the
event they occurred, and to take necessary countermeasures.
When managing operational risk, controls are designed to eliminate or mitigate the risk of sustaining loss due to the risk exposure
of the activities. Risk Management and Internal Control Department monitors, and reports on, the efficiency and adequacy of the
controls, as well as the enforcement of the action plans adopted.
Auditing of Risk Management System and Processes
The risk management system and processes are audited by the Company’s Board of Internal Audit. The Board of Directors
determines the principles relating to execution of action plans for the conduct of the audit, the reporting of audit results, and
remedy of errors and irregularities identified in the audits.
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The Company’s risk management and assessment process consists of providing information to the Board of Directors on topics
such as:
• Adequacy of the Company’s risk management system and processes,
• Compliance with limits,
• Accuracy and quality of the data used in the risk management process,
• Accuracy and quality of limit violation reports,
• Compliance with the policy and implementation procedures.
The process also includes laying down proposals regarding the possible measures that can be adopted, as well as reporting stages.
Information on General Meeting
Contents
• Ordinary General Meeting Agenda
• 2012 Profit Distribution Table
• 2013 Profit Distribution Proposal
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Ordinary General Meeting Agenda
2013 ORDINARY GENERAL MEETING OF SHAREHOLDERS
24 MARCH 2014, MONDAY, İŞ KULELERİ KULE 1 KAT: 41 LEVENT 34330 BEŞİKTAŞ/İSTANBUL, 10:00 HOURS
AGENDA:
1.
Opening, electing a Presiding Board, and authorizing the Presiding Board to sign the minutes of the Ordinary General
Meeting
2.
Presentation and discussion on the Board of Directors’ 2013 Activity Report, and presentation of the Statutory Auditors’
report for 2013
3.
Presentation, discussion and approval of the financial statements for 2013
4.
Individual acquittal of the Company’s Directors
5.
Approval of the amended Dividend Payment Policy
6.
Decision on distribution of profits
7.
Election of the members of the Board of Directors and determination of their terms of office
8.
Authorizing the Board Directors to carry out the transactions set out in Articles 395 and 396 of the Turkish Commercial
Code
9.
Determination of the remuneration of Board Directors
10. Designation of the independent audit firm
11. Presentation of information on grants and donations made during the reporting period
12. Approval of the limit for the donations and grants intended to be made during 2014.
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Anadolu Hayat Emeklilik Anonim Şirketi
Draft Amendment to the Dividend Payment Policy
Former Version of the Dividend Payment Policy
In the Company’s Articles of Association, it has been espoused
as a principle to distribute first dividends in the ratio and
amount determined by the Capital Markets Board out of the
distributable profit.
Dividend distribution proposals laid down by our Board
of Directors for the approval of the General Assembly are
prepared based on a dividend payment policy which;
New Version of the Dividend Payment Policy
Dividend distribution principles applicable to the Company’s
shareholders and other persons participating in the profit
are governed by the provisions contained in the Turkish
Commercial Code, the Capital Market legislation, and other
legislation the Company is subject to, as well as the relevant
arrangements in the Company’s Articles of Incorporation.
The dividend distribution proposals submitted by the
Company’s Board of Directors for approval by the General
a) avoids disturbing the delicate balance between the
Assembly are prepared so as to maintain the delicate balance
shareholders’ expectations and the Company’s need to grow,
between the shareholders’ expectations and the Company’s
need to grow, taking into account the Company’s forecasts
about operations, capital adequacy targets, and the conditions
The Board of Directors has adopted a dividend payment
prevailing in the capital markets, as well as the Company’s
policy that is based on proposing to the General Assembly of
profitability.
Shareholders that at least 30% of net distributable profit be
paid out in bonus shares or in cash.
The dividend distribution policy espoused by the Board of
Directors is based on the principle of proposing at the General
No shares enjoy any privileges in terms of getting a share from
Assembly to distribute at least 30% of the net distributable
profit.
profit for the period calculated according to the legal accounts,
There are no founder’s shares nor is it a Company practice to
in bonus shares and/or in cash.
pay dividends to the members of the Board of Directors.
No shares enjoy any privileges in terms of getting a share from
Pursuant to our Articles of Association, employees are paid
profit.
dividends up to three times of their monthly salaries from no
There are no founder’s shares nor is it a Company practice to
more than 3% of the amount that remains after first dividends
pay dividends to the members of the Board of Directors.
are set aside.
Pursuant to our Articles of Incorporation, employees are paid
Dividend payouts are made within the legally prescribed
dividends up to three times of their monthly salaries from no
periods of time.
more than 3% of the amount that remains after first dividends
The Articles of Association contain no provisions stipulating
are set aside.
paying advances on dividends.
Cash dividend payout is made by no later than the end of the
second month following the date of the General Assembly
meeting in which the profit distribution decision is passed.
Dividend payout in the form of dematerialized shares is
realized following legal permissions.
Advances on dividends may be distributed provided that
the principles and procedures set out in the Capital Market
legislation are adhered to.
83
2012 Profit Distribution Table
12 Paid-in/Issued Capital
Total Legal Reserves (according to legal records)
If there are privileges for distribution of profits according to
the Articles of Incorporation, information on such privileges
Profit for the Period (*)
Taxes Payable (-)
Net Profit for the Period (=)
Losses in Prior Years (-)
First Legal Reserves (-)
NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=)
Donations during the Year (+)
Net Distributable Profit for the Period Including Donations,
Based on Which First Dividend will be Computed
11- First Dividend to Shareholders
- Cash
- Bonus Shares
- Total
12- Dividends Distributed to Owners of Privileged Shares
13- Dividends Distributed to Board Members, Employees, etc.
14- Dividends Distributed to Owners of Redeemed Shares
15- Second Dividend to Shareholders
16- Second Legal Reserves
17- Statutory Reserves
18- Special Reserves
19- EXTRAORDINARY RESERVES (**)
20- Other Resources to be Distributed
- Previous Year Profit
- Extraordinary Reserves
- Other Distributable Reserves as per the Law and Articles
of Incorporation
345678910-
84
INFORMATION ON DIVIDEND RATIO
INFORMATION ON EARNINGS PER SHARE
GROUP
TOTAL DIVIDENDS (¨)
GROSS
A
133,333.33
B
39,866,666.67
TOTAL
40,000,000.00
A
113,333.33
NET (***)
B
33,886,666.67
TOTAL
34,000,000.00
Based on CMB
(Consolidated)
109,052,075
-26,100,000
82,952,075
4,078,774
78,873,301
72,603 78,945,904
78,945,904
15,789,181
15,789,181
1,892,524
24,210,819
2,689,252
6,119,160
28,172,365
300,000,000
65,516,677
THERE ARE NO PRIVILEGES FOR
DISTRIBUTION OF PROFITS
Based on Legal Records
(Unconsolidated)
107,675,486
-26,100,000
81,575,486
4,078,774
77,496,712
6,119,160
26,795,776
DIVIDENDS PER SHARES WITH NOMINAL VALUE OF ¨1 EACH
AMOUNT (¨)
RATE (%)
0.133333
13.3333
0.133333
13.3333
0.113333
0.113333
11.3333
11.3333
RATIO OF DIVIDENDS DISTRIBUTED TO NET DISTRIBUTABLE PERIOD PROFIT INCLUDING DONATIONS
RATIO OF DIVIDENDS DISTRIBUTED TO SHAREHOLDERS TO NET
CASH DIVIDENDS DISTRIBUTED TO SHAREHOLDERS (¨)
DISTRIBUTABLE PERIOD PROFIT INCLUDING DONATIONS (%)
40,000,000
50.67
Pursuant to the requirement set out in the Weekly Bulletin 2010/4 of the Capital Markets Board, profit distribution has been based on the consolidated profit figure.
Provision for dividends to be paid to the personnel in the amount of ¨2,000,000 set aside as per the Turkish Accounting Standards has been added to the profit for
the period ended 31 December 2012.
(*)
(**)
As a result of profit distribution, ¨26,795,776 will be taken into account as extraordinary reserves, which amount is calculated based on legal records.
(***)
15% income tax deduction, which is applicable for full-fledged taxpayer enterprises for cash dividend payouts, will not be applied.
2013 Profit Distribution Proposal
ANADOLU HAYAT EMEKLİLİK A.Ş. 2013 PROFIT DISTRIBUTION PROPOSAL TABLE (¨)
12-
Paid-in/Issued Capital
Total Legal Reserves (according to legal records)
If there are privileges for distribution of profits according to
the Articles of Incorporation, information on such privileges
Based on CMB
(Consolidated)
102,015,935
-15,310,000
86,705,935
4,258,330
82,447,605
36,595
82,484,200
3Profit for the Period (*)
4- Taxes Payable (-)
5Net Profit for the Period (=)
6- Losses in Prior Years (-)
7General Legal Reserves (-)
8- NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=)
9- Donations during the Year (+)
10- Net Distributable Profit for the Period Including Donations
11- First Dividend to Shareholders
- Cash
- Bonus Shares
- Total
12- Dividends Distributed to Owners of Privileged Shares
13- Other Distributed Dividends
- To Board Members
- To Employees
- To People Otpher than Shareholders
14- Dividends Distributed to Owners of Redeemed Shares
15- Second Dividend to Shareholders
16- General Legal Reserves
18- Special Reserves
19- EXTRAORDINARY RESERVES (**)
20- Other Resources to be Distributed
350,000,000
72,284,703
THERE ARE NO PRIVILEGES
FOR DISTRIBUTION OF
PROFITS
Based on Legal Records
(Unconsolidated)
100,476,591
-15,310,000
85,166,591
4,258,330
80,908,261
16,496,840
16,496,840
1,978,523
1,978,523
33,503,160
3,447,852
6,397,224
20,624,006
-
6,397,224
19,084,662
-
NET (***)
A
B
TOTAL
CASH (¨)
121,428.57
42,378,571.43
42,500,000.00
BONUS (¨)
-
RATE (%)
0.15
51.40
51.55
AMOUNT (¨)
0.1214286
0.1214286
-
RATE (%)
12.14286
12.14286
-
Pursuant to the Dividend Guide issued by the Capital Markets Board in January 2014, dividend distribution has been based on the consolidated profit figure.
Provision for dividends to personnel in the amount of ¨2,000,000, which has been set aside as per TAS 19, was added to the profit for the period as at 31 December
2013.
(*)
(**)
As a result of profit distribution, ¨19,084,662 will be taken into account as extraordinary reserves, which amount is calculated according to legal records.
(***)
15% income tax deduction, which is applicable for full-fledged taxpayer enterprises for cash dividend payouts, will not be applied.
INFORMATION ON DIVIDEND RATIO
DIVIDEND RATIOS TABLE
TOTAL DIVIDENDS
DISTRIBUTED /
TOTAL DIVIDENDS
NET DISTRIBUTABLE PROFIT
DIVIDENDS PER SHARES WITH
GROUP
DISTRIBUTED
FOR THE PERIOD
NOMINAL VALUE OF ¨1 EACH
85
Corporate Governance Principles Compliance Report
86
Corporate Governance Principles Compliance Report
1. STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES
Our Company believes that compliance with corporate governance principles is at least as important as its financial performance
and that such compliance is of great benefit from the standpoints both of the development of national and international capital
markets and of the advancement of our own company’s interests.
Our Company implements the compulsory principles as specified in the Communiqué Serial: IV No. 56 on the Determination and
Implementation of Corporate Governance Principles.
Our articles of incorporation 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,
• Expansion of the scope of minority rights beyond the provisions of applicable legislation
• Adoption of resolutions concerning demerger or share exchange that would result in a change in the Company’s capital,
management structure and its assets, buying/selling, letting or renting tangible/intangible assets or making donations or
grants in substantial amounts, and providing guarantee such as suretyship or mortgage in favor of third parties.
Furthermore, minority rights are not represented on our Board of Directors.
There have never been any conflicts of interest among stakeholders over the limited number of principles that have so far not
been implemented.
At the Ordinary General Assembly meeting held on 26 March 2013, the Company’s Articles of Incorporation have been
amended; these modifications are contained in the Company’s Annual Report under a separate heading, “Changes in the
Articles of Incorporation during the Reporting Period”, as per the Corporate Governance Communiqué and applicable legislation.
Modifications to the said articles were registered in the Turkish Trade Registry Gazette issue 8305 dated 22 April 2013.
A determination and assessment of the level of our Company’s compliance with Corporate Governance Principles and opinions
concerning the furtherance of the level of compliance in terms of scope and nature are presented below.
PART I - SHAREHOLDERS
2. SHAREHOLDER RELATIONS UNIT
All shareholders are treated equally at the Company. The Shareholder Relations Unit has been set up in 2004.
The employees assigned to this unit and their contact information are presented below:
Name
Oğuz Haluk Solak
N. Cem Özcan
Alper Eşsizoğlu*
Telephone
+90 212 317 70 06
+90 212 317 71 04
+90 212 317 71 06
E-mail
[email protected]
[email protected]
[email protected]
The head of the unit is Oğuz Haluk Solak, who reports directly to the head of the Corporate Governance Committee.
This unit plays an active part in the protection of shareholding rights and facilitates their exercise, mainly regarding the right to
obtain and review information, and establishes the communication between the Board of Directors and shareholders.
Efforts are underway to facilitate the reporting of the unit’s activities to the Board of Directors.
*Mr. Alper Eşsizoğlu no longer serves in the Investor Relations Unit as of 09 October 2013 due to a reorganization in the Company.
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Corporate Governance Principles Compliance Report ...continued
In essence, the Shareholder Relations Unit works to fulfill the following functions:
• Ensure that records pertaining to shareholders are maintained in a reliable, secure, and up-to-date manner.
• Respond to shareholders’ and potential investors’ written requests for Company-related information apart from those that are
not publicly disclosed, are of a confidential and/or trade secret nature.
• Make available to the shareholders such information and disclosures that may have an effect on the exercise of shareholding
rights on the Company website in an up-to-date manner.
• Ensure that General Assemblies of Shareholders are conducted in accordance with the requirements of current legislation, the
Company’s articles of incorporation and other internal regulations.
• Prepare documents for the use of shareholders at General Assembly meetings.
• Make sure that the results of voting at General Assemblies are recorded and that reports on these results are sent to
shareholders.
• Oversee and monitor any matter related to public disclosures as required by the legislation and the Company’s Public Disclosure
Policy.
• Ensure representation of our Company in investor relations meetings organized in Turkey or abroad by international
establishments.
In 2013, all verbal information requests received from researchers and our investors in relation to our Company and/or publicly
disclosed financial statement results were answered. Requests for meetings received during the reporting period from national
and international investment companies were accepted and necessary information was provided. In total, 162 investor meetings
and four teleconferences were held in 2013. In these meetings, presentations were made on our sector and our Company, and
the investors’ questions were answered.
3. SHAREHOLDERS’ EXERCISE OF THEIR RIGHT TO OBTAIN INFORMATION
All information requested by shareholders is provided except that which is in the nature of a trade secret or has not been publicly
disclosed.
Shareholders’ requests for information are handled by the Shareholder Relations Unit employees and responded to within the
framework of the disclosure policy.
Requests in relation to keeping the shareholders informed are at times personally fulfilled by the Company’s Board of Directors
and statutory auditors.
Information on the topics our shareholders frequently need and developments that might affect the exercise of their rights
aimed at expanding their right to information are posted on the Company website accessible at www.anadoluhayat.com.tr.
It is believed that all information necessary for healthy exercise of shareholders’ rights is made available to our shareholders on
our website, in our annual report and material event disclosures at a general level, and through individual queries, at an individual
level.
88
Given that the General Assembly must honor the request for appointment of a special auditor pursuant to applicable legislation
and that such request constitutes one of the exceptions to the principle of adherence to agenda, the request for the
appointment of a special auditor has been stipulated under the articles of incorporation, based on the concern that problems
might arise in practice with regard to protection of the confidentiality of trade secrets or undisclosed information. Pursuant
to Article 438 of the Turkish Commercial Code, the right to request appointment of a special auditor is reserved for every
shareholder, provided that such shareholder meets the criteria specified under the law.
In 2013, our Shareholders did not request appointment of a special auditor from the General Assembly of Shareholders.
Shareholders’ requests for information about the legal and/or commercial relationships between the Company and real persons
and/or legal entities with which the Company is directly or indirectly related in terms of management or control are responded to,
to the extent allowed by the legislation.
4. GENERAL ASSEMBLY MEETINGS
Our Company’s Ordinary General Assembly Meeting for 2012 was held on 26 March 2013 at the Company headquarters.
Shareholders controlling ¨275 million worth of shares corresponding to 92% of our Company’s ¨300 million paid-in capital took
part in this assembly.
While the Company’s Board Directors, statutory auditors, other relevant individuals, officials responsible for drawing up the
financial statements, two officials from the Independent Audit Firm auditing the financial statements of the Company and some
Company employees participated in the meeting, other stakeholders or media representatives did not attend the meeting.
Announcement summoning the meeting, which covered the information below, was published three weeks before the meeting
date in the Turkish Trade Registry Gazette, the newspapers Dünya and Akşam, and was posted on the website at the address
www.anadoluhayat.com.tr, on the Electronic General Meeting System (e-GEM) under the Central Registry Agency and on the
Public Disclosure Platform (in Turkish: KAP) under Borsa İstanbul (BIST).
Care is taken that General Assembly announcements cover:
• The meeting date and hour,
• The meeting place,
• Agenda,
• Necessary information about the agenda items,
• Specimen proxy statements,
• Former and current versions of the amended article(s) as approved by the related authorities, if the agenda covers any
amendments to the articles of incorporation,
• The body summoning the assembly,
• If another General Assembly of shareholders is being reconvened because a previous one was postponed for any reason, the
reason for the postponement and the quorum that will be required at the new assembly,
• In ordinary meeting announcements, the address at which the annual report, financial statements, and other documents
pertinent to the General Assembly can be examined.
As of the date on which the announcement of the invitation to a general assembly of shareholders is made, copies of the annual
report, financial statements and reports, the agenda, other documents pertaining to the items on the agenda, the current
text of the articles of incorporation, and if the articles of incorporation are to be amended, the texts and justifications of the
amendments are all made available for the inspection of shareholders at the Company’s headquarters and branches.
At the Ordinary General Assembly Meeting held on 26 March 2013, shareholders agreed by majority of votes to:
• form the presiding board,
• forego reading out the annual report on the grounds that it had previously been made available for shareholders’ review,
• read out and discuss the financial statements in outline,
• individually acquit the Company’s Board directors and statutory auditors in relation to the Company’s activities and operations
in 2011,
• accept the Board of Directors’ proposal concerning the distribution of profits as covered in the Annual Report,
• approve the changes in the seats of the Board of Directors that occurred during the reporting period,
• ratify the amendments to articles 1, 3, 4, 6, 7, 8, 9,10, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31,
32, 33,34, 35, 36, 38 and provisional article 1 of the Company’s Articles of Incorporation,
• election of the Board Directors,
• designation of the independent audit firm,
• approve the motions submitted for determination of the remunerations to be paid to the Company’s Directors,
• read out the Company’s Statutory Auditors’ Report and the “opinion” section of the Independent Auditor’s Report,
89
• allow the Board Directors to perform the transactions set out in Articles 395 and 396 of the Turkish Commercial Code,
• approve the Internal Guidelines for the Operating Principles and Procedures of the General Assembly of Shareholders prepared
by the Board of Directors,
• ratify the limit for the donations intended to be made during 2013.
Information has been provided about the changes in the statutory auditor during the reporting period.
During the General Assembly, none of our shareholders exercised their right to pose questions.
No agenda items have been proposed by our shareholders during the meeting.
Under a separate agenda item, our shareholders have been informed that the Company’s donations in 2012 totaled ¨72,603.
The Company’s donations and grants in aid are handled under the Donations Guidelines approved by the Board of Directors
in 2006. If any revisions are made to the Donations Guidelines currently in force, the same shall be laid down at the General
Assembly for approval.
Pursuant to legislation, electronic general meeting system has been introduced starting with the General Assembly meeting for
2012. The Company’s articles of incorporation contain no provisions stipulating that our General Assembly Meetings must be
held open to the public, including stakeholders and the media.
Minutes of the General Assembly meetings in written form are made available for electronic access at our website at www.
anadoluhayat.com.tr.
Maximum attention is paid to achieve full compliance with the requirements of law so as to facilitate participation in general
assembly meetings. It is believed that Company shareholders encounter no difficulties in participating in General Assemblies and
to date, no complaint on this issue has ever been received from a shareholder.
All information and documents pertinent to the General Assembly are also accessible on the Company website at the address
www.anadoluhayat.com.tr. The website covers total number of shares reflecting the Company’s shareholding structure and
relevant voting rights, number of shares representing the preferential class of shares and relevant voting rights, grounds for
dismissal and substitution of Board Directors if the General Assembly meeting agenda includes such dismissal, substitution or
election as an item, information on individuals that will be nominated to the Board of Directors, requests by shareholders, Capital
Markets Board (CMB) and/or any public authority or agency that governs the Company for the inclusion of items on the agenda,
the relevant Board of Directors decision if the agenda covers revisions to the articles of incorporation, as well as the former and
revised versions thereof.
During 2013, the shareholders possessing management control, Board Directors, senior executives, and their spouses and
relatives by blood or marriage up to the second degree did not engage in any transaction which might lead to a conflict of
interest with the Company or its subsidiaries.
90
During 2013, no transaction of material nature as per the legislation took place such as the Company’s assignment of, or creation
of real rights on, or letting all or substantial part of its assets; taking over or renting a material asset, stipulation of privileges
or changing the scope or subject matter of existing privileges; or delisting. Unless a General Assembly decision is required for
such transactions, approval of the majority of independent Board Directors is sought for the execution of Board of Directors
decisions pertaining to such transactions. In the absence of the approval of the majority of independent Board Directors in
material transactions and if it is desired to execute the said transactions despite opposition by majority of independent Board
Directors, the transaction shall be laid down at the General Assembly meeting for approval. In such a case, essentially the
grounds for the opposition of independent Board Directors should be publicly disclosed, notified to the CMB and read out in the
General Assembly meeting to be held. If parties to the transaction of material nature are related parties, then related parties
may not vote in General Assembly meetings. When the General Assembly adopts resolutions on transactions of material nature,
provisions of Article 29/6 of the Capital Market Law will apply.
According to legislation, the Board of Directors is authorized to pass decisions of material nature save for those for which the
General Assembly is authorized.
Minutes of the General Assembly meeting are delivered to the shareholders upon conclusion of the meeting, and are made
available for electronic access at our website at www.anadoluhayat.com.tr, in order to keep non-participating shareholders
informed.
Changes in management or organizational activities that took place in the prior fiscal year or are planned in the future, if any,
are presented for the information of shareholders together with the grounds for such changes, before the General Assembly
Meeting.
In this framework, the following are made available for the examination of shareholders at the General Assembly Meetings:
• Explanations concerning changes in the Company’s organizational structure and their justifications
• The relevant report on the matter by the consultant company, if one is hired; otherwise information and documents on the
subject prepared by the Company
• If there are organizational changes in subsidiaries or affiliates, the annual reports, and full-year financial reports for the most
recent two fiscal years of all the companies affected by the organizational changes.
When preparing agendas for general meeting, care is taken to presenting each item to be voted on under a separate heading; to
make the headings as clear and explicit as possible so as not to be interpreted in any other way; to refrain from including such
legally prohibited items as “Other” or “Miscellaneous”.
Specimen proxy statements for shareholders that wish to have themselves represented at meetings are published along with
assembly announcements and are also made available for the use of shareholders in electronic format.
The principles and procedures that govern voting at the Company’s General Assemblies of shareholders are presented below in
main outline.
• Each share of stock is entitled to one vote.
• If a share of stock has more than one owner, such votes may be cast only by a proxy representing them all.
• Shareholders may be represented at the General Assemblies by a proxy to be nominated from amongst shareholders or nonshareholders
• Proxies who are shareholders in the Company are authorized to cast votes for the shareholders they represent, in addition to
their own votes.
• The format of the proxy form shall be determined by the Board of Directors subject to the requirements of the Capital Markets
Board. The proxy form must be in writing. The proxy shall be obliged to cast the vote in line with the assignor’s wish, provided
that the shareholder assigning the authority has specified the same in the authorization certificate.
• Voting at General Assembly meetings is by an open show of hands. However, upon demand by participating Shareholders
representing one tenth of the capital, secret voting will be carried out.
Compliance is achieved with the Capital Markets Board requirements with respect to voting at General Assembly meetings.
The principles and procedures that govern voting at general assemblies of shareholders are also read out at the beginning of the
assembly.
Pursuant to the applicable legislation and to the articles of incorporation, ordinary General Assembly meetings must be held
within three months following the end of each fiscal year.
In line with our articles of incorporation, General Assemblies are held in the place where our Company headquarters is located
and at a venue that will enable participation by all our Shareholders.
News and analyses pertaining to disputed issues appearing in the media concerning the Company are presented for the
information of shareholders at general assemblies.
Questions that shareholders ask of the Board of Directors are responded to provided that the answers are pertinent to the
exercise of shareholder rights and do not fall within the scope of trade secrets.
The president of a General Assembly of Shareholders conducts the assembly effectively in such a way as to ensure that
shareholders are able to exercise their rights.
Issues that shareholders have told the Shareholder Relations Unit they wish to have included on assembly agendas are given
consideration by the Board of Directors when it prepares an assembly’s agenda.
91
Care is taken to answer every question raised during the General Assembly by the shareholders during the same meeting, and
to provide written answers from the Shareholder Relations Unit within no more than thirty business days, in case the question
raised is not relevant to the agenda or is too comprehensive to be answered promptly.
Directors, authorized employees responsible for the preparation of financial statements, and officials from the Independent
Audit Firm and other relevant people to offer explanations on the agenda topics that are of specialty pays attention to be present
in the meeting to the extent possible.
Each item on the agenda of a General Assembly of Shareholders is voted on individually. To forestall any doubts about the results
of voting, votes are counted and the results of the voting are announced to all shareholders before the assembly is adjourned.
5. VOTING RIGHTS AND MINORITY RIGHTS
According to our articles of incorporation, each share of stock is entitled to one vote.
Our Company’s capital is divided into Class A and Class B shares.
As of 31 December 2013, our Company’s issued capital amounts to ¨350 million consisting of 100,000,000 Class A shares worth
a total of ¨1 million and 34,900,000,000 Class B registered shares worth a total of ¨349 million.
As required by our articles of incorporation, seven of the members of the Board of Directors are elected from among nominees
designated by Class A shareholders and four from among nominees designated by Class B shareholders.
Class A shares have no privileges other than the nomination privilege mentioned above. New Class A shares are not issued when
share capital increases take place.
No shareholder is involved in a cross-shareholding relationship with the Company.
The Company pays maximum attention to ensure exercise of minority rights granted under the Turkish Commercial Code and the
Capital Market Law, and no stipulations were incorporated in our articles of incorporation due to the fact that the legal provisions
governing this matter have been expanded.
Minority shareholding interests are not represented on the Board of Directors, which is formed at the discretion of our General
Assembly.
The articles of incorporation contain no provisions governing the cumulative voting method.
There is no upper limit on the number of votes a shareholder may cast at a General Assembly.
Voting rights are acquired the moment the shares on which they are contingent are acquired. There are no rules stipulating that
voting rights may be exercised only after a specific period of time has passed after shares are acquired.
Our articles of incorporation contain no provisions preventing non-shareholders from voting in proxy.
Shareholders may exercise their voting rights personally at General Assemblies and may do so through any other party
irrespective of the shareholder status of that party.
A non-corporate shareholder may only be represented by a single proxy at a General Assembly. If a corporate shareholder is
represented by more than one individual at an assembly, only one of them may cast votes. The proxy statement must identify
the individual who is authorized to cast votes.
92
6. ENTITLEMENT TO DIVIDENDS
Adopted by the Board of Directors on 10 March 2006 and announced on the İstanbul Stock Exchange on the same date, the
Company’s Dividend Distribution Policy was incorporated in the agenda of the 2005 Annual General Assembly Meeting held on
27 March 2006. Published in annual reports and on the corporate website, the dividend distribution policy is presented below.
Anadolu Hayat Emeklilik A.Ş. Dividend Distribution Policy
The Company’s articles of incorporation sets forth it as a principle to distribute first dividends out of the distributable profit in the
ratio and amount determined by the Capital Markets Board.
The dividend payment proposals that the Board of Directors submits to the general assembly of shareholders are prepared
according to a policy that;
a) avoids disturbing the delicate balance between shareholders’ expectations and the Company’s need to grow, and
The Board of Directors has adopted a dividend payment policy that is based on proposing to the general assembly of
shareholders that at least 30% of net income subject to profit be paid out as free shares of stock or in cash.
There are no preferred stocks in the Company’s profit distribution.
There are no founder’s shares nor is it a company practice to give shares of profits to Members of the Board of Directors.
As required by our articles of incorporation, a maximum of 3% of the total amount remaining after the first dividend has been set
aside is paid out to our employees as their share of the profits, subject to a cap of three monthly salaries.
The Company’s dividends are paid within the legally prescribed periods of time.
Advances on dividends can be paid out provided that the principles and procedures set out in the Capital Market legislation are
adhered to.
There are no significant donations or grants in aid that the Company made during the year or had planned to make as of yearend.
Total cash dividends distributed by the Company in 2013 amounted to ¨40 million.
7. TRANSFER OF SHARES
In our articles of incorporation there are no clauses that restrict transfer of shares.
All shareholders, including minority shareholding interests and foreign nationals are treated equally.
PART II – PUBLIC DISCLOSURE AND TRANSPARENCY
8. DISCLOSURE POLICY
The Company disclosure policy, which is approved by the Board of Directors, is posted on the corporate website. In case of any
changes in the disclosure policy, the points subject to change and the reasons therefor are publicly disclosed via the Public
Disclosure Platform upon approval of the Board of Directors. The main headings of the disclosure policy are presented below:
• General framework
• Authority and responsibility
• Public disclosure work and the methods and tools used
• Other announcements made
• Designation of individuals with administrative responsibility
• Corporate website
In our Company, the Board of Directors is authorized and responsible for monitoring, overseeing and improving the public
disclosure policy.
The disclosure policy covers principles regarding public disclosure of forward-looking information.
The disclosure function is coordinated by the employees in the said unit in close cooperation with the Board of Directors and the
managers responsible for financial management and reporting.
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9. COMPANY INTERNET SITE AND ITS CONTENT
The Company has an internet site prepared in Turkish and English languages, accessible at the address www.anadoluhayat.com.
tr. The Company website is actively used in providing information and public disclosure.
The Company website features the information and data stipulated by the Corporate Governance Principles and regulatory
authorities. In addition to the information that are mandatory to be disclosed as per the legislation, the website covers trade
registry data, most recent shareholding and management structure, detailed information on preferential shares, the most
recent version of articles of incorporation and the dates and numbers of Trade Registry Gazettes in which the changes are
promulgated, material event disclosures, financial reports, annual reports, prospectuses and public offering circulars, agendas,
lists of attendants and minutes of General Assemblies, proxy voting form, dividend distribution policy, disclosure policy,
information on transactions with related parties, rules of ethics formulated by the Company, and information requests, queries
and notifications received by the Company and the responses provided thereto under the heading “Frequently Asked Questions”.
In this framework, the website contains Company-related information covering the past five years at a minimum. A big part of the
information is also translated into and made available in English so as to enable international investors to make use of them.
The information to be disclosed to the public are made available for public use on the Public Disclosure Platform (www.kap.gov.
tr) and the Company’s website so as to help the individuals and establishments that will make use of the disclosure with their
decision-making, in a manner that is timely, accurate, complete, intelligible, interpretable and easily accessible at low cost.
Importance is attached to opinions and suggestions received through the corporate website and they are taken into
consideration. Care is taken to keep the internet site up-to-date at all times.
The address of the internet site takes place on the Company’s letterhead.
10. ANNUAL REPORT
The Company’s annual reports are prepared by the Board of Directors so as to present a complete view of the Company’s financial
status, in accordance with the legislation, and in sufficient detail to cover the information listed in Corporate Governance
Principles.
PART III - STAKEHOLDERS
11. KEEPING STAKEHOLDERS INFORMED
Care is taken to keeping stakeholders –those who have an interest in our Company and include shareholders, employees,
creditors, customers, suppliers, non-governmental organizations, the government, and potential investors in our Company–
informed on issues concerning our Company that are of interest to them in writing, to the extent possible. The Company’s
relationships with stakeholders are governed by written agreements as far as possible.
In situations where the rights of stakeholders are not governed by law or contract, the Company safeguards them within the
framework of the rules of good faith, to the degree possible, and mindful of the Company’s own reputation.
The corporate governance structure provides the means to all stakeholders including employees and their representative bodies
to communicate their concerns about any illegal or unethical practices to the Corporate Governance Committee and the Audit
Committee, and safeguards their right to do so.
94
The Company’s quality policy pledges to offer and maintain quality products and services on the back of the teams enjoying
expertise and experience, strong technological and financial infrastructure, constant development and improvement concept,
combined with its experienced and extensive agency network.
The Company pays regard to ensuring continued quality and standards in service across all phases of its life insurance and
private pension services. Customer demands are responded to quickly and policyholders are informed in case of any delays.
Attention is paid to confidentiality of customers’ and suppliers’ information that is of trade secret nature.
12. STAKEHOLDER PARTICIPATION IN MANAGEMENT
While the articles of incorporation contain no provisions on stakeholder participation in the Company’s management, the
Company’s internal regulations cover practices to this end.
The Suggestion System Regulation targeting the company employees has been introduced as of 01 May 2006. Suggestions for
innovations and improvements are evaluated within the framework of this regulation and put into effect in the Company.
The Company meets with its sales organization twice a year at which time they are informed about the Company’s activities,
their suggestions are heard, and successful intermediaries are rewarded.
13. HUMAN RESOURCES POLICY
The principles of the human resources policy adopted by our Company are set out below.
Job descriptions and assignments and performance criteria were determined by management and announced to employees.
When hiring, it is a principle that individuals are to be given equal opportunity under identical conditions. Hiring criteria are set
forth in writing for each job position and are strictly complied with in practice.
Succession planning is made to identify the new managers to be appointed in cases where it is predicted that changes in a
managerial position will cause hitches in the management of the Company.
When making training, assignment, and promotion decisions, particular care is taken to making use of objective criteria and to
protecting the Company’s best interests.
Training plans are developed and implemented so as to enable our employees to improve their knowledge and skills.
Our Company’s employees are members of the Union of Bank and Insurance Workers. Our Company supports active
acknowledgment of the freedom of association and the right to collectively bargain.
To handle the relations with employees, there are union representatives who are designated by the Union of Banking and
Insurance Workers organized at our Company from amongst our headquarters and regional branch employees.
Safe working environment and conditions are provided for our employees; work is undertaken to improve these conditions
depending on social and technological necessities.
Our employees are kept informed about any company decisions that are made and about developments that may be of concern
to them.
Measures are adopted to prevent discrimination on the basis of race, religion, language and sex among our employees, to ensure
human rights are respected and to protect the employees against internal physical, mental and emotional abuse.
No complaints have been received on account of discrimination among Company employees.
The provisions of the suggestion system regulation are applied to promote Company employees’ creative ideas about the
company activities and practices, collect and evaluate individual ideas, and to appreciate and reward those deemed successful.
Operating as a publicly traded company in the private pension and life insurance branches, Anadolu Hayat Emeklilik A.Ş. (the
Company) strives to achieve its productivity, profitability and continuous growth targets on the back of its parent groups’
corporate culture, business ethics, and the corporate awareness created under the “Codes of Ethics” presented below, as well
as the applicable legislation and pertinent requirements. Every company employee at every level is liable to abide by these rules
of ethics and to ensure compliance therewith in whatever new work flows and organizational structures may be developed.
In general the Company’s activities are to be conducted in a manner that is in compliance with the law, honest, impartial,
trustworthy, transparent and socially responsible.
Company employees are obliged to abide by these rules of ethics without exception, to cause others to comply with them,
and to arrange workflows accordingly. Neither the Company nor the employees may waive these rules in any decisions or
arrangements.
14. CODE OF ETHICS AND SOCIAL RESPONSIBILITY
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Codes of ethics setting out the professional ethics that the Company and its employees are required to abide by when
performing their activities within the existing laws and regulations are posted on the corporate website.
In addition, the Company, in its activities, acts in compliance with the regulations governing the environment, consumers and
public health.
No charges were filed or no sanctions were imposed against our Company on account of any environmental protection
infringement to date.
Within the frame of the social responsibility principle that is regarded as part of our rules of ethics, Anadolu Hayat Emeklilik
upheld the nation’s interests since its inception, and has been striving to propagate Life Insurance and Private Pension System in
Turkey based on its commitment to social responsibility.
Anadolu Hayat Emeklilik believes that women pose great significance for our country’s progress. Accordingly, the Company
designs its social responsibility projects so as to support their improvement.
The project that is dedicated to support girls who are financially unable to continue their education, “Girls: The Insurance of our
Future” began its ninth year in 2013.
Annually organized since 2007, “Shots from Life as Seen by Women” photography competition aims to contribute to the social
and cultural development of the Turkish women, and offer them a platform where they can freely express themselves through
photographs.
PART IV – BOARD OF DIRECTORS
15. STRUCTURE AND FORMATION OF THE BOARD OF DIRECTORS AND INDEPENDENT MEMBERS
The Company’s Board of Directors is composed of eleven members so as to enable our Board Directors to work efficiently and
constructively, make decisions swiftly and rationally, and organize the formation and activities of the committees efficiently.
Inasmuch as our Company has no ultimate non-corporate controlling shareholders, all of the Board Directors are assumed to be
naturally able to act with independence and therefore, have the advantage of being able to act impartially in their decisions by
holding the interests of the Company and of its stakeholders above everything else.
There are two independent members on the Board of Directors. The independent Board Directors have not served as members
for more than six years in the past ten years. While the term of office for an independent Board Director is one year, they can be
reelected upon being nominated.
Two candidates for independent Board Director status have been nominated to the Corporate Governance Committee serving
in lieu of the Nomination Committee, and the report on whether the candidates fulfill the criteria of independence has been
presented to the Board of Directors on 27 February 2013.
Independent Board Directors fulfill the independence criteria published in the relevant legislation, and their declarations
of independence have been duly received. No instances took place during the reporting period, which would compromise
independence. If an instance compromising independence arises, then the independent Board Director shall present such
change immediately to the Board of Directors to be disclosed to the public. In such a case, the Board Director who loses his
independence shall resign as a matter of principle.
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Apart 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.
Name
Mahmut Magemizoğlu
Position
Chairman
Salih Kurtuluş
Vice Chairman
Mete Uğurlu
Director & CEO
A. Yavuz Ege, Ph.D.
Director
Tuncay Ercenk
Director
Prof. Mehmet Baha
Karan
Independent
Director
Atakan Yalçın, Assoc.
Prof.
Independent
Director
R. Semih Nabioğlu
Director
Murat Atalay
Director
Ebru Özşuca
Director
Recep Haki
Director
Educational
Background/
University/Faculty/
Department
Middle East Technical
University/Faculty
of Administrative
Sciences/Business
Administration
İstanbul Private School
of Journalism
University/Faculty
of Administrative
Sciences/Business
Administration
Ankara University/
Faculty of Political
Sciences/Economics &
Public Finance
İstanbul University/
Faculty of Law
University/ Faculty
of Administrative
Sciences/ Business
Administration
Boğaziçi University/
Faculty of Engineering/
Electrical and
Electronic Engineering
Gazi University/
Faculty of Economics
and Administrative
Sciences/Business
Administration
Hacettepe University/
Faculty of Letters and
Science/Statistics
Department
University/ Faculty
of Administrative
Sciences/ Business
Administration
University / Public
Administration
Company
Türkiye İş Bankası
A.Ş./In-Group
Position
Deputy CEO
Anadolu Hayat
Emeklilik A.Ş.
CEO
Professional
Experience
(Years)
31
Tenure of
Office with our
Company
4 years
6 months
40
5 years
2 months
7 years
11 months
34.5
-
-
43
5 years
8 months
-
-
36
Hacettepe
University/ NonGroup
Chair of the
Business
Administration
Department
33
2 years 7
months
1 year
9 months
Özyeğin
University/NonGroup
Faculty
Member
18
1 year
9 months
A.Ş./In-Group
Unit Manager
23
1 year
4 months
A.Ş./In-Group
Division
Manager
17
2 years
7 months
A.Ş./In-Group
Division
Manager
20
9 months
A.Ş./In-Group
Division
Manager
25
9 months
Information about our Board Directors is presented below.
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Although there are no set rules on non-independent Directors’ undertaking other duties outside the Company, the Directors do
not have any other duties apart from their natural duties in the entities they represent and from those in the establishments
owned by the entities they represent. Yet, Board Directors devote sufficient amount of time for Company affairs, and exercise
their powers prudently and within the frame of good faith, possessing all necessary knowledge to ensure full performance of
the duty.
Past experiences, and outside positions held, if any, of the independent Board Directors are disclosed in their résumés and
presented on our website and in our annual report.
In the fulfillment of its decision-making functions, the Board of Directors’ fundamental concerns are to:
• Maximize the Company’s market value
• Ensure that the Company’s activities are conducted in such a way as to secure long-term, stable gains for its shareholders
• Maintain the delicate balance between shareholders’ expectations and the Company’s need to grow.
The Board of Directors define the strategic goals of the Company, determines the human resources and financial resources the
Company will need, and audits the management performance.
At the same time, the Board of Directors also oversees the compliance of the Company activities with the legislation, articles of
incorporation, internal regulations, and the policies formulated.
When choosing new members to fill vacancies on the Board attention is given to the following matters:
• Candidates are required to be present at general assemblies of shareholders at which Board elections are to be held.
• Shareholders are provided with complete information about candidates.
• Shareholders have the right to put questions to candidates.
• Candidates are required to inform shareholders about what, if any, seats they hold on the boards of other companies and state
whether or not they will comply with Company regulations about such matters.
Attention is given to the conduct of regular Board meetings, which are held at least once a month.
Approval of the majority of independent Board Directors is sought for the Board of Directors decisions pertaining to the
Company’s transactions of a material nature with related parties and to furnishing guarantee, pledge and mortgage in favor of
third parties. If majority of the independent Board Directors do not approve the transaction, this is publicly disclosed, providing
adequate information on the transaction within the frame of public disclosure requirements, and the transaction is laid down
for the approval of the General Assembly. The matter is decided in the said General Assembly meeting through voting where
the parties to the transaction and their respective related parties may not cast votes, thus involving other shareholders in such
decisions at the General Assembly. Meeting quorum shall not be sought for General Assembly meetings that will be held for
circumstances specified in this article. Decisions are made with the simple majority of those eligible to vote. Board of Directors
and General Assembly decisions passed in violation of the principles herein shall be null and void. The articles of incorporation
cover provisions governing these aspects.
There are no administrative or judicial sanctions imposed against the Company or the Board Directors.
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There is a woman member on our Board of Directors.
16. OPERATING PRINCIPLES OF THE BOARD OF DIRECTORS
A draft of the agenda for a Board meeting is prepared by the CEO and finalized in line with the recommendations of the Chairman
and other directors.
Special care is taken to setting meeting dates that will allow all Board Directors to attend and to hold the meetings with all
directors in attendance except in unforeseen exceptional cases.
As a rule, at each regular meeting of the Board, the date of the next scheduled meeting is set and Members are subsequently
reminded of this in writing.
Utmost care is paid to ensure that the information and documents pertaining to items on the Board’s agenda are normally sent
out to Members for them to examine at least seven days before the meeting date. In situations where this is not possible, every
effort is made to ensure that all members are equally informed about the matters involved.
A secretariat has been set up that is responsible for executing the activities of the Board of Directors, keeping the Company’s
Directors informed, and for communicating with them.
A Board’s first meeting is preferably held on the same day that it is elected into office.
At this first meeting, the Chairman and Deputy Chairman are elected, duties are assigned, and committees are formed.
The Board meets regularly at least once a month as previously scheduled and occasionally as circumstances warrant.
In principle, Board Directors take part in all meetings.
Each Board Director is entitled to a single vote. All directors’ votes carry equal weight and no Director has a positive or negative
veto power.
As stipulated in our articles of incorporation, the Board convenes with a simple majority of its membership and decisions are
passed by a simple majority of those present.
The Board convened 12 times during 2013.
No Company Director cast a dissenting vote against any Board decision passed during 2013.
There were no related party transactions or transactions of material nature that have been laid down for the approval of our
Independent Directors.
The Board of Directors establishes the internal control systems of the Company, after obtaining the opinions of the related Board
of Directors committees, and annually reviews the efficiency of risk management and internal control systems.
17. NUMBER, STRUCTURE, AND INDEPENDENCE OF COMMITTEES ESTABLISHED BY THE BOARD OF DIRECTORS
There is an Audit Committee, a Corporate Governance Committee and Early Detection of Risk Committee in our Company.
Due to the structure of the Board of Directors, the Corporate Governance Committee also functions as the Nomination
Committee and the Remuneration Committee.
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. However, since all members of the Audit
Committee, the head of the Corporate Governance Committee and the head of the Early Detection of Risk Committee must be
elected from amongst Independent Board Directors, our Independent Board Directors serve on two different committees.
The Corporate Governance Committee is formed by the Board of Directors within the scope of corporate governance principles
and firstly from amongst its own members. When necessary, specialist individuals who are not members of the Board of
Directors may be assigned to the committee. The Chief Executive Officer does not take place in this committee. The Committee
consists of a minimum of two members. The majority of the Committee members consist of non-executive Board Directors. The
head of the Committee is elected from amongst independent Directors. While the term of office for the Corporate Governance
Committee is, in essence, coeval with that of the Board of Directors; the Committee will remain in office until the completion of
the predetermined adjustment process, when the Board of Directors is succeeded. To the extent possible, the Committee meets
consistently with the Board of Directors meetings. Committee decisions are adopted on the basis of the majority of votes cast.
Furthermore, as there are no ultimate non-corporate controlling shareholders in our Company, it is assumed that all of the
Board Directors serving in committees are naturally able to act with independence and therefore, have the advantage of acting
impartially in their decisions.
99
Prof. Mehmet Baha Karan and Recai Semih Nabioğlu serve on the Corporate Governance Committee at the Company. The
Committee head is Prof. Mehmet Baha Karan.
The Audit Committee is formed by the Board of Directors, from amongst its own members. The Committee consists of a
minimum of two members. The majority of the Committee members consist of non-executive Board Directors. The members
of the Committee are elected from amongst independent Directors. The term of office for the Audit Committee is, in essence,
coeval with that of the Board of Directors; the Committee holds at least quarterly meetings. Committee decisions are adopted on
the basis of the majority of votes cast.
On the Audit Committee, Prof. Mehmet Baha Karan serves as the Committee head and Assoc. Prof. Atakan Yalçın as member.
The term of office of the Early Detection of Risk Committee is coeval with that of the Board of Directors. The Committee
spends efforts to early detect the risks that might endanger the existence, progress and survival of the Company, to ensure
implementation of necessary measures and remedies in relation to the identified risks, and to manage the risk. The Committee
undertakes a review of the risk management systems at least on an annual basis. The Committee presents an assessment of the
situation in its bimonthly report to the Board of Directors, pointing at the perils, if any, and indicating the remedies.
On the Early Detection of Risk Committee, Assoc. Prof. Atakan Yalçın serves as the Committee Head and Recai Semih Nabioğlu as
member. The Committee presents an assessment of the situation in its bimonthly report to the Board of Directors, pointing at
the perils, if any, and indicating the remedies.
All of the members of the Audit Committee and the heads of other committees are elected from amongst independent Directors.
Our executive Directors and CEO do not serve on any committee.
The objectives, members, structures and activities of committees take place in the annual report.
18. RISK MANAGEMENT AND INTERNAL CONTROL MECHANISM
Board of Internal Audit carries out its activities within the frame of the Regulation on the Internal Systems of Insurance,
Reinsurance and Pension Companies published in the Official Gazette issue 26913 dated 21 June 2008. In this context, the Board
of Internal Audit reports directly to the Board of Directors and is organized independently in administrative terms.
The Board of Internal Audit reports on all units at the headquarters, regional offices, and branches at least once a year, and on
all agents at least once in three years, in accordance with the Regulation on the Internal Systems of Insurance, Reinsurance
and Pension Companies. The reporting is performed in line with the audit plan and program approved by the Board of Directors,
on the basis of International Internal Audit Standards, employing a risk-focused approach. In addition to these internal audit
activities, investigations and examinations are also conducted.
Risk Management and Internal Control Department conducts its activities within the frame of the Regulation on the Internal
Systems of Insurance, Reinsurance and Pension Companies published in the Official Gazette issue 26913 dated 21 June 2008.
The Department reports directly to the CEO.
It is intended to have a system that enables due and effective management, mitigation and control of the risks involved in the
Company’s activities. In this framework, operational activities and risk elements at the Company are evaluated and priority is
given to compliance efforts. New products and new implementations put on the market are reviewed, and subjected to risk
assessments and compliance checks.
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The internal control system makes up the control functions of the Company and encompasses all units; hence, constant efforts
are spent to keep the system efficient and aligned with the legislation and standards with respect to structure and operation.
