Anadolu Insurance Annual Report 2008

Annual Report 2008
Y Never Lose With Anadolu Sigorta ou
Never Lose Energy
Backing its approach to insurance business formed by the motto Never Lose by its 83 years of experience and know-how, Anadolu
Sigorta's key priorities are to maximize the quality of services and products offered to its policyholders, and to continually contribute to the development of the Turkish insurance business as it has done since its inception.
Corporate Profile
Anadolu Sigorta
2008
Annual Report
Corporate Profile
Maintaining its pioneering mission in the Turkish insurance industry with its growth strategy founded on profitability, Anadolu Sigorta more than doubled its total net profit on a year-to-year basis and continued to take place among the industry's leading companies in profitability in 2008. In the same period, Anadolu Sigorta registered staggering increases of 82% in its gross profit and 346% in its technical profit. In 2008, Anadolu Sigorta had a total market share of 11.84% in non-life branches. Backing its approach to insurance business formed by the motto Never Lose by its 83 years of experience and know-how, Anadolu Sigorta's key priorities are to maximize the quality of services and products offered to its policyholders, and to continually contribute to the development of the Turkish insurance business as it has done since its inception. Anadolu Sigorta will continue to steer the Turkish insurance business with its standard-setting innovative practices and solutions in the industry, and to be Turkey's insurance.
The top place secured in customer preference is best evidenced in the awards granted for the last five consecutive years based on the customer satisfaction provided.
Contents
1 Corporate Profile 3 Milestones 5 Our Vision, Mission and Corporate Values 6 Key Indicators 8 Message from the Chairman 10 Message from the CEO 14 An Overview of the Economy and the Industry in 2008 20 An Assessment of 2008 at Anadolu Sigorta 29 Anadolu Sigorta in the Industry 30 Research & Development Applications Regarding New Services and Activities 31 Commitment to Social Responsibility 32 Annual Activity Report Compliance Opinion Corporate Governance Practices at Anadolu Sigorta 34 Board of Directors and Auditors 36 Executive Committee 38 Heads of Units Under the Internal Audit Systems 39 Organization Chart 40 An Assessment of the Board Directors by the Corporate Governance Committee 43 Committees Operating within Anadolu Sigorta 45 An Assessment of the Operation of the Independent Audit Firm in 2008 Activity Period via the Audit Committee 46 Human Resources Practices 49 The Companys Transactions with the Risk Group 50 Agenda of the Annual General Meeting 51 Board of Directors Report 53 Dividend Distribution Proposal 54 Corporate Governance Principles Compliance Report Financial Information and Assessment on Risk Management 77 Summary of Statutory Auditors Report 78 An Assessment of 2008 by the Board of Inspectors 79 2008 Annual Report Compliance Statement 80 Independent Auditors Report 177 An Assessment of Financial Standing, Profitability and Solvency 179 Information on Financial Structure 180 Summary Financial Information for the Last 5 Years Including the Reporting Period 181 Risk Management Policies Adhered to by Types of Risks 184 Directory
Anadolu Sigorta
2008
Annual Report
Milestones
Never Lose Time
Owing to its superior service quality, Anadolu Sigorta received the Active
Academy Private Customer Satisfaction in Insurance Award for the fifth time in a row in 2008.
Milestones
Anadolu Sigorta
2008
Annual Report
Milestones
1925
Anadolu Sigorta was founded on April 1 at the initiative of Atatrk and under the leadership of bank, Turkey's first national bank.
1996
Policies in legal protection insurance branch, another first in our country, were written.
1975
Being the leader of national insurance since the onset of the Turkish Republic, Anadolu Sigorta celebrated its 50th anniversary.
1997
Aiming to make the most of the possibilities offered by IT, a Recon Project was launched. Services were made more efficient and productive with the inclusion of all services and agencies in the data processing network with online and real-time systems.
Emeklilik, which the Company was required by law to give up. Anadolu Sigorta was awarded its ISO 9001:2000 Quality Management System certification, an endorsement proving that the Company's quality management system complies with international standards.
2006
The Company maintained its sectoral leadership in premium production for the fifth consecutive year and realized a premium production in excess of TRY 1 billion, undersigning yet another historic result in the history of the Turkish insurance industry. The Company also won the Active Academy Private Customer Satisfaction Award in Insurance for a third time, verifying the success of "Maximum Service.
1983
Blue Insurance policies marking the introduction of comprehensive insurance system in Turkey and offering 17 types of cover were put on sale for the first time.
1999
In order to provide the fastest and most comprehensive service to its policyholders in the aftermath of the disastrous earthquake of 17 August, the Company worked round the clock to provide uninterrupted service.
1984
Highly acclaimed by the public and the sector, Insurance of the Future, the most comprehensive life policy ever offered in Turkey until then, was introduced.
2001
After providing service for over five decades, the Company was relocated from its building in Karaky to Towers, where it would be together with bank subsidiaries.
2007
The sector's unrelenting champion in premium production for the last six years, Anadolu Sigorta became in 2007 the first insurance company in Turkey to exceed the USD 1 billion threshold in total premium production. The Company's approach to quality was rewarded once again with the Active Academy Private Customer Satisfaction Award in Insurance 2007, granted to it for the fourth time.
1986
Representing a new branch in the Turkish insurance business, Electronic Equipment Insurance was first started by Anadolu Sigorta.
2002
A brand-new era began with the "Maximum Service in Insurance" concept. The Company introduced the service philosophy under one title that it has possessed since its foundation, and once again became the author of a first in the sector.
1987
Activities commenced in the agricultural insurance branch.
2008
Anadolu Sigorta launched the C2C (Closer to Customer) project whereby all business processes are reviewed and revised. While the Company increased its profitability through sustainable growth strategy, it also received Active Academy Private Customer Satisfaction Award in Insurance for the fifth consecutive time.
1991
The life branch was transferred to Anadolu Hayat Sigorta, a newly-formed life insurer as required by law.
2004
Voted as the most satisfactory insurance company with its products and services, Anadolu Sigorta received the Active Academy Private Customer Satisfaction Award in Insurance. The Company expanded its service range by taking over the health branch from Anadolu Hayat
1993
Extending administrative and technical assistance to Gnay Anadolu Sigorta, founded and started to operate in Azerbaijan, Anadolu Sigorta became the first Turkish insurance company to set up an international operation.
Anadolu Sigorta
2008
Annual Report
Our Vision, Mission and Corporate Values
Never Lose a Customer
In the light of its deeply-rooted, pioneering, honest and strong corporate values, Anadolu Sigorta targets to be the insurance brand to be preferred by
everyone needing insurance, and to attain a strength that is referenced in the international insurance business.
Anadolu Sigorta
2008
Annual Report
Our Vision
To make Anadolu Sigorta the insurance brand preferred by everyone who needs insurance. To achieve a strength that makes it a reference point in the worldwide insurance industry as well.
Our Mission
In keeping with the deeply-rooted, pioneering, honest, and solid corporate values of Anadolu Sigorta to: Lead the sector, Help create a broad public awareness of insurance in Turkey, Implement a customer-focused approach to service, Increase our financial strength to international standards, Enhance the value of our Company.
Our Corporate Values