The basic strategy directed towards this goal is to conduct internal control activities independently, productively and effectively,
based on a risk-focused approach and within the frame of applicable legislation and internationally accepted principles and
standards.
Directed towards the activities carried out by the Company units, the control system basically consists of the following:
compliance and conformity controls, tangible asset controls, review of adherence to limits set by the Company and tracking
limit overruns, controls pertaining to the approval and authorization system, inquiry and reconciliation controls, controls for
information and communication systems, controls for the financial reporting systems, and controls for communication channels.
Reports covering risk monitoring, assessment and management activities, along with the internal control activities are submitted
to the Board of Directors regularly.
The activities of the Department are administered directly by the CEO. The Board Director responsible for Internal Systems is also
responsible toward the Board of Directors for the formation of the Department and ensuring, monitoring and coordinating its
operability, adequacy and effectiveness.
All findings obtained by examining the risks independently from executive functions are regularly reported by the Department to
the Board Director responsible for Internal Systems, to the CEO and the Board of Directors.
19. STRATEGIC GOALS OF THE COMPANY
The Company’s vision is:
“To be the leading company in Turkey in all aspects of financial planning that are of concern to the future of Turkey and the
Turkish people.”
Its mission is:
“To inculcate and further in people an awareness of the need to safeguard their own futures and the futures of their loved
ones; to offer financial solutions that eliminate people’s doubts about the future and enhance the quality of their lives; and to
contribute to the development of the national economy by creating long-term financial resources.
Our corporate strategy is formulated as follows:
• Maintain the product diversity that caters to the customer needs and demands in life insurance sector and Private Pension
System, and contribute to the stable growth of the sector,
• Combine our success in introducing innovative products and creating value with our extensive service network, and thus
secure increased market share,
• Display high performance in the management of pension funds and provide financial protection and savings to our customers
in the Private Pension System,
• Keep our profitability sustainable above the market average.
The Company’s vision, mission and corporate strategy have been publicly disclosed on our website at the address www.
anadoluhayat.com.tr.
Our annual business programs that also include our strategic goals are determined by the management in view of the
competitive conditions, the overall economic conjuncture, general expectations in national and international financial markets,
and the Company’s medium- and long-term objectives, and presented to the Board of Directors for its approval.
Performance with respect to approved strategies and goals is regularly reviewed at monthly Board meetings at which the
Company’s activities, financial structure, and related issues are assessed and evaluated.
In order to effectively and continuously carry out its supervision and control functions, the Board of Directors in principle meets
every month.
At such meetings, consideration is given basically to the Company’s activities, the degree of achievement of the goals set in the
approved annual business program, the Company’s position in the sector, its financial performance, and the degree of compliance
with international standards achieved in its reporting and activities.
The proposed strategies and goals are approved by the Board upon thorough and comprehensive debates thereon.
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20. FINANCIAL RIGHTS
Aggregate of the salaries and similar benefits provided to the Company’s Board Directors and senior executives are disclosed in
the notes to the financial statements, which are publicly disclosed and are also accessible on our corporate website, and thereby,
incorporated in our annual report.
Company directors receive no financial benefits other than the honorarium that is paid to them.
The amount to be paid as an honorarium is determined by shareholders at a general assembly.
The remuneration policy developed for the Company’s managers and employees at any level is put into writing, presented to
the shareholders for their information as a separate agenda item at the 2011 General Assembly. The said remuneration policy is
published on the Company website.
Stock options or payment plans based on the Company’s performance are not used in the remuneration of our Board Directors,
including the independent Board Directors. Nonetheless, it is believed that the remuneration of independent Board Directors is
at a level that will not prejudice their independence.
The Board Directors and Senior Executives have never utilized, directly or indirectly, cash or non-cash loans from the Company,
nor did the Company lent money or gave suretyship or provided any similar guarantee to any Board Director or Senior Executive.
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Financial Reports and Other Matters
Contents
• Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon
• Information on Consolidated Associate
• Consolidated Financial Statements Together with Independent Auditors’ Report Thereon
• Information for Investors
103
Unconsolidated Financial Statements Together with Independent
Auditors’ Report Thereon
104
Independent Auditors’ Report
Akis Bağımsız Denetim ve Serbest
Muhasebeci Mali Müşavirlik A.Ş.
Kavacık Rüzgarlı Bahçe Mah.
Kavak Sok. No: 3
Beykoz 34805 İstanbul
Telephone +90 (216) 6819000
Fax
+90 (216) 6819090
İnternet
www.kpmg.com.tr
To the Board of Directors of Anadolu Hayat Emeklilik Anonim Şirketi
Introduction
We have audited the accompanying unconsolidated balance sheet of Anadolu Hayat Emeklilik Anonim Şirketi (“the Company”)
as at 31 December 2013 and the related unconsolidated statement of income, unconsolidated statement of changes in equity
and unconsolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other
explanatory notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these unconsolidated financial statements in accordance
with the accounting principles and standards in force as per the insurance legislation. This responsibility includes: designing,
implementing and maintaining internal systems relevant to the preparation and fair presentation of financial statements that
are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Independent Auditors’ Responsibility
Our responsibility is to express an opinion on these unconsolidated financial statements based on our audit. We conducted our
audit in accordance with audit standards in force as per the insurance legislation. Those standards require that we comply with
relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements
are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, we consider internal systems relevant to
the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal system.
An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting
estimates made by management, as well as evaluating the 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 opinion.
Independent Auditors’ Opinion
Istanbul, 4 February 2014
Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ
Alper Güvenç, Certified Public Accountant
Partner
Additional paragraph for convenience translation to English:
As explained in Note 2.1.1, the accompanying unconsolidated financial statements are not intended to present the financial
position and results of operations of the Company in accordance with the accounting principles and practices generally accepted
in countries and jurisdictions other than Turkey.
In our opinion, the accompanying unconsolidated financial statements give a true and fair view of the financial position of
Anadolu Hayat Emeklilik Anonim Şirketi as at 31 December 2013, and of its unconsolidated financial performance and its
unconsolidated cash flows for the year then ended in accordance with the accounting principles and standards (see Note 2) in
force as per the insurance legislation.
105
Unconsolidated Financial Statements as at and
For the Year Ended 31 December 2013
We confirm that the unconsolidated financial statements and related disclosures and footnotes as at 31 December 2013 which
were prepared in accordance with the accounting principles and standards in force as per the regulations of T.C. Başbakanlık
Hazine Müsteşarlığı are in compliance with the “Code Related to the Financial Reporting of Insurance, Reinsurance and Private
Pension Companies” and the financial records of our Company.
106
Mete Uğurlu
Oğuz Haluk Solak
N. Cem Özcan
Member of Board of Directors,
Chief Executive Officer
Vice Chief Executive Officer
Accounting Manager
Actuary
(Registration Number: 37)
CONTENTS
BALANCE SHEET
STATEMENT OF INCOME
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
STATEMENT OF PROFIT DISTRIBUTION
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1
General information
NOTE 2
Summary of significant accounting policies NOTE 3
Critical accounting estimates and judgments in applying accounting policies
NOTE 4
Management of insurance and financial risk
NOTE 5
Segment reporting
NOTE 6
Tangible assets
NOTE 7
Investment properties
NOTE 8
Intangible assets
NOTE 9
Investments in associates
NOTE 10
Reinsurance assets and liabilities
NOTE 11
Financial assets
NOTE 12
Loans and receivables NOTE 13
Derivative financial instruments
NOTE 14
NOTE 15
Equity
NOTE 16
Other reserves and equity component of DPF NOTE 17
Insurance contract liabilities and reinsurance assets
NOTE 18
Investment contracts
NOTE 19
Trade and other payables and deferred income
NOTE 20
Financial liabilities
NOTE 21
Deferred tax
NOTE 22
Retirement benefit obligations
NOTE 23
Other liabilities and provisions
NOTE 24
Net insurance premium revenue NOTE 25
Fee revenues
NOTE 26
Investment income
NOTE 27
Net income accrual on financial assets
NOTE 28
Assets held at fair value through profit or loss NOTE 29
Insurance rights and claims
NOTE 30
Investment contract benefits
NOTE 31
Other expenses
NOTE 32
Operating expenses
NOTE 33
Employee benefit expenses
NOTE 34
Financial costs
NOTE 35
Income tax expense
NOTE 36
Net foreign exchange gains
NOTE 37
Earnings per share
NOTE 38
Dividends per share
NOTE 39
Cash generated from operations
NOTE 40
Convertible bonds
NOTE 41
Redeemable preference shares
NOTE 42
Risks
NOTE 43
Commitments
NOTE 44
Business combinations
NOTE 45
Related party transactions
NOTE 46
Events after the reporting period
NOTE 47
Others
PAGE
108-112
113-115
116-117
118
119
120-181
120
122
136
136
152
153
154
154
155
155
156
161
161
162
162
164
165
172
172
173
173
174
174
175
175
175
175
176
176
176
176
176
176
176
176
177
177
177
178
178
178
178
178
178
178
181
181
107
Unconsolidated Balance Sheet
as at 31 December 2013
(Currency: Turkish Lira (¨))
Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1
ASSETS
I- Current Assets
Note
Audited
Current Period
31 December 2013
Audited
Prior Period
31 December 2012
A- Cash and Cash Equivalents
14
138,765,629
142,342,426
1- Cash
14
20,961
14,155
2- Cheques Received
-
-
29,864,319
59,951,461
3- Banks
14
4- Cheques Given and Payment Orders
14
(174,771)
(163,210)
5- Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months
14
109,055,120
82,540,020
-
-
B- Financial Assets and Financial Investments with Risks on Policyholders
11
2,406,892,657
2,682,557,493
1- Available-for-Sale Financial Assets
11
581,745,719
518,741,965
3- Financial Assets Held for Trading
11
36,388,883
42,316,499
4- Loans and Receivables
11
11,401,986
14,091,345
6- Other Cash and Cash Equivalents
2- Held to Maturity Investments
-
5- Provision for Loans and Receivables
-
-
11
1,787,655,851
2,117,707,466
-
-
8- Diminution in Value of Financial Investments
11
(10,299,782)
(10,299,782)
C- Receivables from Main Operations
12
5,296,014,578
4,347,148,160
1- Receivables from Insurance Operations
12
12,788,669
8,959,668
2- Provision for Receivables from Insurance Operations
12
(2,574)
(2,574)
3- Receivables from Reinsurance Operations
-
-
4- Provision for Receivables from Reinsurance Operations
-
-
5- Cash Deposited to Insurance and Reinsurance Companies
-
-
12
43,748,889
51,779,559
-
-
8- Receivables from Individual Pension Operations
12
5,239,479,594
4,286,411,507
9- Doubtful Receivables from Main Operations
12
117,996
117,996
10- Provision for Doubtful Receivables from Main Operations
12
(117,996)
(117,996)
D- Due from Related Parties
12
6- Financial Investments with Risks on Saving Life Policyholders
7- Company’s Own Equity Shares
6- Loans to the Policyholders
7- Provision for Loans to the Policyholders
334,634
1,096,350
1- Due from Shareholders
-
-
2- Due from Associates
-
-
3- Due from Subsidiaries
-
-
4- Due from Joint Ventures
-
-
334,634
1,096,350
6- Due from Other Related Parties
-
-
7- Rediscount on Receivables from Related Parties
-
-
8- Doubtful Receivables from Related Parties
-
-
9- Provision for Doubtful Receivables from Related Parties
-
-
12,165,677
1,891,704
1- Finance Lease Receivables
-
-
2- Unearned Finance Lease Interest Income
-
-
41,395
36,603
5- Due from Personnel
12
E- Other Receivables
12
3- Deposits and Guarantees Given
12,124,282
1,855,101
5- Rediscount on Other Miscellaneous Receivables
4- Other Miscellaneous Receivables
47
-
-
6- Other Doubtful Receivables
-
-
7- Provision for Other Doubtful Receivables
-
-
10,690,180
12,601,372
9,474,281
11,756,454
147,038
194,549
F- Prepaid Expenses and Income Accruals
4.2
1- Deferred Commission Expense
108
2- Accrued Interest and Rent Income
3- Income Accruals
4- Other Prepaid Expenses
G- Other Current Assets
4.2
4
16
1,068,857
650,353
17,887
23,230
1- Stocks to be Used in the Following Months
4,760
13,176
2- Prepaid Taxes and Funds
7,624
6,751
3- Deferred Tax Assets
-
-
4- Job Advances
-
-
5,400
3,200
5- Advances Given to Personnel
6- Inventory Count Differences
103
103
7- Other Miscellaneous Current Assets
-
-
8- Provision for Other Current Assets
-
-
7,864,881,242
7,187,660,735
I- Total Current Assets
The accompanying notes are an integral part of these unconsolidated financial statements.
ASSETS
II- Non-Current Assets
A- Receivables from Main Operations
5- Cash Deposited for Insurance and Reinsurance Companies
8- Receivables from Individual Pension Business
B- Due from Related Parties
C- Other Receivables
D- Financial Assets
1- Investments in Equity Shares
2- Investments in Associates
3- Capital Commitments to Associates
4- Investments in Subsidiaries
5- Capital Commitments to Subsidiaries
6- Investments in Joint Ventures
7- Capital Commitments to Joint Ventures
8- Financial Assets and Financial Investments with Risks on Policyholders
9- Other Financial Assets
10- Impairment in Value of Financial Assets
E- Tangible Assets
1- Investment Properties
2- Impairment for Investment Properties
3- Owner Occupied Property
4- Machinery and Equipments
5- Furniture and Fixtures
6- Motor Vehicles
7- Other Tangible Assets (Including Leasehold Improvements)
8- Tangible Assets Acquired Through Finance Leases
9- Accumulated Depreciation
10- Advances Paid for Tangible Assets (Including Construction in Progress)
F- Intangible Assets
1- Rights
2- Goodwill
3- Pre-operating Expenses
4- Research and Development Costs
5- Other Intangible Assets
6- Accumulated Amortization (Depreciation)
7- Advances Paid for Intangible Assets
G- Prepaid Expenses and Income Accruals
2- Income Accruals
3- Other Prepaid Expenses and Income Accruals
H- Other Non-Current Assets
1- Effective Foreign Currency Accounts
2- Foreign Currency Accounts
3- Stocks to be Used in the Following Years
6- Other Miscellaneous Non-Current Assets
7- Amortization on Other Non-Current Assets
8- Provision for Other Non-Current Assets
II- Total Non-Current Assets
TOTAL ASSETS
Note
9, 45.d
9,45.d
6
6,7
6
6
6
6
6
6
6
8
8
8
21
21
Audited
Current Period
31 December 2013
8,762,193
8,762,193
21,701,481
25,497,361
1,338,902
7,955,505
2,999,195
529,723
2,953,267
1,071,729
(20,644,201)
4,982,250
15,235,745
(10,253,495)
8,905
8,905
2,068,582
2,068,582
37,523,411
7,902,404,653
Audited
Prior Period
31 December 2012
8,762,193
8,762,193
21,311,444
25,873,087
1,338,902
5,722,942
2,852,940
573,475
2,685,382
1,071,729
(18,807,013)
4,297,953
11,845,644
(7,547,691)
58,142
58,142
34,429,732
7,222,090,467
109
LIABILITIES
110
III- Short-Term Liabilities
A- Financial Liabilities
1- Borrowings from Financial Institutions
2- Finance Lease Liabilities
3- Deferred Leasing Costs
4- Current Portion of Long Term Debts
5- Principal Installments and Interests on Bonds Issued
6- Other Financial Assets Issued
7- Valuation Differences of Other Financial Assets Issued
8- Other Financial Liabilities
B- Payables Arising from Main Operations
1- Payables Arising from Insurance Operations
2- Payables Arising from Reinsurance Operations
3- Cash Deposited by Insurance and Reinsurance Companies
4- Payables Arising from Individual Pension Business
5- Payables Arising from Other Main Operations
6- Discount on Payables from Other Main Operations
C- Due to Related Parties
1- Due to Shareholders
2- Due to Associates
3- Due to Subsidiaries
4- Due to Joint Ventures
5- Due to Personnel
6- Due to Other Related Parties
D- Other Payables
1- Deposits and Guarantees Received
2- Medical Treatment Payables to Social Security Institution
3- Other Miscellaneous Payables
4- Discount on Other Miscellaneous Payables
E- Insurance Technical Provisions
1- Reserve for Unearned Premiums - Net
2- Reserve for Unexpired Risks - Net
3- Mathematical Provisions - Net
4- Provision for Outstanding Claims - Net
5- Provision for Bonus and Discounts - Net
6- Other Technical Provisions - Net
F- Provisions for Taxes and Other Similar Obligations
1- Taxes and Funds Payable
2- Social Security Premiums Payable
3- Overdue, Deferred or By Installment Taxes and Other Liabilities
4- Other Taxes and Similar Payables
5- Corporate Tax Payable
6- Prepaid Taxes and Other Liabilities Regarding Current Period Income
7- Provisions for Other Taxes and Similar Liabilities
G- Provisions for Other Risks
1- Provision for Employee Termination Benefits
2- Provision for Pension Fund Deficits
3- Provisions for Costs
H- Deferred Income and Expense Accruals
1- Deferred Commission Income
2- Expense Accruals
3- Other Deferred Income and Expense Accruals
I- Other Short-Term Liabilities
1- Deferred Tax Liabilities
3- Other Various Short-Term Liabilities
III - Total Short-Term Liabilities
Note
19
19
19,10
19
19
19,45
19
19
19
19,47
17
17
17
17
17
35
35
23
23
19
19
19
19
Audited
Current Period
31 December 2013
5,361,512,193
5,868,305
881,759
5,354,762,129
5,014
5,014
8,882,417
320,984
8,561,433
1,972,924,325
20,847,997
1,871,476,210
74,550,204
128,485
5,921,429
8,648,030
3,755,158
1,092,876
2,250
15,310,000
(11,512,254)
5,705,359
5,705,359
2,588,141
515,595
829,103
1,243,443
62
62
7,360,265,541
Audited
Prior Period
31 December 2012
4,371,184,235
4,090,566
636,822
4,366,456,847
10,432
8,172
2,260
6,469,384
244,608
6,224,776
2,288,110,880
22,532,765
2,205,674,373
55,731,619
256,613
3,915,510
11,313,300
3,361,051
778,284
26,100,000
(18,926,035)
6,359,758
6,359,758
1,793,541
415,872
335,971
1,041,698
61
61
6,685,241,591
LIABILITIES
IV- Long-Term Liabilities
4- Bonds Issued
5- Payables Arising from Other Operations
6- Discount on Payables from Other Operations
5- Due to Personnel
D- Other Payables
E-Insurance Technical Provisions
F-Other Liabilities and Relevant Accruals
1- Other Liabilities
3- Other Liabilities and Expense Accruals
H-Deferred Income and Expense Accruals
2- Expense Accruals
I- Other Long-Term Liabilities
2- Other Long-Term Liabilities
IV- Total Long-Term Liabilities
Note
22,23
22,23
21
21
Audited
Current Period
31 December 2013
8,269,886
8,269,886
8,269,886
Audited
Prior Period
31 December 2012
7,408,414
7,408,414
4,760,670
4,760,670
12,169,084
111
EQUITY
Note
2.13,15 2.13,15
15
15
15
15,16
15
V- Equity
A- Paid in Capital
1- (Nominal) Capital
2- Unpaid Capital
3- Positive Capital Restatement Differences
4- Negative Capital Restatement Differences
5- Register in Progress Capital
B- Capital Reserves
1- Share Premiums
2- Cancellation Profits of Equity Shares
3- Profit on Assets Sale That Will Be Transferred to Capital
4- Currency Translation Adjustments
5- Other Capital Reserves
C- Profit Reserves
1- Legal Reserves
3- Extraordinary Reserves
4- Special Funds
5- Revaluation of Financial Assets
6- Other Profit Reserves
D- Retained Earnings
1- Retained Earnings
E- Accumulated Losses
1- Accumulated Losses
F-Net Profit for the Period
1- Net Profit for the Period
2- Net Loss for the Period
3- Profit not Available for Distribution
V- Total Equity
TOTAL EQUITY AND LIABILITIES
Audited
Current Period
31 December 2013
350,000,000
350,000,000
93,815,061
72,284,703
841,874
8,001,112
12,978,741
(291,369)
6,887,574
6,887,574
83,166,591
83,166,591
533,869,226
7,902,404,653
112
Audited
Prior Period
31 December 2012
300,000,000
300,000,000
138,216,732
65,516,677
13,722,714
12,205,336
46,772,005
6,887,574
6,887,574
79,575,486
79,575,486
524,679,792
7,222,090,467
Unconsolidated Statement of Income
I-TECHNICAL SECTION
A- Non-Life Technical Income
1- Earned Premiums (Net of Reinsurer Share)
1.1- Written Premiums (Net of Reinsurer Share)
1.1.1- Written Premiums, gross
1.1.2- Written Premiums, ceded
1.1.3- Premiums Transferred to Social Security Institutions
1.2- Change in Reserve for Unearned Premiums (Net of Reinsurer Shares and Less the
Amounts Carried Forward)
1.2.1- Reserve for Unearned Premiums, gross
1.2.2- Reserve for Unearned Premiums, ceded
1.2.3 - Reserve for Unearned Premiums, Social Security Institution Share
1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts
Carried Forward)
1.3.1- Reserve for Unexpired Risks, gross
1.3.2- Reserve for Unexpired Risks, ceded
2- Investment Income - Transferred from Non-Technical Section
3- Other Technical Income (Net of Reinsurer Share)
3.1- Other Technical Income, gross
3.2- Other Technical Income, ceded
4- Accrued Salvage and Subrogation Income
B- Non-Life Technical Expense
1- Incurred Losses (Net of Reinsurer Share)
1.1- Claims Paid (Net of Reinsurer Share)
1.1.1- Claims Paid, gross
1.1.2- Claims Paid, ceded
1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the
1.2.1- Change in Provisions for Outstanding Claims, gross
1.2.2- Change in Provisions for Outstanding Claims, ceded
2- Change in Provision for Bonus and Discounts (Net of Reinsurer and Less the Amounts
Carried Forward)
2.1- Provision for Bonus and Discounts, gross
2.2- Provision for Bonus and Discounts, ceded
3- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts
Carried Forward)
4- Operating Expenses
5- Change in Mathematical Provision (Net of Reinsurer Share and Less the Amounts
Carried Forward)
5.1.- Change in Mathematical Provision, gross
5.2 - Change in Mathematical Provision, ceded
6- Change in Other Technical Provision (Net of Reinsurer Share and Less the Amounts
Carried Forward)
6.1- Change in Other Technical Provision, gross
6.2.- Change in Other Technical Provision, ceded
C- Net Technical Income-Non-Life (A - B)
D- Life Technical Income
1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the
2- Investment Income
3- Unrealized Gains on Investments
Audited
Current Period
31 December 2013
675,114
675,114
648,587
789,193
(140,606)
-
Audited
Prior Period
31 December 2012
681,276
681,276
588,772
910,935
(322,163)
-
26,527
47,444
(20,917)
-
92,504
119,006
(26,502)
-
10
(658,719)
(260,633)
(272,814)
(407,892)
135,078
(663,540)
(338,489)
(317,078)
(362,397)
45,319
10
12,181
(14,572)
26,753
(21,411)
9,266
(30,677)
(2,690)
2,690
-
(8,698)
(389,388)
(11,704)
(313,347)
-
-
10
16,395
598,513,416
382,876,620
381,218,379
394,219,745
(13,001,366)
17,736
502,677,829
346,805,251
355,597,310
367,057,439
(11,460,129)
10
1,658,241
1,106,340
551,901
(8,792,059)
(8,923,900)
131,841
206,895,965
8,740,831
8,740,831
-
149,640,101
6,232,477
6,232,477
-
Note
5
24
10
10
5
32
5
24
26
113
114
I-TECHNICAL SECTION
E- Life Technical Expense
1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and
Less the Amounts Carried Forward)
2- Change in Provision for Bonus and Discounts (Net of Reinsurer and Less
the Amounts Carried Forward)
3- Change in Life Mathematical Provisions (Net of Reinsurer Share and Less
3.1- Change in Life Mathematical Provisions, gross
3.1.1- Change in Actuarial Mathematical Provisions, gross
3.1.2- Change in Profit Share Provision (Provision for Financial Investments
with Risks on Saving Life Policyholders), gross
3.2- Change in Life Mathematical Provisions, ceded
3.2.1- Change in Actuarial Mathematical Provisions, ceded
with Risks on Saving Life Policyholders), ceded
4- Change in Other Technical Reserves (Net of Reinsurer Share and Less the
6- Investment Expenses
7- Unrealized Losses on Investments
8- Investment Income Transferred to the Non-Life Technical Section
F- Net Technical Income- Life (D - E)
G- Pension Business Technical Income
1- Fund Management Income
2- Management Fee
3- Entrance Fee Income
4- Management Expense Charge in case of Suspension
5- Income from Individual Service Charges
6- Increase in Value of Capital Allowances Given as Advance
7- Other Technical Income
H- Pension Business Technical Expense
1- Total Fund Expenses
2- Decrease in Value of Capital Allowances Given as Advance
4- Other Technical Expenses
5- Fine Payments
I- Net Technical Income - Pension Business (G - H)
10
Audited
Current Period
31 December 2013
(535,102,109)
(527,633,079)
(506,847,643)
(513,541,690)
6,694,047
Audited
Prior Period
31 December 2012
(469,262,040)
(454,748,419)
(442,038,966)
(445,432,538)
3,393,572
10
(20,785,436)
(23,287,695)
2,502,259
(12,709,453)
(12,355,824)
(353,629)
128,128
49,648
78,480
(256,613)
(528,684)
272,071
83,433,502
84,903,898
40,633,870
59,536,681
59,323,757
46,422,570
44,270,028
(1,470,396)
(1,470,396)
12,901,187
212,924
212,924
-
-
(1,997,221)
(89,033,439)
63,411,307
132,002,445
90,764,418
17,771,761
20,236,910
3,120,756
108,600
(143,137,394)
(16,300,221)
(125,961,568)
(873,988)
(1,617)
(11,134,949)
(1,709,090)
(72,084,599)
33,415,789
139,026,057
88,470,973
33,953,327
16,121,343
367,261
113,153
(119,530,396)
(15,070,322)
(2,400)
(102,992,329)
(1,465,345)
19,495,661
Note
5
10
32
5, 25
25
25
25
25
25
25
5
32
II-NON-TECHNICAL SECTION
C- Net Technical Income - Non-Life (A-B)
F- Net Technical Income - Life (D-E)
I - Net Technical Income - Pension Business (G-H)
J- Total Net Technical Income (C+F+I)
K- Investment Income
1- Income from Financial Assets
2- Income from Disposal of Financial Assets
3- Valuation of Financial Assets
4- Foreign Exchange Gains
5- Income from Associates
6- Income from Subsidiaries and Joint Ventures
7- Income from Property, Plant and Equipment
8- Income from Derivative Transactions
9- Other Investments
10- Income Transferred from Life Section
L- Investment Expense (-)
1- Investment Management Expenses (inc. interest)
2- Diminution in Value of Investments
3- Loss from Disposal of Financial Assets
4- Investment Income Transferred to Non-Life Technical Section
5- Loss from Derivative Transactions
6- Foreign Exchange Losses
7- Depreciation and Amortization Expenses
8- Other Investment Expenses
M- Income and Expenses From Other and Extraordinary Operation(+/-)
1- Provisions
2- Rediscounts
3- Specified Insurance Accounts
4- Monetary Gains and Losses
5- Deferred Taxation (Deferred Tax Income)
6- Deferred Taxation (Deferred Tax Expense)
7- Other Income
8- Other Expenses and Losses
9- Prior Year’s Income
10- Prior Year’s Expenses and Losses
N- Net Profit for the Year
1- Profit for the Year
2- Corporate Tax Provision and Other Fiscal Liabilities
3- Net Profit for the Year
Note
26
36
26
7,26
26
36
6,8
47
21
21
37
35
37
Audited
Current Period
31 December 2013
16,395
63,411,307
(11,134,949)
52,292,753
65,435,963
33,906,018
21,336,148
(832,007)
4,480,459
554,972
3,280,321
2,710,052
(17,054,753)
(1,116,227)
(66)
(11,003,005)
(4,935,455)
(2,197,372)
(800,039)
(148,052)
13
(1,249,294)
83,166,591
98,476,591
(15,310,000)
83,166,591
-
Audited
Prior Period
31 December 2012
17,736
33,415,789
19,495,661
52,929,186
63,514,117
21,023,955
7,511,180
23,349,879
513,717
539,038
3,059,325
421,238
7,095,785
(7,186,728)
(1,228,879)
(1,207,110)
(945,869)
(3,804,870)
(3,581,089)
(2,301,040)
(447,909)
6
(832,146)
79,575,486
105,675,486
(26,100,000)
79,575,486
-
115
Unconsolidated Statement of Changes in Equity
Audited Changes in Equity - 31 December 2012
Note
I - Balance at the end of the year period 31 December 2011
II - Change in Accounting Standards
III - Restated balances (I+II) -1 January 2012
A- Capital increase (A1+A2)
Own Shares of the
Company
Revaluation of
Financial Assets
300,000,000
-
(9,601,394)
-
-
-
-
-
300,000,000
-
(9,601,394)
-
-
-
-
-
Paid-in Capital
Inflation
Adjustments
1- In cash
-
-
-
-
2- From reserves
-
-
-
-
B- Purchase of own shares
-
-
-
-
C- Gains or losses that are not included in the
statement of income
D- Change in the value of financial assets
15
-
-
-
-
-
-
56,373,399
-
E- Currency translation adjustments
-
-
-
-
F- Other gains or losses
-
-
-
-
G- Inflation adjustment differences
-
-
-
-
H- Net profit for the year
-
-
-
-
I - Dividends paid
38
-
-
-
-
J - Transfers from retained earnings
15
-
-
-
-
300,000,000
-
46,772,005
-
Paid-in Capital
Own Shares of the
Company
Revaluation of
Financial Assets
Inflation
Adjustments
300,000,000
-
46,772,005
-
-
-
-
-
300,000,000
-
46,772,005
-
50,000,000
-
-
-
IV - Balance at the end of the year 31 December 2012
Note
1- In cash
2- From reserves
statement of income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
-
-
(33,793,264)
-
-
-
-
-
15
-
-
-
-
50,000,000
-
-
-
-
H- Net profit for the period
-
-
-
-
I - Dividends paid
38
-
-
-
-
15
-
-
-
-
350,000,000
-
12,978,741
-
IV - Balance at the end of the period 31 December 2013
116
Legal Reserves
Statutory Reserves
Other Reserves and
Retained Earnings
Net Profit (or Loss)
for the Period
Retained Earnings
Total
430,162,083
-
59,640,083
9,095,243
1,219,776
64,669,510
5,138,865
-
-
-
-
-
-
-
-
59,640,083
9,095,243
1,219,776
64,669,510
5,138,865
430,162,083
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,373,399
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,575,486
-
79,575,486
-
-
-
-
(41,431,176)
-
(41,431,176)
-
5,876,594
4,627,471
10,985,560
(23,238,334)
1,748,709
-
-
65,516,677
13,722,714
12,205,336
79,575,486
6,887,574
524,679,792
Currency
Translation
Adjustments
Legal Reserves
Statutory Reserves
Other Reserves and
Retained Earnings
Net Profit for the
Period
Retained Earnings
Total
524,679,792
-
65,516,677
13,722,714
12,205,336
79,575,486
6,887,574
-
-
-
-
-
-
-
-
65,516,677
13,722,714
12,205,336
79,575,486
6,887,574
524,679,792
-
-
(19,000,000)
(31,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
(19,000,000)
(31,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
(291,369)
-
-
(291,369)
-
-
-
-
-
-
(33,793,264)
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
2,000,000
-
-
-
-
-
-
-
-
-
-
-
83,166,591
-
83,166,591
-
-
-
-
(41,892,524)
-
(41,892,524)
-
6,768,026
6,119,160
26,795,776
(39,682,962)
-
-
-
72,284,703
841,874
7,709,743
83,166,591
6,887,574
533,869,226
Currency
Translation
Adjustments
117
Unconsolidated Statement of Cash Flows
A. Cash flows from operating activities
1. Cash provided from insurance activities
2. Cash provided from reinsurance activities
3. Cash provided from individual pension business
4. Cash used in insurance activities
5. Cash used in reinsurance activities
6. Cash used in individual pension business
7. Cash provided by operating activities
8. Interest paid
9. Income taxes paid
10. Other cash inflows
11. Other cash outflows
12. Net cash provided by operating activities
B. Cash flows from investing activities
1. Proceeds from disposal of tangible assets
2. Acquisition of tangible assets
3. Acquisition of financial assets
4. Proceeds from disposal of financial assets
5. Interests received
6. Dividends received
9. Net cash used in investing activities
6,8
14
14
Audited
Prior Period
31 December 2012
905,029,055
244,937
171,441,309
(932,211,577)
(147,339,063)
(2,835,339)
(26,100,000)
20,579,783
(13,583,826)
(21,939,382)
438,572,755
154,825,958
(514,400,927)
(49,747)
(116,165,455)
(37,217,416)
(13,415,000)
25,303,735
(28,434,068)
(53,762,749)
352,381
(6,227,963)
(305,408,122)
239,925,820
124,550,559
3,815,541
3,441,720
60,449,936
2,346,709
(8,018,006)
(309,005,855)
335,767,769
90,347,872
3,314,217
66,130,167
(63,093,995)
117,788,878
(41,892,524)
(41,892,524)
(41,431,176)
(41,431,176)
(3,381,970)
142,060,223
138,678,253
22,594,953
119,465,270
142,060,223
C. Cash flows from financing activities
1. Equity shares issued
2. Cash provided from loans and borrowings
3. Finance lease payments
4. Dividends paid
7. Net cash provided by financing activities
D. Effect of exchange rate fluctuations on cash and cash
equivalents
E. Net increase in cash and cash equivalents
F. Cash and cash equivalents at the beginning of the year
G. Cash and cash equivalents at the end of the year
Note
Audited
Current Period
31 December 2013
118
Unconsolidated Statement of Profit Distribution
I. DISTRIBUTION OF THE PERIOD PROFIT
1.1. PERIOD PROFIT (*)
1.2 TAXES AND DUTIES PAYABLE
1.2.1. Corporate Tax (Income Tax)
1.2.2. Income Tax Deductions
1.2.3. Other Taxes and Legal Duties
A. CURRENT PERIOD PROFIT (1.1 - 1.2)
1.3. ACCUMULATED LOSSES (-)
1.4 FIRST LEGAL RESERVES (-)
1.5 OTHER STATUTORY RESERVES (-)
B. NET PROFIT AVAILABLE FOR DISTRIBUTION [(A - (1.3 + 1.4 + 1.5))]
1.6. FIRST DIVIDEND TO SHAREHOLDERS (-)
1.6.1. To owners of ordinary shares
1.6.2. To owners of privileged shares
1.6.3 To owners of redeemed shares
1.6.4 To holders profit sharing bonds
1.6.5 To holders of profit and loss sharing certificates
1.7. DIVIDENDS TO PERSONNEL (-)
1.8. DIVIDENDS TO BOARD OF DIRECTORS (-)
1.9. SECOND DIVIDEND TO SHAREHOLDERS (-)
1.9.3. To owners of redeemed shares
1.9.4. To holders profit sharing bonds
1.9.5. To holders of profit and loss sharing certificates
1.10. LEGAL RESERVES (-)
1.11. STATUTORY RESERVES(-)
1.12. EXTRAORDINARY RESERVES
1.13. OTHER RESERVES
1.14. SPECIAL FUNDS
II. DISTRIBUTION OF RESERVES
2.1. APPROPRIATED RESERVES
2.2. SECOND LEGAL RESERVES (-)
2.3. DIVIDENDS TO SHAREHOLDERS (-)
2.3.4. To holders of profit sharing bonds
III. EARNINGS PER SHARE
3.1. TO OWNERS OF ORDINARY SHARES
3.2. TO OWNERS OF ORDINARY SHARES (%)
3.3. TO OWNERS OF PRIVILEGED SHARES
3.4. TO OWNERS OF PRIVILEGED SHARES (%)
IV. DIVIDEND PER SHARE
Note
Audited
Current Period
31 December 2013 (**)
Audited
Prior Period
31 December 2012
102,015,935
(15,310,000)
(15,310,000)
86,705,935
4,158,330
82,547,605
0.24773
24.773
0.24773
24.773
109,052,075
(26,100,000)
(26,100,000)
82,952,075
4,078,774
78,873,301
(15,789,181)
(15,789,181)
(1,892,524)
(24,210,819)
(24,210,819)
(2,689,252)
(6,119,160)
(28,172,365)
0.23701
23.701
0.23701
23.701
-
-
38
Consolidated current year profit is used for profit distribution as per the “Profit Share Guidebook” issued by the Capital Market Board on 2013/10 dated. Provision for
dividend expense amounting to ¨2,000,000 is added to the profit for the year ended 31 December 2013.
(*)
(**)
As of the reporting date, the General Assembly Meeting has not been held; therefore, only distributable net profit is presented in the profit distribution table above.
119
Notes to the Unconsolidated Financial Statements
As at 31 December 2013
1 General information
1.1 Name of the Company and the ultimate owner of the group
Anadolu Hayat Emeklilik Anonim Şirketi (“the Company”) has been operating since 31 May 1990 and the shareholding structure
of the Company is presented below. As at 31 December 2013, the shareholder having direct or indirect control over the shares of
the Company is Türkiye İş Bankası AŞ (“İş Bankası”) by 83.0% of the outstanding shares of the Company.
Name
31 December 2013
Shareholding
Shareholding
amount (¨)
rate (%)
31 December 2012
Shareholding
Shareholding
amount (¨)
rate (%)
Türkiye İş Bankası AŞ
Anadolu Anonim Türk Sigorta Şirketi
Milli Reasürans TAŞ
Publicly traded
Paid in capital
217,000,000
70,000,000
3,500,000
59,500,000
350,000,000
186,000,000
60,000,000
3,000,000
51,000,000
300,000,000
62.0
20.0
1.0
17.0
100.0
62.0
20.0
1.0
17.0
100.0
1.2 Domicile and the legal structure of the Company, country and the address of the registered office (address of the
operating center if it is different from the registered office)
The Company was registered in Turkey and has the status of ‘Incorporated Company’ in accordance with the regulations of
Turkish Commercial Code (“TTK”). The address of the Company’s registered office is Meltem Sokak No: 10 İş Kuleleri Kule: 2 Kat:
16, Levent 34330 Beşiktaş/İstanbul.
1.3 Business of the Company
The activities of the Company involve providing individual and group insurance and reinsurance services relating to group life,
individual life, retirement and related personal accident branches, establishing retirement funds, developing internal rules
and regulations related to these funds, carrying out retirement, annual income insurance, portfolio management and custody
contracts for the assets of the funds held in custody.
As at 31 December 2013, the Company has 24 individual pension investment funds (31 December 2012: 21)
1.4 Description of the main operations of the Company
The Company issues policies in insurance branches specified in the above note 1.3 - Business of the Company and contracts in
individual pension business by conducting it operations in accordance with the Insurance Law No.5684 (the “Insurance Law”)
issued on 14 June 2007 dated and 26552 numbered Official Gazette and Individual Pension Savings and Investment System
Law No.4632 (the “Individual Pension Law”) and other communiqués and regulations in force issued by the Prime Ministry
Undersecretariat of the Treasury of the Turkish Republic (the “Turkish Treasury”) based on the Insurance Law and the Individual
Pension Law.
120
The Company’s shares have been listed on the Borsa Istanbul (“BIST”). In accordance with Article 136(1) in Section VIII of
the Capital Markets Law, insurance companies have to comply with their own specific laws and regulations in matters of
establishment, auditing, supervision/oversight, accounting and financial reporting; therefore, the Company performs its
operations accordingly.
1.5 The average number of the personnel during the period in consideration of their categories
The average number of the personnel during the period in consideration of their categories is as follows:
31 December 2013 31 December 2012
Senior level managers
Directors
Officers
Contracted personnel
Marketing and sales personnel
Other
Total
7
94
331
5
352
12
801
7
86
298
6
315
13
725
1.6 Wages and similar benefits provided to the senior management
For the year ended 31 December 2013, wages and similar benefits provided to the senior management including chairman,
members of the board of the directors, general manager, and deputy general managers amounted to ¨3,958,378 (31 December
2012: ¨3,616,722).
1.7 Explanation about the distribution of investment income and operating expenses (personnel expenses, administrative
expenses, research and development expenses, marketing and selling expenses, and expenses for the services bought from
third parties) in the financial statements
Procedures and principles related to keys used in the financial statements of the companies are determined in accordance with
the 4 January 2008 dated and 2008/1 numbered “Communiqué Related to the Procedures and Principles for the Keys Used
in the Financial Statements Being Prepared In Accordance With Insurance Accounting Plan” issued by the Turkish Treasury.
In accordance with the above mentioned Communiqué, known and exactly distinguishable operating expenses are directly
recorded under life, non-life or individual pension segments. Other non-distinguishable expenses, which are not exactly
distinguished, are distributed between insurance segments and individual pension segment in accordance with the number of
policies and contracts at the end of last 3 years and arithmetic average of contribution premium and earned premium within
the last 3 years in accordance with the 9 August 2010 dated and 2010/9 numbered “Amendments Communiqué Related to
the Procedures and Principles for the Keys Used in the Financial Statements Being Prepared In Accordance With Insurance
Accounting Plan” issued by the Turkish Treasury. Amendment is effective from 1 January 2011. The portion of insurance
segments calculated as described above is distributed between life and non-life branches in accordance with the average of 3
ratios calculated by dividing “number of the policies produced within the last three years”, “gross premiums written within the
last three years”, and “number of the claims reported within the last three years” to the “total number of the policies”, “total gross
written premiums”, and the “total number of the claims reported”, respectively.
Income from the assets invested against non-life technical provisions is transferred to technical section from non-technical
section.
Income from the assets invested against mathematical and profit sharing provisions is recorded under technical section,
remaining income is transferred to the non-technical section.
As at the reporting period, distribution of the operating expense between life, non-life and pension branches is presented in
note 5 - Segment distribution.
1.8 Information on the financial statements as to whether they comprise an individual company or a group of companies
The accompanying financial statements comprise only the unconsolidated financial information of the Company. As further
detailed in note 2.2 - Consolidation, the Company has prepared consolidated financial statements as at 31 December 2013,
separately.
Trade name of the Company
Registered address of the head office
The web page of the Company
E-mail address of the Company
Phone
Fax
: Anadolu Hayat Emeklilik AŞ
: İş Kuleleri, Kule 2 Kat 20 34330, Levent/İstanbul
: www.anadoluhayat.com.tr
: [email protected]
: 0212 317 70 70
: 0212 317 70 77
There has been no change in the aforementioned information subsequent to the previous reporting period.
1.10 Events after the reporting period
None.
1.9 Name or other identity information about the reporting entity and the changes in this information after previous
reporting period
121
2 Summary of significant accounting policies
2.1 Basis of preparation
2.1.1 Information about the principles and the specific accounting policies used in the preparation of the financial statements
In accordance with Article 136 (1) in Section VII of the Capital Markets Law, insurance companies have to comply with their own
specific laws and regulations in matters of establishment, auditing, supervision/oversight, accounting and financial reporting.
Therefore, the Company maintains its books of account and prepares its financial statements in accordance with the Turkish
Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”), and other accounting and financial reporting
principles, statements and guidance (collectively “the Reporting Standards”) in accordance with the “Communiqué Related to the
Financial Reporting of Insurance, Reinsurance, and Individual Pension Companies” as promulgated by the Turkish Treasury based
on Article 18 of the Insurance Law and Article 11 of the Individual Pension Law.
Although the 4th standard of the Turkish Accounting Standards Board (“TASB”) for the ‘Insurance contracts’ became effective
on 25 March 2006 for the accounting periods that begin on or after 31 December 2005, it is stated that TFRS 4 will not be
implemented at this stage since the second phase of the International Accounting Standards Board project about the insurance
contracts has not been completed yet. In this context, “Communiqué on Technical Reserves for Insurance, Reinsurance
and Individual Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves”
(“Communiqué on Technical Reserves”) is published in the Official Gazette dated 7 August 2007, numbered 26606 and became
effective on 1 January 2008. Subsequent to the publication of the Communiqué on Technical Reserves, some other circulars
and sector announcements which contain explanations and regulations related to application of the Communiqué on Technical
Reserves are published. Accounting policies applied for the insurance contracts based on these communiqué, circulars and other
sector announcements are summarized on their own captions in the following sections.
Accounting for subsidiaries, associates and joint ventures is regulated with 28 December 2007 dated and 2007/26 numbered
“Circular Related to the Accounting of Subsidiaries, Associates and Joint Ventures”, issued by the Turkish Treasury. It is stated
that, the companies will continue to apply the principles of the related standards of TFRSs for the accounting of subsidiaries,
associates and joint venture until the publication of another regulation on this issue by the Turkish Treasury. “Circular Related to
the Preparation of the Consolidated Financial Statements of Insurance, Reinsurance, and Individual Pension Companies” issued
by the Turkish Treasury in the 31 December 2008 dated and 27097 numbered (4th repeat) Official Gazette, constituted the basis
of consolidation to be effective on the dates that circular specifies.
Additional paragraph for convenience translation to English
The differences between accounting principles, as described in the preceding paragraphs, and the accounting principles
generally accepted in countries, in which the accompanying unconsolidated financial statements are to be distributed, and
International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying unconsolidated
financial statements. Accordingly, the accompanying unconsolidated financial statements are not intended to present the
financial position and results of operations in accordance with the accounting principles generally accepted in such countries
other than Turkey.
2.1.2 Other accounting policies appropriate for the understanding of the financial statements
Accounting in hyperinflationary countries
122
Financial statements of the Turkish entities have been restated for the changes in the general purchasing power of the Turkish
Lira based on TAS 29 - Financial Reporting in Hyperinflationary Economies as at 31 December 2004. TAS 29 requires that financial
statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the
reporting period, and that corresponding figures for previous years be restated in the same terms.
With respect to the 4 April 2005 dated and 19387 numbered declaration of the Turkish Treasury, the Company restated its
financial statements as at 31 December 2004 and prepared opening financial statements of 2005 in accordance with the
“Restatement of Financial Statements in Hyperinflationary Periods” of the Capital Markets Board (“CMB”) Communiqué No:
25 of Series XI, “Communiqué on Accounting Standards in Capital Market” published in the Official Gazette dated 15 January
2003 and numbered 25290. Inflation accounting is no longer applied starting from 1 January 2005, in accordance with the
same declaration of the Turkish Treasury. Accordingly, as at 31 December 2013, non-monetary assets and liabilities and items
included in shareholders’ equity including paid-in capital recognized or recorded before 1 January 2005 are measured as restated
to 31 December 2004 in order to reflect inflation adjustments. Non-monetary assets and liabilities and items included in
shareholders’ equity including paid-in capital recognized or recorded after 1 January 2005 are measured at their nominal costs or
values.
Other accounting policies
Information regarding to other accounting polices is explained above in the section of note 2.1.1 - Information about the
principles and the special accounting policies used in the preparation of the financial statements and each on its own caption in
following sections of this report.
2.1.3 Functional and presentation currency
The Company’s financial statements are presented in the currency of the primary economic environment in which the entity
operates (its functional currency). The results and financial position of the Company are expressed in ¨, which is the functional
and presentation currency of the Company.
2.1.4 Rounding level of the amounts presented in the financial statements
Financial information presented in ¨, has been rounded to the nearest ¨ values.
2.1.5 Basis of measurement used in the preparation of the financial statements
The accompanying financial statements are prepared on the historical cost basis as adjusted for the effects of inflation that lasted
until 31 December 2004, except for the financial assets at fair value through profit or loss, available-for-sale financial assets and
financial investments with risks on saving life policyholders classified as available-for-sale financial assets and derivative financial
instruments which are measured at their fair values unless reliable measures are available.
2.1.6 Accounting policies, changes in accounting estimates and errors
There have been no changes in the accounting policies or errors in the current period.
Critical accounting judgments made in applying the Company’s accounting policies are explained in note 3 - Critical accounting
estimates and judgments in applying accounting policies.
2.2 Consolidation
“Circular Related to the Preparation of the Consolidated Financial Statements of Insurance, Reinsurance, and Individual Pension
Companies” issued by the Turkish Treasury in the 31 December 2008 dated and 27097 numbered Official Gazette, has been in
force since 31 March 2009. Accordingly, consolidated financial statements are prepared using the equity method of accounting to
consolidate the Company’s associate; İş Portföy Yönetimi AŞ.
In the 12 August 2008 dated and 2008/36 numbered “Sector Announcement Related to the Accounting of Subsidiaries,
Associates and Joint Ventures in the Stand Alone Financial Statements of Insurance, Reinsurance and Individual Pension
Companies” of the Turkish Treasury, it is stated that although insurance, reinsurance and individual pension companies are
exempted from TAS 27 - Consolidated and Separate Financial Statements, subsidiaries, associates and joint-ventures could
be accounted in accordance with TAS 39 - Financial Instruments: Recognition and Measurement or at cost in accordance with
the 37th paragraph of TAS 27 - Consolidated and Separate Financial Statements. Parallel to the related sector announcements
mentioned above, as at the reporting period the Company has accounted for its associate at cost less impairment losses, if any.
An operating segment is a component of the Company that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components,
whose operating results are reviewed regularly by the Board of Directors (being chief operating decision maker) to make
decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is
available.
2.4 Foreign currency transactions
Transactions are recorded in ¨, which is the Company’s functional currency. Transactions in foreign currencies are recorded at the
rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at
exchange rates ruling at the reporting period and foreign currency exchange differences are offset and all exchange differences
are recognized in the statement of income.
2.3 Segment reporting
123
Foreign currency exchange differences of unrecognized gains or losses arising from the difference between their fair value and
the discounted values calculated per effective interest rate method of foreign currency available-for-sale financial assets are
recorded in “Revaluation of financial assets” under equity and the realized gain or losses are recognized directly in the statement
of income. Foreign currency exchange differences of unrecognized gains or losses arising from financial investments with risks
on saving life policyholders classified as available-for-sale financial assets, 5% of the difference is recorded under equity and the
remaining 95% belonging to policyholders is recorded as ‘insurance technical provisions - life mathematical provisions’.
2.5 Tangible assets
Tangible assets are recorded at their historical costs that have been adjusted according to the inflation rates until the end of
31 December 2004. There have been no other inflationary adjustments for these tangible assets for the following years and
therefore they have been recorded at their costs indexed to the inflation rates for 31 December 2004. Tangible assets that have
been purchased after 1 January 2005 have been recorded at their costs excluding their exchange rate differences and finance
expenses less impairment losses if any.
Gains/losses arising from the disposal of the tangible assets are calculated as the difference between the net carrying value and
the proceeds from the disposal of related tangible assets and reflected to the statement of income of the related period.
Maintenance and repair costs incurred in the ordinary course of the business are recorded as expense.
There are no pledges, mortgages and other encumbrances on tangible fixed assets.
There are no changes in accounting estimates that have significant effect on the current period or that are expected to have
significant effect on the following periods.
Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of
tangible assets since this most closely reflects the expected pattern of consumption of the future economic benefits embodied
in the asset.
Depreciation rates and estimated useful lives are as follows:
Tangible assets
Buildings
Machinery and equipment
Fixtures and furniture
Vehicles
Other tangible assets (includes leasehold improvements)
Leased assets
Estimated useful
lives (years)
50 years
3-16 years
4-13 years
5 years
5 years
4-15 years
Depreciation
rates (%)
2.00
6.25-33.33
7.69-25.00
20.00
20.00
6.66-25.00
2.6 Investment properties
Investment properties are held either to earn rentals and/or for capital appreciation or for both.
Investment properties are measured initially at cost including transaction costs.
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Subsequent to initial recognition, the Company measured all investment property based on the cost model in accordance with
the cost model for property and equipment (i.e. at cost less accumulated depreciation and less impairment losses if any).
Depreciation is provided on investment properties on a straight line basis. Depreciation period for investment properties is 50
years for buildings and land is not depreciated.
Investment properties are derecognized when either they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognized in profit or loss in the period of retirement or disposal.
2.7 Intangible assets
The Company’s intangible assets consist of computer software.
Intangible assets are recorded at cost in compliance with the “TAS 38 - Accounting for intangible assets”. The cost of the
intangible assets purchased before 31 December 2004 are restated from the purchasing dates to 31 December 2004, the date
the hyperinflationary period is considered to be ended. The intangible assets purchased after this date are recorded at their
historical costs. Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use
the specific software.
Amortization is charged on a straight-line basis over their estimated useful lives (3 years) over the cost of the asset.
Costs associated with developing or maintaining computer software programs are recognized as expense when incurred.
Costs that are directly associated with the development of identifiable and unique software products that are controlled by
the Company and will probably provide more economic benefits than costs in one year are recognized as intangible assets.
Costs include software development employee costs and an appropriate portion of relevant overheads. Computer software
development costs recognized as assets are amortized over their estimated useful lives (not exceeding three years).
2.8 Financial assets
A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another
financial asset from another entity; or to exchange financial assets or financial liabilities with another entity under conditions
that are potentially favorable to the entity.
Securities are recognized and derecognized at the date of settlement.
Financial assets are classified in four categories; as financial assets held for trading, available-for-sale financial assets, held to
maturity financial assets, and loans and receivables.
Financial assets at fair value through profit or loss are presented as financial assets held for trading in the accompanying
financial statements and trading securities and derivatives are included in this category. Financial assets at fair value through
profit or loss measured at their fair values and gain/loss arising due to changes in the fair values of related financial assets are
recorded in the statement of income. Interest income earned on trading purpose financial assets and the difference between
their fair values and acquisition costs are recorded as interest income in the statement of income. In case of disposal of such
financial assets before their maturities, the gains/losses on such disposal are recorded under trading income/losses. Accounting
policies of derivatives are detailed in note 2.10 - Derivative financial instruments.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading
the receivable. Loans and receivables those are not interest earning are measured by discounting of future cash flows less
impairment losses, and interest earning loans and receivables are measured at amortized cost less impairment losses.
Available-for-sale financial assets are the financial assets other than assets held for trading purposes, held-to-maturity financial
assets and loans and receivables.
Available-for-sale financial assets are initially recorded at cost and subsequently measured at their fair values. Assets that are
not traded in an active market are measured by valuation techniques, including recent market transactions in similar financial
instruments, adjusted for factors unique to the instrument being valued; or discounted cash flow techniques for the assets
which do not have a fixed maturity. Unrecognized gains or losses derived from the difference between their fair value and
the discounted values calculated per effective interest rate method are recorded in “Revaluation of financial assets” under
shareholders’ equity. Upon disposal, the realized gain or losses are recognized directly in the statement of income.
The determination of fair values of financial instruments not traded in an active market is determined by using valuation
techniques. Observable market prices of the quoted financial instruments which are similar in terms of interest, maturity and
other conditions are used in determining the fair value.
Held to maturity financial assets are the financial assets with fixed maturities and fixed or pre-determined payment schedules
that the Company has the intent and ability to hold until maturity, excluding loans and receivables. Subsequent to initial
recognition, held to maturity financial assets and loans and receivables are measured at amortized cost using effective interest
rate method less impairment losses, if any.
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Associates are classified as financial assets in the financial statements. Associates, traded in an active market or whose fair value
can be reliably measured, are recorded at their fair values. Associates that are not traded in an active market and whose fair value
cannot be reliably set are reflected in financial statements at their costs after deducting impairment losses, if any.
Specific instruments
Financial investments with risks on saving life policyholders are the financial assets invested against the savings of the life
policyholders. Financial investments with risks on saving life policyholders could be classified as financial assets held for trading
purpose, available for sale financial assets or held to maturity investments by considering the benefits of the policyholders and
measured in accordance with the principles as explained above.
When such investments are classified as available-for-sale financial assets, 5% of the difference between the fair values
and amortized costs, calculated by using effective interest method, of the financial assets is recorded under equity and the
remaining 95% belonging to policyholders is recorded as ‘insurance technical provisions - life mathematical provisions’. As at
31 December 2013, 95% of the difference between fair values and amortized costs of those assets backing liabilities amounting
to ¨(5,711,673) (31 December 2012: ¨245,052,988) is recorded in life mathematical provisions.
Receivables from individual pension operations consist of ‘capital advances given to pension investment funds’, ‘receivable from
pension investment funds for fund management fees’, ‘entrance fee receivable from participants’ and ‘receivables from clearing
house on behalf of the participants’.
‘Receivable from pension investment funds for fund management fee’ are the fees charged to the pension investment funds
against for the administration of related pension investment funds which consist of fees which are not collected in the same day.
Capital advances given to pension investments funds during their establishment are recorded under ‘capital advances given to
pension investment funds’.
‘Receivables from the clearing house on behalf of the participants’ is the receivable from clearing house on fund basis against
the collections of the participants. Same amount is also recorded as payables to participants for the funds sold against their
collections under the ‘payables arising from individual pension businesses.
Loans to the policyholders are loans that are provided to the policyholders from saving component of the life insurance policies
based on the fund amounts and fund unit prices. Valuation of the loans to the policyholders based on the fund amounts and
fund unit prices as at the reporting date.
Derecognition
A financial asset is derecognized when the control over the contractual rights that comprise that asset is lost. This occurs when
the rights are realized, expire or are surrendered.
2.9 Impairment on assets
Impairment on financial assets
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Financial assets or group of financial assets are reviewed at each reporting period to determine whether there is objective
evidence of impairment. If any such indication exists, the Company estimates the amount of impairment. Impairment loss incurs
if, and only if, there is objective evidence that the expected future cash flows of financial asset or group of financial assets are
adversely affected by an event(s) (“loss event(s)”) incurred subsequent to recognition. The losses expected to incur due to future
events are not recognized even if the probability of loss is high.
Loans and receivables are presented net of specific allowances for uncollectibility. Specific allowances are made against the
carrying amounts of loans and receivables that are identified as being impaired based on regular reviews of outstanding balances
to reduce these loans and receivable to their recoverable amounts.
The recoverable amount of an equity instrument is its fair value. The recoverable amount of debt instruments and purchased
loans measured to fair value is calculated as the present value of the expected future cash flows discounted at the current
market rate of interest.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was
recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities,
the reversal is recognized in the statement of operations. For available-for-sale financial assets that are equity securities, the
reversal is recognized directly in equity.
Impairment on tangible and intangible assets
On each reporting period, the Company evaluates whether there is an indication of impairment of fixed assets. If there is an
objective evidence of impairment, the asset’s recoverable amount is estimated in accordance with the “TAS 36 - Impairment of
Assets” and if the recoverable amount is less than the carrying value of the related asset, a provision for impairment loss is made.
Rediscount and provision expenses of the period are detailed in Note 47.
2.10 Derivative financial instruments
As at the reporting period, derivative financial instruments of the Company consist of TurkDEX-ISE 30 Index future contracts.
These derivative instruments are treated as held for trading financial assets in compliance with the standard TAS 39 - Financial
Instruments.
Derivative financial instruments are initially recognized at their fair value.
The receivables and liabilities arising from the derivative transactions are recognized under the off-balance sheet accounts
through the contract amounts.
Derivative financial instruments are subsequently re-measured at fair value and positive fair value differences are presented
either as “financial assets held for trading” and negative fair value differences are presented as “other financial liabilities” in
the accompanying financial statements. All unrealized gains and losses on these instruments are included in the statement of
income.
2.11 Offsetting of financial assets
Financial assets and liabilities are off-set and the net amount is presented in the balance sheet when, and only when, the
Company has a legal right to set off the amounts and intends either to settle on a net basis or to realize the asset and settle the
liability simultaneously.
Income and expenses are presented on a net basis only when permitted by the Reporting Standards, or for gains and losses
arising from a group of transactions resulting from the Company’s similar activities like trading transactions.
2.12 Cash and cash equivalents
Cash and cash equivalents, which is a base for the preparation of the statement of cash flows includes cash on hand, other cash
and cash equivalents, demand deposits and time deposits at banks having original maturity less than 3 months which are ready
to be used by the Company or not blocked for any other purpose.
2.13 Capital
Sources of the capital increases during the period
The Company’s issued capital increased from ¨300,000,000 to ¨350,000,000 by ¨50,000,000 through the transfer to
extraordinary reserves by ¨31,000,000, statutory reserves by ¨19,000,000.
The shareholding structure of the Company is presented in note 1.1 - Name of the Company and the ultimate owner of the group.
As of 31 December 2013, the Company’s issued capital is ¨350,000,000 (31 December 2012: ¨300,000,000).
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Privileges on common shares representing share capital
As at 31 December 2013, the share capital of the Company was amounted ¨350,000,000 (31 December 2012: ¨300,000,000),
divided into 35,000,000,000 shares (31 December 2012: 30,000,000,000 shares) with each has a nominal value of ¨0.01. The
Company’s share capital was divided into groups comprised of 100,000,000. Among eleven members of the Board of Directors,
seven are elected among candidates nominated by Group A shareholders while four are elected among candidates nominated by
Group B shareholders.
Registered capital system in the Company
The Company has accepted the registered capital system set out in accordance with the Law No: 2499 and applied the system as
of 15 June 2000 upon the permission no: 67/1039 granted by the Capital Markets Board. As at 31 December 2013 the registered
capital of the Company is ¨450,000,000 (31 December 2012: ¨450,000,000).
Repurchased own shares by the Company
None.
2.14 Insurance and investment contracts - classification
An insurance contract is a contract under which the Company accepts significant insurance risk from another party (the
policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely
affects the policyholder. Insurance risk covers all risk except for financial risks. All premiums have been received within the
coverage of insurance contracts recognized as revenue under the account caption “written premiums”.
Investment contracts are those contracts which transfer financial risk with no significant insurance risk. Financial risk is the risk
of a possible future change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index
of prices or rates, credit rating or credit index or other variable, provided, that it is not specific to a party to the contract, in the
case of a non-financial variable.
The Company mainly issues policies under personal accident, risk and saving life insurance branches and individual pension
contracts.
Saving component of the life products can be measured separately by the Company. However, insurance and saving components
are not separated due to accounting policy requirements specified to account all risks and rewards without considering the basis
of measurement.
2.15 Insurance contracts and investment contracts with discretionary participation feature
Discretionary participation feature (“DPF”) within insurance contracts and investment contracts is the right to have following
benefits in addition to the guaranteed benefits.
(i) that are likely to comprise a significant portion of the total contractual benefits,
(ii) whose amount or timing is contractually at the discretion of the Issuer; and
(iii) that are contractually based on:
(1) the performance of a specified pool of contracts or a specified type of contract;
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(2) realized and/or unrealized investments returns on a specified pool of assets held by the Issuer; or
(3) the profit or loss of the Company, Fund or other entity that issues the contract.
As at the reporting period, the Company does not have any insurance or investment contracts that contain a DPF.
2.16 Investment contracts without DPF
In the context of the saving life products, if the investment return, obtained from the savings of the policyholders which is
invested by the Company results a lower yield rate than the technical interest rate, the Company compensates the difference;
if investment return results higher yield than the guaranteed technical interest rate, the difference is distributed to the
policyholders as profit sharing bonus. Due to contractual and competitive constraints in practice, the Company has classified
these contracts as investment contracts without DPF.
For such products, investment income obtained from assets backing liabilities is recorded within income statement or equity in
accordance with the accounting policies mentioned above; and whole contract is presented as a liability under life mathematical
provisions.
2.17 Liabilities
Financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another entity.
Financial liabilities of the Company are measured at their discounted values. A financial liability is derecognized when it is
extinguished.
Payables from individual pension business consist of payables to participants, participants’ temporary accounts, and payables
to individual pension agencies. The payables to participants are the account in which the contribution of participants that
transferred to investments on behalf of individual pension contract owners and income from these investments are recorded.
The temporary account of participants includes the contributions of participants that have not yet been transferred to the
investment. This account also includes the entrance fee deducted portion of the participants’ fund amounts, obtained from the
fund share sales occur in the case of system leaves. This account consists of the amounts of participants that will be transferred
to other individual pension companies or participants’ own accounts. Payables to individual pension agencies are Company’s
liabilities to individual pension agencies in return of their services.
2.18 Income taxes
Corporate tax
Statutory income is subject to corporate tax at 20%. This rate is applied to accounting income modified for certain exemptions
(like dividend income) and deductions (like investment incentives), and additions for certain non-tax deductible expenses and
allowances for tax purposes. If there is no dividend distribution planned, no further tax charges are made.
Dividends paid to the resident institutions and the institutions working through local offices or representatives are not subject
to withholding tax. The withholding tax rate on the dividend payments other than the ones paid to the non-resident institutions
generating income in Turkey through their operations or permanent representatives and the resident institutions is 15%. In
applying the withholding tax rates on dividend payments to the non-resident institutions and the individuals, the withholding
tax rates covered in the related Double Tax Treaty Agreements are taken into account. Appropriation of the retained earnings to
capital is not considered as profit distribution and therefore is not subject to withholding tax.
In accordance with the tax legislation, tax losses can be carried forward to offset against future taxable income for up to five
years. Tax losses cannot be carried back to offset profits from previous periods. As at 31 December 2013 and 2012, the Company
does not have any deductible tax losses.
In Turkey, there is no procedure for a final and definite agreement on tax assessments. Companies file their tax returns with their
tax offices by the end of 25th of the fourth month following the close of the accounting period to which they relate. Tax returns
are open for five years from the beginning of the year that follows the date of filing during which time the tax authorities have
the right to audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based
on their findings.
According to the “General Communique on Corporate Tax” promulgated in Official Gazette no 28178 dated 19 January 2012,
fair value of derivative transactions and option premiums are accepted as income or expense in the corporate tax statement if
those transactions are performed at Derivative Exchange Market and not if those transactions are performed with entities as
previously.
The prepaid taxes are calculated and paid at the rates valid for the earnings of the related years. The payments can be deducted
from the annual corporate tax calculated for the whole year earnings.
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Deferred tax
In accordance with TAS 12 - Income taxes, deferred tax assets and liabilities are recognized on all taxable temporary differences
arising between the carrying values of assets and liabilities in the financial statements and their corresponding balances
considered in the calculation of the tax base, except for the differences not deductible for tax purposes and initial recognition of
assets and liabilities which affect neither accounting nor taxable profit.
The deferred tax assets and liabilities are reported as net in the financial statements if, and only if, the Company has a legally
enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity.
In case where gains/losses resulting from the subsequent measurement of the assets are recognized in the statement of
income, then the related current and/or deferred tax effects are also recognized in the statement of income. On the other
hand, if such gains/losses are recognized as an item under equity, then the related current and/or deferred tax effects are also
recognized directly in the equity.
Transfer pricing
In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of
“disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing,
dated 18 November 2007 sets details about implementation.
If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices
are not set in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner
through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for
corporate income tax purposes.
2.19 Employee benefits
Employee termination benefits
In accordance with existing Turkish Labor Law, the Company is required to make lump-sum termination indemnities to each
employee who has completed one year of service with the Company and whose employment is terminated due to retirement
or for reasons other than resignation or misconduct. The computation of the liability is based upon the retirement pay ceiling
announced by the Government. The applicable ceiling amount as at 31 December 2013 is ¨3,254.44 (31 December 2012:
¨3,033.98).
The Company accounted for employee severance indemnities using actuarial method in compliance with the TAS 19 - Employee
Benefits. After the revision of TAS 19, as the amount of actuarial gain and loss are presented under the other profit reserves,
which were previously shown under the income statement. The major actuarial assumptions used in the calculation of the total
liability as at 31 December 2013 and 2012 are as follows:
Discount rate
Expected rate of salary/limit increase
31 December 2013
3.77%
6.00%
31 December 2012
1.00% - 4.57%
6.00%
Other benefits
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The Company has provided for undiscounted short-term employee benefits earned during the period as per services rendered in
compliance with TAS 19 in the accompanying financial statements.
2.20 Provisions
A provision is made for an existing obligation resulting from past events if it is probable that the commitment will be settled
and a reliable estimate can be made of the amount of the obligation. Provisions are calculated based on the best estimates of
management on the expenses to incur as of the reporting period and, if material, such expenses are discounted to their present
values. If the amount is not reliably estimated and there is no probability of cash outflow from the Company to settle the liability,
the related liability is considered as “contingent” and disclosed in the footnotes to the financial statements.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are
not recognized in financial statements since this may result in the recognition of income that may never be realized. Contingent
assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has
become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the
financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, the
Company discloses the contingent asset.
2.21 Revenue recognition
Written premiums and claims paid
Written premiums represent premiums on policies written during the period net of taxes, premiums of the cancelled policies
which were produced in prior periods and premium ceded to reinsurance companies. Premiums ceded to reinsurance companies
are accounted as “written premiums, ceded” in the profit or loss statement.
Claims are recognized as expense as they are paid. Outstanding claims provision is provided for both reported unpaid claims at
the reporting period and incurred but not reported claims. Reinsurer’s shares of claims paid and outstanding claims provisions are
off-set against these reserves.
Commission income and expense
As further disclosed in Note 2.24, commissions paid to the agencies related to the production of the insurance policies and the
commissions received from the reinsurance firms related to the premiums ceded are recognized over the life of the contract
by deferring commission income and expenses within the calculation of reserve for unearned premiums for the policies
produced before 1 January 2008 and recognizing deferred commission income and deferred commission expense in the financial
statements for the policies produced after 1 January 2008.
In order to net-off the receivable accounts in compliance with the matching principle, the Company reserves a provision of
commissions to intermediaries over the accrued but uncollected receivables from policyholders balance as at the reporting
period. While the commissions to intermediaries for non-life branches are not accrued, the commission amount that has to be
paid in case of the collection of receivables is calculated on the basis of policy for life branch.
Reinsurance commissions are accounted for based on reinsurer agreements. According to the Circular no: 2007/25 issued by
the Turkish Treasury on 28 December 2007, starting from 10 January 2008, deferred reinsurance commissions are presented in
“Deferred Income” account in the balance sheet.
Interest income and expense
Interest income and expense are recognized in the statement of income using the effective interest method. The effective
interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the
financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. The
effective interest rate is established on initial recognition of the financial asset and liability and is not revised subsequently.
Trading income/expense
Trading income/expense includes gains and losses arising from disposals of financial assets held for trading purpose and
available-for-sale financial assets. Trading income and trading expenses are recognized as “Income from disposal of financial
assets” and “Loss from disposal of financial assets” in the accompanying unconsolidated financial statements.
Dividends
Dividend income is recognized when the Company’s right to receive payment is ascertained.
The calculation of the effective interest rate includes all fees and points paid or received transaction costs, and discounts
or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly
attributable to the acquisition, issue or disposal of a financial asset or liability.
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Income from individual pension operations
Fund management fee is recognized as income, charged to the pension investment funds against the hardware, software,
personnel and accounting services provided, and fee is shared between the Company and the portfolio managers in accordance
with the agreement signed between parties. Total of fund management fee charged to the pension investment funds is
recognized as “Fund management income” under technical income and portion of the portfolio manager is recognized as “Fund
management expense” under technical expenses.
Management fee is levied on contributions of the participants up to 2% and recognized as “Management fee” under technical
income. If no payment is made in three months after the payment date of overdue contribution, case of suspension occurs and
management expense is charged. The aforementioned expenses are recognized as “Management expense charge in case of
suspension”.
Entrance fees are received by the Company from participants during the entrance into the system and for the opening of a new
individual pension account. Entrance fees charged to the participants could not be higher than minimum wage that is valid on
the date of the contract. In the outstanding individual pension contracts of the Company, significant portion of the entrance
fees is deferred to the end of the contract. The deferred and contingent entrance fees are not recorded into income statement.
Entrance fee, which is collected in advance and equal to 10% of minimum wage that is valid on the date of the contract, is
recognized as “Entrance fee income” under technical income.
The difference in value of the pension investment fund shares, obtained due to capital advance on the date of establishment,
to the date of selling of those shares to the participants is recorded in the income statement as “increase in value of capital
allowances given as advances”.
2.22 Leasing transactions
Tangible assets acquired by way of finance leasing are recognized in tangible assets and the obligations under finance leases
arising from the lease contracts are presented under finance lease payables account in the financial statements. In the
determination of the related assets and liabilities, the lower of the fair value of the leased asset and the present value of leasing
payments is considered. Financial costs of leasing agreements are expanded in lease periods at a fixed interest rate.
If there is impairment in the value of the assets obtained through financial lease and in the expected future benefits, the leased
assets are valued with net realizable value. Depreciation for assets obtained through financial lease is calculated in the same
manner as tangible assets.
Payments made under operating leases are recognized in the statement of income on a straight-line basis over the term of the
lease.
2.23 Dividend distribution
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In accordance with the Articles of Association of the Company, first dividend distribution is made from distributable profit based
on the rates and amounts set out by the Capital Markets Board. In regards to the profit share distribution policy of the Company,
two options are presented to the General Assembly; 30% of distributable profit at a minimum as bonus shares or in cash. Based
on its articles of association, the Company makes at a maximum of 3% of profit share payments to its employees following the
appropriation of first profit share, limited to a maximum of three-month salary. For the year ended period 31 December 2013,
dividends to the personnel have been accounted for in the statement of income through accounting in the current year’s profits/
losses in accordance with TAS 19 - Employee Benefits.
Dividend payables are recorded as liability in the financial statements when they are announced.
2.24 Reserve for unearned premiums
In accordance with the “Communiqué on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related
Assets That Should Be Invested Against Those Technical Reserves” (“Communiqué on Technical Reserves”) which was issued
in 26606 numbered and 7 August 2007 dated Official Gazette and put into effect starting from 1 January 2008, the reserve for
unearned premiums represents the proportions of the gross premiums written without deductions of commission or any other
allowance, in a period that relate to the period of risk subsequent to the reporting period for all short- term insurance policies.
In the case of personal accident insurance, annual life insurance and life insurance which of the renewal date exceeds one year,
reserve for unearned premiums is calculated for the portion of the remaining part which is left after deducting savings from
gross premium written for the year. In accordance with the “Communiqué on Amendments to the Communiqué on Technical
Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested Against Those
Technical Reserves” issued in 28356 numbered and 17 July 2012 dated Official Gazette and effective from 30 June 2012, reserve
for unearned premiums is calculated from remaining amount of gross written premiums by deducting saving component and
expenses related with saving component for life insurance and life insurance with saving components having longer than one
year maturity. Insurance policies covering possibilities of life and death or both and personal accident, disability by illness and
serious illness insurance policies are considered as life insurance policies and their premiums are classified as life insurance
premiums.
According to the 2009/9 Numbered Circular Related to Application of Technical Reserves issued on 27 March 2009 reserve for
unearned premiums is calculated by taking into account that all polices become active at 12:00 at noon and end at 12:00 at noon.
2.25 Reserve for unexpired risks
In accordance with the Communiqué on Technical Reserves, in each accounting period, the companies while providing reserve
for unearned premiums should perform adequacy test covering the preceding 12 months in regard with the probability of future
claims and compensations of the outstanding policies will arise in excess of the reserve for unearned premiums already provided.
In performing this test, it is required to multiply the reserve for unearned premiums, net with the expected claim/premium ratio.
Expected claim/premium ratio is calculated by dividing incurred losses (provision for outstanding claims, net at the end of the
period + claims paid, net - provision for outstanding claims, net at the beginning of the period) to earned premiums (written
premiums, net + reserve for unearned premiums, net at the beginning of the period - reserve for unearned premiums, net at
the end of the period). In the calculation of earned premiums; deferred commission expenses paid to the agencies and deferred
commission income received from the reinsurance firms which were netted off from reserve for unearned premiums both at the
beginning of the period and at the end of the period are not taken into consideration.
In accordance with the “Communiqué on Amendments to the Communiqué on Technical Reserves for Insurance, Reinsurance
and Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves” issued in 28356
numbered and 17 July 2012 dated Official Gazette and effective from 31 December 2013, the test is performed on branch basis
and in case where the expected claim/premium ratio is higher than 95%, reserve calculated by multiplying the exceeding portion
of the expected claim/premium ratio with the reserve for unearned premiums of that specific branch is added to the reserves
of that branch. The difference between the gross amount and the net amount is considered as the reinsurer’s share. Turkish
Treasury is authorized to change test methods and require additional reserve for unexpired risks on branch basis.
As at 31 December 2013 and 2012, related test have not resulted in any deficiency regarding reserve for unexpired risks.
2.26 Provision for outstanding claims
Change in measurement of technical reserves became effective as at 30 September 2010 according to the Turkish Treasury
Circular which were published as “Communiqué on Amendments to Communiqué on Technical Reserves” in Official Gazette dated
28 July 2010 and numbered 27655.
Communiqué on technical reserves and circulars issued by Turkish Treasury brings essential changes into effect on measurement
of technical reserves and accounting of income from salvage and subrogation. In summary, it is aimed to align Communiqué on
Technical Reserves with methodological changes on Actuarial Chain ladder method, to include matters which were declared
before through circulars and sector announcements to the communiqué. The Turkish Treasury issued the Circulars numbered
2010/12, 2010/13, 2010/14 and the sector announcement numbered 2010/29 which became effective as at 31 December 2010
in order to clarify uncertainties on measurement of technical reserves and accounting of income from salvage and subrogation.
Claims are recorded in the year in which they occur, based on reported claims or on the basis of estimates when not reported.
Provision for outstanding claims represents the estimate of the total reported costs of notified claims on an individual case basis
at the reporting period as well as the corresponding handling costs.
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Additional amendments effective from 30 June 2012 are issued in the “Communiqué on Amendments to the Communiqué
on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested
Against Those Technical Reserves” in 28356 numbered and 17 July 2012 dated Official Gazette. Test IBNR method ceased in
the calculation of provision for outstanding claims. In accordance with the previous communiqués and sector announcements
companies should perform actuarial chain ladder method for the non-life insurance branches engaged more than five years and
had sufficient data.
Claims incurred before the accounting periods but reported subsequent to those dates are accepted as incurred but not reported
(“IBNR”) claims. According to the “Communiqué on Provision for IBNR Claims in Life Branch” numbered 2010/14, IBNR calculation
is changed. In accordance with the related regulations, last five or more than five years’ weighted average calculated by dividing
total gross amount of incurred but not reported claims to average annual guarantee of the related years. As of the current
reporting period, IBNR is calculated by multiplying weighted average IBNR ratio by the average guarantee amount of last twelve
months before reporting period. Accordingly, as at the reporting period, the Company has provided for IBNR, net off ceded
amounting to ¨4,003,978 (31 December 2012: ¨3,832,540).
According to the 7th article 6th subclause of the “Circular on Change in Technical Reserves for Insurance, Reinsurance and Pension
Companies and the Related Assets That Should Be Invested Against Those Technical Reserves”; provision for the outstanding
claims of the period cannot be less than the result of the actuarial chain ladder method determined by Turkish Treasury. The
Company has selected “Standard chain ladder method” for personal accident branch as stated in the “Communiqué on Technical
Reserves and Circular on Actuarial Chain Ladder Method” dated 20 September 2010 and numbered 2010/12. Accordingly, as at
the reporting period, the Company has provided for IBNR, net off ceded amounting to ¨32,878 (31 December 2012: ¨38,228).
In the Sector Announcement dated 18 July 2012 and numbered 2012/13 published by the Turkish Treasury, insurance,
reinsurance and individual pension companies are required to perform adequacy test to assess the adequacy of provision for
outstanding claims at the end of the each reporting period. Companies performed actuarial chain ladder methods are not obliged
to record additional provision for outstanding claims. As at 31 December 2013, this adequacy test has not resulted in additional
provision for outstanding claims.
2.27 Mathematical provisions
In accordance with the Communiqué on Technical Reserves, companies operating in life and non-life insurance branches are
obliged to allocate adequate mathematical reserves based on actuarial basis to meet liabilities against policyholders and
beneficiaries for long-term life, health and personal accident insurance contracts. Mathematical provisions are composed of
actuarial mathematical provisions and profit sharing provisions. Actuarial mathematical provisions, according to formulas and
basis in approved technical basis of tariffs for over one year-length life insurance, are calculated by determining the difference
between present value of liabilities that the Company meets in future and current value of premiums paid by policyholder in
future (prospective method). In life insurance where saving plan premiums are also generated, actuarial mathematical provisions
consist of total saving plan portions of premiums. Provision for profit sharing consist of profit sharing calculated in previous years
and a certain percentage of current year’s income, determined in the approved profit sharing tariffs, obtained from the financial
assets backing liabilities of the Company against the policyholders and other beneficiaries for the contracts which the Company
is liable to give profit sharing. The valuation method used in calculation of the profit to be shared for saving life contracts is
the same with the valuation basis of portfolio on which assets on which the Company invests the provisions allocated due to
liabilities against the beneficiaries are included in the framework of basis defined in the note 2.8 - Financial assets above.
134
2.28 Equalization provision
According to “Communiqué on Technical Reserves”, companies should book equalization provision for guarantees of loan and
earthquakes in order to offset fluctuations in the rate of indemnification and to meet catastrophic risks in the accounting period.
In accordance with the Communiqué on Technical Reserves issued by the Turkish Treasury on 27 March 2009 numbered 2009/9,
the insurance companies should recognize equalization provision for disability and death occurred because of an earthquake and
tariffs that include additional guarantee in life and casualty branches. With the circular released on 28 July 2010 and numbered
27655 “Circular on Change in Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That
Should Be Invested Against Those Technical Reserves”, the calculation of equalization provision is revised. In accordance with
the Communiqué on Technical Reserves, the companies which give additional guarantee in life use their own statistical data for
equalization provision calculation. The companies not having sufficient data for calculation will accept 11% of death net premium
(including damage payments) as earthquake premium and 12% of that amount is calculated as equalization provision.
In accordance with the Communiqué on Technical Reserves, booking provisions should continue until reaching 150% of the
highest net premium amount of the last five financial years. Equalization provisions amounting to ¨5,921,429 are presented
under “other technical reserves” within short-term liabilities in the accompanying financial statements (31 December 2012:
¨3,915,510).
In accordance with Regulation on Technical Reserves, insurance companies are required to account for the bonus or discounts
provided to policyholders and beneficiaries in accordance with the current year technical income. As of 31 December 2013, the
Company accounted for bonus provision amounting to ¨128,485 (31 December 2012: ¨256,613).
2.29 Related parties
Parties are considered related to the Company if;
(a) directly, or indirectly through one or more intermediaries, the party:
• controls, is controlled by, or is under common control with the Company (this includes parent, subsidiaries and fellow
subsidiaries);
• has an interest in the Company that gives it significant influence over the Company; or
• has joint control over the Company;
(b) the party is an associate of the Company;
(c) the party is a joint venture in which the Company is a venturer;
(d) the party is member of the key management personnel of the Company and its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or any individual referred to in (d) or (e)
which significant voting power in such entity resides with directly or indirectly, or
(g) the party is a post-employment benefit plan for the benefit of employees of the Company, or of any entity that is a related
party of the Company.
A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a
price is charged.
A number of transactions are entered into with related parties in the normal course of business.
2.30 Earnings per share
Earnings per share presented in the income statement is calculated by dividing the net profit into the weighted average number
of the outstanding shares throughout the financial year. Companies in Turkey can increase their capital by distributing “bonus
shares” to shareholders from the prior years’ profit. Such “bonus share” distributions are considered as issued shares in the
earnings per share calculations. Accordingly, weighted average number of equity shares used in the calculations is calculated by
considering the retrospective effects of share distributions.
“Events After the Reporting Period”; post-reporting date events that provide additional information about the Company’s
position at the reporting periods (adjusting events) are reflected in the unconsolidated financial statements. Post-reporting date
events that are not adjusting events are disclosed in the notes when material.
2.32 New standards and interpretations not yet adopted
There are a number of new standards, updates related to the existing standards and interpretations which are not adopted
in the preparation of the accompanying financial statements and have not yet entered into force for the accounting period
31 December 2013. These new standards are not expected to have any impact on the financial statements of the Company,
with the exception of TFRS 9 - Financial instruments, which is published by the Turkish Accounting Standards Board on Official
Gazette dated 27 April 2010 and numbered 27564.
135
IFRS 9 - Financial instruments, is published by International Accounting Standards Board in November 2009 as a part of a wider
project that aims to bring new regulations to replace TAS 39 - Financial Instruments: Recognition and Measurement.
Developing a new standard for the financial reporting of financial assets that is principle-based and less complex is aimed by
this project. The objective of TFRS 9, being the first phase of the project, is to establish principles for the financial reporting
of financial assets that will present relevant and useful information to users of financial statements for their assessment
of amounts, timing and uncertainty of the entity’s future cash flows. With TFRS 9 an entity shall classify financial assets as
subsequently measured at either amortized cost or fair value on the basis of both the entity’s business model for managing the
financial assets and the contractual cash flow characteristic of the financial assets. The guidance in TAS 39 on impairment of
financial assets and hedge accounting continues to apply.
An entity shall apply TFRS 9 for annually years beginning on or after 1 January 2015. An earlier application is permitted. If an
entity adopts this TFRS in its financial statements for a period beginning before 1 January 2012, then prior periods are not
needed to be restated.
New standards and interpretations not yet adopted and have no effect on the Company’s financials
• TAS 32 - Financial Instruments: Presentation - The amendment on the Clarification of Financial Assets and Debts aims to
clarify the statement “existence of an available and legal right for clarification of the recognized amounts”. Additionally TAS
32 clarifies application areas of settlement systems (such as Exchange bureaus) where gross payment is made and where
clarification principle is not implemented simultaneously. Amendments will be applied for the accounting periods starting as
from 1 January 2014 retrospectively.
3 Critical accounting estimates and judgments in applying accounting policies
The notes given in this section are provided to addition/supplement the commentary on the management of insurance risk note
4.1 - Management of insurance risk and note 4.2 - Financial risk management.
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in
the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas at estimation uncertainty and critical judgment in applying accounting policies
that have the most significant effect on the amount recognized in the financial statements are described in the following notes:
Note 2.26 - Provision for outstanding claims
Note 2.27 - Mathematical provisions
Note 4.1 - Management of insurance risk
Note 4.2 - Financial risk management
Note 7 - Investment properties
Note 11 - Financial assets
136
Note 12 - Loans and receivables
Note 21 - Deferred tax
4 Management of insurance and financial risk
4.1 Management of insurance risk
Objective of managing risks arising from insurance contracts and policies used to minimize such risks:
Insurance risk is defined as coverage for exposures that exhibit a possibility of financial loss due to applying inappropriate and
insufficient insurance techniques. In line with the nature of an insurance contract, as the risk is coincidental, the risk amount
cannot be predictable.
Insurance risk represents the possibility of the non coverage of the claims paid by the premiums collected.
As of 31 December 2013, the Company’s life insurance claims/premiums ratio stands at 19%. Low claims/premiums ratio, which
is calculated by the proportion of claims to risk premiums collected, indicates that the Company makes significant profit. The
Company adopts central risk assessment policy. The Company applies this policy to the all marketing channels produced. In its life
policy production, the Company has no sales channel with continuous risk exposure. The Company analyzes its claims/premiums
ratio periodically in order to identify its insurance risks.
As of 31 December 2013, the Company’s personal accident insurance claims/premiums ratio is 62%. Since personal accident
insurance portfolio has an insignificant share in the Company’s general portfolio, this ratio would be low when no compensation
is paid and this ratio would be high when compensation is paid.
Claims/premium ratio of the Company as of the financial statement periods is presented below:
Life insurance
Personal accident
31 December 2013
31 December 2012
19%
62%
17%
39%
The Company shares its significant risks associated with natural disasters, such as; earthquake, terrorism or large-scale
accidents, with reinsurers by entering into catastrophic excess of loss agreements.
As at 31 December 2013 and 2012, risk portion transferred to reinsurers in terms of risk guarantee is presented as below:
Death by natural cause
Death by accident
Disability by accident
Disability by illness
31 December 2013
31 December 2012
12%
64%
64%
65%
7%
51%
49%
42%
Sensitivity to insurance risk
The Company’s policy production strategy follows an effective risk management in the policy production process considering the
nature, extent, and accurate distribution of the risk incurred.
Reinsurer agreements include claims surplus, excess of loss and quota reinsurances. As a result of these agreements, if the
Company’s “death by natural cause” risk account exceeds amounts in agreements “death by accident”, the Company transfers
the exceeding claim payments to reinsurers. The Company also transfers the exceeding claim payments to reinsurers if the
Company’s “death by natural cause” or “death by accident” risk accounts exceed amounts in agreements for all policies.
Determination of insurance risk concentrations by management and the common characteristics of insurance risk
concentrations (nature, location and currency)
Branches
Life insurance
Personal accident
Total
Total gross
risk liability (*)
31 December 2013
Reinsurer’s share
of risk liability
The company’s net
claims liability
40,714,955,430
3,488,091,959
44,203,047,389
11,217,790,955
1,787,721,812
13,005,512,767
29,497,164,475
1,700,370,147
31,197,534,622
The Company produces life and personal accident branch policies. The Company’s gross and net insurance risk concentrations
(after reinsurance) in terms of insurance branches are summarized as below:
137
Branches
Life insurance
Personal accident
Total
(*)
Total gross
risk liability (*)
31 December 2012
Reinsurer’s share
of risk liability
The company’s net
claims liability
34,238,444,953
2,802,704,014
37,041,148,967
5,935,647,619
1,534,836,503
7,470,484,122
28,302,797,334
1,267,867,512
29,570,664,846
Represents the maximum insurance amount based on death by natural cause, death by accident, disability by accident and disability by illness.
The Company issues insurance contracts mainly in Turkey. Gross and net insurance risk concentrations of the insurance contracts
(after reinsurance) based on geographical regions are summarized as below:
Claims liability (*)
Marmara Region
Central Anatolian Region
Aegean Region
Mediterranean Region
Black Sea Region
South East Anatolian Region
East Anatolian Region
Foreign countries (other)
Total
Claims liability (*)
Marmara Region
Aegean Region
Black Sea Region
Total
Total gross claims liability
31 December 2013
Reinsurer’s share of
claims liability
Total net claims liability
30,345,519
11,660,915
10,790,830
7,716,232
4,541,838
2,507,785
1,842,388
3,036,119
72,441,626
941,482
225,796
191,640
370,586
103,126
49,291
46,356
1,928,277
29,404,037
11,435,119
10,599,190
7,345,646
4,438,712
2,458,494
1,796,032
3,036,119
70,513,349
Total gross claims liability
31 December 2012
Reinsurer’s share of
claims liability
Total net claims liability
21,480,725
8,709,904
7,173,066
4,462,034
3,713,142
1,715,237
2,025,848
2,722,129
52,002,085
68,937
48,056
5,775
14,598
1,051
1,318
1,500
141,235
21,411,788
8,661,848
7,167,291
4,447,436
3,713,142
1,714,186
2,024,530
2,720,629
51,860,850
Total claims liability includes the actual estimated compensation amounts. IBNR provision and outstanding claims adequacy provision are not included in the
calculation.
(*)
138
Comparison of incurred claims with past estimations
As at 31 December 2013, there is not any deficiency in the outstanding claims reserve of the Company.
Incurred claim development table is disclosed in note 17 - Insurance liabilities and reinsurance assets.
Effects of the changes in assumptions used in the measurement of insurance assets and liabilities showing the effect of each
change separately that has significant effect on financial statements
In the current period, there are no material changes in the assumptions of measurement of insurance assets and liabilities.
4.2 Financial risk management
This note presents information about the Company’s exposure to each of the below risks, the Company’s objectives, policies
and processes for measuring and managing risk, and the Company’s management of capital. The Company has exposure to the
following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market risk
The Company’s risk management program focuses on minimizing the negative effects of the ambiguities in financial markets
on the Company’s financial statements. The Company is mostly exposed to interest risk and price risk in relation with financial
investments, to credit risk in relation with insurance receivables and exchange rate risk due to policies and assets in foreign
currencies.
The risk is managed by a specific department which is in line with the approved policies by the Board of Directors. Several risk
policies have been prepared by the Board of Directors in order to manage the exchange risk, interest risk, credit risk, using the
derivative and non-derivative financial instruments risks.
Credit risk
Credit risk is basically defined as the possibility that counterparty will fail to meet its obligations in accordance under agreed
terms of a contract. When the Company’s field of activity and third party relations is considered, its credit risk is deemed to be
relatively at minimum. The balance sheet items that the Company is exposed to credit risk are as follows:
• Cash at banks
• Other cash and cash equivalents
• Available for sale financial assets
• Financial assets held for trading
• Held-to-maturity financial assets
• Premium receivables from policyholders
• Receivables from intermediaries (agencies)
• Receivables from reinsurance companies related to claims paid and commissions accrued
• Reinsurance shares of insurance liabilities
• Due from related parties
• Other receivables
Reinsurers: Reinsurance contracts are the most common method to manage insurance risk. This does not, however, discharge
the Company’s liability as the primary insurer. If a reinsurer fails to pay a claim for any reason, the Company remains liable for the
payment to the policyholder. The Company works with international reinsurance companies with strong financial status. In this
perspective, the level of risk exposure is also considered to be at minimum.
Agencies: Agencies working with the Company expose it to a limited level of credit risk. Since the Company’s products are issued
with long-term use, commissions given to agencies are also long term in nature; therefore, the Company has consistent payables
to agencies.
Policyholders: Overdue premium receivables are not considered as a significant risk exposure to the Company because if the
Company has unpaid premiums, all guarantees related to the insurance will be invalid.
The review of the Company’s third party relations are presented below.
139
As at 31 December 2013 and 2012, the Company’s credit risk exposure by types of financial instruments is as follows. Banks and
other cash and cash equivalents are also included in the credit risk.
31 December 2013
Maximum credit risk exposure as at
the reporting period (A+B+C)
- Secured portion of maximum risk by
guarantees, provisions, etc.
A. Net book value of neither past due
nor impaired financial assets
B. Net book value of past due but not
impaired assets
C. Net book value of impaired assets
- Gross book value
- Impairment
- Secured portion of net book value
by guarantees, provisions, etc.
31 December 2012
Maximum credit risk exposure as at
the reporting period (A+B+C)
A. Net book value of neither past due
nor impaired financial assets
impaired assets
- Gross book value
- Impairment
- Secured portion of net book value
by guarantees, provisions, etc.
(*)
Receivables (*)
Receivables from
Other
insurance activities
receivables
Related party
Third party Related party
Third party
Banks and other
cash and cash
Financial assets equivalent assets
-
56,534,984
334,634
12,165,677
2,290,684,583
138,919,439
-
-
-
-
-
-
-
47,679,360
334,634
12,165,677
2,290,684,583
138,919,439
-
8,855,624
120,570
-
-
-
-
-
(120,570)
-
-
-
-
-
-
-
-
-
-
Receivables (*)
Receivables from
Receivables from
Related party
Third party Related party
Third party
Banks and other
cash and cash
Financial assets equivalent assets
-
60,736,653
1,096,350
1,891,704
2,562,713,429
142,491,481
-
-
-
-
-
-
-
54,917,279
1,096,350
1,891,704
2,562,713,429
142,491,481
-
5,819,374
120,570
(120,570)
-
-
-
-
-
-
-
-
-
-
Receivables from individual pension activities are not included in the credit risk table since those receivables are followed both side of the balance sheet as asset
and liability and they are held on behalf of participants by IMKB Takas ve Saklama Bankası AŞ (the “ISE Settlement and Custody Bank”).
140
Liquidity risk
31 December 2013
Financial assets and
investments with risks on
policyholders
Receivables from main
operations
Due from related parties
Other receivables
Prepaid expenses and income
accruals, short term
Other current assets
Financial assets (Associates)
Tangible assets
Intangible assets
accruals, long term
Deferred tax assets
Total assets
Payables arising from main
operations
Due to related parties
Other payables
Insurance technical provisions
Provisions for taxes and other
similar obligations
Deferred income and expense
accruals
Other short term liabilities
Provisions for other risks
Deferred tax liabilities
Shareholders’ equity
Total liabilities
Net liquidity surplus/(deficit)
Without
maturity
11,127,176
Up to
1 month
127,638,453
1 to 3
months
-
-
31,035,028
73,707,554
-
685,599
11,261,706
1,206,495
334,634
2,040,950
-
-
-
-
-
11,127,176 170,620,786
3 to 12
months
-
1 to 5 years 5 years and over
-
Unallocated
-
Total
138,765,629
1,362,044,106
207,643,946
2,406,892,657
-
-
5,292,081,534
903,971
5,296,014,578
334,634
12,165,677
-
-
10,690,180
17,887
8,762,193
21,701,481
4,982,250
10,690,180
17,887
8,762,193
21,701,481
4,982,250
75,248,683 320,436,369 414,066,604
1,362,044,106
8,905
2,068,582
5,548,860,929
8,905
2,068,582
7,902,404,653
318,395,419 414,066,604
-
8,949,788
5,702,261
-
-
881,759
5,014
-
-
-
5,351,680,646
3,180,156
1,972,924,325
5,361,512,193
5,014
8,882,417
1,972,924,325
-
4,848,034
-
-
-
-
3,799,996
8,648,03
2,588,141
62
8,269,886
3,055,359
533,869,226
8,269,886
7,871,097,911
1,353,774,220 (2,322,236,982)
2,588,141
62
13,975,245
533,869,226
7,902,404,653
650,000
- 20,150,083
11,127,176 150,470,703
2,000,000
2,886,773
75,248,683 317,549,596 414,066,604
Liquidity risk is the risk that the Company will encounter difficulty in meeting the net funding obligations. Liquidity risk arises
from the events trigger decreasing funds such as deterioration in the market conditions or downgrading of credit ratings. As at
31 December 2013, maturity analyses of the Company’s assets and liabilities are presented in the table below:
141
31 December 2012
policyholders
operations
Other receivables
Tangible assets
Intangible assets
accruals, long term
Deferred tax assets
Total assets
operations
Other payables
similar obligations
accruals
Total liabilities
Net liquidity surplus/(deficit)
Without
maturity
5,724,356
Up to 1
month 1 to 3 months
136,618,070
-
3 to 12
months
-
1 to 5 years 5 years and over
-
Unallocated
-
Total
142,342,426
-
19,083,944
16,543,014
242,201,381
754,493,001
1,423,754,509
226,481,644
2,682,557,493
-
436,074
1,166,746
1,003,583
1,096,350
1,700,637
-
-
-
4,344,007,866
724,958
4,347,148,160
1,096,350
1,891,704
-
-
-
-
-
-
12,601,372
23,230
8,762,193
21,311,444
4,297,953
12,601,372
23,230
8,762,193
21,311,444
4,297,953
18,642,947 243,902,018 754,493,001
1,423,754,509
58,142
4,618,268,802
58,142
7,222,090,467
5,724,356 157,304,834
-
9,105,720
3,850,309
-
-
636,822
8,172
-
-
-
4,361,441,693
2,260
2,619,075
2,288,110,880
4,371,184,235
10,432
6,469,384
2,288,110,880
-
4,139,335
-
-
-
-
7,173,965
11,313,300
1,793,541
61
7,408,414
5,859,758
4,760,670
524,679,792
7,408,414
7,196,441,695
1,416,346,095 (2,578,172,893)
1,793,541
61
13,768,172
4,760,670
524,679,792
7,222,090,467
500,000
17,595,364
5,724,356 139,709,470
644,994
18,642,947 243,257,024 754,493,001
Market risk
Market risk is the risk that changes in market prices, such as interest rate, foreign exchange rates and credit spreads will affect
the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimizing the return on risk.