Anadolu Sigorta a Company Entrenched in History Anadolu Sigorta was founded in accordance with the instructions given by Mustafa Kemal Atatrk as the Turkeys first national insurance company. It has a powerful corporate structure built on its knowledge of insurance accumulated through the years. Anadolu Sigorta and Pioneership Pioneer in creating product; pioneer in service; pioneer in technology; with its self- renewing ability preserves its pioneering position; it plays a pioneering role in social responsibility. Anadolu Sigorta and Integrity It has ethical merits; it fulfills its promises definitely; it inheres in transparency as principle: it never abandons human values. Anadolu Sigorta and a Powerful Structure It has a stable financial power; it has an extended and efficient service network; it has a sophisticated and high qualified human source; it gains power from the synergy created by bank.
Anadolu Sigorta
2008
Annual Report
Key Indicators
Never Lose Financial Strength
Breakdown of Premium Production by Branches (%)

Fire 19.4 Marine 5.82
Accident Motor Third Party Liability Engineering Agriculture
38.09
16.04
4.30
0.63
Legal Protection 0.43
Personal Accident 3.75
Health 11.53
Credit 0.01
Shareholder Structure (%)

Trkiye Bankas A.. 35.53 Milli Reasrans T.A.. 21.78 Other 42.69
Capital Increases in 2008 and their Financial Resources