Foreign currency risk
The Company is exposed to foreign currency risk through insurance and reinsurance transactions in foreign currencies.
Foreign exchange gains and losses arising from foreign currency transactions are recorded at transaction dates. At the end of the
periods, foreign currency assets and liabilities evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates and
the differences arising from foreign currency rates are recorded as foreign exchange gain or loss in the statement of operations.
Parallel to the general characteristic of Turkish insurance sector, the Company holds long position in terms of US Dollar and Euro.
142
Foreign currency position table - 31 December 2013
Total ¨ (Functional
currency)
US Dollar
Euro
1,013,036
235,728
651,781
GBP
112,476
CHF
13,051
JPY
-
349,939,881
297,044
128,461
23,477
351,401,899
229,425,236 108,350,930
168,988
122,673
128,461
23,477
229,853,429 109,253,845
12,163,715
5,383
12,281,574
13,051
-
7. Total assets
351,401,899
229,853,429 109,253,845
12,281,574
13,051
-
8. Finance lease liabilities
9. Payables to reinsurers
10. Agency guarantees
11. Technical provisions
Foreign currency liabilities, short
term
22,163
237,595
339,075,966
21,613
225,078
236,612,886
12,517
91,029,132
381
11,384,517
13,079
169
36,352
339,335,724
236,859,577
91,041,649
11,384,898
13,079
36,521
12. Total liabilities
339,335,724
236,859,577
91,041,649
11,384,898
13,079
36,521
12,066,175
(7,006,148)
18,212,196
896,676
(28) (36,521)
12,042,698
(7,029,625)
18,212,196
896,676
(28) (36,521)
1. Cash at banks
2. Financial assets and financial
policyholders
3. Receivables from main operations
4. Reinsurance receivables
5. Rent receivables
6. Deposits given
Foreign currency assets, current
Net financial position
Net long/(short) position on
monetary items
The Company’s exposure to foreign currency risk is as follows:
143
1. Cash at banks
policyholders
5. Rent receivables
6. Deposits given
7. Total assets
term
monetary items
currency)
US Dollar
Euro
2,543,732
2,138,498
137,416
GBP
CHF
113,413 154,405
JPY
-
297,272,130 107,842,355
303,753
66,438
10,655
13,287
19,609
299,744,645 108,059,496
299,744,645 108,059,496
13,738,577
4,427
13,856,417 154,405
13,856,417 154,405
-
418,853,062
374,618
23,942
19,609
421,814,963
421,814,963
963
181,307
313,232,568
170,648
218,974,074
10,659
84,117,708
700
10,068,544
15,750
263
56,492
313,414,838
313,414,838
219,144,722
219,144,722
84,128,367
84,128,367
10,069,244
10,069,244
15,750
15,750
56,755
56,755
108,400,125
80,599,923
23,931,129
3,787,173 138,655 (56,755)
108,380,516
80,580,314
23,931,129
3,787,173 138,655 (56,755)
Foreign currency transactions are recorded at exchange rates at the transaction dates and foreign currency denominated
monetary items are evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates as at 31 December 2013.
Foreign currency rates used for the translation of foreign currency denominated monetary assets and liabilities as at reporting
periods are as follows:
31 December 2013
Foreign currency rate used in translation of balance sheet
items
31 December 2012
items
144
US Dollar
Euro
GBP
CHF
JPY
2.1343 2.9365
3.5114
2.3899
0.0202
Euro
GBP
CHF
JPY
1.7826 2.3517
2.8708
1.9430
0.0207
US Dollar
Exposure to foreign currency risk
A 10 percent depreciation of the ¨ against the following currencies as at 31 December 2013 and 2012 would have increased
or decreased equity and profit or loss (excluding tax effects) by the amounts shown below. This analysis assumes that all
other variables, in particular interest rates, remain constant. In case of a 10 percent appreciation of the ¨ against the following
currencies, the effect will be in opposite direction.
Exchange rate sensitivity analysis table - 31 December 2013
Profit/loss
Appreciation
Depreciation
of foreign
of foreign
currency
currency
If USD value changes by 10% against ¨:
1- Net US Dollar assets/liabilities
2- Hedged portion from US Dollar risk (-)
3- Net effect of US Dollar (1+2)
(714,269)
(714,269)
714,269
714,269
Equity (*)
Appreciation
Depreciation
of foreign
of foreign
currency
currency
(700,615)
(700,615)
700,615
700,615
If EUR value changes by 10% against ¨:
4- Net Euro assets/liabilities
5- Hedged portion from Euro risk (-)
6- Net effect of Euro (4+5)
1,785,809
1,785,809
(1,785,809)
(1,785,809)
1,821,220
1,821,220
(1,821,220)
(1,821,220)
If GBP value changes by 10% against ¨:
7- Net GBP assets/liabilities
8- Hedged portion from GBP risk (-) 9- Net effect of GBP (7+8) 89,884
89,884
(89,884)
(89,884)
89,668
89,668
(89,668)
(89,668)
If CHF value changes by 10% against ¨:
10- Net CHF assets/liabilities
11- Hedged portion from CHF risk (-)
12- Net effect of CHF (10+11)
(3)
(3)
3
3
(3)
(3)
3
3
(3,652)
(3,652)
3,652
3,652
(3,652)
(3,652)
3,652
3,652
1,157,769
(1,157,769)
1,206,618
(1,206,618)
If JPY value changes by 10% against ¨:
13- Net JPY assets/liabilities
14- Hedged portion from JPY risk (-)
15- Net effect of JPY (13+14)
Total (3+6+9+12+15)
Includes profit/loss effect.
(*)
145
Profit/loss
Appreciation of
Depreciation of
foreign currency
foreign currency
If USD value changes by 10% against ¨: 1- Net US Dollar assets/liabilities
7,654,585
7,654,585
2,332,055
2,332,055
(2,332,055)
(2,332,055)
2,393,113
2,393,113
(2,393,113)
(2,393,113)
8- Hedged portion from GBP risk (-) 9- Net effect of GBP (7+8) 361,013
361,013
(361,013)
(361,013)
378,717
378,717
(378,717)
(378,717)
13,866
13,866
(13,866)
(13,866)
13,866
13,866
(13,866)
(13,866)
(5,676)
(5,676)
5,676
5,676
(5,676)
(5,676)
5,676
5,676
10,355,843
(10,355,843)
10,840,012
(10,840,012)
Total (3+6+9+12+15)
(*)
(7,654,585)
(7,654,585)
Equity (*)
Appreciation of
Depreciation of
foreign currency
foreign currency
8,059,992
8,059,992
(8,059,992)
(8,059,992)
Interest risk
Exposure to interest risk
The changes in interest rate that arise fluctuations in prices of financial instruments lead to the necessity of overcoming interest
rate risk. The Company’s sensitivity for interest rate risk is related to the inconsistency of maturity of asset and liability items. The
interest risk is managed by compensating the assets exposed to the interest fluctuations with the identical liabilities.
Financial instruments which are sensitive to the changes in interest rates are given in the table below:
146
Fixed rate financial instruments
Financial assets
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Loans and receivables
Banks
Variable rate financial instruments
Financial assets
1,635,110,730
1,623,708,744
11,401,986
18,737,143
1,875,486,885
1,861,395,540
14,091,345
54,078,050
564,137,981
580,588,964
Interest rate sensitivity of financial instruments
As at 31 December 2013 and 2012, interest rate risk analysis of financial assets and financial liabilities are summarized in the
table below:
31 December 2013
Assets:
Up to 1
month 1 to 3 months
3 to 12
months
1 to 5 years
5 years and
over
Non-interest
bearing
Total
127,638,453
-
-
-
-
11,127,176
138,765,629
policyholders
521,465,455
73,707,554
165,404,467
76,627,129
1,362,044,106
207,643,946
2,406,892,657
685,599
1,206,495
2,040,950
-
-
5,292,081,534
5,296,014,578
-
334,634
-
-
-
-
334,634
11,261,706
-
-
-
-
903,971
12,165,677
10,690,180
operations
Other receivables
-
-
-
-
-
10,690,180
-
-
-
-
-
17,887
17,887
-
-
-
-
-
8,762,193
8,762,193
Tangible assets
-
-
-
-
-
21,701,481
21,701,481
Intangible assets
-
-
-
-
-
4,982,250
4,982,250
accruals, long term
-
-
-
-
-
8,905
8,905
Deferred tax assets
-
-
-
-
-
2,068,582
2,068,582
661,051,213
75,248,683
167,445,417
76,627,129 1,362,044,106
5,559,988,105
7,902,404,653
8,949,788
-
881,759
-
-
5,351,680,646
5,361,512,193
-
-
5,014
-
-
-
5,014
5,702,261
-
-
-
-
3,180,156
8,882,417
-
-
-
-
-
1,972,924,325
1,972,924,325
similar obligations
4,848,034
-
-
-
-
3,799,996
8,648,030
2,588,141
Total assets
operations
Other liabilities
accruals
-
-
-
-
-
2,588,141
-
-
-
-
-
62
62
650,000
-
2,000,000
-
8,269,886
3,055,359
13,975,245
-
-
-
-
-
-
-
-
-
-
-
-
533,869,226
533,869,226
20,150,083
-
2,886,773
-
8,269,886
7,871,097,911
7,902,404,653
640,901,130
75,248,683
164,558,644
76,627,129
1,353,774,220
(2,311,109,806)
-
Total liabilities and equity
Net position
Liabilities:
147
31 December 2012
Assets:
Up to 1
month 1 to 3 months
3 to 12
months
1 to 5 years
5 years and
over
Non-interest
bearing
Total
54,078,050
-
-
-
-
88,264,376
142,342,426
policyholders
513,609,225
102,606,697
242,201,381
173,904,037
1,423,754,509
226,481,644
2,682,557,493
436,074
1,003,583
1,700,637
-
-
4,344,007,866
4,347,148,160
-
1,096,350
-
-
-
-
1,096,350
1,166,746
-
-
-
-
724,958
1,891,704
12,601,372
operations
Other receivables
-
-
-
-
-
12,601,372
-
-
-
-
-
23,230
23,230
-
-
-
-
-
8,762,193
8,762,193
Tangible assets
-
-
-
-
-
21,311,444
21,311,444
Intangible assets
-
-
-
-
-
4,297,953
4,297,953
58,142
accruals, long term
-
-
-
-
-
58,142
Deferred tax assets
-
-
-
-
-
-
-
569,290,095
104,706,630
243,902,018 173,904,037
1,423,754,509
4,706,533,178
7,222,090,467
4,371,184,235
Total assets
Liabilities:
operations
9,105,720
-
636,822
-
-
4,361,441,693
-
-
8,172
-
-
2,260
10,432
3,850,309
-
-
-
-
2,619,075
6,469,384
-
-
-
-
-
2,288,110,880
2,288,110,880
similar obligations
4,139,335
-
-
-
-
7,173,965
11,313,300
1,793,541
Other liabilities
accruals
-
-
-
-
-
1,793,541
-
-
-
-
-
61
61
500,000
-
-
-
7,408,414
5,859,758
13,768,172
-
-
-
-
-
4,760,670
4,760,670
-
-
-
-
-
524,679,792
524,679,792
17,595,364
-
644,994
-
7,408,414
7,196,441,695
7,222,090,467
551,694,731
104,706,630
243,257,024 173,904,037 1,416,346,095 (2,489,908,517)
-
Net position
148
Interest rate sensitivity of the statement of income is the effect of the assumed changes in interest rates on the fair values of
financial assets at fair value through profit or loss and on the net interest income as at and for 31 December 2013 and 2012 of
the floating rate non-trading financial assets and financial liabilities held at 31 December 2013 and 2012. Interest rate sensitivity
of equity is calculated by revaluing available-for-sale financial assets at 31 December 2013 and 2012 for the effects of the
assumed changes in interest rates. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant. The table below demonstrating the effect of changes in interest rates on statement of income and equity excludes tax
effects on related loss or income.
31 December 2013
Company’s own portfolio
Total, net
31 December 2012
Total, net
100 bp
increase
100 bp
decrease
500 bp
increase
500 bp
decrease
(4,775,898)
(4,775,898)
4,893,034
4,893,034
(22,025,376)
(22,025,376)
26,775,962
26,775,962
100 bp
increase
100 bp
decrease
500 bp
increase
500 bp
decrease
(6,165,010)
(6,165,010)
6,477,278
6,477,278
(28,088,476)
(28,088,476)
35,978,405
35,978,405
Fair value information
The estimated fair values of financial instruments have been determined using available market information, and where it exists,
appropriate valuation methodologies.
The Company has classified its financial assets as whether held for trading purpose or available for sale. As at reporting period,
available for sale financial assets and financial assets held for trading are measured at their fair values in the accompanying
financial statements.
Management estimates that the fair value of other financial assets and liabilities are not materially different than their carrying
values.
Classification relevant to fair value information
IFRS 7 - Financial instruments: Disclosures requires the classification of fair value measurements into a fair value hierarchy by
reference to the observability and significance of the inputs used in measuring fair value of financial instruments measured at
fair value to be disclosed. This classification basically relies on whether the relevant inputs are observable or not. Observable
inputs refer to the use of market data obtained from independent sources, whereas unobservable inputs refer to the use of
predictions and assumptions about the market made by the Company. This distinction brings about a fair value measurement
classification generally as follows:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (as prices) or indirectly (derived from prices).
Level 3: Fair value measurements using inputs for the assets or liability that are not based on observable market data
(unobservable inputs).
If classification is available for usage, it necessitates the utilization of observable market data.
149
The classification of fair value measurements of financial assets and liabilities measured at fair value is as follows:
Level 1
36,388,883
532,884,056
11,401,986
13,929,093
-
-
1,787,655,851
5,231,179,012
7,599,509,788
13,929,093
- 1,787,655,851
5,231,179,012
- 7,613,438,881
Financial liabilities:
Investment contract liabilities - life mathematical
provision for saving life policies
Payables arising from individual pension business (**)
Total financial liabilities
1,871,476,210
5,231,179,012
7,102,655,222
-
-
36,388,883
546,813,149
11,401,986
1,871,476,210
5,231,179,012
7,102,655,222
As at 31 December 2013, securities that are not publicly traded amounting to ¨34,932,570 have been measured at cost and are excluded from the table.
(**)
Includes investments directed individual pension funds.
Level 1
31 December 2012
Level 2
Level 3
Total
Financial assets:
Financial assets held for trading
Available for sale financial assets (*)
Financial investments with risks on policyholders
classified as available for sale
Receivables from individual pension business
Total financial assets
42,316,499
475,524,095
14,091,345
8,335,117
-
-
2,117,707,466
4,277,830,443
6,927,469,848
8,335,117
- 2,117,707,466
- 4,277,830,443
- 6,935,804,965
2,205,674,373
4,277,830,443
6,483,504,816
-
- 2,205,674,373
- 4,277,830,443
- 6,483,504,816
(*)
42,316,499
483,859,212
14,091,345
(**)
Total
Financial assets:
(*)
150
31 December 2013
Level 2
Level 3
Equity share price risk
Equity share price risk is defined as the risk of decreasing the market price of equity shares as a result of a decline in index.
The effect of changes in fair values of the available-for-sale financial assets on equity that is resulted from the fluctuations on
index (all of the other variables are assumed to be fixed) are as follows as at 31 December 2013 and 2012.
Market price of equity
Change in index
31 December 2013
31 December 2012
10%
8,920,298
9,320,633
The effect of changes in fair values of the financial assets held for trading on equity that is resulted from the fluctuations on
Change in index
31 December 2013
31 December 2012
10%
237,230
205,477
Capital management
The aim of the Company’s capital management is defined as to provide the continuity of profit-making company, to protect the
benefits of the shareholders and institutional partners and also to conduct the most efficient capital structure in order to reduce
the cost of capital.
Capital Adequacy Table
31 December 2013
31 December 2012
115,435
109,078,343
14,952,948
124,146,726
196,369
108,496,682
12,569,576
121,262,627
66,013,754
2,561,093
1,863,755
19,093,348
904,963
90,436,913
59,220,929
2,638,414
2,848,020
1,393,290
17,809,304
8,130,010
92,039,967
124,146,726
539,790,655
415,643,929(*)
121,262,627
524,679,792
403,417,165
Required capital for non-life branches
Required capital for life branch
Required capital for pension branch
Required capital based on the first method
Required capital for asset risk
Required capital for reinsurance risk
Required capital for excessive premium increase
Required capital for outstanding claims risk
Required capital for underwriting risk
Required capital for interest rate and currency risk
Required capital based on the second method
Required capital
Current capital
Excessive capital
(*)
As a result of legal regulation, the equalization provision amounted ¨5,921,429 is included in the current capital.
The capital adequacy of the Company is calculated in accordance with the Decree “Measurement and Assessment of Capital
Adequacy of Insurance and Reinsurance Companies and Pension Funds” in all reporting periods. The Capital Adequacy calculated
according to two methods are in line with the minimum requirements. The Company’s recent capital adequacy table prepared as
at the report date for 31 December 2013 is summarized below. As at 31 December 2013, the capital adequacy of the Company is
¨124,146,726 and ¨90,436,913; based on first and second method respectively. By the table below, it is observed that capital
adequacy balances calculated by using first and second methods are less than the Company’s capital as at 31 December 2013.
The Company’s capital calculated based on the regulation as at 31 December 2013 ¨539,790,655. Consequently, the Company’s
capital is adequate.
151
5 Segment reporting
Segmenting of balance sheet and income statement items is based on the distribution key described in Circular “Principles and
Procedures of Distribution Keys Used in Financial Statements under the Insurance Uniformed Chart of Accounts” issued by the
Undersecretariat of Treasury on 4 January 2008 and Circular “Amendments to Principles and Procedures of Distribution Keys
Used in Financial Statements under the Insurance Uniformed Chart of Accounts” issued by the Undersecretariat of Treasury on
9 August 2010.
31 December 2013
Technical income
Technical expense
Total of other income and expense
Income before tax
Income tax expense
31 December 2013
Segment assets
Total assets
Segment liabilities
Total liabilities
31 December 2012
Technical income
Technical expense
Income before tax
Income tax expense
31 December 2012
152
Segment assets
Total assets
Segment liabilities
Total liabilities
Life
Individual Pension
Personal Accident
Total
598,513,416
(535,102,109)
23,130,004
86,541,311
86,541,311
132,002,445
(143,137,394)
22,885,286
11,750,337
11,750,337
675,114
(658,719)
168,548
184,943
184,943
731,190,975
(678,898,222)
46,183,838
98,476,591
(15,310,000)
83,166,591
Life
Individual Pension
Personal Accident
Total
2,245,556,871
2,245,556,871
5,640,484,413
5,640,484,413
16,363,369
16,363,369
7,902,404,653
7,902,404,653
(2,251,440,771)
(2,251,440,771)
(5,634,566,447)
(5,634,566,447)
(16,397,435)
(16,397,435)
(7,902,404,653)
(7,902,404,653)
(2,471,797)
(2,445,646)
(18,012)
(4,935,455)
Life
Individual Pension
Personal Accident
Total
502,677,829
(469,262,040)
26,468,063
59,883,852
59,883,852
139,026,057
(119,530,396)
26,092,017
45,587,678
45,587,678
681,276
(663,540)
186,220
203,956
203,956
642,385,162
(589,455,976)
52,746,300
105,675,486
(26,100,000)
79,575,486
Life
Individual Pension
Personal Accident
Total
2,555,929,807
2,555,929,807
4,648,178,044
4,648,178,044
17,982,616
17,982,616
7,222,090,467
7,222,090,467
(2,560,541,778)
(2,560,541,778)
(4,643,538,704)
(4,643,538,704)
(18,009,985)
(18,009,985)
(7,222,090,467)
(7,222,090,467)
(1,909,282)
(1,882,155)
(13,433)
(3,804,870)
6 Tangible assets
Movement in tangible assets in the period from 1 January to 31 December 2013 is presented below:
Cost:
Land (*)
Buildings (*)
Vehicles
Furniture and fixtures (includes leased assets)
Leasehold improvements
Accumulated depreciation:
Buildings
Vehicles
Carrying amounts
1 January 2013
Additions
Disposals 31 December 2013
1,832,831
25,379,158
5,722,942
573,475
3,924,669
2,685,382
40,118,457
2,239,866
183,856
146,255
267,885
2,837,862
(375,726)
(7,303)
(227,608)
(610,637)
1,832,831
25,003,432
7,955,505
529,723
4,070,924
2,953,267
42,345,682
(10,430,872)
(3,326,955)
(442,475)
(2,953,316)
(1,653,395)
(18,807,013)
21,311,444
(503,679)
(1,072,558)
(105,377)
(287,209)
(260,828)
(2,229,651)
167,824
6,481
218,158
392,463
(10,766,727)
(4,393,032)
(329,694)
(3,240,525)
(1,914,223)
(20,644,201)
21,701,481
Land with a carrying amount of ¨1,411,831 and buildings with a carrying amount of ¨13,568,863 are investment properties and given in Note 7 - Investment
properties in detail. Total impairment losses on own use land amounted to ¨417,070.
(*)
Buildings (*)
Vehicles
Carrying amounts
1 January 2012
Additions
1,832,831
25,379,158
4,212,702
797,979
3,723,903
2,229,627
38,176,200
1,528,873
297,573
455,755
2,282,201
(18,633)
(224,504)
(96,807)
(339,944)
1,832,831
25,379,158
5,722,942
573,475
3,924,669
2,685,382
40,118,457
(9,922,184)
(2,642,412)
(546,574)
(2,759,383)
(1,402,711)
(17,273,264)
20,902,936
(508,688)
(696,092)
(87,506)
(280,979)
(250,684)
(1,823,949)
11,549
191,605
87,046
290,200
(10,430,872)
(3,326,955)
(442,475)
(2,953,316)
(1,653,395)
(18,807,013)
21,311,444
(*)
There are no pledges on tangible assets.
Cost:
Land (*)
Buildings (*)
Vehicles
153
7 Investment properties
Movement in investment properties in the period from 1 January to 31 December 2013 is presented below:
Cost:
Land
Buildings
Buildings
Carrying amounts
1 January 2013
Additions
Disposals
31 December 2013
1,411,831
24,461,256
25,873,087
-
(375,726)
(375,726)
1,411,831
24,085,530
25,497,361
(10,200,275)
(10,200,275)
15,672,812
(484,216)
(484,216)
167,824
167,824
(10,516,667)
(10,516,667)
14,980,694
For the year ended 31 December 2013, the Company has rental income from investment properties amounting ¨3,280,321
(31 December 2012: ¨3,059,325).
Cost:
Land
Buildings
Buildings
Carrying amounts
1 January 2012
Additions
Disposals
31 December 2012
1,411,831
24,461,256
25,873,087
-
-
1,411,831
24,461,256
25,873,087
(9,711,050)
(9,711,050)
16,162,037
(489,225)
(489,225)
(10,200,275)
(10,200,275)
15,672,812
As at 31 December 2012, total fair value of the Company’s investment properties amounting to ¨53,523,000. Expert reports on
these properties have been prepared by the authorized real estate valuation companies at January and February of 2010. There
are no pledges on these properties.
8 Intangible assets
Movement in intangible assets in the period from 1 January to 31 December 2013 is presented below:
Cost:
Rights
154
Accumulated amortization:
Rights
Carrying amounts
1 January 2013
Additions
Disposals
31 December 2013
11,845,644
11,845,644
3,390,101
3,390,101
-
15,235,745
15,235,745
(7,547,691)
(7,547,691)
(2,705,804)
(2,705,804)
-
(10,253,495)
(10,253,495)
4,297,953
4,982,250
Movements in intangible assets in the period from 1 January to 31 December 2012 are presented below:
Cost:
Rights
1 January 2012
Additions
Disposals
31 December 2012
8,299,662
8,299,662
3,545,982
3,545,982
-
11,845,644
11,845,644
(5,566,770)
(5,566,770)
(1,980,921)
(1,980,921)
-
(7,547,691)
(7,547,691)
Rights
Carrying amounts
2,732,892
4,297,953
9 Investments in associates
31 December 2013
Carrying value
Participation rate %
Investments in
associates, net
Associate
8,762,193
31 December 2012
Carrying value
Participation rate %
20.0%
8,762,193
8,762,193
Total assets
80,906,115
Shareholders’
equity
75,181,480
20.0%
8,762,193
Retained
earnings
14,958,829
Profit for the
period
10,471,581
Audited or
not
Audited
Period
31 December 2013
The Company has ¨554,972 of dividend income from associates.
10 Reinsurance assets and liabilities
Outstanding reinsurance assets and liabilities of the Company, as a ceding company in accordance with the existing reinsurance
contracts are as follows:
Reinsurance assets
Reserve for unearned premiums, ceded (Note 17.15)
Provision for outstanding claims, ceded (Note 17.15)
Life mathematical reserve, ceded (Note 17.15)
Provision for bonus and discount, ceded (Not 17.15)
Other technical provision, ceded
Due from reinsurers
Total
31 December 2013
31 December 2012
2,193,599
3,134,362
3,998,021
353,241
268,623
113,350
10,061,196
1,662,615
605,350
5,468,417
272,071
180,789
242,024
8,431,266
31 December 2013
31 December 2012
881,759
881,759
636,822
636,822
Reinsurance liabilities
Cash deposited by insurance and reinsurance companies (Note 19)
Total
There is not any impairment losses recognized for reinsurance assets.
155
Gains and losses recognized in the statement of income in accordance with existing reinsurance contracts are as follows:
31 December 2013
31 December 2012
(13,001,366)
551,901
2,613,736
6,694,047
2,502,259
78,480
(1,470,396)
(2,031,339)
(11,460,129)
131,841
2,760,812
3,393,572
(353,629)
272,071
212,924
(5,042,538)
(140,606)
(20,917)
48,490
135,078
26,753
2,690
51,488
(322,163)
(26,502)
60,894
45,319
(30,677)
(273,129)
(1,979,851)
(5,315,667)
31 December 2013
31 December 2012
581,745,719
36,388,883
11,401,986
518,741,965
42,316,499
14,091,345
1,787,655,851
(10,299,782)
2,406,892,657
2,117,707,466
(10,299,782)
2,682,557,493
Life branch:
Premiums ceded during the period
Change in unearned premiums reserve, ceded
Commissions received from reinsurers (*)
Reinsurers share of claims paid
Change in outstanding claims, ceded
Change in bonus and discount provision, ceded
Change in life mathematical reserve, ceded
Non-life branch:
Change in provision for bonus and discount, ceded
Total, net
(*)
Deferred commissions are excluded from commissions received from reinsurers.
11 Financial assets
As at 31 December 2013 and 2012, the Company’s financial assets are detailed as follows:
Financial assets and financial investments with risk on policyholders
Available for sale financial assets, Company’s own portfolio
Financial assets held for trading purpose
Financial investments with risks on saving life policyholders classified as
available for sale
Impairment loss on financial assets
Total
As at 31 December 2013 and 2012, the Company’s financial assets held for trading are detailed as follows:
156
Face value
Equity shares and other non-fixed income
financial assets:
Equity shares
Investment funds and Turkish derivatives
exchange contracts
Total financial assets held for trading
purpose - other
purpose
31 December 2013
Cost
Fair value
Carrying value
1,265,614
2,372,303
2,372,303
26,279,907
34,016,580
34,016,580
27,545,521
36,388,883
36,388,883
27,545,521
36,388,883
36,388,883
Face value
Equity shares and other non-fixed income financial assets:
Equity shares
exchange contracts
purpose - other
purpose
31 December 2012
Cost
Fair value
Carrying value
1,265,614
2,054,767
2,054,767
30,259,023
40,261,732
40,261,732
31,524,637
42,316,499
42,316,499
31,524,637
42,316,499
42,316,499
The Company’s financial assets held for trading issued by the Company’s related parties, are detailed as follows:
Face value
Investment funds
Total
557,536,556
557,536,556
Face value
Investment funds
Total
501,187,090
501,187,090
31 December 2013
Cost
Fair value
26,279,907
26,279,907
Carrying value
34,016,580
34,016,580
34,016,580
34,016,580
31 December 2012
Cost
Fair value
Carrying value
30,259,023
30,259,023
40,261,732
40,261,732
40,261,732
40,261,732
Reverse repo
Receivables from reverse repo
Reverse repo
Cost
31 December 2013
Fair value
Carrying value
11,400,000
11,400,000
11,401,986
11,401,986
11,401,986
11,401,986
Cost
31 December 2012
Fair value
Carrying value
14,089,404
14,089,404
14,091,345
14,091,345
14,091,345
14,091,345
As at 31 December 2013 and 2012, the Company’s loans and receivables are detailed as follows:
157
As at 31 December 2013 and 2012, the Company’s available for sale financial assets in its own portfolio are detailed as follows:
Face value
Debt instruments:
Private sector bonds
Government bonds
Total available for sale financial assets - debt instruments
56,048,139
406,881,935
462,930,074
58,211,104
399,399,063
457,610,167
58,211,104
399,399,063
457,610,167
Equity shares (*)
Total available for sale financial assets - other
104,449,208
104,449,208
124,135,552
124,135,552
124,135,552
124,135,552
Total available for sale financial assets
567,379,282
581,745,719
581,745,719
Impairment loss on available for sale equity shares
(10,299,782)
(10,299,782)
(10,299,782)
Net available for sale financial assets
557,079,500
571,445,937
571,445,937
(*)
63,159,000
392,952,232
Financial assets of which the fair values are measured reliably are presented at their fair values, if not, presented at their costs.
Face value
Debt instruments:
Government bonds
Total available for sale financial assets - debt instruments
29,492,970
349,474,472
31 December 2012
Cost
Fair value Carrying value
25,758,616
333,670,209
359,428,825
26,512,627
364,140,259
390,652,886
26,512,627
364,140,259
390,652,886
Equity shares (*)
Total available for sale financial assets - other
100,871,811
100,871,811
128,089,079
128,089,079
128,089,079
128,089,079
460,300,636
518,741,965
518,741,965
Impairment loss on available for sale equity shares
(10,299,782)
(10,299,782)
(10,299,782)
450,000,854
508,442,183
508,442,183
(*)
158
31 December 2013
Cost
Fair value Carrying value
The Company has equity shares and bonds issued by the Company’s related parties and classified as available for sale financial
assets in its own portfolio with a cost amount of ¨103,220,742 and ¨18,291,112 a carrying value of ¨120,795,738 and
¨18,312,084 as at 31 December 2013 (31 December 2012: Equity shares with a cost amount of ¨99,643,344 and a carrying
amount of ¨125,103,318; Bonds issued by the Company’s related parties with a cost amount ¨4,799,350 and a carrying amount
of ¨4,992,600).
Financial investments with risks on saving life policyholders (“FIRSLP”) as at 31 December 2013 and 2012 are detailed as follows:
Debt Instruments:
Government bonds - ¨
Eurobonds issued by the Turkish
Government
Investment funds
Total available for sale financial assets debt instruments
Financial investments with risks on
saving life policyholders
Face value
Carrying value
1,359,428,127
1,372,517,064
1,387,177,831
1,387,177,831
137,578,000
5,500,000
55,151,200
318,932,698
5,146,240
51,500,165
337,737,532
5,321,195
57,419,293
337,737,532
5,321,195
57,419,293
1,557,657,327
1,748,096,167
1,787,655,851
1,787,655,851
1,748,096,167
1,787,655,851
1,787,655,851
31 December 2012
Cost
Fair value
Carrying value
Face value
Debt Instruments:
Government
Investment Funds
31 December 2013
Cost
Fair value
1,413,003,589
1,464,050,779
1,646,165,027
1,646,165,027
154,991,000
55,151,200
300,765,080
51,500,165
405,166,591
66,375,848
405,166,591
66,375,848
1,623,145,789
1,816,316,024
2,117,707,466
2,117,707,466
1,816,316,024
2,117,707,466
2,117,707,466
The financial assets issued by the Company’s related parties and classified as FIRSLP are detailed as follows:
Investment funds
Total
55,151,200
5,500,000
60,651,200
Face value
Investment funds
Total
55,151,200
55,151,200
51,500,165
5,146,240
56,646,405
Carrying value
57,419,293
5,321,195
62,740,488
57,419,293
5,321,195
62,740,488
31 December 2012
Cost
Fair value
Carrying value
51,500,165
51,500,165
66,375,848
66,375,848
The Company has no securities, other than issued shares in the current period, or any matured debt securities.
66,375,848
66,375,848
Face value
31 December 2013
Cost
Fair value
159
Value increases in financial assets for the last three periods:
31 December 2013 31 December 2012 31 December 2011
Current financial assets:
Financial investments with risks on saving life policyholders
Total
14,366,437
8,843,362
1,986
58,441,329
10,791,862
1,941
774,599
2,410,277
162
39,559,684
62,771,469
301,391,442
370,626,574
141,798,468
144,983,506
Value increases reflect the difference between the carrying value and cost of the financial assets.
The Company has ¨10,299,782 of impairment loss arising from its available for sale investments in equity participations not
having a quoted market price in an active market.
The Company does not apply hedge accounting.
Exchange rate differences arising from the payments of monetary items or different conversion rates used in the current period
or at initial recognition are recognized in profit or loss.
Financial assets blocked in favor of the Turkish Treasury as a guarantee for the insurance activities are as follows:
Face value
saving life policyholders - debt securities
Available for sale financial assets
Total
1,557,657,327
133,995,798
Face value
Total
160
1,623,145,789
135,522,223
31 December 2013
Cost
Fair value
1,748,096,167
138,191,971
1,886,288,138
Carrying value
1,787,655,851
135,211,744
1,922,867,595
1,787,655,851
135,211,744
1,922,867,595
31 December 2012
Cost
Fair value
Carrying value
1,816,316,024
137,669,477
1,953,985,501
2,117,707,466
150,802,627
2,268,510,093
2,117,707,466
150,802,627
2,268,510,093
12 Loans and receivables
Receivables from insurance operations
Provisions for receivables from insurance operations
Loans to the policyholders
Doubtful receivables from main operations and insurance operations
Provisions for doubtful receivables from main operations and insurance
operations
Receivables from pension activities
Net fund value of participants
Other
Total receivables from main operations
Receivables from personnel
Other receivables
Total
31 December 2013
31 December 2012
12,788,669
(2,574)
43,748,889
117,996
8,959,668
(2,574)
51,779,559
117,996
(117,996)
5,239,479,594
5,231,179,012
8,300,582
5,296,014,578
334,634
12,165,677
5,308,514,889
(117,996)
4,286,411,507
4,277,830,443
8,581,064
4,347,148,160
1,096,350
1,891,704
4,350,136,214
31 December 2013
31 December 2012
4,112,320
1,655,469
1,026,400
6,794,189
4,075,128
1,140,697
1,016,400
6,232,225
31 December 2013
31 December 2012
117,996
-
117,996
-
117,996
117,996
The details of guarantees for the Company’s receivables are presented below:
Guarantees and commitments
Letters of guarantees
Real estate pledges
Total
operations at the beginning of the period
Collections
Charge for the period
operations at the end of the period
Provision for both overdue receivables and receivables not due yet
a) Receivables under legal or administrative follow up (due): ¨117,996 (31 December 2012: ¨117,996).
b) Provision for premium receivables (due): ¨2,574 (31 December 2012: ¨2,574).
The Company reflects its receivables from and payables to reinsurance and insurance companies by netting off on the entity
basis.
The Company’s receivables from and payables to shareholders, associates and subsidiaries are detailed in note 45 - Related party
transactions.
13 Derivative financial instruments
As at 31 December 2013, the detailed information about the Company’s current derivative financial instruments is presented in
11 - Financial assets. At the reporting period, Company has no derivative financial instruments.
The Company provides provision for its doubtful receivables in the legal follow-up by considering the value and nature of the
receivable.
161
14 Cash and cash equivalents
As at 31 December 2013 and 2012, cash and cash equivalents are as follows:
31 December 2013
At the end of the At the beginning of
period
the period
Cash on hand
Bank deposits
Bank Guaranteed Credit Card Receivables
with Maturities Less Than Three Months (*)
Cheques given and payment orders
Cash and cash equivalents in the
balance sheet
Interest accruals on bank deposits
Time deposits with maturities longer
than 3 months
Cash and cash equivalents presented in
the statement of cash flow
31 December 2012
period
the period
20,961
29,864,319
14,155
59,951,461
14,155
59,951,461
12,206
52,803,532
109,055,120
(174,771)
82,540,020
(163,210)
82,540,020
(163,210)
67,036,981
(63,794)
138,765,629
142,342,426
142,342,426
119,788,925
(87,376)
(282,203)
(282,203)
(323,655)
-
-
-
-
138,678,253
142,060,223
142,060,223
119,465,270
Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months include credit card receivables from banks in relation to premium payments of
policyholders.
(*)
As at 31 December 2013 and 2012, bank deposits are further analyzed as follows:
Foreign currency denominated bank deposits
- time deposits
- demand deposits
Bank deposits in Turkish Lira
- time deposits
- demand deposits
Cash at banks
1,013,036
2,543,732
18,737,143
10,114,140
29,864,319
54,078,050
3,329,679
59,951,461
As at 31 December 2013, ¨ time deposits have a maximum maturity of 1 month and their simple interest rates vary between
7.00% and 9.00%. The Company has no foreign currency denominated bank deposits.
15 Equity
Paid in capital
162
As at 31 December 2013, the authorized nominal share capital of the Company is ¨350,000,000 and the share capital of the
Company consists of 35,000,000,000 issued shares with ¨0.01 nominal value each.
The Company’s share capital is divided into group A and group B shares. Group A share is represented by 100,000,000 of equity
shares having a nominal amount of ¨0.01 each. Group B share is represented by 34,900,000,000 shares having a nominal
amount of ¨0.01 each and all shares are owned by Türkiye İş Bankası AŞ. Group A shareholders have no privileges except for
the election of Board members. In accordance with the Articles of Association, new group A shares cannot be issued in capital
increases.
of 15 June 2000 upon the permission no: 67/1039 granted by the Capital Markets Board. As at 31 December 2013, the Company’s
registered capital is ¨450,000,000.
As at 31 December 2013, there are not any treasury shares held by the Company’s associate; namely İş Portföy Yönetimi AŞ.
There are not any treasury shares held by the Company itself.
Profit on assets sale that will be transferred to capital
In accordance with tax legislation, 75% of profits from sales of participation shares and real states included in the assets of
companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains
cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years.
Legal reserves
The legal reserves consist of first and second legal reserves in accordance with the Turkish Commercial Code. The first legal
reserve is appropriated out of the statutory profits at the rate of 5%, until the total reserve reaches a maximum of 20% of the
entity’s share capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the
entity’s share capital. The first and second legal reserves are not available for distribution unless they exceed 50% of the share
capital, but may be used to absorb losses in the event that the general reserve is exhausted.
The movement of legal reserves is as follows:
Legal reserves at the beginning of the period
Transfer from profit
Legal reserves at the end of the period
65,516,677
6,768,026
72,284,703
59,640,083
5,876,594
65,516,677
Extraordinary reserves
The movement of extraordinary reserves is presented below:
Extraordinary reserves at the beginning of the period
Capital increase
Extraordinary reserves at the end of the period
12,205,336
26,795,776
(31,000,000)
8,001,112
1,219,776
10,985,560
12,205,336
Statutory reserves
The movement of statutory reserves is presented below:
Statutory reserves at the beginning of the period
Capital increase
Statutory reserves at the end of the period
13,722,714
6,119,160
(19,000,000)
841,874
9,095,243
4,627,471
13,722,714
As of 31 December 2013, in accordance with the revision of TAS 19, as the amount of actuarial gains and losses (¨(291,369), are
presented under the other profit reserves, which are previously shown under the income statement.
Other Profit Reserves
163
Valuation of financial assets
Movement of fair value reserves of available for sale financial assets is presented below:
Fair value reserves at the beginning of the period
46,772,005
(9,601,394)
829,468
(69,361)
(251,823,405)
230,582,919
239,232,235
(219,053,773)
(19,698,771)
4,517,072
54,407,569
(7,550,933)
(19,772,207)
(368,680)
18,783,597
350,246
(2,568,256)
711,373
4,276,718
(851,657)
Amounts transferred to income statement due to bonus shares:
(4,004,370)
(5,349,649)
Fair value reserves at the end of the period
12,978,741
46,772,005
Changes during the period:
The effect of changes in foreign exchange rates on unrealized gains and losses,
recognized due to change in the fair values of available for sale financial assets with
risks on saving life policyholders
Change in unrealized gains and losses due to changes in the fair values of available
for sale financial assets with risks on saving life policyholders
for sale financial assets with risks on saving life policyholders, policyholders’ portion
Change in unrealized gains and losses from available for sale financial assets,
company’s own portfolio
Deferred and corporate tax effect
Disposals during the period:
Unrealized gains and losses transferred from equity to income statement due to
disposal of available for sale financial assets with risks on saving life policyholders
disposal of available for sale financial assets with risks on saving life policyholders,
policyholders’ portion
disposal of available for sale financial assets, company’s own portfolio
16 Other reserves and equity component of DPF
Income and expense items that are directly accrued in equity as of the reporting period are as follows:
Temporary differences arising from revaluation of financial assets
Permanent differences arising from revaluation of financial assets
Deferred tax effect
Total
164
(2,254,978)
14,782,723
450,996
12,978,741
32,267,327
20,958,144
(6,453,466)
46,772,005
17 Insurance contract liabilities and reinsurance assets
17.1 Total amount of guarantee that should be placed by the Company for life and non-life branches and guarantees placed
for the life and non-life branches in respect of related assets:
31 December 2013
Should be
Placed (*)
placed (**)
Life:
Financial assets (*)
Total
1,942,439,296
1,942,439,296
1,931,004,910
1,931,004,910
Non-life:
Total
768,354
768,354
1,988,009
1,988,009
1,943,207,650
1,932,992,919
Total
31 December 2012
Should be
placed (**)
Placed (*)
1,917,972,126
1,917,972,126
591,383
591,383
1,918,563,509
2,214,166,541
2,214,166,541
1,718,017
1,718,017
2,215,884,558
As at 31 December 2013 and 2012, government bonds and treasury bills are measured at daily official prices announced by the Central Bank of Turkey; if these
prices are not available, they are measured with stock exchange values; investment fund participation certificates are measured using the daily prices in accordance
with the 6th Article of “Circular Related to the Financial Structure of Insurance, Reinsurance, and Individual Pension Companies”.
(*)
According to 7th article of “Circular Related to the Financial Structure of Insurance, Reinsurance, and Individual Pension Companies” which regulates necessary
guarantee amount, minimum guarantee fund for capital adequacy calculation period will be established as a guarantee in two months following the calculation
period. According to “Regulations Regarding to Capital Adequacy Measurement and Assessment of Insurance, Reinsurance, and Individual Pension Companies”,
companies must prepare their capital adequacy tables twice in a financial year at June and December periods and must sent capital adequacy tables to the Turkish
Treasury Department within two months. As at 31 December 2013 (31 December 2012), minimum guarantee amount of 30 June 2013 is shown as necessary
guarantee amount; since, minimum guarantee amount as at 30 June 2013 (30 June 2012) is based on 30 June calculations.
(**)
As at 31 December 2013, ¨1,547,605,688 of government bonds (31 December 2012: ¨1,841,176,020) and ¨327,967,938 of
Eurobonds (31 December 2012: ¨308,332,690) and ¨57,419,293 (31 December 2012: ¨66,375,848) of investment funds are
placed as guarantee for the life and non-life branches.
17.2 Number of life insurance policies, additions, disposals in the current period, and current life policy holders and the
related mathematical reserves
Additions during the period
Disposals during the period
Outstanding
31 December 2012 (*)
Number of
Mathematical
policies
reserves
1,343,918
298,965,577
(1,047,267)
(358,289,334)
1,618,520
1,966,089,802
The above table includes 71 of reactivated life insurance policies (31 December 2012: 95) and their corresponding mathematical reserves.
As explained in Note 2 - Financial Assets, available for sale financial assets with risks on saving life policyholders are measured at
fair value; 95% of the fair value and amortized cost difference amounting to ¨5,711,673 (31 December 2012: ¨245,052,988) is
recognized under the life mathematical provisions. As at the reporting date, there is no future withholding tax levied to income
obtained from financial investments which are classified under the Company’s assets recognized under the life mathematical
provisions (31 December 2012: None). These balances are not included in the above table.
¨3,998,021 (31 December 2012: ¨5,468,417) of reinsurer’s share of life mathematical provisions is not offset against the
mathematical provisions in the above table.
17.3 Guarantees given to non-life insurances based on branches:
Guarantees given to death by accident
Guarantees given to disability by accident
Total
1,740,325,537
1,747,766,422
3,488,091,959
1,388,855,772
1,390,190,772
2,779,046,544
(*)
Number of
Mathematical
policies
reserves
1,445,462
217,280,779
(1,245,897)
(302,184,677)
1,818,085
1,881,185,904
165
17.4 Pension investment funds established by the Company and their unit prices:
As at 31 December 2013 and 2012, individual pension investment funds founded by the Company and their unit prices are as
follows:
31 December 2013
Unit price
31 December 2012
Unit price
0.042305
0.030218
0.028274
0.028272
0.064897
0.026641
0.035264
0.043627
0.062572
0.011865
0.011893
0.011548
0.011700
0.038790
0.022108
0.041903
0.033958
0.026597
0.024832
0.020885
0.020926
0.009579
0.009921
0.009450
0.042710
0.028745
0.026961
0.023889
0.074480
0.019754
0.033813
0.045663
0.064976
0.011646
0.010674
0.011856
0.011227
0.038902
0.020035
0.047584
0.032217
0.026523
0.028644
0.020235
0.021922
AH1 Bond Fund
AH2 Liquid Fund
AH5 Equity Fund
AH9 Balanced Fund
AH0 Aggressive Fund
ABE BRIC Plus Fund
AHL Dynamic Flexible Fund (*)
AHC Mixed Fund (¨) (*)
AG1 Group Bond Fund
AEA Gold Fund (***)
ATK Orange Bond-Bill Fund’s name has changed as ATK Standard Fund according to statute of fund at 25 April 2013.
(*)
Initial public offering of AET Contribution Fund (¨) and AER Alternative Contribution Fund has been executed at 30 April 2013, respectively.
(**)
Initial public offering of AEA Gold Fund (¨) has been executed at 15 April 2013, respectively.
(***)
166
17.5 Number and amount of participation certificates in portfolio and circulation:
Number of participation documents in the portfolio and in circulation is such as follows as of 31 December 2013 and 2012:
31 December 2013
Participation Certificates in Circulation
Number
Amount
AH1 Bond Fund
AH2 Liquid Fund
AH5 Equity Fund
AH9 Balanced Fund
AH0 Aggressive Fund
ABE BRIC Plus Fund
AHL Dynamic Flexible Fund
AHC Mixed Fund (¨)
AG1 Group Bond Fund
ATK -Standard Fund (*)
AER Alternative Contribution
Fund (**)
AEA Gold Fund (***)
Total
38,294,022,156.01
4,585,072,946.63
4,560,450,091.56
4,119,971,344.87
3,488,537,052.92
2,276,433,080.72
4,468,009,325.79
24,428,037,174.32
8,961,780,267.35
6,639,861,442.46
2,922,204,366.22
2,018,248,514.43
3,133,028,631.87
5,561,805,321.32
436,337,123.02
773,259,624.18
2,539,158,903.61
11,277,987,267.19
2,100,959,453.72
1,089,957,724.29
532,193,862.27
23,587,324,029.54
489,145,045.72
2,301,993,477.32
31 December 2012
Number
Amount
1,620,028,607.31 34,044,230,542.89
138,551,734.30
4,028,128,998.44
128,942,165.89
4,156,360,776.66
116,479,829.86
3,434,167,896.02
226,395,589.12
2,686,126,576.72
60,646,453.70
573,914,153.51
157,559,880.86
3,109,262,703.31
1,065,721,977.80 20,479,238,309.32
560,756,514.89
7,593,578,573.45
78,781,956.01
3,287,291,074.08
34,753,776.53
2,819,064,006.50
23,306,733.84
836,806,404.80
36,656,434.99
564,956,145.74
215,742,428.41
5,967,101,621.38
9,646,541.12
337,897,019.12
32,401,898.03
587,998,732.06
86,224,758.05
2,327,553,802.12
299,960,627.35
10,089,694,555.13
52,171,025.15
1,474,177,699.61
22,763,767.07
973,520,735.30
11,136,688.76
583,713,510.49
225,942,976.88 -
1,454,029,086.49
115,788,568.06
112,059,642.90
82,038,836.87
200,062,707.43
11,337,100.19
105,133,499.79
935,143,458.92
493,400,361.39
38,283,791.85
30,090,689.21
9,921,176.74
6,342,762.65
232,132,187.27
6,769,766.78
27,979,331.67
74,986,800.84
267,608,968.69
42,226,346.03
19,699,192.08
12,796,167.58
-
4,852,808.00 21,753,838.36 5,231,179,012.28
4,277,830,443.43
(*)
(**)
(***)
167
17.6 Portfolio amounts in terms of number of new participants left or cancelled existing participants for individuals and
groups:
Individuals
Group
Total
Additions during
the period
138,770
57,618
196,388
31 December 2013
Left/cancellations
during the period
Outstanding
57,142
623,983
18,264
197,717
75,406
821,700
Total amount
3,772,234,203
1,228,096,224
5,000,330,427
Individuals
Group
Total
Additions during
the period
114,708
29,324
144,032
31 December 2012
Left/cancellations
during the period
Outstanding
64,759
543,632
19,244
157,086
84,003
700,718
Total amount
3,215,797,259
1,062,013,086
4,277,810,345
Additions: The sum of the new contracts added in the period and their registered cumulative values as of the period end in
addition with the number of the contracts that begin and finish in the same period. For the data calculated for 31 December
2013, portfolio amount and insurance contract numbers related with contribution amounts collected before the exercise date
are not taken into consideration. In addition, the amounts related with credit card collections with undue blockage terms are not
added to the calculation.
Left/cancellations: The number of finalized contracts during the period and their values at their expiration dates.
Outstanding: The number of outstanding contracts and their values as of the period end.
Since retirement plan transfers between individual and group retirement plans occurs during the period, periodical changes
should be followed by the total number and portfolio amount of policies. Also, when the contracts effective at the prior reporting
period become a liability because of collection reversals in the current period or when the contracts effective at the prior
reporting period become an asset, total numbers and portfolio values of these contracts are net off at the period end. Number
and portfolio amount of individual and group policies presented in notes reflect the outstanding position of the Company as of
the period-end.
Outstanding contracts have state contribution amounting to ¨230,795,560 in the state contribution funds as of the period end.
17.7 Valuation methods used in profit share calculation for saving life contracts with profit sharing:
Financial investments with risks on saving life policyholders are classified as “available-for-sale financial assets”. These assets
are measured in accordance with the principles specified in Note 2.8 Financial Assets and valuation differences are taken into
account in the profit share calculation.
17.8 Distribution of new participants in terms of their numbers and gross and net contributions for individuals and groups:
168
Individuals
Group
Total
1 January - 31 December 2013
Number of
Gross
Net
contracts
contributions
contributions
138,770
339,682,488
338,357,397
57,618
63,100,324
63,001,457
196,388
402,782,812
401,358,854
Number of
Gross
Net
contracts
contributions
contributions
114,708
227,156,127
222,408,785
29,324
41,292,795
41,024,760
144,032
268,448,922
263,433,545
Contracts become effective in the current period and the total contracts become effective and ceased in the same period
and contributions collected regarding these contracts and the investment oriented contributions have been specified. The
collections made with credit cards with undue blockage terms are also added into gross and net contributions. Transfer
amounts are not included in the current period numbers and balances. In addition, Company has collected ¨56,072,348 as State
Contribution.
17.9 Distribution of new participants in terms of their numbers and gross and net contributions for individuals and groups
which were transferred from other insurance companies during the period:
Individuals
Group
Total
Number of
contracts
1,707
585
2,292
31 December 2013
Gross
contributions
27,039,688
7,517,259
34,556,947
Net
contributions
27,039,688
7,517,259
34,556,947
Number of
contracts
1,909
1,324
3,233
31 December 2012
Gross
contributions
23,460,763
5,683,833
29,144,596
Net
contributions
23,460,763
5,683,833
29,144,596
In addition, Company has transferred ¨463,248 as State Contribution from other pension companies in the related period.
17.10 Distribution of individual and group participants and their gross and net contributions which were transferred from life
insurance portfolio to private pension portfolio during the period:
The legal permission of the transfer from life portfolio to private pension portfolio expired on 7 October 2006 and therefore,
there is no transfer in the current and prior period.
17.11 Distribution of individual and group participants which were transferred to other insurance companies in terms of their
numbers and gross and net contributions:
Individuals
Group
Total
Number of
Gross
Net
contracts
contributions
contributions
57,142
205,015,835
191,601,159
18,264
57,066,401
54,291,399
75,406
262,082,236
245,892,558
Number of
Gross
Net
contracts
contributions
contributions
64,759
409,585,946
370,510,795
19,244
101,825,247
92,434,269
84,003
511,411,193
462,945,064
Number of contracts indicates the number of disposals in the related period.
Gross contributions indicate the fund sales amount as a result of disposal, i.e.; disposal amount.
Net contributions indicate the remaining amount paid to participant less any deductions (initiation fee and withholding) against
the gross amount as a result of disposal.
In addition, Company’s fund outflow is ¨6,763,234 as State Contribution.
17.12 Distribution of new life insurance participants in terms of their numbers and first premium amounts for individuals and
groups during the period:
(*)
31 December 2012
Number of
First premium
contracts
amounts (¨)
11,742
1,433,649
1,445,391
17,185
1,326,638
1,343,823
96,098,428
180,855,996
276,954,424
81,871,623
149,189,900
231,061,523
71 of reactivated contracts are not included in the current period additions.
17.13 Distribution of left or cancelled life insurance participants in terms of their numbers and mathematical reserves for
individuals and groups during the period:
Number of
Mathematical
contracts
reserves (¨)
Individuals
Group
Total
86,784
1,159,113
1,245,897
266,681,983
35,502,694
302,184,677
Number of
Mathematical
contracts
reserves (¨)
140,003
907,264
1,047,267
310,416,026
47,873,308
358,289,334
Individuals
Group
Total (*)
31 December 2013
Number of
First premium
contracts
amounts (¨)
169
17.14 Profit share distribution rate of life insurances as of 31 December 2013 and 2012
31 December 2013 %
31 December 2012 %
7.43
7.43
10.50
10.50
7.98
7.98
7.92
7.92
5.57
5.57
6.01
6.01
7.04
7.04
7.75
7.75
31 December 2013
31 December 2012
Reserve for unearned premiums, gross
Reserve for unearned premiums, ceded (Note 10)
Reserves for unearned premiums, net
23,041,596
(2,193,599)
20,847,997
24,195,380
(1,662,615)
22,532,765
Provision for outstanding claims, gross
Provision for outstanding claims, ceded (Note 10)
Provision for outstanding claims, net
77,684,566
(3,134,362)
74,550,204
56,336,969
(605,350)
55,731,619
1,875,474,231
(3,998,021)
1,871,476,210
2,211,142,790
(5,468,417)
2,205,674,373
481,726
(353,241)
128,485
528,684
(272,071)
256,613
5,921,429
3,915,510
1,972,924,325
2,288,110,880
¨
Life insurance
Income insurance
USD
Life insurance
Income insurance
EURO
Life insurance
Income insurance
GBP
Life insurance
Income insurance
17.15 Information on insurance contract balances in the financial statements
Life mathematical provisions, gross
Life mathematical provisions, ceded (Note 10)
Life mathematical provisions, net
Provision for bonus and discount, gross
Provision for bonus and discount, ceded (Not 10)
Provision for bonus and discount, net
Equalization provision, net
Total insurance technical provisions, net
170
17.16 Factors resulting from individual insurance policies which provide portfolio
Factors resulting from individual insurance policies which provide portfolio increase through the change in mathematical
provisions for the periods 1 January - 31 December 2013 and 1 January - 31 December 2012 are as follows:
Mathematical provisions
New policies issued
Activated from reductions
Activated from cancellations
Contracts with increased capital
Total increase in the portfolio
31 December 2013
31 December 2012
74,528,869
9,277,026
23,649
63,975,789
147,805,333
59,033,558
7,754,761
228,156
145,046,829
212,063,304
Factors resulting from individual insurance policies which provide portfolio decrease through the change in mathematical
Terminations and cancellations (-)
Transformed to contracts without charge (-)
Insurances had capital decrease (-)
Withdrawals (-)
Ceased with risk formed (-)
Expirations (-)
Total decrease in the portfolio
31 December 2013
31 December 2012
(4,482,167)
20,553,462
(41,138)
(100,308,637)
(5,747,889)
(156,102,151)
(246,128,520)
(142,997)
21,987,028
(179,540,126)
(4,824,419)
(125,908,484)
(288,428,998)
Factors resulting from group insurance policies which provide portfolio increase through the change in mathematical reserves for
the period 1 January - 31 December 2013 and 1 January - 31 December 2012 are as follows:
New contracts
Insurances had capital increase
31 December 2013
31 December 2012
39,269,669
28,582
137,766
10,653,144
50,089,161
31,984,921
48,534
49,487
32,110,639
64,193,581
Withdrawals (-)
Expirations (-)
31 December 2013
31 December 2012
303,218
(19,905,213)
(4,003,329)
(4,015)
(11,590,137)
(35,199,476)
(874)
508,740
(1,837,164)
(16,456)
(46,018,814)
(47,364,568)
Factors resulting from group insurance policies which provide portfolio decrease through the change in mathematical reserves
for the periods 1 January - 31 December 2013 and 1 January - 31 December 2012 are as follows:
171
17.17 Gain/losses resulted from reinsurance contracts and recognized in the income statement
Gain or losses resulted from reinsurance contracts and recognized in the income statement are disclosed in note 10 Reinsurance assets, liabilities.
17.18 Incurred claim development table
Incurred claim development table presented below provided cumulative payments of claims according to claim year and following
years:
Claim year
Claim year
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
Cumulative payments up to
date
Payments for the year ended
*)
2008
2009
2010
2011
2012
2013
Total
7,621,312
6,201,960
10,858,399
8,532,107
15,285,562
19,456,357
67,955,697
3,634,320
4,113,823
4,610,880
5,329,728
9,723,183
-
27,411,934
273,370
286,233
399,311
304,054
-
-
1,262,968
14,037
4,938
198,602
-
-
-
217,577
28,668
19,148
-
-
-
-
47,816
19,792
-
-
-
-
-
-
-
-
-
-
-
11,591,499
10,626,102
16,067,192
14,165,889
25,008,745
19,456,357
96,915,784
19,792
19,148
198,602
304,054
9,723,183
19,456,357
29,721,136
19,792
The claims paid includes death-disability termination and personal accident branch gross payments.
17.19 Effects of changes in the assumptions used in the measurement of insurance assets and liabilities, showing the effects
of each change that has significant effect on the financial statements separately
Effects of changes in the assumptions used in the measurement of insurance assets and liabilities are disclosed in note 4 Management of insurance risks.
18 Investment contracts
None.
19 Trade and other payables and deferred income
31 December 2013
31 December 2012
5,868,305
881,759
5,354,762,129
5,231,179,012
123,583,117
5,361,512,193
4,090,566
636,822
4,366,456,847
4,277,830,443
88,626,404
4,371,184,235
5,014
5,014
8,172
2,260
10,432
Guarantees and deposits received
Other payables
Total other payables
320,984
8,561,433
8,882,417
244,608
6,224,776
6,469,384
Deferred commission income
Expense accruals
Other Deferred Income and Expense Accruals
Total deferred income and expense accruals
515,595
829,103
1,243,443
2,588,141
415,872
335,971
1,041,698
1,793,541
5,372,987,765
4,379,457,592
Payables from insurance operations
Cash deposited by insurance and reinsurance companies
Payables from pension activities
Other
Total payables from main operations
172
Due to shareholders
Payables to other related parties
Total payables to related parties
Total
20 Financial liabilities
The Company has no financial liabilities as at the reporting date (31 December 2012: None).
21 Deferred tax
The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial
statements as reported for TFRS purposes and its statutory tax financial statements. These differences usually result in the
recognition of revenue and expenses in different reporting periods for TFRS and tax purposes and they are given below.
20% tax rate is used in the calculation of deferred tax asset and liabilities.
Deferred tax (assets)/liabilities base:
Difference in valuation of financial assets
Provision for employee termination benefits
Equalization reserves/bonus and discount provision
Dividend to personnel and salary provision
Differences in depreciation methods on tangible and intangible assets
between tax regulations and the Reporting Standards
Provision for unused vacation pay liability
Total
Deferred tax (assets)/liabilities:
Total
31 December 2013
31 December 2012
11,170,825
(8,269,886)
(6,049,914)
(2,000,000)
43,619,636
(7,408,414)
(4,172,123)
(3,800,000)
(2,275,544)
(2,918,389)
(10,342,908)
(2,469,963)
(1,965,788)
23,803,348
31 December 2013
31 December 2012
2,234,165
(1,653,977)
(1,209,983)
(400,000)
8,723,927
(1,481,683)
(834,424)
(760,000)
(455,109)
(583,678)
(2,068,582)
(493,993)
(393,157)
4,760,670
Movement of deferred tax (assets)/liabilities:
Opening balance at 1 January
Recognized in profit or loss
Recognized in equity
Closing balance at 31 December
31 December 2013
31 December 2012
4,760,670
148,052
(6,977,304)
(2,068,582)
(4,541,053)
447,909
8,853,814
4,760,670
Movement of deferred tax assets/liabilities for the year ended 31 December 2013 and 2012 are given below:
173
22 Retirement benefit obligations
Under the Turkish Labor Law, the Company is required to pay employment termination benefits to each employee who has
qualified for such payment. Also, employees are entitled to retirement pay provisions subsequent to the completion of their
retirement period by gaining a right to receive retirement payments in accordance with the amended Article 60 of the applicable
Social Insurance Law No: 506 and the related Decrees No: 2422 and 4447 issued on 6 March 1981 and 25 August 1999,
respectively. Some transitional provisions related to pre-retirement service term was excluded from the law since the related law
was amended as of 23 May 2002.
The termination benefit to be paid is subject to upper limit of ¨3,254.44 as at 31 December 2013 (31 December 2012:
¨3,033.98).
The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from
the retirement of employees. TAS 19 (“Employee Benefits”) requires actuarial valuation methods to be developed to estimate the
enterprise’s obligation under defined benefit plans. Accordingly, the following 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 of future inflation.
Consequently, in the accompanying financial statements as at 31 December 2013, the provision has been calculated by
estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. The
provisions at the respective reporting periods have been calculated assuming an annual inflation rate of 6.0% and a discount
rate 10% resulting in a real discount rate 3,77% (31 December 2012: 6.0%, and 1.00% - 4.57%, respectively). The anticipated
rate of forfeitures is considered and estimated rate of the Company’s retirement pay is also taken into account.
After the revision of TAS 19, as the amount of actuarial gain and loss are presented under the other profit reserves, which were
previously shown under the income statement.
Movement of provision for employee termination benefits during the period is presented below:
Provision as at 1 January
Interest cost
Service cost
Payments made during the year
Actuarial gain and losses
Provision as at 31 December
31 December 2013
31 December 2012
7,408,414
444,505
734,666
(681,910)
364,211
8,269,886
4,828,646
289,719
638,792
(1,132,288)
2,783,545
7,408,414
23 Other liabilities and provisions
As at 31 December 2013 and 2012; the details of the provisions for other risks are as follows:
174
Provision for commissions to sales personnel
Provision for litigations
Provision for commissions and expenses
Provisions for costs
Total provisions for other risks
31 December 2013
31 December 2012
2,000,000
2,918,389
650,000
93,970
43,000
5,705,359
8,269,886
13,975,245
3,800,000
1,965,788
500,000
93,970
6,359,758
7,408,414
13,768,172
24 Net insurance premium revenue
Non-life
Life
Total
31 December 2013
31 December 2012
648,587
381,218,379
381,866,966
588,772
355,597,310
356,186,082
25 Fee revenues
The details of fee revenues for the year ended 31 December 2013 and 2012 received from individual pension, life and non-life
branches in accordance with TAS 18 are as follows:
Fund management income
Administrative cost deductions
Entrance fee
Administrative cost deductions in the form of cessation
Other technical income
Increase in value of capital allowances given
Total
31 December 2013
31 December 2012
90,764,418
17,771,761
20,236,910
3,120,756
108,600
132,002,445
88,470,973
33,953,327
16,121,343
367,261
113,153
139,026,057
31 December 2013
(892,251)
21
-
31 December 2012
125,943,353
99,452,715
27,252,894
3,260,568
554,972
135,334,531
38,766,493
6,637,140
2,755,630
539,038
3,280,321
13,479,335
272,331,928
3,059,325
14,923,268
213,154,218
26 Investment income
Financial assets held-for-trading:
Valuation gain/(loss)
Gain on sale
Interest income
Dividend income
Financial assets available- for-sale:
Interest income
Valuation gain (internal rate of return gain)
Gain on sale
Dividend income
Income from associates:
Investment properties:
Rent income
Other income: (*)
Total (**)
9,585,612
1,351,553
182,079
19,549
Other income includes income from bonus shares through capital increases in associates from profit or capital reserves, interest income from time deposits, income
from derivative transactions, foreign exchange gains and insurers’ money not requested from the Company.
(**)
¨65,435,963 (31 December 2012: ¨63,514,117) of investment income obtained from the Company’s own portfolio and ¨206,895,965 (31 December 2012:
¨149,640,101) of investment income obtained from policyholders’ portfolio.
27 Net income accrual on financial assets
Net income accrual from the Company’s own portfolio is as follows:
Available-for-sale financial assets:
Fair value differences recognized in equity
Fair value differences recognized in profit/loss
Total
31 December 2013
12,828,359
4,430,562
17,258,921
31 December 2012
40,327,945
13,121,631
53,449,576
(*)
175
28 Assets held at fair value through profit or loss
Net loss from assets held at fair value through profit or loss recognized in income statement as at 31 December 2013 is
¨(892,230) (31 December 2012: ¨11,138,793, net gain.).
29 Insurance rights and claims
Details of insurance rights and claims are presented in statement of income.
30 Investment contract benefits
None.
31 Other expenses
The allocation of the expenses with respect to their nature or function is presented in note 32 - Operating expenses below.
32 Operating expenses
For the year ended 31 December 2013 and 2012, the details of operating expenses are as follows:
Production commission expenses
Employee benefit expenses (*)
Administration expenses
Marketing and sales expenses
Rent expenses
Outsourced benefits and services
Bank fees
Reinsurance commission income
Other expenses
Total
31 December 2013
31 December 2012
(98,513,424)
(64,378,951)
(19,427,362)
(20,783,342)
(6,506,431)
(3,561,044)
(3,372,117)
2,559,861
(1,401,585)
(215,384,395)
(80,054,824)
(52,595,033)
(18,465,127)
(13,520,385)
(5,906,613)
(3,598,516)
(2,490,347)
2,808,701
(1,568,131)
(175,390,275)
As of 31 December 2013 the amount of ‘dividend and personnel fee expenses’ are presented under ‘personnel expenses’ which are previously shown under
provision expenses.
(*)
33 Employee benefit expenses
Wages and salaries
Dividend to personnel and salary provision expense
Provision for unused vacation
Total
31 December 2013
31 December 2012
64,378,951
2,000,000
497,260
952,602
67,828,813
52,595,033
2,579,768
302,069
55,476,870
34 Financial costs
176
The Company’s has no finance expense in the current period (31 December 2012: None).
35 Income tax expense
Corporate tax liabilities:
Corporate tax provision
Less: Corporation taxes paid in advances during the period
Total
31 December 2013
31 December 2012
15,310,000
(11,512,254)
3,797,746
26,100,000
(18,926,035)
7,173,965
Total tax expense recognized in profit or loss
31 December 2013
31 December 2012
15,310,000
148,052
15,458,052
26,100,000
447,909
26,547,909
31 December 2013
31 December 2012
(450,996)
(450,996)
6,453,466
6,453,466
Current tax expense
Deferred tax expense/(income)
Total
Total tax expense recognized in equity
Change in fair value of available for sale financial assets
Total deferred tax expense recognized in equity
Reconciliation of the Company’s taxation for the year ended 31 December 2013 and 2012 are as follows:
Profit before tax
Taxes on income per statutory tax rate
Disallowable expenses
Effect of allowances
31 December 2013
98,624,643
Tax rate (%)
(19,724,929)
(20.00)
(1,598,009)
(1.62)
5,864,886
5.95
(15,458,052)
(15.67)
31 December 2012
106,123,395
Tax rate (%)
(21,224,679)
(20.00)
(6,680,378)
(6.29)
1,357,148
1.28
(26,547,909)
(25.01)
36 Net foreign exchange gains
31 December 2013
31 December 2012
4,480,459
(11,003,005)
(6,522,546)
513,717
(945,869)
(432,152)
Foreign exchange gains
Foreign exchange losses
Total
37 Earnings per share
Earnings per share is calculated by dividing net profit for the period to the weighted average number of shares.
For a share having TRKr (Kuruş) 1 of nominal value:
Weighted average number of shares (*)
Earnings per share (for 100 shares)
31 December 2013
31 December 2012
35,000,000,000
83,166,591
0.23762
35,000,000,000
79,575,486
0.22736
Capital increase is made through internal resources and prior period’s earnings per share figure is revised by using the number of shares subsequent to the capital
increase.
(*)
The Company’s dividend distribution in 2013 from the profit of 2012 is presented below.
Gross
Net
Group
A
B
Total
A
B
Total
Total Cash
Dividend Amount
(¨)
133,333.33
39,866,666.67
40,000,000.00
113,333.33
33,886,666.67
34,000,000.00
Cash dividend corresponding to
a share having ¨1 of nominal value
Amount (¨)
Rate (%)
0.133333
13.3333
0.133333
13.3333
0.113333
0.113333
11.3333
11.3333
The Company’s dividend distribution in 2013 from the profit of 2012 is ¨40,000,000. Other than that, a dividend of ¨1,892,524
is distributed to the personnel of the Company.
38 Dividends per share
177
39 Cash generated from operations
The cash flows from operating activities are presented in the accompanying statement of cash flows.
40 Convertible bonds
None.
41 Redeemable preference shares
None.
42 Risks
In the normal course of its operations, the Company is exposed to legal disputes, claims and challenges, which mainly stem from
its insurance operations. The necessary income/expense accruals for the revocable cases against/on behalf of the Company are
provided either under provision for outstanding claims or provisions for other risks in the accompanying financial statements.
As at 31 December 2013, there are 105 ongoing law suit filed against the Company and total amount of these suits are
¨2,221,291. ¨2,376,705 (31 December 2012: ¨3,412,883) of provision including interest expense for ongoing law suits for which
cash outflow is probable and measurable reliably is set by the Company in the financial statements. There are 30 ongoing law
suits prosecuted by the Company against the third parties that have amounted ¨1,402,896. Subsequent to the reporting period,
there is no expected amount of law suits to be prosecuted against the Company.
43 Commitments
Total amount of commitments that are not included in liabilities:
Capital commitments
31 December 2013
31 December 2012
475,786
475,786
863,986
863,986
The Company does not have finance lease liabilities as at the reporting period (31 December 2012: None).
44 Business combinations
None.
45 Related party transactions
a. Parent company’s name and the ultimate owner of the group
The Company’s parent is Turkey İş Bankası AŞ with a 62% of share.
b. In accordance with the Company’s activities, items of sub-classifications
178
c. No expense is recognized in the related period for bad or doubtful debts in respect of the amounts owed by the shareholders,
associates and subsidiaries.
d. Details of associates and subsidiaries having indirect capital and management relations with the Company; names, amounts
and rates of participations in the associates and subsidiaries; profit/loss for the period presented in the recent financial
statements of such participations; net profit/loss for the period and period covered by the financial statements; information
about whether these financial statements are prepared in accordance with the CMB standards; information about whether these
financial statements are audited; details of the audit opinion (if the report includes unqualified, adverse or qualified opinion):
İş Portföy
Yönetimi AŞ
Carrying
amount
Participation
rate (%)
Reporting
period
Profit before
income tax
Net profit of
the period
Financial
statements
base
Independent
auditor’s
opinion
8,762,193
20,00
31 December 2013
13,150,735
10,471,581
SPK XI/29
Unqualified
e. Bonus shares obtained from associates or subsidiaries through internal resource capital increases
At the reporting date The Company has obtained no bonus shares through capital increases in associates from profit or capital
reserves.
f. No guarantees, commitments, guarantee letters, advances and endorsements given in favor of shareholders, associates and
subsidiaries.
g. Related party disclosures
Türkiye İş Bankası AŞ - receivables from credit card collections
Türkiye İş Bankası AŞ - bank deposits
Cash at banks
Anadolu Anonim Türk Sigorta Şirketi - premium receivables
Türkiye İş Bankası AŞ - commission payables
Milli Reasürans TAŞ - premium payables
Anadolu Anonim Türk Sigorta Şirketi - other payables
Other payables
31 December 2013
31 December 2012
102,192,002
102,192,002
76,031,154
76,031,154
9,813,038
9,813,038
5,534,597
5,534,597
-
-
5,081,480
99,454
5,180,934
4,374,762
162,086
4,536,848
5,014
5,014
8,172
8,172
4,115,797
353,476
96,614
4,565,887
3,738,711
198,734
77,092
4,014,537
179
For the year ended 31 December 2013, the Company obtained employer contribution for individual pension plans amounting
to ¨15,486,007 (31 December 2012: ¨14,316,736) and accrued employer premium for life insurance amounting to ¨506,769
(31 December 2012: ¨302,422) from related parties. Other transactions with related parties during the year ended 31 December
2013 and 2012 are as follows:
31 December 2013
31 December 2012
702,590
702,590
917,985
917,985
294,309
294,309
246,831
246,831
Türkiye İş Bankası AŞ - interest income from deposits
Investment income
663,404
663,404
652,012
652,012
195,552
15,750
-
187,488
20,256
13,125
8,080
-
13,278
211,302
10,674
252,901
51,918,079
12,984,035
4,178,552
3,131,677
45,144,459
12,191,098
3,961,869
2,917,306
825,064
1,649,623
1,253,519
1,020,191
764,575
664,311
588,558
157,199
76,861,673
839,031
503,624
424,717
152,082
68,407,896
İş Portföy Yönetimi AŞ - investment consultancy fee
İş Portföy Yönetimi AŞ - portfolio management fee
İş Yatırım Menkul Değerler AŞ - MKK service commission
İş Yatırım Menkul Değerler AŞ - portfolio management fee
İş Portföy Yönetimi AŞ - secondary market operations of marketable
securities
İş Yatırım Menkul Değerler AŞ - secondary market operations of
marketable securities
Investment expense
Türkiye İş Bankası AŞ - commission of production
İş Portföy Yönetimi AŞ - portfolio management fee of pension funds
İş Merkezleri Yönetim ve İşletim A.Ş. - building administrative expense
İş Gayrimenkul Yatırım Ortaklığı AŞ - rent expense
İş-Net Elektronik Bilgi Üretim Dağ. Tic. ve İletişim A.Ş. -communication
expense
Anadolu Anonim Türk Sigorta Şirketi - premium paid
Türkiye İş Bankası AŞ - commission of premium collection and banking
services
Türkiye İş Bankası A.Ş. - fund operation service expense
Türkiye Iş Bankası AŞ - rent expense
Anadolu Anonim Türk Sigorta Şirketi - rent expense
Other expenses
180
46 Events after the reporting period
Events after the reporting period are disclosed in note 1.10 - events after the reporting period.
47 Others
Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of
the group to which they relate or 5% of the total assets in the balance sheet
Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of the
group to which they relate or 5% of the total assets in the balance sheet are as follows:
Current Assets (Other Receivables)
31 December 2013
31 December 2012
11,261,706
862,576
12,124,282
1,166,746
688,355
1,855,101
31 December 2013
31 December 2012
2,778,054
2,445
5,699,816
81,118
8,561,433
1,990,188
92,431
3,757,877
384,280
6,224,776
Securities reconciliation account
Other
Total
Short-term Liabilities (Other Miscellaneous Payables)
Suspense accounts
Payable to suppliers
Other
Total
Payables to employees and receivables from employees presented under accounts, “other receivables” and “other short or
long term payables”, and which have balance more than 1% of the total assets
None.
Subrogation recorded in “Off-Balance Sheet Accounts”
None.
Real rights on immovable and their values
None.
Explanatory note for the amounts and nature of previous years’ income and losses
None.
Unused vacation pay liability
Provisions no longer required
Provision for impairment loss on financial assets
Other provision expense
Provision expense
31 December 2013
(497,260)
(952,602)
840,768
(190,945)
(800,039)
31 December 2012
(2,579,768)
(302,069)
619,356
(38,559)
(2,301,040)
For the year ended 31 December 2013 and 2012, details of discount and provision expenses are as follows:
181
Information on Consolidated Associate
Pursuant to the “Circular Related to the Preparation of the Consolidated Financial Statements of Insurance, Reinsurance, and
Private Pension Companies” (“Consolidation Circular”) issued by the Turkish Treasury in the Official Gazette issue 27097 dated
31 December 2008, insurance, reinsurance and pension companies are obliged to publish consolidated financial statements
besides unconsolidated financial statements.
Accordingly, our Company started drawing up consolidated financial statements as of 2010, taking into consideration the
financial statements of İş Portföy Yönetimi A.Ş., which is the only associate of the Company, and using the equity method of
accounting.
Founded in October 2000 as an associate of İşbank, İş Portföy Yönetimi A.Ş. offers asset management and investment advisory
services to institutional investors.
General information on İş Portföy Yönetimi A.Ş. is presented in the below-given table.
İş Portföy Yönetimi A.Ş. does not hold any shares in our Company.
İş Portföy
Yönetimi A.Ş.
Carrying
Value
Participation
Rate (%)
15,036,296
20,0
Reporting
Period
31 December
2013
Profit for the
Period before
Tax
Net Profit
for the
Period
Financial
Statements
Base
13,150,735
10,471,581
SPK XI/29
Independent
Auditor’s
Opinion
Unqualified
Unconsolidated/Consolidated Summary Financial Data (¨ thousand):
Financial statement items that show a different value due to consolidation are presented below with their unconsolidated and
consolidated values.
Associates
Financial Income
Pretax Profit
Total Assets
182
Unconsolidated
8,762
65,436
98,477
533,869
7,902,405
Consolidated
15,036
66,975
100,016
540,143
7,908,679
Consolidated Financial Statements Together with Independent
Auditors’ Report Thereon
183
Independent Auditors’ Report
Akis Bağımsız Denetim ve Serbest
Muhasebeci Mali Müşavirlik A.Ş.
Kavacık Rüzgarlı Bahçe Mah.
Kavak Sok. No: 3
Beykoz 34805 İstanbul
Telephone +90 (216) 6819000
Fax
+90 (216) 6819090
İnternet
www.kpmg.com.tr
To the Board of Directors of Anadolu Hayat Emeklilik Anonim Şirketi
Introduction
We have audited the accompanying consolidated balance sheet of Anadolu Hayat Emeklilik Anonim Şirketi (“the Company”)
as at 31 December 2013 and the related consolidated statement of income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other
explanatory notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with the accounting principles and standards in force as per the insurance legislation. This responsibility includes: designing,
implementing and maintaining internal systems relevant to the preparation and fair presentation of financial statements that
are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Independent Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with audit standards in force as per the insurance legislation. Those standards require that we comply with
relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements
are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, we consider internal systems relevant to
the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal system.
An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting
estimates made by management, as well as evaluating the 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 opinion.
184
Independent Auditors’ Opinion
In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial position of Anadolu
Hayat Emeklilik Anonim Şirketi as at 31 December 2013, and of its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with the accounting principles and standards (see Note 2) in force as per the
Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ
Alper Güvenç, Certified Public Accountant
Partner
Additional paragraph for convenience translation to English:
As explained in Note 2.1.1, the accompanying consolidated financial statements are not intended to present the financial position
and results of operations of the Company in accordance with the accounting principles and practices generally accepted in
countries and jurisdictions other than Turkey.
185
Consolidated Financial Statements as at and
We confirm that the consolidated financial statements and related disclosures and footnotes as at 31 December 2013 which
were prepared in accordance with the accounting principles and standards in force as per the regulations of T.C. Başbakanlık
Hazine Müsteşarlığı are in compliance with the “Code Related to the Financial Reporting of Insurance, Reinsurance and Private
Pension Companies” and the financial records of our Company.
186
Mete Uğurlu
Oğuz Haluk Solak
N. Cem Özcan
Member of Board of Directors,
Chief Executive Officer
Vice Chief Executive Officer
Accounting Manager
Actuary
(Registration Number: 37)
CONTENTS
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF INCOME
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF PROFIT DISTRIBUTION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
General information
NOTE 2
Summary of significant accounting policies
NOTE 3
Critical accounting estimates and judgments in applying accounting policies
NOTE 4
Management of insurance and financial risk
NOTE 5
Segment reporting
NOTE 6
Tangible assets
NOTE 7
Investment properties
NOTE 8
Intangible assets
NOTE 9
Investments in associates
NOTE 10
Reinsurance assets and liabilities
NOTE 11
Financial assets
NOTE 12
Loans and receivables NOTE 13
Derivative financial instruments
NOTE 14
NOTE 15
Equity
NOTE 16
Other reserves and equity component of DPF NOTE 17
Insurance contract liabilities and reinsurance assets
NOTE 18
Investment contracts
NOTE 19
Trade and other payables and deferred income
NOTE 20
Financial liabilities
NOTE 21
Deferred taxes
NOTE 22
Retirement benefit obligations
NOTE 23
Other liabilities and provisions
NOTE 24
Net insurance premium revenue NOTE 25
Fee revenues
NOTE 26
Investment income
NOTE 27
Net income accrual on financial assets
NOTE 28
Assets held at fair value through profit or loss NOTE 29
Insurance rights and claims
NOTE 30
Investment contract benefits
NOTE 31
Other expenses
NOTE 32
Operating expenses
NOTE 33
Employee benefit expenses
NOTE 34
Financial costs
NOTE 35
Income tax expense
NOTE 36
Net foreign exchange gains
NOTE 37
Earnings per share
NOTE 38
Dividends per share
NOTE 39
Cash generated from operations
NOTE 40
Convertible bonds
NOTE 41
Redeemable preference shares
NOTE 42
Risks
NOTE 43
Commitments
NOTE 44
Business combinations
NOTE 45
Related party transactions
NOTE 46
Events after the reporting period
NOTE 47
Others
PAGE
188-192
193-195
196-197
198
199
200-262
200
202
216
216
232
233
234
234
235
235
236
241
241
242
242
244
245
252
252
253
253
254
254
255
255
255
255
256
256
256
256
256
256
256
256
257
257
257
258
258
258
258
258
259
259
262
262
187
Consolidated Balance Sheet
ASSETS
I- Current Assets
Note
Audited
Current Period
31 December 2013
Audited
Prior Period
31 December 2012
A- Cash and Cash Equivalents
14
138,765,629
142,342,426
1- Cash
14
20,961
14,155
2- Cheques Received
3- Banks
14
-
-
29,864,319
59,951,461
4- Cheques Given and Payment Orders
14
(174,771)
(163,210)
5- Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months
14
109,055,120
82,540,020
-
-
B- Financial Assets and Financial Investments with Risks on Policyholders
11
2,406,892,657
2,682,557,493
1- Available-for-Sale Financial Assets
11
581,745,719
518,741,965
3- Financial Assets Held for Trading
11
36,388,883
42,316,499
4- Loans and Receivables
11
11,401,986
14,091,345
6- Other Cash and Cash Equivalents
2- Held to Maturity Investments
-
5- Provision for Loans and Receivables
-
-
11
1,787,655,851
2,117,707,466
-
-
8- Diminution in Value of Financial Investments
11
(10,299,782)
(10,299,782)
C- Receivables from Main Operations
12
5,296,014,578
4,347,148,160
12
12,788,669
8,959,668
12
(2,574)
(2,574)
6- Financial Investments with Risks on Saving Life Policyholders
7- Company’s Own Equity Shares
-
-
-
-
5- Cash Deposited to Insurance and Reinsurance Companies
-
-
12
43,748,889
51,779,559
-
-
8- Receivables from Individual Pension Operations
12
5,239,479,594
4,286,411,507
12
117,996
117,996
12
(117,996)
(117,996)
D- Due from Related Parties
12
334,634
1,096,350
-
-
-
-
-
-
-
-
334,634
1,096,350
12
-
-
-
-
-
-
-
-
12,165,677
1,891,704
E- Other Receivables
12
-
-
-
-
47
41,395
36,603
12,124,282
1,855,101
-
-
-
-
F- Prepaid Expenses and Income Accruals
188
4.2
2- Accrued Interest and Rent Income
-
-
10,690,180
12,601,372
9,474,281
11,756,454
147,038
194,549
3- Income Accruals
4- Other Prepaid Expenses
G- Other Current Assets
4.2
4
16
1,068,857
650,353
17,887
23,230
1- Stocks to be Used in the Following Months
4,760
13,176
7,624
6,751
-
-
4- Job Advances
-
-
5,400
3,200
103
103
5- Advances Given to Personnel
7- Other Miscellaneous Current Assets
-
-
8- Provision for Other Current Assets
-
-
7,864,881,242
7,187,660,735
I- Total Current Assets
ASSETS
II- Non-Current Assets
A- Receivables from Main Operations
5- Cash Deposited for Insurance and Reinsurance Companies
8- Receivables from Individual Pension Business
B- Due from Related Parties
C- Other Receivables
D- Financial Assets
1- Investments in Equity Shares
2- Investments in Associates
3- Capital Commitments to Associates
4- Investments in Subsidiaries
5- Capital Commitments to Subsidiaries
6- Investments in Joint Ventures
7- Capital Commitments to Joint Ventures
8- Financial Assets and Financial Investments with Risks on Policyholders
9- Other Financial Assets
10- Impairment in Value of Financial Assets
E- Tangible Assets
1- Investment Properties
2- Impairment for Investment Properties
3- Owner Occupied Property
4- Machinery and Equipments
5- Furniture and Fixtures
6- Motor Vehicles
7- Other Tangible Assets (Including Leasehold Improvements)
8- Tangible Assets Acquired Through Finance Leases
9- Accumulated Depreciation
10- Advances Paid for Tangible Assets (Including Construction in Progress)
F- Intangible Assets
1- Rights
2- Goodwill
3- Pre-operating Expenses
4- Research and Development Costs
5- Other Intangible Assets
6- Accumulated Amortization
7- Advances Paid for Intangible Assets
G- Prepaid Expenses and Income Accruals
2- Income Accruals
3- Other Prepaid Expenses and Income Accruals
H- Other Non-Current Assets
1- Effective Foreign Currency Accounts
2- Foreign Currency Accounts
3- Stocks to be Used in the Following Years
6- Other Miscellaneous Non-Current Assets
7- Amortization on Other Non-Current Assets
8- Provision for Other Non-Current Assets
II- Total Non-Current Assets
TOTAL ASSETS
Note
9, 45.d
9,45.d
6
6,7
6
6
6
6
6
6
6
8
8
8
21
21
Audited
Current Period
31 December 2013
15,036,296
15,036,296
21,701,481
25,497,361
1,338,902
7,955,505
2,999,195
529,723
2,953,267
1,071,729
(20,644,201)
4,982,250
15,235,745
(10,253,495)
8,905
8,905
2,068,582
2,068,582
43,797,514
7,908,678,756
Audited
Prior Period
31 December 2012
13,568,006
13,568,006
21,311,444
25,873,087
1,338,902
5,722,942
2,852,940
573,475
2,685,382
1,071,729
(18,807,013)
4,297,953
11,845,644
(7,547,691)
58,142
58,142
39,235,545
7,226,896,280
189
LIABILITIES
III- Short-Term Liabilities
Audited
Current Period
31 December 2013
Note
-
-
-
-
-
-
-
-
4- Current Portion of Long Term Debts
-
-
5- Principal Installments and Interests on Bonds Issued
-
-
-
-
-
-
-
-
19
5,361,512,193
4,371,184,235
19
5,868,305
4,090,566
19,10
-
881,759
636,822
5,354,762,129
4,366,456,847
-
-
6- Discount on Payables from Other Main Operations
-
-
19
5,014
10,432
19,45
19
-
5- Payables Arising from Other Main Operations
5,014
8,172
-
-
-
-
-
-
5- Due to Personnel
-
-
19
-
2,260
D- Other Payables
19
8,882,417
6,469,384
19
320,984
244,608
19,47
-
-
8,561,433
6,224,776
-
-
E- Insurance Technical Provisions
17
1,972,924,325
2,288,110,880
17
20,847,997
22,532,765
-
17
1,871,476,210
2,205,674,373
17
74,550,204
55,731,619
17
F- Provisions for Taxes and Other Similar Obligations
128,485
256,613
5,921,429
3,915,510
8,648,030
11,313,300
1- Taxes and Funds Payable
3,755,158
3,361,051
2- Social Security Premiums Payable
1,092,876
778,284
-
-
4- Other Taxes and Similar Payables
2,250
-
5- Corporate Tax Payable
35
15,310,000
26,100,000
6- Prepaid Taxes and Other Liabilities Regarding Current Period Income
35
(11,512,254)
(18,926,035)
7- Provisions for Other Taxes and Similar Liabilities
-
-
5,705,359
6,359,758
-
-
-
-
-
190
Audited
Prior Period
31 December 2012
23
3- Provisions for Costs
23
5,705,359
6,359,758
H- Deferred Income and Expense Accruals
19
2,588,141
1,793,541
19
515,595
415,872
2- Expense Accruals
19
829,103
335,971
19
1,243,443
1,041,698
62
61
I- Other Short-Term Liabilities
3- Other Various Short-Term Liabilities
III - Total Short-Term Liabilities
-
-
62
61
-
-
7,360,265,541
6,685,241,591
IV- Long-Term Liabilities
Note
Audited
Current Period
31 December 2013
Audited
Prior Period
31 December 2012
-
-
-
-
-
-
-
-
4- Bonds Issued
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5- Payables Arising from Other Operations
-
-
6- Discount on Payables from Other Operations
-
-
-
-
-
-
-
-
-
-
-
-
5- Due to Personnel
-
-
-
-
D- Other Payables
-
-
-
-
-
-
-
-
-
-
E-Insurance Technical Provisions
-
-
-
-
-
-
-
-
-
-
-
-
-
-
F-Other Liabilities and Relevant Accruals
-
-
1- Other Liabilities
-
-
-
-
3- Other Liabilities and Expense Accruals
-
-
22,23
8,269,886
7,408,414
22,23
8,269,886
7,408,414
-
-
H-Deferred Income and Expense Accruals
-
-
-
-
2- Expense Accruals
-
-
-
-
-
4,760,670
-
4,760,670
I- Other Long-Term Liabilities
21
21
2- Other Long-Term Liabilities
IV- Total Long-Term Liabilities
-
-
8,269,886
12,169,084
LIABILITIES
191
EQUITY
Note
2.13,15 2.13,15
15
15
15
15,16
15
V- Equity
A- Paid in Capital
1- (Nominal) Capital
2- Unpaid Capital
3- Positive Capital Restatement Differences
4- Negative Capital Restatement Differences
5- Register in Progress Capital
B- Capital Reserves
1- Share Premiums
2- Cancellation Profits of Equity Shares
3- Profit on Assets Sale That Will Be Transferred to Capital
4- Currency Translation Adjustments
5- Other Capital Reserves
C- Profit Reserves
1- Legal Reserves
3- Extraordinary Reserves
4- Special Funds
5- Revaluation of Financial Assets
6- Other Profit Reserves
D- Retained Earnings
1- Retained Earnings
E- Accumulated Losses
1- Accumulated Losses
F-Net Profit/(Loss) for the Period
1- Net Profit for the Period
2- Net Loss for the Period
3- Profit not Available for Distribution
V- Total Equity
TOTAL EQUITY AND LIABILITIES
Audited
Current Period
31 December 2013
350,000,000
350,000,000
94,766,924
73,274,700
841,874
8,001,112
12,938,958
(289,720)
10,670,470
10,670,470
84,705,935
84,705,935
540,143,329
7,908,678,756
192
Audited
Prior Period
31 December 2012
300,000,000
300,000,000
139,133,371
66,400,396
13,722,714
12,205,336
46,804,925
9,400,159
9,400,159
80,952,075
80,952,075
529,485,605
7,226,896,280
Consolidated Statement of Income
I-TECHNICAL SECTION
A- Non-Life Technical Income
1.1.3- Premiums Transferred to Social Security Institutions
1.2.3 - Reserve for Unearned Premiums, Social Security Institution Share
1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the Amounts
Carried Forward)
2- Investment Income - Transferred from Non-Technical Section
B- Non-Life Technical Expense
1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and Less the
2- Change in Provision for Bonus and Discounts (Net of Reinsurer and Less the Amounts
Carried Forward)
3- Change in Other Technical Reserves (Net of Reinsurer Share and Less the Amounts
Carried Forward)
5- Change in Mathematical Provision (Net of Reinsurer Share and Less the Amounts
Carried Forward)
5.1.- Change in Mathematical Provision, gross
5.2 - Change in Mathematical Provision, ceded
6- Change in Other Technical Provision (Net of Reinsurer Share and Less the Amounts
Carried Forward)
6.1- Change in Other Technical Provision, gross
6.2.- Change in Other Technical Provision, ceded
C- Net Technical Income-Non-Life (A - B)
D- Life Technical Income
1.3- Change in Reserve for Unexpired Risks (Net of Reinsurer Share and Less the
2- Investment Income
3- Unrealized Gains on Investments
Audited
Current Period
31 December 2013
675,114
675,114
648,587
789,193
(140,606)
-
Audited
Prior Period
31 December 2012
681,276
681,276
588,772
910,935
(322,163)
-
26,527
47,444
(20,917)
-
92,504
119,006
(26,502)
-
10
(658,719)
(260,633)
(272,814)
(407,892)
135,078
(663,540)
(338,489)
(317,078)
(362,397)
45,319
10
12,181
(14,572)
26,753
(21,411)
9,266
(30,677)
(2,690)
2,690
-
(8,698)
(389,388)
(11,704)
(313,347)
-
-
10
16,395
598,513,416
382,876,620
381,218,379
394,219,745
(13,001,366)
17,736
502,677,829
346,805,251
355,597,310
367,057,439
(11,460,129)
10
1,658,241
1,106,340
551,901
(8,792,059)
(8,923,900)
131,841
206,895,965
8,740,831
8,740,831
-
149,640,101
6,232,477
6,232,477
-
Note
5
24
10
10
5
32
5
24
26
193
194
I-TECHNICAL SECTION
E- Life Technical Expense
1.2- Change in Provisions for Outstanding Claims (Net of Reinsurer Share and
Less the Amounts Carried Forward)
2- Change in Provision for Bonus and Discounts (Net of Reinsurer and Less
3- Change in Life Mathematical Provisions (Net of Reinsurer Share and Less
3.1- Change in Life Mathematical Provisions, gross
3.1.1- Change in Actuarial Mathematical Provisions, gross
with Risks on Saving Life Policyholders), gross
3.2- Change in Life Mathematical Provisions, ceded
3.2.1- Change in Actuarial Mathematical Provisions, ceded
with Risks on Saving Life Policyholders), ceded
4- Change in Other Technical Reserves (Net of Reinsurer Share and Less the
6- Investment Expenses
7- Unrealized Losses on Investments
8- Investment Income Transferred to the Non-Life Technical Section
F- Net Technical Income- Life (D - E)
G- Pension Business Technical Income
1- Fund Management Income
2- Management Fee
3- Entrance Fee Income
4- Management Expense Charge in case of Suspension
5- Income from Individual Service Charges
6- Increase in Value of Capital Allowances Given as Advance
7- Other Technical Income
H- Pension Business Technical Expense
1- Total Fund Expenses
2- Decrease in Value of Capital Allowances Given as Advance
4- Other Technical Expenses
5-Fine Payments
I- Net Technical Income - Pension Business (G - H)
10
Audited
Current Period
31 December 2013
(535,102,109)
(527,633,079)
(506,847,643)
(513,541,690)
6,694,047
Audited
Prior Period
31 December 2012
(469,262,040)
(454,748,419)
(442,038,966)
(445,432,538)
3,393,572
10
(20,785,436)
(23,287,695)
2,502,259
(12,709,453)
(12,355,824)
(353,629)
128,128
49,648
78,480
(256,613)
(528,684)
272,071
83,433,502
84,903,898
40,633,870
59,536,681
59,323,757
46,422,570
44,270,028
(1,470,396)
(1,470,396)
12,901,187
212,924
212,924
-
-
(1,997,221)
(89,033,439)
63,411,307
132,002,445
90,764,418
17,771,761
20,236,910
3,120,756
108,600
(143,137,394)
(16,300,221)
(125,961,568)
(873,988)
(1,617)
(11,134,949)
(1,709,090)
(72,084,599)
33,415,789
139,026,057
88,470,973
33,953,327
16,121,343
367,261
113,153
(119,530,396)
(15,070,322)
(2,400)
(102,992,329)
(1,465,345)
Note
5
10
32
5, 25
25
25
25
25
25
25
5
32
19,495,661
II-NON-TECHNICAL SECTION
C- Net Technical Income - Non-Life (A-B)
F- Net Technical Income - Life (D-E)
I - Net Technical Income - Pension Business (G-H)
J- Total Net Technical Income (C+F+I)
K- Investment Income
1- Income from Financial Assets
2- Income from Disposal of Financial Assets
3- Valuation of Financial Assets
4- Foreign Exchange Gains
5- Income from Associates
6- Income from Subsidiaries and Joint Ventures
7- Income from Property, Plant and Equipment
8- Income from Derivative Transactions
9- Other Investments
10- Income Transferred from Life Section
L- Investment Expense (-)
1- Investment Management Expenses (inc. interest)
2- Diminution in Value of Investments
3- Loss from Disposal of Financial Assets
4- Investment Income Transferred to Non-Life Technical Section
5- Loss from Derivative Transactions
6- Foreign Exchange Losses
7- Depreciation and Amortization Expenses
8- Other Investment Expenses
M- Income and Expenses From Other and Extraordinary Operation(+/-)
1- Provisions
2- Rediscounts
3- Specified Insurance Accounts
5- Deferred Taxation (Deferred Tax Income)
6- Deferred Taxation (Deferred Tax Expense)
7- Other Income
8- Other Expenses and Losses
9- Prior Year’s Income
10- Prior Year’s Expenses and Losses
N- Net Profit for the Year
1- Profit for the Year
2- Corporate Tax Provision and Other Fiscal Liabilities
3- Net Profit for the Year
Note
26
36
26
7,26
26
36
6,8
47
21
21
37
35
37
Audited
Current Period
31 December 2013
16,395
63,411,307
(11,134,949)
52,292,753
66,975,307
33,906,018
21,336,148
(832,007)
4,480,459
2,094,316
3,280,321
2,710,052
(17,054,753)
(1,116,227)
(66)
(11,003,005)
(4,935,455)
(2,197,372)
(800,039)
(148,052)
13
(1,249,294)
84,705,935
100,015,935
(15,310,000)
84,705,935
-
Audited
Prior Period
31 December 2012
17,736
33,415,789
19,495,661
52,929,186
64,890,706
21,023,955
7,511,180
23,349,879
513,717
1,915,627
3,059,325
421,238
7,095,785
(7,186,728)
(1,228,879)
(1,207,110)
(945,869)
(3,804,870)
(3,581,089)
(2,301,040)
(447,909)
6
(832,146)
80,952,075
107,052,075
(26,100,000)
80,952,075
-
195
Consolidated Statement of Changes in Equity
Note
Own Shares of the
Company
Revaluation of
Financial Assets
300,000,000
-
(9,822,204)
-
-
-
-
-
300,000,000
-
(9,822,204)
-
-
-
-
-
Paid-in Capital
Inflation
Adjustments
1- In cash
-
-
-
-
2- From reserves
-
-
-
-
-
-
-
-
statement of income
15
-
-
-
-
-
-
56,627,129
-
-
-
-
-
-
-
-
-
-
-
-
-
H- Net profit for the year
-
-
-
-
I - Dividends paid
38
-
-
-
-
15
-
-
-
-
300,000,000
-
46,804,925
-
Paid-in Capital
Own Shares of the
Company
Revaluation of
Financial Assets
Inflation
Adjustments
300,000,000
-
46,804,925
-
-
-
-
-
300,000,000
-
46,804,925
-
50,000,000
-
-
-
IV - Balance at the end of the year 31 December 2012
Note
1- In cash
2- From reserves
statement of income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
-
-
(33,865,967)
-
-
-
-
-
15
-
-
-
-
50,000,000
-
-
-
-
H- Net profit for the period
-
-
-
-
I - Dividends paid
38
-
-
-
-
15
-
-
-
-
350,000,000
-
12,938,958
-
IV - Balance at the end of the period 31 December 2013
196
Legal Reserves
Statutory Reserves
Other Reserves and
Retained Earnings
Net Profit (or Loss)
for the Period
Retained Earnings
Total
433,337,577
-
60,430,004
9,095,243
1,219,776
62,920,800
9,493,958
-
-
-
-
-
-
-
-
60,430,004
9,095,243
1,219,776
62,920,800
9,493,958
433,337,577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,627,129
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,952,075
-
80,952,075
-
-
-
-
(41,431,176)
-
(41,431,176)
-
5,970,392
4,627,471
10,985,560
(21,489,624)
(93,799)
-
-
66,400,396
13,722,714
12,205,336
80,952,075
9,400,159
529,485,605
Currency
Translation
Adjustments
Legal Reserves
Statutory Reserves
Other Reserves and
Retained Earnings
Net Profit for the
Period
Retained Earnings
Total
529,485,605
-
66,400,396
13,722,714
12,205,336
80,952,075
9,400,159
-
-
-
-
-
-
-
-
66,400,396
13,722,714
12,205,336
80,952,075
9,400,159
529,485,605
-
-
(19,000,000)
(31,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
(19,000,000)
(31,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
(289,720)
-
-
(289,720)
-
-
-
-
-
-
(33,865,967)
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
2,000,000
-
-
-
-
-
-
-
-
-
-
-
84,705,935
-
84,705,935
-
-
-
-
(41,892,524)
-
(41,892,524)
-
6,874,304
6,119,160
26,795,776
(41,059,551)
1,270,311
-
-
73,274,700
841,874
7,711,392
84,705,935
10,670,470
540,143,329
Currency
Translation
Adjustments
197
Consolidated Statement of Cash Flows
Note
6,8
14
14
Audited
Prior Period
31 December 2012
905,029,055
244,937
171,441,309
(932,211,577)
(147,339,063)
(2,835,339)
(26,100,000)
20,579,783
(13,583,826)
(21,939,382)
438,572,755
154,825,958
(514,400,927)
(49,747)
(116,165,455)
(37,217,416)
(13,415,000)
25,303,735
(28,434,068)
(53,762,749)
352,381
(6,227,963)
(305,408,122)
239,925,820
124,550,559
3,815,541
3,441,720
60,449,936
2,346,709
(8,018,006)
(309,005,855)
335,767,769
90,347,872
3,314,217
66,130,167
(63,093,995)
117,788,878
(41,892,524)
(41,892,524)
(41,431,176)
(41,431,176)
(3,381,970)
142,060,223
138,678,253
22,594,953
119,465,270
142,060,223
A. Cash flows from operating activities
1. Cash provided from insurance activities
2. Cash provided from reinsurance activities
3. Cash provided from individual pension business
4. Cash used in insurance activities
5. Cash used in reinsurance activities
6. Cash used in individual pension business
7. Cash provided by operating activities
8. Interest paid
9. Income taxes paid
12. Net cash provided by operating activities
B. Cash flows from investing activities
1. Proceeds from disposal of tangible assets
2. Acquisition of tangible assets
3. Acquisition of financial assets
4. Proceeds from disposal of financial assets
5. Interests received
6. Dividends received
9. Net cash used in investing activities
C. Cash flows from financing activities
1. Equity shares issued
2. Cash provided from loans and borrowings
3. Finance lease payments
4. Dividends paid
7. Net cash provided by financing activities
D. Effect of exchange rate fluctuations on cash and cash
equivalents
E. Net increase in cash and cash equivalents
F. Cash and cash equivalents at the beginning of the year
G. Cash and cash equivalents at the end of the year
Audited
Current Period
31 December 2013
198
Consolidated Statement of Profit Distribution
1.1. PERIOD PROFIT (*)
1.2 TAXES AND DUTIES PAYABLE
1.2.1. Corporate Tax (Income Tax)
1.2.2. Income Tax Deductions
1.2.3. Other Taxes and Legal Duties
A. CURRENT PERIOD PROFIT (1.1 - 1.2)
1.3. ACCUMULATED LOSSES (-)
1.4 FIRST LEGAL RESERVES (-)
1.5 OTHER STATUTORY RESERVES (-)
B. NET PROFIT AVAILABLE FOR DISTRIBUTION [(A - (1.3 + 1.4 + 1.5)]
1.6. FIRST DIVIDEND TO SHAREHOLDERS (-)
1.6.3 To owners of redeemed shares
1.6.4 To holders profit sharing bonds
1.6.5 To holders of profit and loss sharing certificates
1.9. SECOND DIVIDEND TO SHAREHOLDERS (-)
1.9.4. To holders profit sharing bonds
1.10. LEGAL RESERVES (-)
1.11. STATUTORY RESERVES(-)
1.12. EXTRAORDINARY RESERVES
1.13. OTHER RESERVES
1.14. SPECIAL FUNDS
II. DISTRIBUTION OF RESERVES
2.1. APPROPRIATED RESERVES
2.2. SECOND LEGAL RESERVES (-)
2.3. DIVIDENDS TO SHAREHOLDERS (-)
2.3.4. To holders of profit sharing bonds
III. EARNINGS PER SHARE
IV. DIVIDEND PER SHARE
Note
Audited
Current Period
31 December 2013(**)
Audited
Prior Period
31 December 2012
102,015,935
(15,310,000)
(15,310,000)
86,705,935
4,158,330
82,547,605
0,24773
24,773
0,24773
24,773
109,052,075
(26,100,000)
(26,100,000)
82,952,075
4,078,774
78,873,301
(15,789,181)
(15,789,181)
(1,892,524)
(24,210,819)
(24,210,819)
(2,689,252)
(6,119,160)
(28,172,365)
0,23701
23,701
0,23701
23,701
-
-
38
Consolidated current year profit is used for profit distribution as per the “Profit Share Guidebook” issued by the Capital Market Board on 2013/10 dated. Provision for
dividend expense amounting to ¨2,000,000 is added to the profit for the year ended 31 December 2013.