In 2008, the issued capital of Anadolu Sigorta was increased from TRY 275,000,000 to TRY 350,000,000 through bonus capital increase. Of TRY 75,000,000 that was increased in total, representing 27.2% increment, TRY 23,000,000 was covered from 2007 dividends, TRY 51,460,668 from retained earnings and TRY 539,332 from sales income to be added to the capital. The Companys issued capital was registered on 16 June 2008 and promulgated in the Turkish Trade Registry Gazette issue 7087 dated 19 June 2008.
Changes Made in the Articles of Association During the Year 2008

No changes were made in the Articles of Association during the year 2008.
Key Indicators
Anadolu Sigorta
2008
Annual Report
Key Indicators
Financial Highlights (TRY thousand)
Total Premium Production Total Assets Losses Paid Paid-in Capital Shareholders Equity Pretax Profit Net Profit
2007
1,192,587 1,401,538 708,006 275,000 644,088 77,225 54,209
2008
1,161,386 1,534,376 685,304 350,000 607,991 140,723 117,666
Capital Adequacy Ratios

Premium Received/Shareholders Equity Shareholders Equity/Total Assets Shareholders Equity/Technical Provisions (Net) 1.85 0.46 1.05 1.91 0.40 0.84
Asset Quality and Liquidity Ratios

Current Assets/Total Assets Liquidity Ratio Current Ratio Premium and Reinsurance Receivables/Total Assets Receivables From Agencies/Shareholders Equity 0.5 0.96 1.58 0.32 0.68 0.59 1.01 1.60 0.28 0.68
Operational Ratios
Conservation Ratio Claims Payment Ratio 0.77 0.72 0.75 0.67
Profitability Ratios
Loss-Premium Ratio Loss-Premium Ratio (Net) Cost Ratio Combined Ratio (Loss-Premium Ratio+Cost Ratio) Pretax Profit/Premium Received Financial Profit (Gross)/Premium Received Technical Profit/Premium Received 0.66 0.74 0.20 0.94 0.06 0.05 0.02 0.70 * 0.79 ** 0.20 0.99 0.12 0.04 0.08
* In line with the amendment made by the Undersecretariat of Treasury in 2008, deferred commissions were deducted from the Unearned Premium Provisions. The loss-premium ratio (net) according to the old method is 0.65. ** In line with the amendment made by the Undersecretariat of Treasury in 2008, deferred commissions were deducted from the Unearned Premium Provisions. The loss-premium ratio according to the old method is 0.73.
Premium Production (TRY thousand)

Fire 221,897 225,172 Marine 54,581 67,557 Accident 512,562 442,403 Motor Third Party Liability 153,825 186,246 Engineering 53,256 49,992 Agriculture 4,930 7,315 Legal Protection 4,699 5,015 Personal Accident 46,034 43,594 Health 140,722 133,920 Credit 172 81 08 112.35 08 4.83
07 08
07 08
07 08
07 08
07 08
07 08
07 08
07 08
07 08
07 08
Increase in Premium Production (%)

Fire 1.48 Marine 23.77 Accident Motor Third Party Liability 21.08 Engineering Agriculture 48.38 Legal Protection 6.72 Personal Accident Health Credit
08 08
08 08 -13.69
08 -6.13 08 08
08 -5.30
Anadolu Sigorta
2008
Annual Report
Message from the Chairman
Turkey's insurance
We lead the sector in product creation, service and technology.

Our goal is to create a broad public awareness of insurance in Turkey and to protect our people against any loss with our customer-focused approach to service.
Anadolu Sigorta
2008
Annual Report

Dear shareholders, 2008 presented us with the occasion to live through a crucial experience about how to be successful under unusual and tough economic conditions. The current crisis in the world bears either a direct or indirect impact on numerous sectors. It will be an illusion to think that one would be totally immune to the crisis; however, it is a reality that companies possessing a robust financial structure and correctly channeled investments such as Anadolu Sigorta will be less influenced by it. As Anadolu Sigorta, our recent priority has been to capture a setting of strong growth built on solid foundations, which does not disregard profitability. The crisis reminded us once again of the great importance and appropriateness of this tendency we have. Anadolu Sigorta, being the first national company, holds a distinctive and very important place in the history of insurance business in Turkey. Backed by this deeply-rooted history of 83 years, we are working towards authoring more novelties and we steer our industry. We lead the sector in product creation, service and technology. Our goal is to create a broad public awareness of insurance in Turkey and to protect our people against any loss with our customer-focused approach to service. In our efforts to this end, we are supported and brought to a privileged position in terms of access to our policyholders by the perfect combination of our competence to reflect advanced technology in our services, our speed, efficiency, and result-orientation, and the capabilities granted by our extensive service network. One of the main engines behind our achievements is the synergy created with bank, the greatest contributor to the economic progress owing to its unique scale today, as it has been at any phase of the national economy. Being a member of this community has always given us immense pride and the perseverance to work harder. Trust and reputation are the two features we keep repeating in our messages, and we will not grow tired of reiterating them. Both are hard to earn, and extremely easy to lose. This is a fact that has been even better comprehended during the latest global crisis. Anadolu Sigorta preserves these features as the key to sustainability, combined with the strong corporate values espoused, the principles of caring for the human and ethical code of conduct. We fulfill all the criteria to be a successful insurance company: we are a profitable company, we maintain our strong financial structure, we achieve maximum customer satisfaction, and we are a professional team. Challenging circumstances further tighten the bond among us and sharpen our focus on the target. Drawing on the pride and power bestowed upon us by our assertion to be Turkey's insurance, we will keep working vigorously to offer maximum protection to our policyholders and to always stand by their side. Not today and not tomorrow, neither our customers, nor our company can ever lose with Anadolu Sigorta. Sincerely,
Burhan Karagz Chairman of the Board
10
Anadolu Sigorta
2008
Annual Report
Message from the CEO
Innovative products and solutions...
Once again in 2008, Anadolu Sigorta reached two important targets: The Company maintained and further
increased its profitability, and remained the name achieving highest customer satisfaction.
Anadolu Sigorta
2008
Annual Report
11

We are raising our return on premiums. Under ideal conditions, more premiums mean more profit; however, correct pricing policies are not implemented in Turkey for competition purposes. As a result, the risk of posting loss is not reduced even if there is an increase in turnover, as opposed to the general principle. Not sustainable, this competition policy will be abandoned even more rapidly in the crisis environment. This may be interpreted as increased prices at first glance. Yet, it should be kept in mind that otherwise companies will have difficulty in maintaining their existence, not to mention in growing. Our Company's success in raising the return on premiums led to increased technical profitability despite decreased premium production in some products. Like we always say, our aim is to derive profit on insurance business. For the fifth time, we are the leader in customer satisfaction. Once again in 2008, Anadolu Sigorta was named the the most satisfactory insurance company with its products and services, and won the Active Academy Private Customer Satisfaction Award in Insurance. Anadolu Sigorta got nearly 29% of the votes in the survey which is basically a customer satisfaction poll. We sculpt all the products and services we present as the sector's leader with a keen eye on our policyholders' demands and needs. As Anadolu Sigorta, we appear before our insured customers with the principle Never lose. We take enormous pride in the fact that our approach is being rewarded for the fifth consecutive time. Our achievements are crowned with awards. Focused on producing innovative products and solutions, and erected on customer satisfaction, the superior service understanding of Anadolu Sigorta continued to be crowned with various awards also in the reporting period. Anadolu Sigorta; was named the best insurance company in Turkey by Euromoney, the leading international economy and finance magazine, and took the first place also in claims payment, innovation and price subcategories in addition to its overall leadership. was awarded for its Spare Part Supply Project by Active Academy at the Insurance Summit under the Innovative Company Award category. An overview of the sector in 2008... In 2008, the insurance sector expanded 7.71% overall, registering 6.24% nominal growth in total nonlife branches; however, the sector did not grow in real terms. While total premium production stood at TRY 11.8 billion, non-life premium production materialized as TRY 10.2 billion.
Once again in 2008 we have reached two important targets: We maintained and further increased our profitability, and we remained the name achieving highest customer satisfaction. At a time when global crisis conditions made their presence felt, the performance results attained while adhering strictly to our strategies yet again confirmed that we have correctly positioned our Company. Growth backed by profitability... We set our priority goal for 2008 as growth established on solid foundations backed by profitability. The results we achieved brought a success beyond our targets. Owing to our strategy based on the fact that profitability is one of the key elements for securing sustainable growth, our technical profit in 2008 reached TRY 96,671,499, with a staggering increase by 346% on a year-to-year basis. As this achievement was supported also by our Company's financial performance results, our gross profit for 2008 went up 82% to TRY 140,722,726, while our net profit more than doubled with a 117% rise and materialized as TRY 117,666,276. We believe that it is necessary to brace up the financial structure with profitability and to minimize reinsurance requirements particularly at times of crisis. On the other hand, we support this solid structure with our liquid assets.
12
Anadolu Sigorta
2008
Annual Report
Public awareness of insurance...