(*)
(**)
As of the reporting date, the General Assembly Meeting has not been held; therefore, only distributable net profit is presented in the profit distribution table above.
199
Consolidated Statement of Income For the Year Ended 31 December 2013
1 General information
1.1 Name of the Company and the ultimate owner of the group
Anadolu Hayat Emeklilik Anonim Şirketi (“the Company”) has been operating since 31 May 1990 and the shareholding structure
of the Company is presented below. As at 31 December 2013, the shareholder having direct or indirect control over the shares of
the Company is Türkiye İş Bankası AŞ (“İş Bankası”) by 83.0% of the outstanding shares of the Company.
Name
31 December 2013
Shareholding Shareholding rate
amount (¨)
(%)
31 December 2012
Shareholding Shareholding rate
amount (¨)
(%)
Türkiye İş Bankası AŞ
Anadolu Anonim Türk Sigorta Şirketi
Milli Reasürans TAŞ
Publicly traded
Paid in capital
217,000,000
70,000,000
3,500,000
59,500,000
350,000,000
186,000,000
60,000,000
3,000,000
51,000,000
300,000,000
62.0
20.0
1.0
17.0
100.0
62.0
20.0
1.0
17.0
100.0
1.2 Domicile and the legal structure of the Company, country and the address of the registered office (address of the
operating center if it is different from the registered office)
The Company was registered in Turkey and has the status of ‘Incorporated Company’ in accordance with the regulations of
Turkish Commercial Code (“TTK”). The address of the Company’s registered office is Meltem Sokak No: 10 İş Kuleleri Kule: 2 Kat:
16, Levent 34330 Beşiktaş/İstanbul.
1.3 Business of the Company
As at 31 December 2013, the Company has 24 individual pension investment funds (31 December 2012:21).
1.4 Description of the main operations of the Company
The Company issues policies in insurance branches specified in the above note 1.3 - Business of the Company and contracts in
individual pension business by conducting it operations in accordance with the Insurance Law No.5684 (the “Insurance Law”)
issued on 14 June 2007 dated and 26552 numbered Official Gazette and Individual Pension Savings and Investment System
Law No.4632 (the “Individual Pension Law”) and other communiqués and regulations in force issued by the Prime Ministry
Undersecretariat of the Treasury of the Turkish Republic(the “Turkish Treasury”) based on the Insurance Law and the Individual
Pension Law.
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The Company’s shares have been listed on the Borsa Istanbul (“BIST”). In accordance with Article 136(1) in Section VIII of
the Capital Markets Law, insurance companies have to comply with their own specific laws and regulations in matters of
establishment, auditing, supervision/oversight, accounting and financial reporting; therefore, the Company performs its
operations accordingly.
1.5 The average number of the personnel during the period in consideration of their categories
The average number of the personnel during the period in consideration of their categories is as follows:
Senior level managers
Directors
Officers
Contracted personnel
Marketing and sales personnel
Other
Total
7
94
331
5
352
12
801
7
86
298
6
315
13
725
1.6 Wages and similar benefits provided to the senior management
For the year ended 31 December 2013, wages and similar benefits provided to the senior management including chairman,
members of the board of the directors, general manager, and deputy general managers amounted to ¨3,958,378 (31 December
2012: ¨3,616,722).
1.7 Explanation about the distribution of investment income and operating expenses (personnel expenses, administrative
expenses, research and development expenses, marketing and selling expenses, and expenses for the services bought from
third parties) in the financial statements
Procedures and principles related to keys used in the financial statements of the companies are determined in accordance with
the 4 January 2008 dated and 2008/1 numbered “Communiqué Related to the Procedures and Principles for the Keys Used
in the Financial Statements Being Prepared In Accordance With Insurance Accounting Plan” issued by the Turkish Treasury.
In accordance with the above mentioned Communiqué, known and exactly distinguishable operating expenses are directly
recorded under life, non-life or individual pension segments. Other non-distinguishable expenses, which are not exactly
distinguished, are distributed between insurance segments and individual pension segment in accordance with the number of
policies and contracts at the end of last 3 years and arithmetic average of contribution premium and earned premium within
the last 3 years in accordance with the 9 August 2010 dated and 2010/9 numbered “Amendments Communiqué Related to
the Procedures and Principles for the Keys Used in the Financial Statements Being Prepared In Accordance With Insurance
Accounting Plan” issued by the Turkish Treasury. Amendment is effective from 1 January 2011. The portion of insurance
segments calculated as described above is distributed between life and non-life branches in accordance with the average of 3
ratios calculated by dividing “number of the policies produced within the last three years”, “gross premiums written within the
last three years”, and “number of the claims reported within the last three years” to the “total number of the policies”, “total gross
written premiums”, and the “total number of the claims reported”, respectively.
Income from the assets invested against non-life technical provisions is transferred to technical section from non-technical
section.
Income from the assets invested against mathematical and profit sharing provisions is recorded under technical section,
remaining income is transferred to the non-technical section.
As at the reporting period, distribution of the operating expense between life, non-life and pension branches is presented in
note 5 - Segment distribution.
1.8 Information on the financial statements as to whether they comprise an individual company or a group of companies
The accompanying financial statements comprise the consolidated financial information of the Company as further detailed in
note 2.2 - Consolidation.
İş Portföy was registered with the İstanbul Trade Registry on 23 September 2000 and its foundation was published in the
Turkish Trade Registry Gazette number 5168 on 6 November 2000. İş Portföy deals with capital market activities in accordance
with its Articles of Association and Capital Market Law number 2499 as modified by Law number 3794. İş Portföy manages
portfolios, which are made up of the capital market instruments according to the rules of the related regulations and the Capital
Market Law by entering into portfolio management agreements with its clients. Additionally, İş Portföy manages domestic and
foreign funds, the portfolios of the investment partnerships, the portfolios of the domestic and foreign real or judicial persons,
the portfolios of the investment companies and similar entities. In addition, the İş Portföy provides investment consultancy
services.
1.9 Name or other identity information about the reporting entity and the changes in this information after previous
reporting period
Trade name of the Company
Registered address of the head office
The web page of the Company
E-mail address of the Company
Phone
Fax
: Anadolu Hayat Emeklilik AŞ
: İş Kuleleri, Kule 2 Kat 20 34330, Levent/İstanbul
: www.anadoluhayat.com.tr
: [email protected]
: 0212 317 70 70
: 0212 317 70 77
There has been no change in the aforementioned information subsequent to the previous reporting period.
The Company owns 20% of İş Portföy Yönetimi A.Ş. (“İş Portföy”) and this associate has been consolidated in the accompanying
consolidated financial statements by using the equity method of accounting.
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None.
2 Summary of significant accounting policies
2.1 Basis of preparation
2.1.1 Information about the principles and the specific accounting policies used in the preparation of the financial statements
In accordance with Article 136(1) in Section VIII of the Capital Markets Law, insurance companies have to comply with their own
specific laws and regulations in matters of establishment, auditing, supervision/oversight, accounting and financial reporting.
Therefore, the Company maintains its books of account and prepares its financial statements in accordance with the Turkish
Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”), and other accounting and financial reporting
principles, statements and guidance (collectively “the Reporting Standards”) in accordance with the “Communiqué Related to the
Financial Reporting of Insurance, Reinsurance, and Individual Pension Companies” as promulgated by the Turkish Treasury based
on Article 18 of the Insurance Law and Article 11 of the Individual Pension Law.
Although the 4th standard of the Turkish Accounting Standards Board (“TASB”) for the ‘Insurance contracts’ became effective
on 25 March 2006 for the accounting periods that begin on or after 31 December 2005, it is stated that TFRS 4 will not be
implemented at this stage since the second phase of the International Accounting Standards Board project about the insurance
contracts has not been completed yet. In this context, “Communiqué on Technical Reserves for Insurance, Reinsurance
and Individual Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves”
(“Communiqué on Technical Reserves”) is published in the Official Gazette dated 7 August 2007, numbered 26606 and became
effective on 1 January 2008. Subsequent to the publication of the Communiqué on Technical Reserves, some other circulars
and sector announcements which contain explanations and regulations related to application of the Communiqué on Technical
Reserves are published. Accounting policies applied for the insurance contracts based on these communiqué, circulars and other
sector announcements are summarized on their own captions in the following sections.
Accounting for subsidiaries, associates and joint ventures is regulated with 28 December 2007 dated and 2007/26 numbered
“Circular Related to the Accounting of Subsidiaries, Associates and Joint Ventures”, issued by the Turkish Treasury. It is stated
that, the companies will continue to apply the principles of the related standards of TFRSs for the accounting of subsidiaries,
associates and joint venture until the publication of another regulation on this issue by the Turkish Treasury. “Circular Related to
the Preparation of the Consolidated Financial Statements of Insurance, Reinsurance, and Individual Pension Companies” issued
by the Turkish Treasury in the 31 December 2008 dated and 27097 numbered (4th repeat) Official Gazette, constituted the basis
of consolidation to be effective on the dates that circular specifies.
Per decree no 660 published on the Official Gazette dated 2 November 2011 and became effective, additional article no 1 of
the 2499 numbered Law on establishment of TASB has been abrogated and establishment of Public Oversight, Accounting
and Auditing Standards Association (“Board”) has been decided by the Council of Ministers. In accordance with this additional
temporary article no 1 of the decree, current regulations will prevail until related standards and regulations will be issued by the
Board.
Additional paragraph for convenience translation to English
202
The differences between accounting principles, as described in the preceding paragraphs, and the accounting principles
generally accepted in countries, in which the accompanying consolidated financial statements are to be distributed, and
International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying consolidated financial
statements. Accordingly, the accompanying consolidated financial statements are not intended to present the financial position
and results of operations in accordance with the accounting principles generally accepted in such countries other than Turkey.
2.1.2 Other accounting policies appropriate for the understanding of the financial statements
Accounting in hyperinflationary countries
Financial statements of the Turkish entities have been restated for the changes in the general purchasing power of the Turkish
Lira based on TAS 29 - Financial Reporting in Hyperinflationary Economies as at 31 December 2004. TAS 29 requires that financial
statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the
reporting period, and that corresponding figures for previous years be restated in the same terms.
With respect to the 4 April 2005 dated and 19387 numbered declaration of the Turkish Treasury, the Company restated its
financial statements as at 31 December 2004 and prepared opening financial statements of 2005 in accordance with the
“Restatement of Financial Statements in Hyperinflationary Periods” of the Capital Markets Board (“CMB”) Communiqué No:
25 of Series XI, “Communiqué on Accounting Standards in Capital Market” published in the Official Gazette dated 15 January
2003 and numbered 25290. Inflation accounting is no longer applied starting from 1 January 2005, in accordance with the
same declaration of the Turkish Treasury. Accordingly, as at 31 December 2010, non-monetary assets and liabilities and items
included in shareholders’ equity including paid-in capital recognized or recorded before 1 January 2005 are measured as restated
to 31 December 2004 in order to reflect inflation adjustments. Non-monetary assets and liabilities and items included in
shareholders’ equity including paid-in capital recognized or recorded after 1 January 2005 are measured at their nominal costs or
values.
Other accounting policies
Information regarding to other accounting polices is explained above in the section of note 2.1.1- Information about the
principles and the special accounting policies used in the preparation of the financial statements and each on its own caption in
following sections of this report.
2.1.3 Functional and presentation currency
The Company’s financial statements are presented in the currency of the primary economic environment in which the entity
operates (its functional currency). The results and financial position of the Company are expressed in ¨, which is the functional
and presentation currency of the Company.
2.1.4 Rounding level of the amounts presented in the financial statements
Financial information presented in ¨, has been rounded to the nearest ¨ values.
2.1.5 Basis of measurement used in the preparation of the financial statements
The accompanying financial statements are prepared on the historical cost basis as adjusted for the effects of inflation that lasted
until 31 December 2004, except for the financial assets at fair value through profit or loss, available-for-sale financial assets,
financial investments with risks on saving life policyholders classified as available-for-sale financial assets and derivative financial
instruments which are measured at their fair values unless reliable measures are available.
2.1.6 Accounting policies, changes in accounting estimates and errors
There have been no changes in the accounting policies or errors in the current period.
Critical accounting judgments made in applying the Company’s accounting policies are explained in note 3 - Critical accounting
estimates and judgments in applying accounting policies.
2.2 Consolidation
2.3 Segment reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components,
whose operating results are reviewed regularly by the Board of Directors (being chief operating decision maker) to make
decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is
available.
“Circular Related to the Preparation of the Consolidated Financial Statements of Insurance, Reinsurance, and Individual Pension
Companies” issued by the Turkish Treasury in the 31 December 2008 dated and 27097 numbered Official Gazette, has been in
force since 31 March 2009. Accordingly, consolidated financial statements are prepared using the equity method of accounting to
consolidate the Company’s associate; İş Portföy Yönetimi AŞ.
203
2.4 Foreign currency transactions
Transactions are recorded in ¨, which is the Company’s functional currency. Transactions in foreign currencies are recorded at the
rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at
exchange rates ruling at the reporting period and foreign currency exchange differences are offset and all exchange differences
are recognized in the statement of income.
Foreign currency exchange differences of unrecognized gains or losses arising from the difference between their fair value and
the discounted values calculated per effective interest rate method of foreign currency available-for-sale financial assets are
recorded in “Revaluation of financial assets” under equity and the realized gain or losses are recognized directly in the statement
of income. Foreign currency exchange differences of unrecognized gains or losses arising from financial investments with risks
on saving life policyholders classified as available-for-sale financial assets, 5% of the difference is recorded under equity and the
remaining 95% belonging to policyholders is recorded as ‘insurance technical provisions - life mathematical provisions’.
2.5 Tangible assets
Tangible assets are recorded at their historical costs that have been adjusted according to the inflation rates until the end of
31 December 2004. There have been no other inflationary adjustments for these tangible assets for the following years and
therefore they have been recorded at their costs indexed to the inflation rates for 31 December 2004. Tangible assets that have
been purchased after 1 January 2005 have been recorded at their costs excluding their exchange rate differences and finance
expenses less impairment losses if any.
Gains/losses arising from the disposal of the tangible assets are calculated as the difference between the net carrying value and
the proceeds from the disposal of related tangible assets and reflected to the statement of income of the related period.
Maintenance and repair costs incurred in the ordinary course of the business are recorded as expense.
There are no pledges, mortgages and other encumbrances on tangible fixed assets.
There are no changes in accounting estimates that have significant effect on the current period or that are expected to have
significant effect on the following periods.
Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of
tangible assets since this most closely reflects the expected pattern of consumption of the future economic benefits embodied
in the asset.
Depreciation rates and estimated useful lives are as follows:
Tangible assets
Buildings
Fixtures and furniture
Vehicles
Other tangible assets (includes leasehold improvements)
Leased assets
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Estimated useful
lives (years)
50 years
3-16 years
4-13 years
5 years
5 years
4-15 years
Depreciation
rates (%)
2.00
6.25-33.33
7.69-25.00
20.00
20.00
6.66-25.00
2.6 Investment properties
Investment properties are held either to earn rentals and/or for capital appreciation or for both.
Investment properties are measured initially at cost including transaction costs.
Subsequent to initial recognition, the Company measured all investment property based on the cost model in accordance with
the cost model for property and equipment (i.e. at cost less accumulated depreciation and less impairment losses if any).
Depreciation is provided on investment properties on a straight line basis. Depreciation period for investment properties is 50
years for buildings and land is not depreciated.
Investment properties are derecognized when either they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognized in profit or loss in the period of retirement or disposal.
2.7 Intangible assets
The Company’s intangible assets consist of computer software.
Intangible assets are recorded at cost in compliance with the “TAS 38 - Accounting for intangible assets”. The cost of the
intangible assets purchased before 31 December 2004 are restated from the purchasing dates to 31 December 2004, the date
the hyperinflationary period is considered to be ended. The intangible assets purchased after this date are recorded at their
historical costs. Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use
the specific software.
Amortization is charged on a straight-line basis over their estimated useful lives (3 years) over the cost of the asset.
Costs associated with developing or maintaining computer software programs are recognized as expense when incurred.
Costs that are directly associated with the development of identifiable and unique software products that are controlled by
the Company and will probably provide more economic benefits than costs in one year are recognized as intangible assets.
Costs include software development employee costs and an appropriate portion of relevant overheads. Computer software
development costs recognized as assets are amortized over their estimated useful lives (not exceeding three years).
2.8 Financial assets
A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another
financial asset from another entity; or to exchange financial assets or financial liabilities with another entity under conditions
that are potentially favorable to the entity.
Securities are recognized and derecognized at the date of settlement.
Financial assets are classified in four categories; as financial assets held for trading, available-for-sale financial assets, held to
maturity financial assets, and loans and receivables.
Financial assets at fair value through profit or loss are presented as financial assets held for trading in the accompanying
financial statements and trading securities and derivatives are included in this category. Financial assets at fair value through
profit or loss measured at their fair values and gain/loss arising due to changes in the fair values of related financial assets are
recorded in the statement of income. Interest income earned on trading purpose financial assets and the difference between
their fair values and acquisition costs are recorded as interest income in the statement of income. In case of disposal of such
financial assets before their maturities, the gains/losses on such disposal are recorded under trading income/losses. Accounting
policies of derivatives are detailed in note 2.10 - Derivative financial instruments.
Held to maturity financial assets are the financial assets with fixed maturities and fixed or pre-determined payment schedules
that the Company has the intent and ability to hold until maturity, excluding loans and receivables. Subsequent to initial
recognition, held to maturity financial assets and loans and receivables are measured at amortized cost using effective interest
rate method less impairment losses, if any.
Available-for-sale financial assets are the financial assets other than assets held for trading purposes, held-to-maturity financial
assets and loans and receivables.
Available-for-sale financial assets are initially recorded at cost and subsequently measured at their fair values. Assets that are
not traded in an active market are measured by valuation techniques, including recent market transactions in similar financial
instruments, adjusted for factors unique to the instrument being valued; or discounted cash flow techniques for the assets
which do not have a fixed maturity. Unrecognized gains or losses derived from the difference between their fair value and
the discounted values calculated per effective interest rate method are recorded in “Revaluation of financial assets” under
shareholders’ equity. Upon disposal, the realized gain or losses are recognized directly in the statement of income.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading
the receivable. Loans and receivables those are not interest earning are measured by discounting of future cash flows less
impairment losses, and interest earning loans and receivables are measured at amortized cost less impairment losses.
205
The determination of fair values of financial instruments not traded in an active market is determined by using valuation
techniques. Observable market prices of the quoted financial instruments which are similar in terms of interest, maturity and
other conditions are used in determining the fair value.
Associates; İş Portföy has been consolidated in the accompanying consolidated financial statements by using the equity method
of accounting.
Specific instruments
Financial investments with risks on saving life policyholders are the financial assets invested against the savings of the life
policyholders. Financial investments with risks on saving life policyholders could be classified as financial assets held for trading
purpose, available for sale financial assets or held to maturity investments by considering the benefits of the policyholders and
measured in accordance with the principles as explained above.
When such investments are classified as available-for-sale financial assets, 5% of the difference between the fair values
and amortized costs, calculated by using effective interest method, of the financial assets is recorded under equity and the
remaining 95% belonging to policyholders is recorded as ‘insurance technical provisions - life mathematical provisions’. As at
31 December 2013, 95% of the difference between fair values and amortized costs of those assets backing liabilities amounting
to ¨(5,711,673) (31 December 2012: ¨245,052,988) is recorded in life mathematical provisions.
Receivables from individual pension operations consist of ‘capital advances given to pension investment funds’, ‘receivable from
pension investment funds for fund management fees’, ‘entrance fee receivable from participants’ and ‘receivables from clearing
house on behalf of the participants’.
‘Receivable from pension investment funds for fund management fee’ are the fees charged to the pension investment funds
against for the administration of related pension investment funds which consist of fees which are not collected in the same day.
Capital advances given to pension investments funds during their establishment are recorded under ‘capital advances given to
pension investment funds’.
‘Receivables from the clearing house on behalf of the participants’ is the receivable from clearing house on fund basis against
the collections of the participants. Same amount is also recorded as payables to participants for the funds sold against their
collections under the ‘payables arising from individual pension businesses.
Loans to the policyholders are loans that are provided to the policyholders from saving component of the life insurance policies
based on the fund amounts and fund unit prices. Valuation of the loans to the policyholders based on the fund amounts and
fund unit prices as at the reporting date.
Derecognition
A financial asset is derecognized when the control over the contractual rights that comprise that asset is lost. This occurs when
the rights are realized, expire or are surrendered.
2.9 Impairment on assets
Impairment on financial assets
206
Financial assets or group of financial assets are reviewed at each reporting period to determine whether there is objective
evidence of impairment. If any such indication exists, the Company estimates the amount of impairment. Impairment loss incurs
if, and only if, there is objective evidence that the expected future cash flows of financial asset or group of financial assets are
adversely affected by an event(s) (“loss event(s)”) incurred subsequent to recognition. The losses expected to incur due to future
events are not recognized even if the probability of loss is high.
Loans and receivables are presented net of specific allowances for uncollectibility. Specific allowances are made against the
carrying amounts of loans and receivables that are identified as being impaired based on regular reviews of outstanding balances
to reduce these loans and receivable to their recoverable amounts.
The recoverable amount of an equity instrument is its fair value. The recoverable amount of debt instruments and purchased
loans measured to fair value is calculated as the present value of the expected future cash flows discounted at the current
market rate of interest.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was
recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities,
the reversal is recognized in the statement of operations. For available-for-sale financial assets that are equity securities, the
reversal is recognized directly in equity.
Impairment on tangible and intangible assets
On each reporting period, the Company evaluates whether there is an indication of impairment of fixed assets. If there is an
objective evidence of impairment, the asset’s recoverable amount is estimated in accordance with the “TAS 36 - Impairment of
Assets” and if the recoverable amount is less than the carrying value of the related asset, a provision for impairment loss is made.
Rediscount and provision expenses of the period are detailed in Note 47.
2.10 Derivative financial instruments
As at the reporting period, derivative financial instruments of the Company consist of TurkDEX-ISE 30 Index future contracts.
These derivative instruments are treated as held for trading financial assets in compliance with the standard TAS 39 - Financial
Instruments.
Derivative financial instruments are initially recognized at their fair value.
The receivables and liabilities arising from the derivative transactions are recognized under the off-balance sheet accounts
through the contract amounts.
Derivative financial instruments are subsequently re-measured at fair value and positive fair value differences are presented
either as “financial assets held for trading” and negative fair value differences are presented as “other financial liabilities” in
the accompanying financial statements. All unrealized gains and losses on these instruments are included in the statement of
income.
2.11 Offsetting of financial assets
Financial assets and liabilities are off-set and the net amount is presented in the balance sheet when, and only when, the
Company has a legal right to set off the amounts and intends either to settle on a net basis or to realize the asset and settle the
liability simultaneously.
Income and expenses are presented on a net basis only when permitted by the Reporting Standards, or for gains and losses
arising from a group of transactions resulting from the Company’s similar activities like trading transactions.
2.12 Cash and cash equivalents
Cash and cash equivalents, which is a base for the preparation of the statement of cash flows includes cash on hand, other cash
and cash equivalents, demand deposits and time deposits at banks having original maturity less than 3 months which are ready
to be used by the Company or not blocked for any other purpose.
The shareholding structure of the Company is presented in note 1.1 - Name of the Company and the ultimate owner of the group.
As of 31 December 2013, the Company’s issued capital is ¨350,000,000 (31 December 2012: ¨300,000,000).
Sources of the capital increases during the period
The Company’s issued capital increased from ¨300,000,000 to ¨350,000,000 by ¨50,000,000 through the transfer to
extraordinary reserves by ¨31,000,000, statutory reserves by ¨19,000,000.
2.13 Capital
207
Privileges on common shares representing share capital
As at 31 December 2013, the share capital of the Company was amounted ¨350,000,000 (31 December 2012: ¨300,000,000),
divided into 35,000,000,000 shares (31 December 2012: 30,000,000,000 shares) with each has a nominal value of ¨0.01.
The Company’s share capital was divided into groups comprised of 100,000,000 Group A shares having nominal values of
¨0.01 for each. Among eleven members of the Board of Directors, seven are elected among candidates nominated by Group A
shareholders while four are elected among candidates nominated by Group B shareholders.
Registered capital system in the Company
of 15 June 2000 upon the permission no: 67/1039 granted by the Capital Markets Board. As at 31 December 2013 the registered
capital of the Company is ¨450,000,000 (31 December 2012: ¨450,000,000).
Repurchased own shares by the Company
None.
2.14 Insurance and investment contracts - classification
An insurance contract is a contract under which the Company accepts significant insurance risk from another party (the
policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely
affects the policyholder. Insurance risk covers all risk except for financial risks. All premiums have been received within the
coverage of insurance contracts recognized as revenue under the account caption “written premiums”.
Investment contracts are those contracts which transfer financial risk with no significant insurance risk. Financial risk is the risk
of a possible future change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index
of prices or rates, credit rating or credit index or other variable, provided, that it is not specific to a party to the contract, in the
case of a non-financial variable.
The Company mainly issues policies under personal accident, risk and saving life insurance branches and individual pension
contracts.
Saving component of the life products can be measured separately by the Company. However, insurance and saving components
are not separated due to accounting policy requirements specified to account all risks and rewards without considering the basis
of measurement.
2.15 Insurance contracts and investment contracts with discretionary participation feature
Discretionary participation feature (“DPF”) within insurance contracts and investment contracts is the right to have following
benefits in addition to the guaranteed benefits.
(i) that are likely to comprise a significant portion of the total contractual benefits,
(ii) whose amount or timing is contractually at the discretion of the Issuer; and
(iii) that are contractually based on:
(1) the performance of a specified pool of contracts or a specified type of contract;
208
(2) realized and/or unrealized investments returns on a specified pool of assets held by the Issuer; or
(3) the profit or loss of the Company, Fund or other entity that issues the contract.
As at the reporting period, the Company does not have any insurance or investment contracts that contain a DPF.
2.16 Investment contracts without DPF
In the context of the saving life products, if the investment return, obtained from the savings of the policyholders which is
invested by the Company results a lower yield rate than the technical interest rate, the Company compensates the difference;
if investment return results higher yield than the guaranteed technical interest rate, the difference is distributed to the
policyholders as profit sharing bonus. Due to contractual and competitive constraints in practice, the Company has classified
these contracts as investment contracts without DPF.
For such products, investment income obtained from assets backing liabilities is recorded within income statement or equity in
accordance with the accounting policies mentioned above; and whole contract is presented as a liability under life mathematical
provisions.
2.17 Liabilities
Financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another entity.
Financial liabilities of the Company are measured at their discounted values. A financial liability is derecognized when it is
extinguished.
Payables from individual pension business consist of payables to participants, participants’ temporary accounts, and payables
to individual pension agencies. The payables to participants are the account in which the contribution of participants that
transferred to investments on behalf of individual pension contract owners and income from these investments are recorded.
The temporary account of participants includes the contributions of participants that have not yet been transferred to the
investment. This account also includes the entrance fee deducted portion of the participants’ fund amounts, obtained from the
fund share sales occur in the case of system leaves. This account consists of the amounts of participants that will be transferred
to other individual pension companies or participants’ own accounts. This account means Company’s liabilities to individual
pension agencies in return of their services.
2.18 Income taxes
Corporate tax
Statutory income is subject to corporate tax at 20%. This rate is applied to accounting income modified for certain exemptions
(like dividend income) and deductions (like investment incentives), and additions for certain non-tax deductible expenses and
allowances for tax purposes. If there is no dividend distribution planned, no further tax charges are made.
Dividends paid to the resident institutions and the institutions working through local offices or representatives are not subject
to withholding tax. The withholding tax rate on the dividend payments other than the ones paid to the non-resident institutions
generating income in Turkey through their operations or permanent representatives and the resident institutions is 15%. In
applying the withholding tax rates on dividend payments to the non-resident institutions and the individuals, the withholding
tax rates covered in the related Double Tax Treaty Agreements are taken into account. Appropriation of the retained earnings to
capital is not considered as profit distribution and therefore is not subject to withholding tax.
In accordance with the tax legislation, tax losses can be carried forward to offset against future taxable income for up to five
years. Tax losses cannot be carried back to offset profits from previous periods. As at 31 December 2013 and 2012, the Company
does not have any deductible tax losses.
In Turkey, there is no procedure for a final and definite agreement on tax assessments. Companies file their tax returns with their
tax offices by the end of 25th of the fourth month following the close of the accounting period to which they relate. Tax returns
are open for five years from the beginning of the year that follows the date of filing during which time the tax authorities have
the right to audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based
on their findings.
According to the “General Communique on Corporate Tax” promulgated in Official Gazette no 28178 dated 19 January 2012,
fair value of derivative transactions and option premiums are accepted as income or expense in the corporate tax statement if
those transactions are performed at Derivative Exchange Market and not if those transactions are performed with entities as
previously.
The prepaid taxes are calculated and paid at the rates valid for the earnings of the related years. The payments can be deducted
from the annual corporate tax calculated for the whole year earnings.
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Deferred tax
In accordance with TAS 12 - Income taxes, deferred tax assets and liabilities are recognized on all taxable temporary differences
arising between the carrying values of assets and liabilities in the financial statements and their corresponding balances
considered in the calculation of the tax base, except for the differences not deductible for tax purposes and initial recognition of
assets and liabilities which affect neither accounting nor taxable profit.
The deferred tax assets and liabilities are reported as net in the financial statements if, and only if, the Company has a legally
enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity.
In case where gains/losses resulting from the subsequent measurement of the assets are recognized in the statement of
income, then the related current and/or deferred tax effects are also recognized in the statement of income. On the other
hand, if such gains/losses are recognized as an item under equity, then the related current and/or deferred tax effects are also
recognized directly in the equity.
Transfer pricing
In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of
“disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing,
dated 18 November 2007 sets details about implementation.
If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices
are not set in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner
through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for
corporate income tax purposes.
2.19 Employee benefits
In accordance with existing Turkish Labor Law, the Company is required to make lump-sum termination indemnities to each
employee who has completed one year of service with the Company and whose employment is terminated due to retirement
or for reasons other than resignation or misconduct. The computation of the liability is based upon the retirement pay ceiling
announced by the Government. The applicable ceiling amount as at 31 December 2013 is ¨3,254.44 (31 December 2012:
¨3,033.98).
The Company accounted for employee severance indemnities using actuarial method in compliance with the TAS 19 - Employee
Benefits. After the revision of TAS 19, as the amount of actuarial gain and loss are presented under the other profit reserves,
which were previously shown under the income statement. The major actuarial assumptions used in the calculation of the total
liability as at 31 December 2013 and 2012 are as follows:
Discount rate
Expected rate of salary/limit increase
3.77%
1.00% - 4.57%
6.00%
6.00%
Other benefits
210
The Company has provided for undiscounted short-term employee benefits earned during the period as per services rendered in
compliance with TAS 19 in the accompanying financial statements.
2.20 Provisions
A provision is made for an existing obligation resulting from past events if it is probable that the commitment will be settled
and a reliable estimate can be made of the amount of the obligation. Provisions are calculated based on the best estimates of
management on the expenses to incur as of the reporting period and, if material, such expenses are discounted to their present
values. If the amount is not reliably estimated and there is no probability of cash outflow from the Company to settle the liability,
the related liability is considered as “contingent” and disclosed in the footnotes to the financial statements.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are
not recognized in financial statements since this may result in the recognition of income that may never be realized. Contingent
assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has
become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the
financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, the
Company discloses the contingent asset.
2.21 Revenue recognition
Written premiums and claims paid
Written premiums represent premiums on policies written during the period net of taxes, premiums of the cancelled policies
which were produced in prior periods and premium ceded to reinsurance companies. Premiums ceded to reinsurance companies
are accounted as “written premiums, ceded” in the profit or loss statement.
Claims are recognized as expense as they are paid. Outstanding claims provision is provided for both reported unpaid claims at
the reporting period and incurred but not reported claims. Reinsurer’s shares of claims paid and outstanding claims provisions are
off-set against these reserves.
Commission income and expense
As further disclosed in Note 2.24, commissions paid to the agencies related to the production of the insurance policies and the
commissions received from the reinsurance firms related to the premiums ceded are recognized over the life of the contract
by deferring commission income and expenses within the calculation of reserve for unearned premiums for the policies
produced before 1 January 2008 and recognizing deferred commission income and deferred commission expense in the financial
statements for the policies produced after 1 January 2008.
In order to net-off the receivable accounts in compliance with the matching principle, The Company reserves a provision of
commissions to intermediaries over the accrued but uncollected receivables from policyholders balance as at the reporting
period. While the commissions to intermediaries for non-life branches are not accrued, the commission amount that has to be
paid in case of the collection of receivables is calculated on the basis of policy for life branch.
Reinsurance commissions are accounted for based on reinsurer agreements. According to the Circular no: 2007/25 issued by
the Turkish Treasury on 28 December 2007, starting from 10 January 2008, deferred reinsurance commissions are presented in
“Deferred Income” account in the balance sheet.
Interest income and expense
Interest income and expense are recognized in the statement of income using the effective interest method. The effective
interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the
financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. The
effective interest rate is established on initial recognition of the financial asset and liability and is not revised subsequently.
Trading income/expense
Trading income/expense includes gains and losses arising from disposals of financial assets held for trading purpose and
available-for-sale financial assets. Trading income and trading expenses are recognized as “Income from disposal of financial
assets” and “Loss from disposal of financial assets” in the accompanying financial statements.
Dividends
Dividend income is recognized when the Company’s right to receive payment is ascertained.
The calculation of the effective interest rate includes all fees and points paid or received transaction costs, and discounts
or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly
attributable to the acquisition, issue or disposal of a financial asset or liability.
211
Income from individual pension operations
Fund management fee is recognized as income, charged to the pension investment funds against the hardware, software,
personnel and accounting services provided, and fee is shared between the Company and the portfolio managers in accordance
with the agreement signed between parties. Total of fund management fee charged to the pension investment funds is
recognized as “Fund management income” under technical income and portion of the portfolio manager is recognized as “Fund
management expense” under technical expenses.
Management fee is levied on contributions of the participants up to 2% and recognized as “Management fee” under technical
income. If no payment is made in three months after the payment date of overdue contribution, case of suspension occurs and
management expense is charged. The aforementioned expenses are recognized as “Management expense charge in case of
suspension”.
Entrance fees are received by the Company from participants during the entrance into the system and for the opening of a new
individual pension account. Entrance fees charged to the participants could not be higher than minimum wage that is valid on
the date of the contract. In the outstanding individual pension contracts of the Company, significant portion of the entrance fees
is deferred to the end of the contract. The deferred and contingent entrance The difference in value of the pension investment
fund shares, obtained due to capital advance on the date of establishment, to the date of selling of those shares to the
participants is recorded in the income statement as “increase in value of capital allowances given as advances”.
2.22 Leasing transactions
Tangible assets acquired by way of finance leasing are recognized in tangible assets and the obligations under finance leases
arising from the lease contracts are presented under finance lease payables account in the financial statements. In the
determination of the related assets and liabilities, the lower of the fair value of the leased asset and the present value of leasing
payments is considered. Financial costs of leasing agreements are expanded in lease periods at a fixed interest rate.
If there is impairment in the value of the assets obtained through financial lease and in the expected future benefits, the leased
assets are valued with net realizable value. Depreciation for assets obtained through financial lease is calculated in the same
manner as tangible assets.
Payments made under operating leases are recognized in the statement of income on a straight-line basis over the term of the
lease.
2.23 Dividend distribution
In accordance with the Articles of Association of the Company, first dividend distribution is made from distributable profit based
on the rates and amounts set out by the Capital Markets Board. In regards to the profit share distribution policy of the Company,
two options are presented to the General Assembly; 30% of distributable profit at a minimum as bonus shares or in cash.
Based on its articles of association, the Company makes at a maximum of 3% of profit share payments to its employees following
the appropriation of first profit share, limited to a maximum of three-month salary.
Dividend payables are recorded as liability in the financial statements when they are announced.
2.24 Reserve for unearned premiums
212
In accordance with the “Communiqué on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related
Assets That Should Be Invested Against Those Technical Reserves” (“Communiqué on Technical Reserves”) which was issued
in 26606 numbered and 7 August 2007 dated Official Gazette and put into effect starting from 1 January 2008, the reserve for
unearned premiums represents the proportions of the gross premiums written without deductions of commission or any other
allowance, in a period that relate to the period of risk subsequent to the reporting period for all short- term insurance policies.
In the case of personal accident insurance, annual life insurance and life insurance which of the renewal date exceeds one year,
reserve for unearned premiums is calculated for the portion of the remaining part which is left after deducting savings from
gross premium written for the year. In accordance with the “Communiqué on Amendments to the Communiqué on Technical
Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested Against Those
Technical Reserves” issued in 28356 numbered and 17 July 2012 dated Official Gazette and effective from 30 June 2012, reserve
for unearned premiums is calculated from remaining amount of gross written premiums by deducting saving component and
expenses related with saving component for life insurance and life insurance with saving components having longer than one
year maturity. Insurance policies covering possibilities of life and death or both and personal accident, disability by illness and
serious illness insurance policies are considered as life insurance policies and their premiums are classified as life insurance
premiums.
According to the 2009/9 Numbered Circular Related to Application of Technical Reserves issued on 27 March 2009 reserve for
unearned premiums is calculated by taking into account that all polices become active at 12:00 at noon and end at 12:00 at noon.
2.25 Reserve for unexpired risks
In accordance with the Communiqué on Technical Reserves, in each accounting period, the companies while providing reserve
for unearned premiums should perform adequacy test covering the preceding 12 months in regard with the probability of future
claims and compensations of the outstanding policies will arise in excess of the reserve for unearned premiums already provided.
In performing this test, it is required to multiply the reserve for unearned premiums, net with the expected claim/premium ratio.
Expected claim/premium ratio is calculated by dividing incurred losses (provision for outstanding claims, net at the end of the
period + claims paid, net - provision for outstanding claims, net at the beginning of the period) to earned premiums (written
premiums, net + reserve for unearned premiums, net at the beginning of the period - reserve for unearned premiums, net at
the end of the period). In the calculation of earned premiums; deferred commission expenses paid to the agencies and deferred
commission income received from the reinsurance firms which were netted off from reserve for unearned premiums both at the
beginning of the period and at the end of the period are not taken into consideration.
In accordance with the “Communiqué on Amendments to the Communiqué on Technical Reserves for Insurance, Reinsurance
and Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves” issued in 28356
numbered and 17 July 2012 dated Official Gazette and effective from 31 December 2012, the test is performed on branch basis
and in case where the expected claim/premium ratio is higher than 95%, reserve calculated by multiplying the exceeding portion
of the expected claim/premium ratio with the reserve for unearned premiums of that specific branch is added to the reserves
of that branch. The difference between the gross amount and the net amount is considered as the reinsurer’s share. Turkish
Treasury is authorized to change test methods and require additional reserve for unexpired risks on branch basis.
As at 31 December 2013 and 2012, related test have not resulted in any deficiency regarding reserve for unexpired risks.
2.26 Provision for outstanding claims
Change in measurement of technical reserves became effective as at 30 September 2010 according to the Turkish Treasury
Circular which were published as “Communiqué on Amendments to Communiqué on Technical Reserves” in Official Gazette dated
28 July 2010 and numbered 27655.
Communiqué on technical reserves and circulars issued by Turkish Treasury brings essential changes into effect on measurement
of technical reserves and accounting of income from salvage and subrogation. In summary, it is aimed to align Communiqué on
Technical Reserves with methodological changes on Actuarial Chain ladder method, to include matters which were declared
before through circulars and sector announcements to the communiqué. The Turkish Treasury issued the Circulars numbered
2010/12, 2010/13, 2010/14 and the sector announcement numbered 2010/29 which became effective as at 31 December 2010
in order to clarify uncertainties on measurement of technical reserves and accounting of income from salvage and subrogation.