The work on legal infrastructure has been ongoing with the secondary legislation continued to be published during 2008 following the enforcement of the Insurance Law in 2007. All these efforts in the legal arena bear utmost importance in bringing the insurance industry into alignment with the European Union and international norms. Revised legislation and the changes introduced are generally of the nature to enhance the reliability of the existing or future companies engaged in the industry, and to protect the insured. Foreigners' interest in the industry gets more and more intense. Similar to the previous year, foreign capital inflow into the insurance industry increased also in 2008. Following the agreement reached for the sale of 50% stake in AXA Oyak Holding A.. to the AXA Group, TEB Sigorta A.. has been acquired by Zurich Financial Services Group, Ko Allianz Sigorta A.. and Ko Allianz Hayat ve Emeklilik A.. by Allianz, and Ankara Emeklilik A.. by Aegon. The contraction in economy will impact also the insurance industry. Though the stagnation caused by global crisis combined with liquidity shortage gave rise to significant issues for a part of the financial services sector, the insurance industry was able to shun the first wave without suffering from major injuries. The reasons behind the relative resilience of insurance companies include various factors such as the flexibility of their business models, the conservative attitude displayed by executives in investments as a result of past experiences, and the strict supervision of the public authorities over the insurance industry. In addition, the financing of insurance companies is based on insurance premiums that serve as a relatively more regular resource. Although they are not affected by the crisis as much as the other financial institutions for the time being, insurance companies will also be inevitably influenced from the negative economic conditions and reduced growth expectations at an increasing extent. In the last quarter of 2008, the contraction in the national economy and the stagnation in manufacturing led by sectors such as textile and automotive started to be felt. The hardships particularly in automotive will be directly reflected in the premium production of motor own damage branch. On the other hand, the narrowed lending volume translates into non-emergence of new economic values, which will impact our industry. The antidote to the economic crisis is to attract new policyholders... We believe that crisis period is just the right time for tapping the big potential we frequently refer to. At times when wheels stop turning, revenues shrink and businesses post losses, indemnification gets all the more difficult if a risk materializes. For this reason, we should be able to clearly communicate to our target audience that having insurance cover becomes more important than ever at times of crisis. As Anadolu Sigorta, our goal in this period is to introduce the segment of individuals and organizations that never have had any insurance cover to the insurance notion, and to sell new products while retaining our existing customers. For us, the antidote to the economic crisis is to attract new policyholders. We need to broaden public awareness of insurance. We recognize our responsibilities as the leading company of the insurance industry. Based on these responsibilities, Anadolu Sigorta has adopted it as a mission to create enhanced public awareness of insurance. We observe that there is still a huge gap of knowledge about the major returns that can be derived on minor precautions to be adopted against the negative events that everyday life has in store for us all like flood, fire or theft. Our efforts to develop the dynamics of the insurance industry and to extend the reach of service solutions are backed by advertising and promotional campaigns. In this frame, we successfully realized two advertising campaigns on home insurance and motor own damage insurance in 2008.
Anadolu Sigorta
2008
Annual Report
13
We constantly adapt ourselves. Targeting to keep its service standards at the highest level, Anadolu Sigorta continued with its technology investments also in 2008, which were commenced for rendering the best service in the fastest and most effective manner. Our Company is undergoing a major change and transformation process, thereby fortifying its technical infrastructure with new systems employing rule, service and processbased software solution and advanced hardware products that will support growth. Technological upgrade carried out via the System Web Integration Project (SWEP) is supported by the Process Improvement Project whereby all our business processes are reviewed and revised as necessary. Upon completion of all these activities, we aim to launch a new powerful, renewed system of maximum effectiveness at the Company. Our endeavors within the scope of our transformation program named C2C (Closer to Customer) will be ongoing also in 2009. We are targeting to better capitalize on bank's potential. Representing one of the most deeplyrooted examples of bancassurance activities in Turkey, our cooperation with bank and the synergy created therefrom give our Company an unparalleled advantage in customer reach.
While the total number of Anadolu Sigorta delivery points exceeds 3,000, we aim to further increase our premium production via bank branches numbering over 1,000 and each acting as an Anadolu Sigorta agency. We are planning to speed up the activities of our direct sales team working at the branches in particular. We are a big family with our customers... All of us as the members of Anadolu Sigorta community share the thrill of moving closer to our targets by the day with the help of the projects realized, which targets were set in line with our motto never lose. Our service approach focused on customer satisfaction is reinforced by the awards we win. We will remain loyal to this attitude also in 2009. We should always keep in mind that what makes a company is not figures or charts, but its employees. Anadolu Sigorta holds a privileged position in the industry also with respect to human resource as manifested in the Company's efforts invested towards employing and training qualified human resource. Our strong intellectual capital plays a major part in making the most of the industry's growth potential.
I would like to take this opportunity to thank all my colleagues offering service all over the country under the roof of Anadolu Sigorta, to all bank employees, our agencies, business partners and policyholders. Strictly adhering to its profitabilitybased growth strategy, our Company, as the most deeply-rooted establishment in the insurance industry, moves ahead with the understanding a stronger Anadolu Sigorta for a stronger insurance industry.
Mustafa Su Chief Executive Officer
14
Anadolu Sigorta
2008
Annual Report
An Overview of the Economy and the Industry in 2008
Developments in the World...

Global Economy The crisis sustained in the financial services sector since September 2008 and the decline in the confidence of producers/consumers led to a decrease in the growth rate of global economy. In 2009, developed countries are expected to experience a contraction in production which is similar to the one in the post-1929 crisis period. On another wing, emerging countries are estimated to exhibit higher growth rates than developed countries, although they will also suffer from some deceleration. The global growth rate which was 5.2% in 2007 and 3.4% in 2008 is expected to decrease to 0.5% in 2009. With 9% increase in GNP, China was the greatest contributor to the development in global economy, while the same ratio was 7.3% in India and 6.2% in Russia. EU and US economies grew nearly by 1% in the same period. International crude oil prices soared to a historic high level of over USD 140 in July 2008, as a result of the upward move that commenced in 2006 and 2007 due to intense demand. After the fall in the commodity demand due to the stagnation and declined growth rate that followed the onset of the financial crisis, crude oil prices fell below USD 40, matching its price level in 2005, and closed 2008 below USD 39. Floating around 1.48 in January, Euro/USD parity exceeded 1.60 by late August due to devaluation of US dollar, a result born out of the fact that the financial crisis broke out in the USA. Major policies and measures enforced by the USA against the crisis pushed the parity down to 1.25 in October. As the action packages failed to bring about the desired results and the crisis started bearing heavier impact upon the manufacturing industry, the parity rose once again, and adopted a flat course around 1.40 in December 2008. After the end of crisis which is expected to get deeper, the period of low interest rate and high liquidity is anticipated to cease with liquidity and credit crunch, global banking sector is expected to be restructured and free market economy is expected to turn into regulated market economy.
The impact of the global crisis on the insurance industry has been limited in 2008 compared to the effect it had on the overall financial services sector. The industry was affected by the
crisis at a later stage because of the regular income derived on insurance premiums, cautious attitude of the companies in their investments, and the legislation that imposes strict supervisory rules.
Anadolu Sigorta
2008
Annual Report
15
Worldwide Insurance Business Though the stagnation caused by the global crisis combined with liquidity shortage gave rise to significant issues for a part of the financial services sector, the insurance industry was able to get through the first phase of the financial crisis without suffering from major negative impacts . The primary exceptions to this were AIG and Fortis, big financial institutions whose operations covered insurance business among their other financial operations One of the biggest companies in the world, AIG was able to sustain its operations only by means of urgent loan in the amount of USD 85 billion extended by the Federal Reserve Bank. The impact of the global crisis on the insurance industry has been limited in 2008 compared to the effect it had on the overall financial services sector. The industry was affected by the crisis at a later stage because of the regular income derived on insurance premiums, cautious attitude of the companies in their investments, and the legislation that imposes strict supervisory rules. Yet, insurance and reinsurance companies will be inevitably influenced at a greater extent by the global crisis in 2009. This was already started to be manifested from end-2008 in the declining credit ratings of international insurance and reinsurance companies. As the global crisis increased its depth, the actors in the insurance industry started questioning the correctness of their asset management strategies, the reliability of their financial analysis models and credit ratings, and the adequacy of the provisions they set aside. The uncertainty of the market led the
insurance companies to act more cautiously both in their investments and in their underwriting policies. The global insurance industry continued to expand in 2007 and the global premium production has increased by 3.3% when compared to the last year. The greater portion of this increase was contributed by the life branch that went up 5.4%, whereas premiums in non-life branches rose merely 0.7%. Worldwide premium production totaled USD 4,061 billion, with USD 2,393 billion generated in life branch and USD 1,668 billion in non-life branches. In 2007, industrialized countries accounted for 90% of the global premium production, while there was 0.3% decrease in the premiums on non-life branches in these countries. Bringing their share in global production up to 10%, emerging countries registered 10% growth in premiums. Representing the world's largest market in non-life branches, continental America achieved 3.7% increase in premium production in 2007. While premium production dropped by 1.3% in North America, it increased by 8.3% in Latin American countries. The premium increase averaged 0.8% in the European continent. Premium production slightly decreased in Western Europe but rose 11.7% in Central and Eastern European countries. As premium production decreased 1.6% in Japan, it increased 20% and 5.6% in China and India, resulting in the growth of premium production in the Asian continent to be in the region of 10%.
Total losses caused by the natural disasters that occurred in 2008 are estimated to amount to USD 200 billion, while insured loss amount was nearly USD 45 billion. With these figures, 2008 has been the third year with highest losses after 2005 and 1995. The great majority of these losses resulted from meteorological events. Such great number of hurricanes had never occurred before in the first half of any year, and 2008 was marked by weather catastrophes that particularly hit America. Six tropical cyclones occurred along the American coasts, with Ike and Gustav being the most drastic ones among them; insured losses of these two extraordinary events were determined as USD 30 billion and USD 5 billion, respectively. Scientists state that the upward trend in climatebased risks in relation to global warming will continue and further increase in the years coming. The financial crisis and increased meteorological risks also shape the expectations about Solvency II (EU Solvency Standards), which was planned to be enforced in 2010 but has been postponed to 2012. The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) already announced that Solvency II structure will need to be reinforced after the crisis so as to place even greater emphasis on international cooperation. Apart from such modifications, the overall structure of Solvency II is considered sufficient for combating crises, and is expected to add to the financial stability of the insurance industry in the future.