Claims are recorded in the year in which they occur, based on reported claims or on the basis of estimates when not reported.
Provision for outstanding claims represents the estimate of the total reported costs of notified claims on an individual case basis
at the reporting period as well as the corresponding handling costs.
213
Additional amendments effective from 30 June 2013 are issued in the “Communiqué on Amendments to the Communiqué
on Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested
Against Those Technical Reserves” in 28356 numbered and 17 July 2012 dated Official Gazette. Test IBNR method ceased in
the calculation of provision for outstanding claims. In accordance with the previous communiqués and sector announcements
companies should perform actuarial chain ladder method for the non-life insurance branches engaged more than five years and
had sufficient data. “
Claims incurred before the accounting periods but reported subsequent to those dates are accepted as incurred but not reported
(“IBNR”) claims. According to the “Communiqué on Provision for IBNR Claims in Life Branch” numbered 2010/14, IBNR calculation
is changed. In accordance with the related regulations, last five or more than five years’ weighted average calculated by dividing
total gross amount of incurred but not reported claims to average annual guarantee of the related years. As of the current
reporting period, IBNR is calculated by multiplying weighted average IBNR ratio by the average guarantee amount of last twelve
months before reporting period. Accordingly, as at the reporting period, the Company has provided for IBNR, net off ceded
amounting to ¨4,003,978 (31 December 2012: ¨3,832,540).
According to the 7th article 6th subclause of the “Circular on Change in Technical Reserves for Insurance, Reinsurance and Pension
Companies and the Related Assets That Should Be Invested Against Those Technical Reserves”; provision for the outstanding
claims of the period cannot be less than the result of the actuarial chain ladder method determined by Turkish Treasury. The
Company has selected “Standard chain ladder method” for personal accident branch as stated in the “Communiqué on Technical
Reserves and Circular on Actuarial Chain Ladder Method” dated 20 September 2010 and numbered 2010/12. Accordingly, as at
the reporting period, the Company has provided for IBNR, net off ceded amounting to ¨32,878 (31 December 2012: ¨38,228).
In the Sector Announcement dated 18 July 2012 and numbered 2012/13 published by the Turkish Treasury, insurance,
reinsurance and individual pension companies are required to perform adequacy test to assess the adequacy of provision for
outstanding claims at the end of the each reporting period. Companies performed actuarial chain ladder method are not obliged
to record additional provision for outstanding claims. As at 31 December 2013, this adequacy test has not resulted in additional
provision for outstanding claims.
2.27 Mathematical provisions
In accordance with the Communiqué on Technical Reserves, companies operating in life and non-life insurance branches are
obliged to allocate adequate mathematical reserves based on actuarial basis to meet liabilities against policyholders and
beneficiaries for long-term life, health and personal accident insurance contracts. Mathematical provisions are composed of
actuarial mathematical provisions and profit sharing provisions. Actuarial mathematical provisions, according to formulas and
basis in approved technical basis of tariffs for over one year-length life insurance, are calculated by determining the difference
between present value of liabilities that the Company meets in future and current value of premiums paid by policyholder in
future (prospective method). In life insurance where saving plan premiums are also generated, actuarial mathematical provisions
consist of total saving plan portions of premiums. Provision for profit sharing consist of profit sharing calculated in previous years
and a certain percentage of current year’s income, determined in the approved profit sharing tariffs, obtained from the financial
assets backing liabilities of the Company against the policyholders and other beneficiaries for the contracts which the Company
is liable to give profit sharing. The valuation method used in calculation of the profit to be shared for saving life contracts is
the same with the valuation basis of portfolio on which assets on which the Company invests the provisions allocated due to
liabilities against the beneficiaries are included in the framework of basis defined in the note 2.8 - Financial assets above.
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2.28 Equalization provision
According to “Communiqué on Technical Reserves”, companies should book equalization provision for guarantees of loan and
earthquakes in order to offset fluctuations in the rate of indemnification and to meet catastrophic risks in the accounting period.
In accordance with the Communiqué on Technical Reserves issued by the Turkish Treasury on 27 March 2009 numbered 2009/9,
the insurance companies should recognize equalization provision for disability and death occurred because of an earthquake and
tariffs that include additional guarantee in life and casualty branches. With the circular released on 28 July 2010 and numbered
27655 “Circular on Change in Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That
Should Be Invested Against Those Technical Reserves”, the calculation of equalization provision is revised. In accordance with
the Communiqué on Technical Reserves, the companies which give additional guarantee in life use their own statistical data for
equalization provision calculation. The companies not having sufficient data for calculation will accept 11% of death net premium
(including damage payments) as earthquake premium and 12% of that amount is calculated as equalization provision.
In accordance with the Communiqué on Technical Reserves, booking provisions should continue until reaching 150% of the
highest net premium amount of the last five financial years. Equalization provisions amounting to ¨5,921,429 are presented
under “other technical reserves” within short-term liabilities in the accompanying financial statements (31 December 2012:
¨3,915,510).
In accordance with Regulation on Technical Reserves, insurance companies are required to account for the bonus or discounts
provided to policyholders and beneficiaries in accordance with the current year technical income. As of 31 December 2013, the
Company accounted for bonus provision amounting to ¨128,485 (31 December 2012: ¨256,613).
2.29 Related parties
Parties are considered related to the Company if;
(a) directly, or indirectly through one or more intermediaries, the party:
• controls, is controlled by, or is under common control with the Company (this includes parent, subsidiaries and fellow
subsidiaries);
• has an interest in the Company that gives it significant influence over the Company; or
• has joint control over the Company;
(b) the party is an associate of the Company;
(c) the party is a joint venture in which the Company is a venturer;
(d) the party is member of the key management personnel of the Company and its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled or significantly influenced by, or for which significant voting power in such entity
resides with directly or indirectly, any individual referred to in (d) or
(g) the party is a post-employment benefit plan for the benefit of employees of the Company, or of any entity that is a related
party of the Company.
A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a
price is charged.
A number of transactions are entered into with related parties in the normal course of business.
2.30 Earnings per share
Earnings per share presented in the income statement is calculated by dividing the net profit into the weighted average number
of the outstanding shares throughout the financial year. Companies in Turkey can increase their capital by distributing “bonus
shares” to shareholders from the prior years’ profit. Such “bonus share” distributions are considered as issued shares in the
earnings per share calculations. Accordingly, weighted average number of equity shares used in the calculations is calculated by
considering the retrospective effects of share distributions.
“Events After the Reporting Period”; post-reporting date events that provide additional information about the Company’s
position at the reporting periods (adjusting events) are reflected in the financial statements. Post-reporting date events that are
not adjusting events are disclosed in the notes when material.
2.32 New standards and interpretations not yet adopted
There are a number of new standards, updates related to the existing standards and interpretations which are not adopted
in the preparation of the accompanying financial statements and have not yet entered into force for the accounting period
31 December 2013. These new standards are not expected to have any impact on the financial statements of the Company,
with the exception of TFRS 9 - Financial instruments, which is published by the Turkish Accounting Standards Board on Official
Gazette dated 27 April 2010 and numbered 27564.
TFRS 9 - Financial instruments, is published by International Accounting Standards Board in November 2009 as a part of a wider
project that aims to bring new regulations to replace TAS 39 - Financial Instruments: Recognition and Measurement.
215
Developing a new standard for the financial reporting of financial assets that is principle-based and less complex is aimed by
this project. The objective of TFRS 9, being the first phase of the project, is to establish principles for the financial reporting
of financial assets that will present relevant and useful information to users of financial statements for their assessment
of amounts, timing and uncertainty of the entity’s future cash flows. With TFRS 9 an entity shall classify financial assets as
subsequently measured at either amortized cost or fair value on the basis of both the entity’s business model for managing the
financial assets and the contractual cash flow characteristic of the financial assets. The guidance in TAS 39 on impairment of
financial assets and hedge accounting continues to apply.
An entity shall apply TFRS 9 for annually years beginning on or after 1 January 2015. An earlier application is permitted. If an
entity adopts this TFRS in its financial statements for a period beginning before 1 January 2012, then prior periods are not
needed to be restated.
New standards and interpretations not yet adopted and have no effect on the Company’s financials
• TAS 32 - Financial Instruments: Presentation - The amendment on the Clarification of Financial Assets and Debts aims to
clarify the statement “existence of an available and legal right for clarification of the recognized amounts”. Additionally TAS
32 clarifies application areas of settlement systems (such as Exchange bureaus) where gross payment is made and where
clarification principle is not implemented simultaneously. Amendments will be applied for the accounting periods starting as
from 1 January 2014 retrospectively. 3 Critical accounting estimates and judgments in applying accounting policies
The notes given in this section are provided to addition/supplement the commentary on the management of insurance risk note
4.1 - Management of insurance risk and note 4.2 - Financial risk management.
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in
the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas at estimation uncertainty and critical judgment in applying accounting policies
that have the most significant effect on the amount recognized in the financial statements are described in the following notes:
Note 2.26 - Provision for outstanding claims
Note 2.27 - Mathematical provisions
Note 4.1 - Management of insurance risk
Note 4.2 - Financial risk management
Note 7 - Investment properties
Note 11 - Financial assets
Note 12 - Loans and receivables
216
Note 21 - Deferred income tax
4 Management of insurance and financial risk
4.1 Management of insurance risk
Objective of managing risks arising from insurance contracts and policies used to minimize such risks:
Insurance risk is defined as coverage for exposures that exhibit a possibility of financial loss due to applying inappropriate and
insufficient insurance techniques. In line with the nature of an insurance contract, as the risk is coincidental, the risk amount
cannot be predictable.
Insurance risk represents the possibility of the non coverage of the claims paid by the premiums collected.
As of 31 December 2013, the Company’s life insurance claims/premiums ratio stands at 19%. Low claims/premiums ratio, which
is calculated by the proportion of claims to risk premiums collected, indicates that the Company makes significant profit. The
Company adopts central risk assessment policy. The Company applies this policy to the all marketing channels produced. In its life
policy production, the Company has no sales channel with continuous risk exposure. The Company analyzes its claims/premiums
ratio periodically in order to identify its insurance risks.
As of 31 December 2013, the Company’s personal accident insurance claims/premiums ratio is 62% Since personal accident
insurance portfolio has an insignificant share in the Company’s general portfolio, this ratio would be low when no compensation
is paid and this ratio would be high when compensation is paid.
Claims/premium ratio of the Company as of the financial statement periods is presented below:
Life insurance
Personal accident
31 December 2013
31 December 2012
19%
62%
17%
39%
The Company shares its significant risks associated with natural disasters, such as; earthquake, terrorism or large-scale
accidents, with reinsurers by entering into catastrophic excess of loss agreements.
As at 31 December 2013 and 2012, risk portion transferred to reinsurers in terms of risk guarantee is presented as below:
Death by natural cause
Death by accident
Disability by accident
Disability by illness
31 December 2013
31 December 2012
12%
64%
64%
65%
7%
51%
49%
42%
Sensitivity to insurance risk
The Company’s policy production strategy follows an effective risk management in the policy production process considering the
nature, extent, and accurate distribution of the risk incurred.
Reinsurer agreements include claims surplus, excess of loss and quota reinsurances. As a result of these agreements, if the
Company’s “death by natural cause” risk account exceeds amounts in agreements “death by accident”, the Company transfers
the exceeding claim payments to reinsurers. The Company also transfers the exceeding claim payments to reinsurers if the
Company’s “death by natural cause” or “death by accident” risk accounts exceeds amounts in agreements for all policies.
Outstanding claims are reviewed and updated periodically by the experts of the Company’s Claims Department.
Determination of insurance risk concentrations by management and the common characteristics of insurance risk
concentrations (nature, location and currency)
Branches
Life insurance
Personal accident
Total
Total gross
risk liability (*)
31 December 2013
Reinsurer’s share of risk
liability
The company’s net claims
liability
40,714,955,430
3,488,091,959
44,203,047,389
11,217,790,955
1,787,721,812
13,005,512,767
29,497,164,475
1,700,370,147
31,197,534,622
The Company produces life and personal accident branch policies. The Company’s gross and net insurance risk concentrations
(after reinsurance) in terms of insurance branches are summarized as below:
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Branches
Life insurance
Personal accident
Total
(*)
Total gross
risk liability (*)
31 December 2012
Reinsurer’s share of risk
liability
The company’s net claims
liability
34,238,444,953
2,802,704,014
37,041,148,967
5,935,647,619
1,534,836,503
7,470,484,122
28,302,797,334
1,267,867,512
29,570,664,846
Represents the maximum insurance amount based on death by natural cause, death by accident, disability by accident and disability by illness.
The Company issues insurance contracts mainly in Turkey. Gross and net insurance risk concentrations of the insurance contracts
(after reinsurance) based on geographical regions are summarized as below:
Claims liability total (*)
Marmara Region
Aegean Region
Black Sea Region
Total
Claims liability total (*)
Marmara Region
Aegean Region
Black Sea Region
Total
Total gross
claims liability
31 December 2013
Reinsurer’s share
of claims liability
Total net
claims liability
30,345,519
11,660,915
10,790,830
7,716,232
4,541,838
2,507,785
1,842,388
3,036,119
72,441,626
941,482
225,796
191,640
370,586
103,126
49,291
46,356
1,928,277
29,404,037
11,435,119
10,599,190
7,345,646
4,438,712
2,458,494
1,796,032
3,036,119
70,513,349
Total gross
claims liability
31 December 2012
Reinsurer’s share
of claims liability
Total net
claims liability
21,480,725
8,709,904
7,173,066
4,462,034
3,713,142
1,715,237
2,025,848
2,722,129
52,002,085
68,937
48,056
5,775
14,598
1,051
1,318
1,500
141,235
21,411,788
8,661,848
7,167,291
4,447,436
3,713,142
1,714,186
2,024,530
2,720,629
51,860,850
Total claims liability includes the actual estimated compensation amounts. IBNR provision and outstanding claims adequacy provision are not included in the
calculation.
(*)
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Comparison of incurred claims with past estimations
As at 31 December 2013, there is not any deficiency in the outstanding claims reserve of the Company.
Incurred claim development table is disclosed in note 17 - Insurance liabilities and reinsurance assets.
Effects of the changes in assumptions used in the measurement of insurance assets and liabilities showing the effect of each
change separately that has significant effect on financial statements
In the current period, there are no material changes in the assumptions of measurement of insurance assets and liabilities.
4.2 Financial risk management
This note presents information about the Company’s exposure to each of the below risks, the Company’s objectives, policies
and processes for measuring and managing risk, and the Company’s management of capital. The Company has exposure to the
following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market risk
The Company’s risk management program focuses on minimizing the negative effects of the ambiguities in financial markets
on the Company’s financial statements. The Company is mostly exposed to interest risk and price risk in relation with financial
investments, to credit risk in relation with insurance receivables and exchange rate risk due to policies and assets in foreign
currencies.
The risk is managed by a specific department which is in line with the approved policies by the Board of Directors. Several risk
policies have been prepared by the Board of Directors in order to manage the exchange risk, interest risk, credit risk, using the
derivative and non-derivative financial instruments risks.
Credit risk
Credit risk is basically defined as the possibility that counterparty will fail to meet its obligations in accordance under agreed
terms of a contract. When the Company’s field of activity and third party relations is considered, its credit risk is deemed to be
relatively at minimum. The balance sheet items that the Company is exposed to credit risk are as follows:
• Cash at banks
• Other cash and cash equivalents
• Available for sale financial assets
• Financial assets held for trading
• Held-to-maturity financial assets
• Premium receivables from policyholders
• Receivables from intermediaries (agencies)
• Receivables from reinsurance companies related to claims paid and commissions accrued
• Reinsurance shares of insurance liabilities
• Due from related parties
• Other receivables
Reinsurers: Reinsurance contracts are the most common method to manage insurance risk. This does not, however, discharge
the Company’s liability as the primary insurer. If a reinsurer fails to pay a claim for any reason, the Company remains liable for the
payment to the policyholder. The Company works with international reinsurance companies with strong financial status. In this
perspective, the level of risk exposure is also considered to be at minimum.
Agencies: Agencies working with the Company expose it to a limited level of credit risk. Since the Company’s products are issued
with long-term use, commissions given to agencies are also long term in nature; therefore, the Company has consistent payables
to agencies.
Policyholders: Overdue premium receivables are not considered as a significant risk exposure to the Company because if the
Company has unpaid premiums, all guarantees related to the insurance will be invalid.
The review of the Company’s third party relations are presented below.
219
As at 31 December 2013 and 2012, the Company’s credit risk exposure by types of financial instruments is as follows. Banks and
other cash and cash equivalents are also included in the credit risk.
31 December 2013
Maximum credit risk exposure as at the
reporting period (A+B+C)
A. Net book value of neither past due nor
impaired financial assets
impaired assets
- Gross book value
- Impairment
- Secured portion of net book value by
31 December 2012
Maximum credit risk exposure as at the
reporting period (A+B+C)
A. Net book value of neither past due nor
impaired financial assets
impaired assets
- Gross book value
- Impairment
- Secured portion of net book value by
220
Receivables (*)
Receivables from
Other receivables
Related
Related
party Third party
party Third party
Financial
assets
Banks and
other cash
and cash
equivalent
assets
-
56,534,984
334,634
12,165,677
2,290,684,583
138,919,439
-
-
-
-
-
-
-
47,679,360
334,634
12,165,677
2,290,684,583
138,919,439
-
8,855,624
-
-
-
-
-
-
-
-
-
-
-
120,570
-
-
-
-
-
(120,570)
-
-
-
-
-
-
-
-
-
-
Financial
assets
Banks and
other cash
and cash
equivalent
assets
1,891,704
2,562,713,429
142,491,481
-
-
-
-
54,917,279 1,096,350
1,891,704
2,562,713,429
142,491,481
Receivables (*)
Receivables from
Receivables from
Related
Related
party Third party
party Third party
-
60,736,653 1,096,350
-
-
-
5,819,374
-
-
-
-
-
-
-
-
-
120,570
-
-
-
-
(120,570)
-
-
-
-
-
-
-
-
-
-
Receivables from individual pension activities are not included in the credit risk table since those receivables are followed both side of the balance sheet as asset
and liability and they are held on behalf of participants by IMKB Takas ve Saklama Bankası AŞ (the “ISE Settlement and Custody Bank”).
(*)
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the net funding obligations. Liquidity risk arises
from the events trigger decreasing funds such as deterioration in the market conditions or downgrading of credit ratings. As at
31 December 2013, maturity analyses of the Company’s assets and liabilities are presented in the table below:
Payables arising from
main operations
Other payables
Insurance technical
provisions
Provisions for taxes and
other similar obligations
Deferred income and
expense accruals
Other short term
liabilities
Total liabilities
Net liquidity surplus/
(deficit)
Unallocated
Total
-
138,765,629
207,643,946 2,406,892,657
5,292,081,534
903,971
5,296,014,578
334,634
12,165,677
10,690,180
17,887
10,690,180
17,887
15,036,296
21,701,481
4,982,250
15,036,296
21,701,481
4,982,250
8,905
8,905
2,068,582
2,068,582
5,555,135,032 7,908,678,756
-
8,949,788
5,702,261
-
881,759
5,014
-
-
-
5,351,680,646
3,180,156
5,361,512,193
5,014
8,882,417
-
-
-
-
-
-
1,972,924,325
1,972,924,325
-
4,848,034
-
-
-
-
-
3,799,996
2,588,141
8,648,030
2,588,141
-
-
-
-
-
-
62
62
-
650,000
20,150,083
-
2,000,000
2,886,773
-
8,269,886
8,269,886
3,055,359
13,975,245
540,143,329
540,143,329
7,877,372,014 7,908,678,756
11,127,176 150,470,703 75,248,683 317,549,596 414,066,604 1,353,774,220 (2,322,236,982)
-
Without
Up to
1 to
3 to
1 to 5
5 years
31 December 2013
maturity
1 month
3 months
12 months
years
and over
Cash and cash
equivalents
11,127,176 127,638,453
policyholders
31,035,028 73,707,554 318,395,419 414,066,604 1,362,044,106
operations
685,599 1,206,495
2,040,950
334,634
Other receivables
11,261,706
Prepaid expenses and
income accruals, short
term
Financial assets
(Associates)
Tangible assets
Intangible assets
income accruals, long
term
Deferred tax assets
Total assets
11,127,176 170,620,786 75,248,683 320,436,369 414,066,604 1,362,044,106
221
31 December 2012
policyholders
operations
Other receivables
income accruals, short term
Financial assets
(Associates)
Tangible assets
Intangible assets
income accruals, long term
Deferred tax assets
Total assets
operations
Other payables
Insurance technical
provisions
Provisions for taxes and
other similar obligations
Deferred income and
expense accruals
Total liabilities
Net liquidity surplus/
(deficit)
222
Without
maturity
5,724,356
Up to
1 month
136,618,070
1 to
3 months
-
3 to
12 months
-
1 to 5
years
-
5 years
and over
-
Unallocated
-
Total
142,342,426
-
19,083,944
16,543,014
242,201,381
754,493,001
1,423,754,509
226,481,644
2,682,557,493
-
436,074
1,166,746
1,003,583
1,096,350
1,700,637
-
-
-
4,344,007,866
724,958
4,347,148,160
1,096,350
1,891,704
-
-
-
-
-
-
12,601,372
23,230
12,601,372
23,230
-
-
-
-
-
-
13,568,006
21,311,444
4,297,953
13,568,006
21,311,444
4,297,953
157,304,834 18,642,947
243,902,018
754,493,001
1,423,754,509
58,142
4,623,074,615
58,142
7,226,896,280
5,724,356
-
9,105,720
3,850,309
-
636,822
8,172
-
-
-
4,361,441,693
2,260
2,619,075
4,371,184,235
10,432
6,469,384
-
-
-
-
-
-
2,288,110,880
2,288,110,880
-
4,139,335
-
-
-
-
7,173,965
11,313,300
-
500,000
17,595,364
-
644,994
-
7,408,414
7,408,414
1,793,541
61
5,859,758
4,760,670
529,485,605
7,201,247,508
1,793,541
61
13,768,172
4,760,670
529,485,605
7,226,896,280
139,709,470 18,642,947
243,257,024
754,493,001
1,416,346,095
(2,578,172,893)
-
5,724,356
Market risk
Market risk is the risk that changes in market prices, such as interest rate, foreign exchange rates and credit spreads will affect
the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimizing the return on risk.
Foreign currency risk
The Company is exposed to foreign currency risk through insurance and reinsurance transactions in foreign currencies.
Foreign exchange gains and losses arising from foreign currency transactions are recorded at transaction dates. At the end of the
periods, foreign currency assets and liabilities evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates and
the differences arising from foreign currency rates are recorded as foreign exchange gain or loss in the statement of operations.
Parallel to the general characteristic of Turkish insurance sector, the Company holds long position in terms of US Dollar and Euro.
currency)
US Dollar
Euro
1,013,036
235,728
651,781
GBP
112,476
CHF
13,051
JPY
-
349,939,881 229,425,236 108,350,930
297,044
168,988
122,673
128,461
128,461
23,477
23,477
351,401,899 229,853,429 109,253,845
12,163,715
5,383
12,281,574
13,051
-
7. Total assets
351,401,899 229,853,429 109,253,845
12,281,574
13,051
-
term
22,163
237,595
339,075,966
21,613
225,078
236,612,886
12,517
91,029,132
381
11,384,517
13,079
169
36,352
339,335,724 236,859,577
91,041,649
11,384,898
13,079
36,521
339,335,724 236,859,577
91,041,649
11,384,898
13,079
36,521
1. Cash at banks
policyholders
5. Rent receivables
6. Deposits given
monetary items
12,066,175
(7,006,148)
18,212,196
896,676
(28) (36,521)
12,042,698
(7,029,625)
18,212,196
896,676
(28) (36,521)
The Company’s exposure to foreign currency risk is as follows:
223
currency)
US Dollar
Euro
2,543,732
2,138,498
137,416
GBP
CHF
113,413 154,405
JPY
-
418,853,062 297,272,130 107,842,355
374,618
303,753
66,438
23,942
10,655
13,287
19,609
19,609
421,814,963 299,744,645 108,059,496
13,738,577
4,427
13,856,417 154,405
-
7. Total assets
421,814,963 299,744,645 108,059,496
13,856,417 154,405
-
term
963
181,307
313,232,568
170,648
218,974,074
10,659
84,117,708
700
10,068,544
15,750
263
56,492
313,414,838
219,144,722
84,128,367
10,069,244
15,750
56,755
313,414,838
219,144,722
84,128,367
10,069,244
15,750
56,755
monetary items
108,400,125
80,599,923
23,931,129
3,787,173 138,655 (56,755)
108,380,516
80,580,314
23,931,129
3,787,173 138,655 (56,755)
1. Cash at banks
policyholders
5. Rent receivables
6. Deposits given
Foreign currency transactions are recorded at exchange rates at the transaction dates and foreign currency denominated
monetary items are evaluated by the Central Bank of the Republic of Turkey’s spot purchase rates as at 31 December 2013.
Foreign currency rates used for the translation of foreign currency denominated monetary assets and liabilities as at reporting
periods are as follows:
31 December 2013
items
31 December 2012
items
224
US Dollar
Euro
GBP
CHF
JPY
2.1343
2.9365
3.5114
2.3899
0.0202
US Dollar
Euro
GBP
CHF
JPY
1.7826
2.3517
2.8708
1.9430
0.0207
Exposure to foreign currency risk
A 10 percent depreciation of the ¨ against the following currencies as at 31 December 2013 and 2012 would have increased
or decreased equity and profit or loss (excluding tax effects) by the amounts shown below. This analysis assumes that all
other variables, in particular interest rates, remain constant. In case of a 10 percent appreciation of the ¨ against the following
currencies, the effect will be in opposite direction.
Profit/loss
Equity (*)
Appreciation of
Depreciation of
Appreciation of
Depreciation of
foreign currency
foreign currency
foreign currency
foreign currency
(714,269)
-
(714,269)
714,269
(700,615)
700,615
1,785,809
-
(1,785,809)
-
1,821,220
-
(1,821,220)
-
1,785,809
(1,785,809)
1,821,220
(1,821,220)
8- Hedged portion from GBP risk (-) 89,884
-
(89,884)
-
89,668
-
(89,668)
-
9- Net effect of GBP (7+8) 89,884
(89,884)
89,668
(89,668)
(3)
-
3
-
(3)
-
3
-
(3)
3
(3)
3
(3,652)
-
3,652
-
(3,652)
-
3,652
-
(3,652)
3,652
(3,652)
3,652
1,157,769
(1,157,769)
1,206,618
(1,206,618)
Total (3+6+9+12+15)
(*)
714,269
-
(700,615)
-
700,615
-
225
Profit/loss
Appreciation of
Depreciation of
foreign currency
foreign currency
7,654,585
-
7,654,585
(7,654,585)
8,059,992
(8,059,992)
2,332,055
-
(2,332,055)
-
2,393,113
-
(2,393,113)
-
2,332,055
(2,332,055)
2,393,113
(2,393,113)
8- Hedged portion from GBP risk (-) 361,013
-
(361,013)
-
378,717
-
(378,717)
-
9- Net effect of GBP (7+8) 361,013
(361,013)
378,717
(378,717)
13,866
-
(13,866)
-
13,866
-
(13,866)
-
13,866
(13,866)
13,866
(13,866)
(5,676)
(5,676)
5,676
5,676
(5,676)
(5,676)
5,676
5,676
10,355,843
(10,355,843)
10,840,012
(10,840,012)
Total (3+6+9+12+15)
(*)
Equity(*)
Appreciation of
Depreciation of
foreign currency
foreign currency
(7,654,585)
-
8,059,992
-
(8,059,992)
-
Interest risk
Exposure to interest risk
226
The changes in interest rate that arise fluctuations in prices of financial instruments lead to the necessity of overcoming interest
rate risk. The Company’s sensitivity for interest rate risk is related to the inconsistency of maturity of asset and liability items. The
interest risk is managed by compensating the assets exposed to the interest fluctuations with the identical liabilities.
Financial instruments which are sensitive to the changes in interest rates are given in the table below:
Fixed rate financial instruments
Financial assets
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Banks
Variable rate financial instruments
Financial assets
1,635,110,730
1,623,708,744
11,401,986
18,737,143
1,875,486,885
1,861,395,540
14,091,345
54,078,050
564,137,981
580,588,964
Interest rate sensitivity of financial instruments
As at 31 December 2013 and 2012, interest rate risk analysis of financial assets and financial liabilities are summarized in the
table below:
31 December 2013
Assets:
Up to 1 month 1 to 3 months
3 to 12
months
1 to 5 years
5 years and
over
Non-interest
bearing
Total
127,638,453
-
-
-
-
11,127,176
138,765,629
policyholders
521,465,455
73,707,554
165,404,467
76,627,129
1,362,044,106
685,599
1,206,495
2,040,950
-
-
5,292,081,534
-
334,634
-
-
-
-
334,634
11,261,706
-
-
-
-
903,971
12,165,677
10,690,180
operations
Other receivables
207,643,946 2,406,892,657
5,296,014,578
-
-
-
-
-
10,690,180
-
-
-
-
-
17,887
17,887
-
-
-
-
-
15,036,296
15,036,296
Tangible assets
-
-
-
-
-
21,701,481
21,701,481
Intangible assets
-
-
-
-
-
4,982,250
4,982,250
accruals, long term
-
-
-
-
-
8,905
8,905
Deferred tax assets
-
-
-
-
-
2,068,582
2,068,582
661,051,213
75,248,683
167,445,417
8,949,788
-
881,759
-
-
5,351,680,646
-
-
5,014
-
-
-
5,014
5,702,261
-
-
-
-
3,180,156
8,882,417
-
-
-
-
-
1,972,924,325
1,972,924,325
similar obligations
4,848,034
-
-
-
-
3,799,996
8,648,030
2,588,141
Total assets
76,627,129 1,362,044,106
5,566,262,208 7,908,678,756
Liabilities:
Other liabilities
5,361,512,193
accruals
-
-
-
-
-
2,588,141
-
-
-
-
-
62
62
650,000
-
2,000,000
-
8,269,886
3,055,359
13,975,245
-
-
-
-
-
-
-
-
-
-
-
-
540,143,329
540,143,329
20,150,083
-
2,886,773
-
8,269,886
640,901,130
75,248,683
164,558,644
76,627,129
1,353,774,220
Net position
7,877,372,014 7,908,678,756
(2,311,109,806)
-
operations
227
31 December 2012
Assets:
Up to 1 month 1 to 3 months
3 to 12
months
1 to 5 years
5 years and
over
Non-interest
bearing
Total
54,078,050
-
-
-
-
88,264,376
142,342,426
policyholders
513,609,225
102,606,697
242,201,381
173,904,037
1,423,754,509
226,481,644
2,682,557,493
436,074
1,003,583
1,700,637
-
-
4,344,007,866
4,347,148,160
-
1,096,350
-
-
-
-
1,096,350
1,166,746
-
-
-
-
724,958
1,891,704
12,601,372
operations
Other receivables
-
-
-
-
-
12,601,372
-
-
-
-
-
23,230
23,230
-
-
-
-
-
13,568,006
13,568,006
Tangible assets
-
-
-
-
-
21,311,444
21,311,444
Intangible assets
-
-
-
-
-
4,297,953
4,297,953
accruals, long term
-
-
-
-
-
58,142
58,142
Deferred tax asset
-
-
-
-
-
-
-
569,290,095
104,706,630
243,902,018
173,904,037
1,423,754,509
9,105,720
-
636,822
-
-
4,361,441,693
-
-
8,172
-
-
2,260
10,432
3,850,309
-
-
-
-
2,619,075
6,469,384
-
-
-
-
-
similar obligations
4,139,335
-
-
-
-
7,173,965
11,313,300
-
-
-
-
-
1,793,541
1,793,541
Total assets
4,711,338,991 7,226,896,280
Liabilities:
operations
Other liabilities
accruals
-
-
-
-
-
61
61
500,000
-
-
-
7,408,414
5,859,758
13,768,172
-
-
-
-
-
4,760,670
4,760,670
-
-
-
-
-
529,485,605
529,485,605
17,595,364
-
644,994
-
7,408,414
551,694,731
104,706,630
243,257,024
Net position
2,288,110,880 2,288,110,880
228
4,371,184,235
7,201,247,508 7,226,896,280
173,904,037 1,416,346,095 (2,489,908,517)
-
Interest rate sensitivity of the statement of income is the effect of the assumed changes in interest rates on the fair values of
financial assets at fair value through profit or loss and on the net interest income as at and for 31 December 2013 and 2012 of
the floating rate non-trading financial assets and financial liabilities held at 31 December 2013 and 2012. Interest rate sensitivity
of equity is calculated by revaluing available-for-sale financial assets at 31 December 2013 and 2012 for the effects of the
assumed changes in interest rates. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant. The table below demonstrating the effect of changes in interest rates on statement of income and equity excludes tax
effects on related loss or income.
31 December 2013
Total, net
31 December 2012
Total, net
100 bp
increase
100 bp
decrease
500 bp
increase
500 bp
decrease
(4,775,898)
(4,775,898)
4,893,034
4,893,034
(22,025,376)
(22,025,376)
26,775,962
26,775,962
100 bp
increase
100 bp
decrease
500 bp
increase
500 bp
decrease
(6,165,010)
(6,165,010)
6,477,278
6,477,278
(28,088,476)
(28,088,476)
35,978,405
35,978,405
Fair value information
The estimated fair values of financial instruments have been determined using available market information, and where it exists,
appropriate valuation methodologies.
The Company has classified its financial assets as whether held for trading purpose or available for sale. As at reporting period,
available for sale financial assets and financial assets held for trading are measured at their fair values in the accompanying
financial statements.
Management estimates that the fair value of other financial assets and liabilities are not materially different than their carrying
values.
Classification relevant to fair value information
TFRS 7 - Financial instruments: Disclosures requires the classification of fair value measurements into a fair value hierarchy by
reference to the observability and significance of the inputs used in measuring fair value of financial instruments measured at
fair value to be disclosed. This classification basically relies on whether the relevant inputs are observable or not. Observable
inputs refer to the use of market data obtained from independent sources, whereas unobservable inputs refer to the use of
predictions and assumptions about the market made by the Company. This distinction brings about a fair value measurement
classification generally as follows:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (as prices) or indirectly (derived from prices).
Level 3: Fair value measurements using inputs for the assets or liability that are not based on observable market data
(unobservable inputs).
If classification is available for usage, it necessitates the utilization of observable market data.
229
The classification of fair value measurements of financial assets and liabilities measured at fair value is as follows:
Level 1
36,388,883
532,884,056
11,401,986
13,929,093
-
-
1,787,655,851
5,231,179,012
7,599,509,788
13,929,093
- 1,787,655,851
5,231,179,012
- 7,613,438,881
1,871,476,210
5,231,179,012
7,102,655,222
-
-
36,388,883
546,813,149
11,401,986
1,871,476,210
5,231,179,012
7,102,655,222
(**)
Level 1
31 December 2012
Level 2
Level 3
Total
Financial assets:
42,316,499
475,524,095
14,091,345
8,335,117
-
-
2,117,707,466
4,277,830,443
6,927,469,848
8,335,117
- 2,117,707,466
- 4,277,830,443
- 6,935,804,965
2,205,674,373
4,277,830,443
6,483,504,816
-
- 2,205,674,373
- 4,277,830,443
- 6,483,504,816
(*)
42,316,499
483,859,212
14,091,345
(**)
Total
Financial assets:
(*)
230
31 December 2013
Level 2
Level 3
Equity share price risk
Equity share price risk is defined as the risk of decreasing the market price of equity shares as a result of a decline in index.
The effect of changes in fair values of the available-for-sale financial assets on equity that is resulted from the fluctuations on
Change in index
31 December 2013
31 December 2012
10%
8,920,298
9,320,633
The effect of changes in fair values of the financial assets held for trading on equity that is resulted from the fluctuations on
Change in index
31 December 2013
31 December 2012
10%
237,230
205,477
Capital management
The aim of the Company’s capital management is defined as to provide the continuity of profit-making company, to protect the
benefits of the shareholders and institutional partners and also to conduct the most efficient capital structure in order to reduce
the cost of capital.
Capital Adequacy Table
31 December 2013
31 December 2012
115,435
109,078,343
14,952,948
124,146,726
196,369
108,496,682
12,569,576
121,262,627
66,013,754
2,561,093
1,863,755
19,093,348
904,963
90,436,913
59,220,929
2,638,414
2,848,020
1,393,290
17,809,304
8,130,010
92,039,967
124,146,726
539,790,655(*)
415,643,929
121,262,627
524,679,792
403,417,165
Required capital for non-life branches
Required capital for life branch
Required capital for pension branch
Required capital based on the first method
Required capital for asset risk
Required capital for reinsurance risk
Required capital for excessive premium increase
Required capital for outstanding claims risk
Required capital for underwriting risk
Required capital for interest rate and currency risk
Required capital based on the second method
Required capital
Current capital
Excessive capital
(*)
As a result of legal regulation the equalization provision amounted ¨5,921,429 is included in the current capital.
The capital adequacy of the Company is calculated in accordance with the Decree “Measurement and Assessment of Capital
Adequacy of Insurance and Reinsurance Companies and Pension Funds” in all reporting periods. The Capital Adequacy calculated
according to two methods are in line with the minimum requirements. The Company’s recent capital adequacy table prepared as
at the report date for 31 December 2013 is summarized below. As at 31 December 2013, the capital adequacy of the Company is
¨124,146,726 and ¨90,436,913; based on first and second method respectively. By the table below, it is observed that capital
adequacy balances calculated by using first and second methods are less than the Company’s capital as at 31 December 2013.
The Company’s capital calculated based on the regulation as at 31 December 2013 ¨539,790,655. Consequently, the Company’s
capital is adequate.
231
5 Segment reporting
Segmenting of balance sheet and income statement items is based on the distribution key described in Circular “Principles and
Procedures of Distribution Keys Used in Financial Statements under the Insurance Uniformed Chart of Accounts” issued by the
Undersecretariat of Treasury on 4 January 2008 and Circular “Amendments to Principles and Procedures of Distribution Keys
Used in Financial Statements under the Insurance Uniformed Chart of Accounts” issued by the Undersecretariat of Treasury on
9 August 2010.
31 December 2013
Technical income
Technical expense
Income before tax
Income tax expense
31 December 2013
Segment assets
Total assets
Segment liabilities
Total liabilities
31 December 2012
Technical income
Technical expense
Income before tax
Income tax expense
31 December 2012
232
Segment assets
Total assets
Segment liabilities
Total liabilities
Life
Individual Pension
Personal Accident
Total
598,513,416
(535,102,109)
23,900,945
87,312,252
87,312,252
132,002,445
(143,137,394)
23,648,071
12,513,122
12,513,122
675,114
(658,719)
174,166
190,561
190,561
731,190,975
(678,898,222)
47,723,182
100,015,935
(15,310,000)
84,705,935
Life
Individual Pension
Personal Accident
Total
2,248,699,096
2,248,699,096
5,643,593,393
5,643,593,393
16,386,267
16,386,267
7,908,678,756
7,908,678,756
(2,254,582,996)
(2,254,582,996)
(5,637,675,427)
(5,637,675,427)
(16,420,333)
(16,420,333)
(7,908,678,756)
(7,908,678,756)
(2,471,797)
(2,445,646)
(18,012)
(4,935,455)
Life
Individual Pension
Personal Accident
Total
502,677,829
(469,262,040)
27,158,835
60,574,624
60,574,624
139,026,057
(119,530,396)
26,772,974
46,268,635
46,268,635
681,276
(663,540)
191,080
208,816
208,816
642,385,162
(589,455,976)
54,122,889
107,052,075
(26,100,000)
80,952,075
Life
Individual Pension
Personal Accident
Total
2,558,341,361
2,558,341,361
4,650,555,336
4,650,555,336
17,999,583
17,999,583
7,226,896,280
7,226,896,280
(2,562,953,332)
(2,562,953,332)
(4,645,915,996)
(4,645,915,996)
(18,026,952)
(18,026,952)
(7,226,896,280)
(7,226,896,280)
(1,909,282)
(1,882,155)
(13,433)
(3,804,870)
6 Tangible assets
Cost:
Land (*)
Buildings (*)
Vehicles
Furniture and fixtures (includes leased
assets)
Buildings (*)
Vehicles
assets)
Carrying amounts
1 January 2013
Additions
1,832,831
25,379,158
5,722,942
573,475
2,239,866
183,856
(375,726)
(7,303)
(227,608)
1,832,831
25,003,432
7,955,505
529,723
3,924,669
2,685,382
40,118,457
146,255
267,885
2,837,862
(610,637)
4,070,924
2,953,267
42,345,682
(10,430,872)
(3,326,955)
(442,475)
(503,679)
(1,072,558)
(105,377)
167,824
6,481
218,158
(10,766,727)
(4,393,032)
(329,694)
(2,953,316)
(1,653,395)
(18,807,013)
(287,209)
(260,828)
(2,229,651)
392,463
(3,240,525)
(1,914,223)
(20,644,201)
21,311,444
21,701,481
(*)
Cost:
Land (*)
Buildings (*)
Vehicles
assets)
Buildings (*)
Vehicles
assets)
Carrying amounts
1 January 2012
Additions
1,832,831
25,379,158
4,212,702
797,979
1,528,873
-
(18,633)
(224,504)
1,832,831
25,379,158
5,722,942
573,475
3,723,903
2,229,627
38,176,200
297,573
455,755
2,282,201
(96,807)
(339,944)
3,924,669
2,685,382
40,118,457
(9,922,184)
(2,642,412)
(546,574)
(508,688)
(696,092)
(87,506)
11,549
191,605
(10,430,872)
(3,326,955)
(442,475)
(2,759,383)
(1,402,711)
(17,273,264)
(280,979)
(250,684)
(1,823,949)
87,046
290,200
(2,953,316)
(1,653,395)
(18,807,013)
20,902,936
21,311,444
(*)
There are no pledges on tangible assets.
233
7 Investment properties
Cost:
Land
Buildings
Buildings
Carrying amounts
1 January 2013
Additions
1,411,831
24,461,256
25,873,087
-
(375,726)
(375,726)
1,411,831
24,085,530
25,497,361
(10,200,275)
(10,200,275)
15,672,812
(484,216)
(484,216)
167,824
167,824
(10,516,667)
(10,516,667)
14,980,694
For the year ended 31 December 2013, the Company has rental income from investment properties amounting ¨3,280,321
(31 December 2012: ¨3,059,325).
Cost:
Land
Buildings
Buildings
Carrying amounts
1 January 2012
Additions
1,411,831
24,461,256
25,873,087
-
-
1,411,831
24,461,256
25,873,087
(9,711,050)
(9,711,050)
16,162,037
(489,225)
(489,225)
(10,200,275)
(10,200,275)
15,672,812
As at 31 December 2013, total fair value of the Company’s investment properties amounting to ¨53,523,000. Expert reports on
these properties have been prepared by the authorized real estate valuation companies at January and February of 2010. There
are no pledges on these properties.
8 Intangible assets
Movement in intangible assets in the period from 1 January to 31 December 2013 is presented below:
Cost:
Rights
234
Rights
Carrying amounts
1 January 2013
Additions
11,845,644
11,845,644
3,390,101
3,390,101
-
15,235,745
15,235,745
(7,547,691)
(7,547,691)
(2,705,804)
(2,705,804)
-
(10,253,495)
(10,253,495)
4,297,953
4,982,250
Movements in intangible assets in the period from 1 January to 31 December 2012 is presented below:
Cost:
Rights
Rights
1 January 2012
Additions
8,299,662
8,299,662
3,545,982
3,545,982
-
11,845,644
11,845,644
(5,566,770)
(5,566,770)
(1,980,921)
(1,980,921)
-
(7,547,691)
(7,547,691)
Carrying amounts
2,732,892
4,297,953
9 Investments in associates
31 December 2013
Participation
Carrying value
rate %
Investments in associates, net
15,036,296
15,036,296
20.0%
Associate
Total assets
Shareholders’
equity
Retained
earnings
İş Portföy Yönetimi A.Ş.
80,906,115
75,181,480
14,950,581
31 December 2012
Participation
Carrying value
rate %
13,568,006
13,568,006
Profit for the
period Audited or not
10,471,581
Reviewed
20.0%
Period
31 December
2013
¨2,094,316 of income is obtained from associates through equity accounted consolidation method (31 December 2012:
¨1,915,627).
10 Reinsurance assets and liabilities
Outstanding reinsurance assets and liabilities of the Company, as a ceding company in accordance with the existing reinsurance
contracts are as follows:
Reinsurance assets
Reserve for unearned premiums, ceded (Note 17.15)
Provision for outstanding claims, ceded (Note 17.15)
Life mathematical reserve, ceded (Note 17.15)
Other Technical provision, ceeded
Provision for bonus and discount, ceded (Not 17.15)
Due from reinsurers
Total
2,193,599
3,134,362
3,998,021
268,623
353,241
113,350
10,061,196
1,662,615
605,350
5,468,417
180,789
272,071
242,024
8,431,266
Reinsurance liabilities
Cash deposited by insurance and reinsurance companies (Note 19)
Total
881,759
881,759
636,822
636,822
There is not any impairment losses recognized for reinsurance assets.
235
Gains and losses recognized in the statement of income in accordance with existing reinsurance contracts are as follows:
Life branch:
Change in life mathematical reserve, ceded
Non-life branch:
Total, net
(*)
(13,001,366)
551,901
2,613,736
6,694,047
2,502,259
78,480
(1,470,396)
(2,031,339)
(11,460,129)
131,841
2,760,812
3,393,572
(353,629)
272,071
212,924
(5,042,538)
(140,606)
(20,917)
48,490
135,078
26,753
2,690
51,488
(322,163)
(26,502)
60,894
45,319
(30,677)
(273,129)
(1,979,851)
(5,315,667)
Deferred commissions are excluded from commissions received from reinsurers.
11 Financial assets
As at 31 December 2013 and 2012, the Company’s financial assets are detailed as follows:
Financial assets and financial investments with risk on policyholders
Financial investments with risks on saving life policyholders classified as available
for sale
Impairment loss on financial assets
Total
581,745,719
36,388,883
11,401,986
518,741,965
42,316,499
14,091,345
1,787,655,851
(10,299,782)
2,406,892,657
2,117,707,466
(10,299,782)
2,682,557,493
As at 31 December 2013 and 2012, the Company’s financial assets held for trading are detailed as follows:
236
Face value
Equity shares and other non-fixed
income financial assets:
Equity shares
exchange contracts
purpose - other
purpose
31 December 2013
Cost
Fair value
Carrying value
1,265,614
2,372,303
2,372,303
26,279,907
34,016,580
34,016,580
27,545,521
36,388,883
36,388,883
27,545,521
36,388,883
36,388,883
Face value
Equity shares
exchange contracts
purpose - other
purpose
31 December 2012
Cost
Fair value
Carrying value
1,265,614
2,054,767
2,054,767
30,259,023
40,261,732
40,261,732
31,524,637
42,316,499
42,316,499
31,524,637
42,316,499
42,316,499
As at 31 December 2013, the Company’s financial assets held for trading issued by the Company’s related parties, are detailed as
follows:
Face value
Investment funds
Total
557,536,556
557,536,556
Face value
Investment funds
Total
501,187,090
501,187,090
31 December 2013
Cost
Fair value
26,279,907
26,279,907
Carrying value
34,016,580
34,016,580
34,016,580
34,016,580
31 December 2012
Cost
Fair value
Carrying value
30,259,023
30,259,023
40,261,732
40,261,732
40,261,732
40,261,732
As at 31 December 2013 and 2012, the Company’s loans and receivables are detailed as follows:
Reverse repo
Reverse repo
11,400,000
11,400,000
Carrying value
11,401,986
11,401,986
11,401,986
11,401,986
31 December 2012
Cost
Fair value
Carrying value
14,089,404
14,089,404
14,091,345
14,091,345
14,091,345
14,091,345
31 December 2013
Cost
Fair value
237
As at 31 December 2013 and 2012, the Company’s available for sale financial assets in its own portfolio are detailed as follows:
Face value
Debt instruments:
Government bonds
63,159,000
392,952,232
56,048,139
406,881,935
58,211,104
399,399,063
58,211,104
399,399,063
462,930,074
457,610,167
457,610,167
104,449,208
124,135,552
124,135,552
104,449,208
124,135,552
124,135,552
567,379,282
581,745,719
581,745,719
Impairment loss on available for sale
equity shares
(10,299,782)
(10,299,782)
(10,299,782)
557,079,500
571,445,937
571,445,937
Face value
Debt instruments:
Government bonds
Carrying value
Equity shares (*)
- other
(*)
238
31 December 2013
Cost
Fair value
29,492,970
349,474,472
31 December 2012
Cost
Fair value
Carrying value
25,758,616
333,670,209
26,512,627
364,140,259
26,512,627
364,140,259
359,428,825
390,652,886
390,652,886
Equity shares (*)
- other
100,871,811
128,089,079
128,089,079
100,871,811
128,089,079
128,089,079
460,300,636
518,741,965
518,741,965
Impairment loss on available for sale
equity shares
(10,299,782)
(10,299,782)
(10,299,782)
450,000,854
508,442,183
508,442,183
(*)
The Company has equity shares and bonds issued by the Company’s related parties and classified as available for sale financial
assets in its own portfolio with a cost amount of ¨103,220,742 and ¨18,291,112 a carrying value of ¨120,795,738 and
¨18,312,084 as at 31 December 2013 (31 December 2012: Equity shares with a cost amount of ¨99,643,344 and a carrying
amount of ¨125,103,318; Bonds issued by the Company’s related parties with a cost amount ¨4,799,350 and a carrying amount
of ¨4,992,600).