16
Anadolu Sigorta
2008
Annual Report
Developments in Turkey...
Turkish Economy The weak course of domestic demand, coupled with the foreign demand that slackened because of the global credit crisis, negatively influenced the Turkish economy. The marked decline experienced in the industrial production first in August then in September strengthened the expectations for contraction in the economy in the third quarter of the year. The downturn in the manufacturing sector and consumer confidence indices, the downfall in automotive sales, and the downsizing in employment in certain sectors point out that the slowdown in the Turkish economy will continue in the periods coming. According to temporary data for the first three quarters of 2008, the Turkish economy grew 3% year-on. The growth in the GDP that stood at 6.7% in the first quarter of the year with the contribution of the low base in the same period of the prior year was realized as 2.3% and 0.5% in the second and third quarters of the year, respectively. The decelerated domestic demand, contracted public investment outlays and the marked loss of pace in private investment outlays have been influential in the slowdown in growth in the second and third quarters of 2008. Annual consumer inflation stood at 10.06% as of December 2008. Though the increase in food prices maintained its high level of the recent years in 2008, there was some decline owing to the combined effect of the betterment in domestic production and the decrease in international prices. As a result of the high increases in items other than fuel oil, energy prices continued to go up despite the significant reduction in oil prices in the last period of the year. Each of these developments has been a factor in the sustained increase in inflation in 2008, resulting in failure to reach the 4% target. Based on TURKSTAT (Turkish Statistical Institute) data, exports went down 3.1% and imports 4.8% yearon in October 2008, while foreign trade deficit contracted by 7.6% and decreased to USD 5.3 billion. Thus, exports and imports declined on an annual basis for the first time since February 2002. In the first ten months of the year under review, foreign trade volume stood at USD 293 billion and foreign trade deficit at USD 63 billion, and the ratio of exports to imports was 64.4%. The overall export performance was negatively influenced by the shrinkage experienced particularly in road motor vehicles and in the textile industry in October. There was 20% decline in the exports to the European Union during this period. The contributing factors to decreased imports in October were the decelerated domestic demand and the decrease in commodity prices, combined with the devaluation of the Turkish lira. In this timeframe, imports contracted by 13.9% in consumer goods, by 12.8% in investment goods and by 1.1% in intermediate goods on a yearly basis. In September, the current deficit went down 60.1% year-on to USD 914 million. This figure represents the
Having consistently achieved a growth above the inflation in the recent years, the insurance industry entered into
a period of standstill in 2008 displaying a growth that lags behind inflation.
Anadolu Sigorta
2008
Annual Report
17
lowest current deficit since October 2005. The deficit in the first nine months of the year rose to USD 35.4 billion, up 35.6% YoY. As at September, the 12-month cumulative deficit stepped down from USD 48.4 billion in August to USD 47.0 billion. The pronounced decline in the foreign trade deficit has been influential in the decline of the current deficit in September. According to the balance of payments data, foreign trade deficit stood at its lowest since April 2007. The primary factors that led to this development are regarded as the decline particularly in oil prices and the loss of value by the Turkish lira. The balance of payments data for September indicate that the current deficit might adopt a shrinking trend in the period coming in connection with the decrease in oil prices, devaluation of the Turkish lira and the deceleration in domestic demand. Yet, the Turkish economy remains vulnerable because of the problems that might be encountered in the financing due to the global credit crisis.
It is observed that the budget realizations are aligned with year-end targets as of the first ten months of the reporting period. Yet, the narrowed domestic demand because of the economic stagnation might have a negative impact on indirect taxes that make up a substantial portion of tax revenues. In addition, reduced corporate profits might also reduce the corporate tax revenues. The developments in budget expenditures are also critical due to the upcoming local elections in 2009. In its meeting held in November, the Central Bank of the Republic of Turkey (CBT) Monetary Policy Committee (the Committee) reduced short-term interest rate by 50 base points to 16.25%, and lending interest rate by 100 base points to 18.75%. The Committee's brief stated that the recently announced data point at pronounced deceleration in economic activity; the issues in international credit markets and global economy will continue to limit domestic and foreign demand for a prolonged period of time, and therefore the
movements in exchange rates will have a limited impact on inflation, and the plunge in oil and other commodity prices will positively affect the inflation. In terms of the developments in FX markets, the Committee drew attention to the importance of fluidity in the financial system and active operation of lending markets in view of the existing conjuncture, and along this line, decided to introduce additional precautions on FX liquidity. At the end of 2008, the course of exchange rates was affected by the increased risk perception, deterioration in funding conditions, and the developments in EUR/USD parity. As at year-end 2008, Turkish lira lost value by 34.77% against US dollar and by 17.46% against euro. Standing at 55,538 points at the onset of 2008, the ISE National-100 index closed the year at 26,864, down 51.6% compared with end-2007, in parallel with the developments in international asset prices.
2007 GNP Growth (%) 4.6
2008 Quarter I Quarter II 6.7 2.3
Quarter III 6 Months 9 Months 0.5 4.2 3
Inflation (%) PPI Annual change CPI Annual change
December 10.06
8.11
Source: As of writing of this report, the Turkish Statistical Institute has not announced the data for the 4th quarter.
Source: Turkish Statistical Institute
18
Anadolu Sigorta
2008
Annual Report
Changes, new practices...