Financial investments with risks on saving life policyholders (“FIRSLP”) as at 31 December 2013 and 2012 are detailed as follows:
Face value
Debt Instruments:
Government
Investment funds
Debt Instruments:
Government
Investment funds
31 December 2013
Cost
Fair value
Carrying value
1,359,428,127
1,372,517,064
1,387,177,831
1,387,177,831
137,578,000
5,500,000
55,151,200
318,932,698
5,146,240
51,500,165
337,737,532
5,321,195
57,419,293
337,737,532
5,321,195
57,419,293
1,557,657,327
1,748,096,167
1,787,655,851
1,787,655,851
1,748,096,167
1,787,655,851
1,787,655,851
31 December 2012
Cost
Fair value
Carrying value
Face value
1,413,003,589
1,464,050,779
1,646,165,027
1,646,165,027
154,991,000
55,151,200
300,765,080
51,500,165
405,166,591
66,375,848
405,166,591
66,375,848
1,623,145,789
1,816,316,024
2,117,707,466
2,117,707,466
1,816,316,024
2,117,707,466
2,117,707,466
As at 31 December 2013, the financial assets issued by the Company’s related parties and classified as FIRSLP are detailed as
follows (31 December 2012: None):
Investment funds
Total
55,151,200
5,500,000
60,651,200
Face value
Investment funds
Total
55,151,200
55,151,200
51,500,165
57,419,293
5,146,240
5,321,195
56,646,405
62,740,488
31 December 2012
Cost
Fair value
51,500,165
51,500,165
66,375,848
66,375,848
Carrying value
57,419,293
5,321,195
62,740,488
Carrying value
66,375,848
66,375,848
Face value
31 December 2013
Cost
Fair value
239
The Company has no securities, other than issued shares in the current period, or any matured debt securities.
Value increases in financial assets for the last three periods:
31 December 2013 31 December 2012 31 December 2011
Current financial assets:
Financial investments with risks on saving life policyholders
14,366,437
8,843,362
1,986
58,441,329
10,791,862
1,941
774,599
2,410,277
162
39,559,684
301,391,442
Total
62,771,469
370,626,574
141,798,468
144,983,506
Value increases reflect the difference between the carrying value and cost of the financial assets.
The Company has ¨10,299,782 of impairment loss arising from its available for sale investments in equity participations not
having a quoted market price in an active market.
The Company does not apply hedge accounting.
Exchange rate differences arising from the payments of monetary items or different conversion rates used in the current period
or at initial recognition are recognized in profit or loss.
Financial assets blocked in favor of the Turkish Treasury as a guarantee for the insurance activities are as follows:
Face value
Total
1,557,657,327
133,995,798
Face value
Total
240
1,623,145,789
135,522,223
31 December 2013
Cost
Fair value
1,748,096,167
138,191,971
1,886,288,138
Carrying value
1,787,655,851
135,211,744
1,922,867,595
1,787,655,851
135,211,744
1,922,867,595
31 December 2012
Cost
Fair value
Carrying value
1,816,316,024
137,669,477
1,953,985,501
2,117,707,466
150,802,627
2,268,510,093
2,117,707,466
150,802,627
2,268,510,093
12 Loans and receivables
The details of the Company’s receivables are as follows:
Receivables from insurance operations
Provisions for receivables from insurance operations
Loans to the policyholders
Doubtful receivables from main operations and insurance operations
Provisions for doubtful receivables from main operations and insurance operations
Receivables from pension activities
Other
Total receivables from main operations
Receivables from personnel
Other receivables
Total
12,788,669
(2,574)
43,748,889
117,996
(117,996)
5,239,479,594
5,231,179,012
8,300,582
5,296,014,578
334,634
12,165,677
5,308,514,889
8,959,668
(2,574)
51,779,559
117,996
(117,996)
4,286,411,507
4,277,830,443
8,581,064
4,347,148,160
1,096,350
1,891,704
4,350,136,214
The details of guarantees for the Company’s receivables are presented below:
Letters of guarantees
Real estate pledges
Total
4,112,320
1,655,469
1,026,400
6,794,189
4,075,128
1,140,697
1,016,400
6,232,225
Provisions for doubtful receivables from main operations and insurance operations
at the beginning of the period
Collections
Charge for the period
operations at the end of the period
117,996
-
117,996
-
117,996
117,996
Provision for both overdue receivables and receivables not due yet
a) Receivables under legal or administrative follow up (due): ¨117,996 (31 December 2012: ¨117,996).
The Company provides provision for its doubtful receivables in the legal follow-up by considering the value and nature of the
receivable.
The Company reflects its receivables from and payables to reinsurance and insurance companies by netting off on the entity
basis.
The Company’s receivables from and payables to shareholders, associates and subsidiaries are detailed in note 45 - Related party
transactions.
13 Derivative financial instruments
As at 31 December 2013, the detailed information about the Company’s current derivative financial instruments is presented in
11 - Financial assets. At the reporting period, Company has no derivative financial instruments.
b) Provision for premium receivables (due): ¨2,574 (31 December 2012: ¨2,574).
241
14 Cash and cash equivalents
As at 31 December 2013 and 2012, cash and cash equivalents are as follows:
31 December 2013
period
the period
Cash on hand
Bank deposits
Bank Guaranteed Credit Card Receivables
with Maturities Less Than Three Months (*)
Cheques given and payment orders
Cash and cash equivalents in the
balance sheet
Interest accruals on bank deposits
Time deposits with maturities longer
than 3 months
Cash and cash equivalents presented in
the statement of cash flow
31 December 2012
period
the period
20,961
29,864,319
14,155
59,951,461
14,155
59,951,461
12,206
52,803,532
109,055,120
(174,771)
82,540,020
(163,210)
82,540,020
(163,210)
67,036,981
(63,794)
138,765,629
142,342,426
142,342,426
119,788,925
(87,376)
(282,203)
(282,203)
(323,655)
-
-
-
-
138,678,253
142,060,223
142,060,223
119,465,270
Bank Guaranteed Credit Card Receivables with Maturities Less Than Three Months include credit card receivables from banks in relation to premium payments of
policyholders.
(*)
As at 31 December 2013 and 2012, bank deposits are further analyzed as follows:
Foreign currency denominated bank deposits
- demand deposits
Bank deposits in Turkish Lira
- time deposits
- demand deposits
Cash at banks
1,013,036
2,543,732
18,737,143
10,114,140
29,864,319
54,078,050
3,329,679
59,951,461
7.00% and 9.00% simple interest rate. The Company has no foreign currency denominated bank deposits.
15 Equity
Paid in Capital
242
As at 31 December 2013, the authorized nominal share capital of the Company is ¨350,000,000 and the share capital of the
Company consists of 35,000,000,000 issued shares with ¨0.01 nominal value each.
The Company’s share capital is divided into group A and group B shares. Group A share is represented by 100,000,000 of equity
shares having a nominal amount of ¨0.01 each. Group B share is represented by 34,900,000,000 shares having a nominal
amount of ¨0.01 each and all shares are owned by Türkiye İş Bankası AŞ. Group A shareholders have no privileges except for
the election of Board members. In accordance with the Articles of Association, new group A shares cannot be issued in capital
increases.
of 15 June 2000 upon the permission no: 67/1039 granted by the Capital Markets Board. As at 31 December 2013, the Company’s
registered capital is ¨450,000,000.
As at 31 December 2013, there are not any treasury shares held by the Company’s associate; namely İş Portföy Yönetimi AŞ.
There are not any treasury shares held by the Company itself.
Profit on Assets Sale That will be Transferred to Capital
In accordance with tax legislation, 75% of profits from sales of participation shares and real states included in the assets of
companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains
cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years.
Legal reserves
The legal reserves consist of first and second legal reserves in accordance with the Turkish Commercial Code. The first legal
reserve is appropriated out of the statutory profits at the rate of 5%, until the total reserve reaches a maximum of 20% of the
entity’s share capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the
entity’s share capital. The first and second legal reserves are not available for distribution unless they exceed 50% of the share
capital, but may be used to absorb losses in the event that the general reserve is exhausted.
The movement of legal reserves is as follows:
Legal reserves at the beginning of the year
Legal reserves at the end of the year
66,400,396
6,874,304
73,274,700
60,430,004
5,970,392
66,400,396
Extraordinary reserves
The movement of extraordinary reserves is presented below:
Extraordinary reserves at the beginning of the year
Capital increase
Extraordinary reserves at the end of the year
12,205,336
26,795,776
(31,000,000)
8,001,112
1,219,776
10,985,560
12,205,336
Statutory reserves
The movement of statutory reserves is presented below:
Statutory reserves at the beginning of the year
Capital increase
Statutory reserves at the end of the year
13,722,714
6,119,160
(19,000,000)
841,874
9,095,243
4,627,471
13,722,714
As of 31 December 2013, in accordance with the revision of TAS 19, as the amount of actuarial gains and losses ¨ (289,720), are
presented under the other profit reserves, which are previously shown under the income statement.
Other Profit Reserves
243
Valuation of financial assets
Movement of fair value reserves of available for sale financial assets is presented below:
Fair value reserves at the beginning of the year
Changes during the year:
The effect of changes in foreign exchange rates on unrealized gains and losses,
recognized due to change in the fair values of available for sale financial assets with
risks on saving life policyholders
for sale financial assets with risks on saving life policyholders
for sale financial assets with risks on saving life policyholders, policyholders’ portion
Change in unrealized gains and losses from available for sale financial assets,
company’s own portfolio
Disposals during the year:
disposal of available for sale financial assets with risks on saving life policyholders
disposal of available for sale financial assets with risks on saving life policyholders,
policyholders’ portion
disposal of available for sale financial assets, company’s own portfolio
Amounts transferred to income statement due to bonus shares:
Fair value changes in investments in associates
Fair value reserves at the end of the year
46,804,925
(9,822,204)
829,468
(69,361)
(251,823,405)
230,582,919
239,232,235
(219,053,773)
(19,698,771)
4,517,072
54,407,569
(7,550,933)
(19,772,207)
(368,680)
18,783,597
350,246
(2,568,256)
711,373
4,276,718
(851,657)
(4,004,370)
(5,349,649)
(72,703)
253,730
12,938,958
46,804,925
16 Other reserves and equity component of DPF
Income and expense items that are directly accrued in equity as of the reporting period are as follows:
244
Temporary differences arising from revaluation of financial assets
Permanent differences arising from revaluation of financial assets
Deferred tax effect
Total
(2,254,978)
14,742,940
450,996
12,938,958
32,267,327
20,991,064
(6,453,466)
46,804,925
17 Insurance contract liabilities and reinsurance assets
17.1 Total amount of guarantee that should be placed by the Company for life and non-life branches and guarantees placed
for the life and non-life branches in respect of related assets:
31 December 2013
Should be
Placed (*)
placed (**)
31 December 2012
Should be
placed (**)
Placed (*)
Life:
Total
1,942,439,296
1,942,439,296
1,931,004,910
1,931,004,910
1,917,972,126
1,917,972,126
2,214,166,541
2,214,166,541
Non-life:
Total
768,354
768,354
1,988,009
1,988,009
591,383
591,383
1,718,017
1,718,017
1,943,207,650
1,932,992,919
1,918,563,509
2,215,884,558
Total
As at 31 December 2013 and 2012, government bonds and treasury bills are measured at daily official prices announced by the Central Bank of Turkey; if these
prices are not available, they are measured with stock exchange values; investment fund participation certificates are measured using the daily prices in accordance
with the 6th Article of “Circular Related to the Financial Structure of Insurance, Reinsurance, and Individual Pension Companies”.
(*)
According to 7th article of “Circular Related to the Financial Structure of Insurance, Reinsurance, and Individual Pension Companies” which regulates necessary
guarantee amount, minimum guarantee fund for capital adequacy calculation period will be established as a guarantee in two months following the calculation
period. According to “Regulations Regarding to Capital Adequacy Measurement and Assessment of Insurance, Reinsurance, and Individual Pension Companies”,
companies must prepare their capital adequacy tables twice in a financial year at June and December periods and must sent capital adequacy tables to the Turkish
Treasury Department within two months. As at 31 December 2013 (31 December 2012), minimum guarantee amount of 30 June 2013 is shown as necessary
guarantee amount; since, minimum guarantee amount as at 30 June 2013 (30 June 2012) is based on 30 June calculations.
(**)
As at 31 December 2013, ¨1,547,605,688 of government bonds (31 December 2012: ¨1,841,176,020) and ¨327,967,938 of
Eurobonds (31 December 2012: ¨308,332,690) and ¨57,419,293 (31 December 2012: ¨66,375,848) of investment funds are
placed as guarantee for the life and non-life branches.
17.2 Number of life insurance policies, additions, disposals in the current period, and current life policy holders and the
related mathematical reserves
Additions during the period
Disposals during the period
Outstanding
(*)
31 December 2013(*)
Number of
Mathematical
policies
reserves
1,445,462
217,280,779
(1,245,897)
(302,184,677)
1,818,085
1,881,185,904
31 December 2012(*)
Number of
Mathematical
policies
reserves
1,343,918
298,965,577
(1,047,267)
(358,289,334)
1,618,520
1,966,089,802
The above table includes 71 of reactivated life insurance policies (31 December 2012: 95) and their corresponding mathematical reserves.
¨3,998,021 (31 December 2012: ¨5,468,417) of reinsurer’s share of life mathematical provisions is not offset against the
mathematical provisions in the above table.
17.3 Guarantees given to non-life insurances based on branches:
Guarantees given to death by accident
Guarantees given to disability by accident
Total
1,740,325,537
1,747,766,422
3,488,091,959
1,388,855,772
1,390,190,772
2,779,046,544
As explained in Note 2 - Financial Assets, available for sale financial assets with risks on saving life policyholders are measured at
fair value; 95% of the fair value and amortized cost difference amounting to ¨5,711,673 (31 December 2012: ¨245,052,988) is
recognized under the life mathematical provisions.
245
17.4 Pension investment funds established by the Company and their unit prices:
As at 31 December 2013 and 2012, individual pension investment funds founded by the Company and their unit prices are as
follows:
31 December 2013
Unit price
31 December 2012
Unit price
0.042305
0.030218
0.028274
0.028272
0.064897
0.026641
0.035264
0.043627
0.062572
0.011865
0.011893
0.011548
0.011700
0.038790
0.022108
0.041903
0.033958
0.026597
0.024832
0.020885
0.020926
0.009579
0.009921
0.009450
0.042710
0.028745
0.026961
0.023889
0.074480
0.019754
0.033813
0.045663
0.064976
0.011646
0.010674
0.011856
0.011227
0.038902
0.020035
0.047584
0.032217
0.026523
0.028644
0.020235
0.021922
-
AH1 Bond Fund
AH2 Liquid Fund
AH5 Equity Fund
AH9 Balanced Fund
AH0 Aggressive Fund
ABE BRIC Plus Fund
AG1 Group Bond Fund
AEA Gold Fund (***)
(*)
(**)
(***)
246
17.5 Number and amount of participation certificates in portfolio and circulation:
Number of participation documents in the portfolio and in circulation is such as follows as of 31 December 2013 and 2012:
31 December 2013
Number
Amount
AH1 Bond Fund
AH2 Liquid Fund
AH5 Equity Fund
AH9 Balanced Fund
AH0 Aggressive Fund
ABE BRIC Plus Fund
AG1 Group Bond Fund
AEA Gold Fund (***)
Total
38,294,022,156,01
4,585,072,946,63
4,560,450,091,56
4,119,971,344,87
3,488,537,052,92
2,276,433,080,72
4,468,009,325,79
24,428,037,174,32
8,961,780,267,35
6,639,861,442,46
2,922,204,366,22
2,018,248,514,43
3,133,028,631,87
5,561,805,321,32
436,337,123,02
773,259,624,18
2,539,158,903,61
11,277,987,267,19
2,100,959,453,72
1,089,957,724,29
532,193,862,27
23,587,324,029,54
489,145,045,72
2,301,993,477,32
31 December 2012
Number
Amount
1,620,028,607,31 34,044,230,542,89
138,551,734,30 4,028,128,998,44
128,942,165,89
4,156,360,776,66
116,479,829,86
3,434,167,896,02
226,395,589,12
2,686,126,576,72
60,646,453,70
573,914,153,51
157,559,880,86
3,109,262,703,31
1,065,721,977,80 20,479,238,309,32
560,756,514,89
7,593,578,573,45
78,781,956,01
3,287,291,074,08
34,753,776,53 2,819,064,006,50
23,306,733,84
836,806,404,80
36,656,434,99
564,956,145,74
215,742,428,41
5,967,101,621,38
9,646,541,12
337,897,019,12
32,401,898,03
587,998,732,06
86,224,758,05
2,327,553,802,12
299,960,627,35 10,089,694,555,13
52,171,025,15
1,474,177,699,61
22,763,767,07
973,520,735,30
11,136,688,76
583,713,510,49
225,942,976,88
4,852,808,00
21,753,838,36
5,231,179,012,28
1,454,029,086,49
115,788,568,06
112,059,642,90
82,038,836,87
200,062,707,43
11,337,100,19
105,133,499,79
935,143,458,92
493,400,361,39
38,283,791,85
30,090,689,21
9,921,176,74
6,342,762,65
232,132,187,27
6,769,766,78
27,979,331,67
74,986,800,84
267,608,968,69
42,226,346,03
19,699,192,08
12,796,167,58
4,277,830,443,43
(*)
(**)
(***)
247
17.6 Portfolio amounts in terms of number of new participants, left or cancelled participants, and existing participants for
individuals and groups:
Individuals
Group
Total
Additions during
the period
138,770
57,618
196,388
Left/cancellations
during the period
Outstanding
57,142
623,983
18,264
197,717
75,406
821,700
Total amount
3,772,234,203
1,228,096,224
5,000,330,427
Individuals
Group
Total
Additions during
the period
114,708
29,324
144,032
Left/cancellations
during the period
Outstanding
64,759
543,632
19,244
157,086
84,003
700,718
Total amount
3,215,797,259
1,062,013,086
4,277,810,345
Additions: The sum of the new contracts added in the period and their registered cumulative values as of the period end in
addition with the number of the contracts that begin and finish in the same period. For the data calculated for 31 December
2013, portfolio amount and insurance contract numbers related with contribution amounts collected before the exercise date
are not taken into consideration. In addition, the amounts related with credit card collections with undue blockage terms are not
added to the calculation.
Left/cancellations: The number of finalized contracts during the period and their values at their expiration dates.
Outstanding: The number of outstanding contracts and their values as of the period end.
Since retirement plan transfers between individual and group retirement plans occurs during the period, periodical changes
should be followed by the total number and portfolio amount of policies. Also, when the contracts effective at the prior reporting
period become a liability because of collection reversals in the current period or when the contracts effective at the prior
reporting period become an asset, total numbers and portfolio values of these contracts are net off at the period end. Number
and portfolio amount of individual and group policies presented in notes reflect the outstanding position of the Company as of
the period-end.
Outstanding contracts have state contribution amounting to ¨230,795,560 in the state contribution funds as of the period end.
17.7 Valuation methods used in profit share calculation for saving life contracts with profit sharing:
Financial investments with risks on saving life policyholders are classified as “available-for-sale financial assets”. These assets
are measured in accordance with the principles specified in Note 2.8 Financial Assets and valuation differences are taken into
account in the profit share calculation.
17.8 Distribution of new participants in terms of their numbers and gross and net contributions for individuals and groups:
248
Individuals
Group
Total
Number of
Gross
Net
contracts
contributions
contributions
138,770
339,682,488
338,357,397
57,618
63,100,324
63,001,457
196,388
402,782,812
401,358,854
Number of
Gross
Net
contracts
contributions
contributions
114,708
227,156,127
222,408,785
29,324
41,292,795
41,024,760
144,032
268,448,922
263,433,545
Contracts become effective in the current period and the total contracts become effective and ceased in the same period
and contributions collected regarding these contracts and the investment oriented contributions have been specified. The
collections made with credit cards with undue blockage terms are also added into gross and net contributions. Transfer
amounts are not included in the current period numbers and balances. In addition, Company has collected ¨56,072,348 as State
Contribution.
17.9 Distribution of new participants in terms of their numbers and gross and net contributions for individuals and groups
which were transferred from other insurance companies during the period:
Individuals
Group
Total
31 December 2013
Number of
Gross
contracts
contributions
1,707
27,039,688
585
7,517,259
2,292
34,556,947
Net
contributions
27,039,688
7,517,259
34,556,947
31 December 2012
Number of
Gross
contracts
contributions
1,909
23,460,763
1,324
5,683,833
3,233
29,144,596
Net
contributions
23,460,763
5,683,833
29,144,596
In addition, Company has transferred ¨463,248 as State Contribution from other pension companies in the related period.
17.10 Distribution of individual and group participants and their gross and net contributions which were transferred from life
insurance portfolio to private pension portfolio during the period:
The legal permission of the transfer from life portfolio to private pension portfolio expired on 7 October 2006 and therefore,
there is no transfer in the current and prior period.
17.11 Distribution of individual and group participants which were transferred to other insurance companies in terms of their
numbers and gross and net contributions:
Individuals
Group
Total
Number of
Gross
Net
contracts
contributions
contributions
57,142
205,015,835
191,601,159
18,264
57,066,401
54,291,399
75,406
262,082,236
245,892,558
Number of
Gross
Net
contracts
contributions
contributions
64,759
409,585,946
370,510,795
19,244
101,825,247
92,434,269
84,003
511,411,193
462,945,064
Number of contracts indicates the number of disposals in the related period.
Gross contributions indicate the fund sales amount as a result of disposal, i.e.; disposal amount.
Net contributions indicate the remaining amount paid to participant less any deductions (initiation fee and withholding) against
the gross amount as a result of disposal.
In addition, Company’s fund outflow is ¨6,673,234 as State Contribution.
17.12 Distribution of new life insurance participants in terms of their numbers and first premium amounts for individuals and
groups during the period:
(*)
31 December 2012
Number of
First premium
contracts
amounts (¨)
11,742
1,433,649
1,445,391
17,185
1,326,638
1,343,823
96,098,428
180,855,996
276,954,424
81,871,623
149,189,900
231,061,523
71 of reactivated contracts are not included in the current year additions.
17.13 Distribution of left or cancelled life insurance participants in terms of their numbers and mathematical reserves for
individuals and groups during the period:
Number of
Mathematical
contracts
reserves (¨)
Individuals
Group
Total
86,784
1,159,113
1,245,897
266,681,983
35,502,694
302,184,677
Number of
Mathematical
contracts
reserves (¨)
140,003
907,264
1,047,267
310,416,026
47,873,308
358,289,334
Individuals
Group
Total (*)
31 December 2013
Number of
First premium
contracts
amounts (¨)
249
17.14 Profit share distribution rate of life insurances as of 31 December 2013 and 2012
31 December 2013 %
31 December 2012 %
7.43
7.43
10.50
10.50
7.98
7.98
7.92
7.92
5.57
5.57
6.01
6.01
7.04
7.04
7.75
7.75
31 December 2013
31 December 2012
Reserve for unearned premiums, gross
Reserve for unearned premiums, ceded (Note 10)
Reserves for unearned premiums, net
23,041,596
(2,193,599)
20,847,997
24,195,380
(1,662,615)
22,532,765
Provision for outstanding claims, gross
Provision for outstanding claims, ceded (Note 10)
Provision for outstanding claims, net
77,684,566
(3,134,362)
74,550,204
56,336,969
(605,350)
55,731,619
1,875,474,231
(3,998,021)
1,871,476,210
2,211,142,790
(5,468,417)
2,205,674,373
481,726
(353,241)
128,485
528,684
(272,071)
256,613
5,921,429
1,972,924,325
3,915,510
2,288,110,880
¨
Life insurance
Income insurance
USD
Life insurance
Income insurance
EURO
Life insurance
Income insurance
GBP
Life insurance
Income insurance
17.15 Information on insurance contract balances in the financial statements
Life mathematical provisions, gross
Life mathematical provisions, ceded (Note 10)
Life mathematical provisions, net
Provision for bonus and discount, gross
Provision for bonus and discount, ceded (Not 10)
Provision for bonus and discount, net
Equalization provision, net
Total insurance technical provisions, net
250
17.16 Factors resulting from individual insurance policies which provide portfolio
Factors resulting from individual insurance policies which provide portfolio increase through the change in mathematical
New policies issued
Contracts with increased capital
31 December 2013
31 December 2012
74,528,869
9,277,026
23,649
63,975,789
147,805,333
59,033,558
7,754,761
228,156
145,046,829
212,063,304
Factors resulting from individual insurance policies which provide portfolio decrease through the change in mathematical
Insurance has capital decrease (-)
Purchases (-)
Expirations (-)
31 December 2013
31 December 2012
(4,482,167)
20,553,462
(41,138)
(100,308,637)
(5,747,889)
(156,102,151)
(246,128,520)
(142,997)
21,987,028
(179,540,126)
(4,824,419)
(125,908,484)
(288,428,998)
Factors resulting from group insurance policies which provide portfolio increase through the change in mathematical reserves for
the period 1 January - 31 December 2013 and 1 January - 31 December 2012 are as follows:
New contracts
Insurances had capital increase
31 December 2013
31 December 2012
39,269,669
28,582
137,766
10,653,144
50,089,161
31,984,921
48,534
49,487
32,110,639
64,193,581
Purchases (-)
Expirations (-)
31 December 2013
31 December 2012
303,218
(19,905,213)
(4,003,329)
(4,015)
(11,590,137)
(35,199,476)
(874)
508,740
(1,837,164)
(16,456)
(46,018,814)
(47,364,568)
Factors resulting from group insurance policies which provide portfolio decrease through the change in mathematical reserves
for the 1 January - 31 December 2013 and 1 January - 31 December 2012 periods:
251
17.17 Gain/losses resulted from reinsurance contracts and recognized in the income statement
Gain or losses resulted from reinsurance contracts and recognized in the income statement are disclosed in note 10 -Reinsurance
assets, liabilities.
17.18 Incurred claim development table
Incurred claim development table presented below provided cumulative payments of claims according to claim year and following
years:
Claim year
Claim year
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
Cumulative payments up to
date
Payments for the year ended
(*)
2008
2009
2010
2011
2012
2013
Total
7,621,312
6,201,960
10,858,399
8,532,107
15,285,562
19,456,357
67,955,697
3,634,320
4,113,823
4,610,880
5,329,728
9,723,183
-
27,411,934
273,370
286,233
399,311
304,054
-
-
1,262,968
14,037
4,938
198,602
-
-
-
217,577
28,668
19,148
-
-
-
-
47,816
19,792
-
-
-
-
-
-
-
-
-
-
-
11,591,499
10,626,102
16,067,192
14,165,889
25,008,745
19,456,357
96,915,784
19,792
19,148
198,602
304,054
9,723,183
19,456,357
29,721,136
19,792
The claims paid includes death-disability termination and personal accident branch gross payments.
17.19 Effects of changes in the assumptions used in the measurement of insurance assets and liabilities, showing the effects
of each change that has significant effect on the financial statements separately
Effects of changes in the assumptions used in the measurement of insurance assets and liabilities are disclosed in note 4
-Management of insurance risks.
18 Investment contracts
None.
19 Trade and other payables and deferred income
Payables from insurance operations
Cash deposited by insurance and reinsurance companies
Payables from pension activities
Other
Total payables from main operations
252
5,868,305
881,759
5,354,762,129
5,231,179,012
123,583,117
5,361,512,193
4,090,566
636,822
4,366,456,847
4,277,830,443
88,626,404
4,371,184,235
5,014
5,014
8,172
2,260
10,432
Guarantees and deposits received
Other payables
Total other payables
320,984
8,561,433
8,882,417
244,608
6,224,776
6,469,384
Deferred commission income
Expense accruals
Other Deferred Income and Expense Accruals
Total deferred income and expense accruals
515,595
829,103
1,243,443
2,588,141
415,872
335,971
1,041,698
1,793,541
5,372,987,765
4,379,457,592
Due to shareholders
Payables to other related parties
Total payables to related parties
Total
20 Financial liabilities
The Company has no financial liabilities as at the reporting date (31 December 2012: None).
21 Deferred taxes
The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial
statements as reported for TFRS purposes and its statutory tax financial statements. These differences usually result in the
recognition of revenue and expenses in different reporting periods for TFRS and tax purposes and they are given below.
20% tax rate is used in the calculation of deferred tax asset and liabilities.
Deferred tax (assets)/liabilities base:
Total
Deferred tax (assets)/liabilities:
Total
31 December 2013
31 December 2012
11,170,825
(8,269,886)
(6,049,914)
(2,000,000)
43,619,636
(7,408,414)
(4,172,123)
(3,800,000)
(2,275,544)
(2,918,389)
(10,342,908)
(2,469,963)
(1,965,788)
23,803,348
31 December 2013
31 December 2012
2,234,165
(1,653,977)
(1,209,983)
(400,000)
8,723,927
(1,481,683)
(834,424)
(760,000)
(455,109)
(583,678)
(2,068,582)
(493,993)
(393,157)
4,760,670
Movement of deferred tax (assets)/liabilities:
Opening balance at 1 January
Recognized in profit or loss
Recognized in equity
Closing balance at 31 December
31 December 2013
31 December 2012
4,760,670
148,052
(6,977,304)
(2,068,582)
(4,541,053)
447,909
8,853,814
4,760,670
Movement of deferred tax assets/liabilities as at 31 December 2013 and 2012 are given below:
253
22 Retirement benefit obligations
Under the Turkish Labor Law, the Company is required to pay employment termination benefits to each employee who has
qualified for such payment. Also, employees are entitled to retirement pay provisions subsequent to the completion of their
retirement period by gaining a right to receive retirement payments in accordance with the amended Article 60 of the applicable
Social Insurance Law No: 506 and the related Decrees No: 2422 and 4447 issued on 6 March 1981 and 25 August 1999,
respectively. Some transitional provisions related to pre-retirement service term was excluded from the law since the related law
was amended as of 23 May 2002.
The termination benefit to be paid is subject to upper limit of ¨3,254.44 as at 31 December 2013 (31 December 2012:
¨3,033.98).
The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from
the retirement of employees. TAS 19 (“Employee Benefits”) requires actuarial valuation methods to be developed to estimate the
enterprise’s obligation under defined benefit plans. Accordingly, the following 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 of future inflation.
Consequently, in the accompanying financial statements as at 31 December 2013, the provision has been calculated by
estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. The
provisions at the respective reporting periods have been calculated assuming an annual inflation rate of 6.0% and a discount
rate of 10%, resulting in a real discount rate of between 3.77% (31 December 2012: 6.0%, 1.00% - 4.57%, respectively). The
anticipated rate of forfeitures is considered and estimated rate of the Company’s retirement pay is also taken into account.
After the revision of TAS 19, as the amount of actuarial gain and loss are presented under the other profit reserves, which were
previously shown under the income statement.
Movement of provision for employee termination benefits during the period is presented below:
Provision as at 1 January
Interest cost
Service cost
Payments made during the year
Actuarial gain and losses
Provision as at 31 December
7,408,414
444,505
734,666
(681,910)
364,211
8,269,886
4,828,646
289,719
638,792
(1,132,288)
2,783,545
7,408,414
23 Other liabilities and provisions
As at 31 December 2013 and 2012; the details of the provisions for other risks are as follows:
254
Provision for commissions to sales personnel
Provision for litigations
Provision for commissions and expenses
Provisions for costs
Total provisions for other risks
2,000,000
2,918,389
650,000
93,970
43,000
5,705,359
8,269,886
13,975,245
3,800,000
1,965,788
500,000
93,970
6,359,758
7,408,414
13,768,172
24 Net insurance premium revenue
Non-life
Life
Total
648,587
381,218,379
381,866,966
588,772
355,597,310
356,186,082
25 Fee revenues
The details of fee revenues for the year ended 31 December 2013 and 2012 received from individual pension, life and non-life
branches in accordance with TAS 18 are as follows:
Fund management income
Administrative cost deductions
Entrance fee
Administrative cost deductions in the form of cessation
Other technical income
Total
90,764,418
17,771,761
20,236,910
3,120,756
108,600
132,002,445
88,470,973
33,953,327
16,121,343
367,261
113,153
139,026,057
26 Investment income
Financial assets held-for-trading:
Valuation gain/(loss)
Gain on sale
Interest income
Dividend income
Financial assets available- for-sale:
Interest income
Valuation gain (internal rate of return gain)
Gain on sale
Dividend income
Income from associates:
Investment properties:
Rent income
Other income: (*)
Total (**)
(892,251)
9,585,612
1,351,553
21
182,079
19,549
125,943,353
99,452,715
27,252,894
3,260,568
2,094,316
135,334,531
38,766,493
6,637,140
2,755,630
1,915,627
3,280,321
13,479,335
273,871,272
3,059,325
14,923,268
214,530,807
Other income includes income from bonus shares through capital increases in associates from profit or capital reserves, interest income from time deposits, income
from derivative transactions, foreign exchange gains and insurers’ money not requested from the Company.
(**)
¨66,975,307 (31 December 2012: ¨64,890,706) of investment income obtained from the Company’s own portfolio and ¨206,895,965 (31 December 2012:
¨149,640,101) of investment income obtained from policyholders’ portfolio.
27 Net income accrual on financial assets
Net income accrual from the Company’s own portfolio is as follows:
Available-for-sale financial assets:
Fair value differences recognized in equity
Fair value differences recognized in profit/loss
Total
12,828,359
40,327,945
4,430,562
13,121,631
17,258,921
53,449,576
(*)
255
28 Assets held at fair value through profit or loss
Net loss from assets held at fair value through profit or loss recognized in income statement as at 31 December 2013 is ¨
(892,230) (31 December 2012: ¨11,138,793, net profit).
29 Insurance rights and claims
Details of insurance rights and claims are presented in statement of income.
30 Investment contract benefits
None.
31 Other expenses
The allocation of the expenses with respect to their nature or function is presented in note 32- Operating expenses below.
32 Operating expenses
For the year ended 31 December 2013 and 2012, the details of operating expenses are as follows:
Production commission expenses
Employee benefit expenses(*)
Administration expenses
Marketing and sales expenses
Rent expenses
Outsourced benefits and services
Bank fees
Reinsurance commission income
Other expenses
Total
(98,513,424)
(64,378,951)
(19,427,362)
(20,783,342)
(6,506,431)
(3,561,044)
(3,372,117)
2,559,861
(1,401,585)
(215,384,395)
(80,054,824)
(52,595,033)
(18,465,127)
(13,520,385)
(5,906,613)
(3,598,516)
(2,490,347)
2,808,701
(1,568,131)
(175,390,275)
As of 31 December 2013 the amount of ‘dividend and personnel fee expenses’ are presented under ‘personnel expenses’ which are previously shown under
provision expenses
(*)
33 Employee benefit expenses
Wages and salaries
Dividend to personnel and salary provision expense
Provision for unused vacation
Total
64,378,951
2,000,000
497,260
952,602
67,828,813
52,595,033
2,579,768
302,069
55,476,870
34 Financial costs
256
The Company’s has no finance expense in the current period (31 December 2012: None).
35 Income tax expense
Corporate tax liabilities:
Corporate tax provision
Less: Corporation taxes paid in advances during the period
Total
15,310,000
(11,512,254)
3,797,746
26,100,000
(18,926,035)
7,173,965
Current tax expense
Deferred tax expense/(income)
Total
15,310,000
148,052
15,458,052
26,100,000
447,909
26,547,909
Total tax expense recognized in equity
Change in fair value of available for sale financial assets
Total deferred tax expense recognized in equity
(450,996)
(450,996)
6,453,466
6,453,466
Reconciliation of the Company’s taxation for the year ended 31 December 2013 and 2012 are as follows:
Profit before tax
Taxes on income per statutory tax rate
Disallowable expenses
Effect of allowances
31 December 2013
Tax rate
100,163,987
(%)
(20,032,797)
(20.00)
(1,598,009)
(1.60)
6,172,754
6.16
(15,458,052)
(15.44)
31 December 2012
Tax rate
107,499,984
(%)
(21,499,997)
(20.00)
(6,405,060)
(5,96)
1,357,148
1.26
(26,547,909)
(24.70)
36 Net foreign exchange gains
Foreign exchange gains
Foreign exchange losses
Total
4,480,459
(11,003,005)
(6,522,546)
513,717
(945,869)
(432,152)
37 Earnings per share
Earnings per share is calculated by dividing net profit for the year to the weighted average number of shares.
For a share having TRKr (Kuruş) 1 of nominal value:
Weighted average number of shares (*)
Earnings per share (for 100 shares)
35,000,000,000
84,705,935
0.24202
35,000,000,000
80,952,075
0.23129
38 Dividends per share
Gross
Net
Group
A
B
Total
A
B
Total
Total Cash dividend corresponding to a share
having ¨1 of nominal value
Cash Dividend
Amount (¨)
Amount (¨)
Rate (%)
133,333.33
0.133333
13.3333
39,866,666.67
0.133333
13.3333
40,000,000.00
113,333.33
0.113333
11.3333
33,886,666.67
0.113333
11.3333
34,000,000.00
The Company’s dividend distribution in 2013 from the profit of 2012 is ¨40,000,000. Other than that, a dividend of ¨1,892,524
is distributed to the personnel of the Company.
The Company’s dividend distribution in 2013 from the profit of 2012 is presented below.
257
39 Cash generated from operations
The cash flows from operating activities is presented in the accompanying statement of cash flows.
40 Convertible bonds
None.
41 Redeemable preference shares
None.
42 Risks
In the normal course of its operations, the Company is exposed to legal disputes, claims and challenges, which mainly stem from
its insurance operations. The necessary income/expense accruals for the revocable cases against/on behalf of the Company are
provided either under provision for outstanding claims or provisions for other risks in the accompanying financial statements.
As at 31 December 2013, there are 105 ongoing law suit filed against the Company and total amount of these suits are
¨2,221,291. ¨2,376,705 (31 December 2012: ¨3,412,883) of provision including interest expense for ongoing law suits for which
cash outflow is probable and measurable reliably is set by the Company in the financial statements. There are 30 ongoing law
suits prosecuted by the Company against the third parties that have amounted ¨1,402,896. Subsequent to the reporting period,
there is no expected amount of law suits to be prosecuted against the Company.
43 Commitments
Total amount of commitments that are not included in liabilities:
Capital commitments
31 December 2013
31 December 2012
475,786
475,786
863,986
863,986
The Company does not have finance lease liabilities as at the reporting period (31 December 2012: None).
258
44 Business combinations
None.
45 Related party transactions
a. Parent company’s name and the ultimate owner of the group
The Company’s parent is Turkey İş Bankası AŞ with a 62% of share.
b. In accordance with the Company’s activities, items of sub-classifications
c. No expense is recognized in the related period for bad or doubtful debts in respect of the amounts owed by the shareholders,
associates and subsidiaries.
İş Portföy
Yönetimi AŞ
Carrying
amount
Participation
rate (%)
15,036,296
20.0
Reporting
period
31 December
2013
Profit before
income tax
Net profit of
the period
Financial
statements
base
Independent
auditor’s
opinion
13,150,735
10,471,581
SPK XI/29
Unqualified
d. Details of associates and subsidiaries having indirect capital and management relations with the Company; names, amounts
and rates of participations in the associates and subsidiaries; profit/loss for the period presented in the recent financial
statements of such participations; net profit/loss for the period and period covered by the financial statements; information
about whether these financial statements are prepared in accordance with the CMB standards; information about whether these
financial statements are audited; details of the audit opinion (if the report includes unqualified, adverse or qualified opinion):
259
e. Bonus shares obtained from associates or subsidiaries through internal resource capital increases
At the reporting date The Company has obtained no bonus shares through capital increases in associates from profit or capital
reserves.
f. No guarantees, commitments, guarantee letters, advances and endorsements given in favor of shareholders, associates and
subsidiaries.
g. Related party disclosures
Türkiye İş Bankası AŞ - receivables from credit card collections
Türkiye İş Bankası AŞ - bank deposits
Cash at banks
Anadolu Anonim Türk Sigorta Şirketi - premium receivables
Türkiye İş Bankası AŞ - commission payables
Milli Reasürans TAŞ - premium payables
Anadolu Anonim Türk Sigorta Şirketi - premium payables
Other payables
260
31 December 2013
31 December 2012
102,192,002
102,192,002
76,031,154
76,031,154
9,813,038
9,813,038
5,534,597
5,534,597
-
-
5,081,480
99,454
5,180,934
4,374,762
162,086
4,536,848
5,014
5,014
8,172
8,172
4,115,797
353,476
96,614
4,565,887
3,738,711
198,734
77,092
4,014,537
31 December 2013
31 December 2012
702,590
702,590
917,985
917,985
294,309
294,309
246,831
246,831
Türkiye İş Bankası AŞ - interest income from deposits
Investment income
663,404
663,404
652,012
652,012
195,552
15,750
187,488
20,256
13,125
8,080
-
13,278
211,302
10,674
252,901
51,918,079
12,984,035
4,178,552
3,131,677
45,144,459
12,191,098
3,961,869
2,917,306
825,064
1,649,623
1,253,519
1,020,191
764,575
664,311
588,558
157,199
76,861,673
839,031
503,624
424,717
152,082
68,407,896
İş Portföy Yönetimi AŞ - investment consultancy fee
İş Portföy Yönetimi AŞ - portfolio management fee
İş Yatırım Menkul Değerler AŞ - MKK service commission
İş Yatırım Menkul Değerler AŞ - portfolio management fee
İş Portföy Yönetimi AŞ - secondary market operations of marketable
securities
İş Yatırım Menkul Değerler AŞ - secondary market operations of
marketable securities
Investment expense
Türkiye İş Bankası AŞ - commission of production
İş Portföy Yönetimi AŞ - portfolio management fee of pension funds
İş Merkezleri Yönetim ve İşletim A.Ş. - building administrative expense
İş Gayrimenkul Yatırım Ortaklığı AŞ - rent expense
İş-Net Elektronik Bilgi Üretim Dağ. Tic. ve İletişim A.Ş. -communication
expense
Anadolu Anonim Türk Sigorta Şirketi - premium paid
Türkiye İş Bankası AŞ - commission of premium collection and banking
services
Türkiye İş Bankası A.Ş. - fund operation service expense
Türkiye Iş Bankası AŞ - rent expense
Anadolu Anonim Türk Sigorta Şirketi - rent expense
Other expenses
For the year ended 31 December 2013, the Company obtained employer contribution for individual pension plans amounting
to ¨15,486,007 (31 December 2012: ¨14,316,736) and accrued employer premium for life insurance amounting to ¨506,769
(31 December 2012: ¨302,422) from related parties. Other transactions with related parties during the year ended 31 December
2013 and 2012 are as follows:
261
46 Events after the reporting period
Events after the reporting period are disclosed in note 1.10 -events after the reporting period.
47 Others
Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of
the group to which they relate or 5% of the total assets in the balance sheet
Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of the
group to which they relate or 5% of the total assets in the balance sheet are as follows:
Current Assets (Other Receivables)
31 December 2013
31 December 2012
11,261,706
862,576
12,124,282
1,166,746
688,355
1,855,101
31 December 2013
31 December 2012
2,778,054
2,445
5,699,816
81,118
8,561,433
1,990,188
92,431
3,757,877
384,280
6,224,776
Other
Total
Short-term Liabilities (Other Miscellaneous Payables)
Suspense accounts
Payable to suppliers
Other
Total
Payables to employees and receivables from employees presented under accounts, “other receivables” and “other short or
long term payables”, and which have balance more than 1% of the total assets
None.
Subrogation recorded in “Off-Balance Sheet Accounts”
None.
Real rights on immovable and their values
None.
Explanatory note for the amounts and nature of previous years’ income and losses
None.
For the year ended 31 December 2013 and 2012, details of discount and provision expenses are as follows:
262
Unused vacation pay liability
Provisions no longer required
Other provision expense
Provision expense
31 December 2013
31 December 2012
(497,260)
(952,602)
840,768
(190,945)
(800,039)
(2,579,768)
(302,069)
619,356
(38,559)
(2,301,040)
Information for Investors
Stock Exchange
Anadolu Hayat Emeklilik A.Ş. stocks are traded on the İstanbul Stock Exchange (ISE) in the national market under the symbol
ANHYT. Information about the Company’s stocks is published on the economics pages of daily newspapers and on the internet
portals of brokerage houses.
Investor Relations
Copies of Anadolu Hayat Emeklilik A.Ş.’s annual reports and other information about the Company may be obtained from the
following address as well as from the corporate website located at anadoluhayat.com.tr.
Shareholder Relations Unit
İş Kuleleri, Kule 2, Kat: 19, Levent 34330, Beşiktaş/İstanbul
Annual General Meeting
Anadolu Hayat Emeklilik A.Ş.’s Annual General Meeting will be held on 24 March 2013 at 10:00 hours at the address of İş Kuleleri,
Kule 1, Kat: 41, Levent 34330 Beşiktaş/İstanbul.
Independent Auditor
Akis Bağımsız Denetim ve
Serbest Muhasebeci Mali Müşavirlik A.Ş.
Rüzgarlıbahçe Mah. Kavak Sokak No: 29
Kavacık-Beykoz 34805, İstanbul
Tax Certification
DRT Yeminli Mali Müşavirlik ve Bağımsız Denetim A.Ş.
Maslak Mah. Bilim Sokak Sun Plaza No: 5 Kat: 23
Maslak 34398, İstanbul
Anadolu Hayat Emeklilik Share Performance in 2013
As of 31 December 2013, the Company’s nominal capital amounts to ¨350,000,000, consisting of fully-paid 35,000,000,000
shares each with a value of ¨0.01. 17% of the Company’s shares are publicly held.
¨
01.01.2013-31.03.2013
01.04.2013-30.06.2013
01.07.2013-30.09.2013
01.10.2013-31.12.2013
¨ HIGHEST
5.18
5.37
4.61
5.56
¨ LOWEST
3.64
3.51
3.64
4.58
¨ CLOSING
5.14
4.26
4.55
5.26
Share price quarterly lows and highs are presented below.
263
Directory
Website:
anadoluhayat.com.tr
For correspondence:
[email protected]
Head Office
Meltem Sokak No: 10
İş Kuleleri Kule: 2 Kat: 16
Levent 34330 Beşiktaş-İstanbul
Customer Relations
Tel: 444 55 00
Fax: (+90 212) 317 70 77
Customer Relations Center
Değirmenyolu Caddesi No: 6 C Blok Kat: 6
34752 İçerenköy-Kadıköy-İstanbul
Tel: 444 55 00
Fax: (+90 212) 317 70 77
264
Sinanpaşa Mahallesi
Dolmabahçe Caddesi No: 7/A Kat: 6
34353 Beşiktaş-İstanbul
Tel: (+90 212) 244 76 00 pbx
Fax: (+90 212) 243 84 40
Odunluk Mahallesi
Akademi Caddesi No: 10/B
Zeno İş Merkezi A Blok Kat: 1 No: 4-5
16130 Nilüfer-Bursa
Tel: (+90 224) 223 71 35 / 223 73 57
Fax: (+90 224) 223 75 08
Caferağa Mahallesi
Albay Faik Sözdener Caddesi
Güran İş Merkezi No: 11/13 Kat: 1
34710 Kadıköy-İstanbul
Tel: (+90 216) 330 94 84 pbx
Fax: (+90 216) 330 92 54
Atatürk Caddesi No: 92 Kat: 3
35210 Konak-İzmir
Tel: (+90 232) 441 23 43 pbx
Fax: (+90 232) 441 82 92
Cumhuriyet Mahallesi
Atatürk Bulvarı No: 75-77 Kat: 6
06442 Çankaya-Ankara
Tel: (+90 312) 468 62 82 pbx
Fax: (+90 312) 468 30 67
Southern Anatolian District Office
Kurtuluş Mahallesi Ziyapaşa Bulvarı Tevfik Bey Apartmanı No: 37/A
01120 Seyhan-Adana
Tel: (+90 322) 458 30 70 pbx
Fax: (+90 322) 458 70 43
Şirinyalı Mahallesi
İsmet Gökşen Caddesi No: 64 Kat: 1
07160 Muratpaşa-Antalya
Tel: (+90 242) 316 22 82
Fax: (+90 242) 316 14 42
TRNC Branch Office
Şerif Arzık Sokak No: 25
Köşklüçiftlik Lefkoşa-TRNC
Tel: (+90 392) 227 01 27 / 227 04 08-09
Fax: (+90 392) 227 01 26
Produced by Tayburn
Tel: (90 212) 227 04 36
www.tayburnkurumsal.com

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