Turkish Insurance Business Having consistently achieved a growth above the inflation in the recent years, the insurance industry entered into a period of standstill in 2008 displaying a growth that lags behind inflation. TRY 9,600 million in non-life branches as at year-end 2007, premium production expanded 6.24% and went up to TRY 10,199 million at the end of 2008. The conclusion of the 2008 Regular Report on Turkey's Progress towards Accession reads ... Turkey achieved significant progress in relation to the insurance business and private pension by accepting arrangements regarding private pension plans, publishing financial statements and introducing regulations on insurance brokerage. The Capital Markets Board of Turkey accepted international accounting standards and international financial reporting standards for companies traded on the stock exchange... Alignment has been completed in insurance business and private pensions. An independent supervision agency that will regulate the insurance and private pension industries needs to be set up. The remark there is partial compliance with the European Union's acquis in insurance business and private pension sector that appeared in the 2007 Regular Report takes place also in the 2008 Regular Report. Another important development that occurred in 2008 concerning the insurance industry was the increase in foreign capital inflow into the industry in a manner similar to the prior year. Following the agreement reached for the sale of 50% stake in AXA Oyak Holding A.. to the AXA Group, TEB Sigorta A.. has been acquired by Zurich Financial Services Group, Ko Allianz Sigorta A.. and Ko Allianz Hayat ve Emeklilik A.. by Allianz, and Ankara Emeklilik A.. by Aegon. For the insurance industry, 2008 has been a year in which numerous changes and new practices were introduced. Pursuant to the Insurance Law published in the Official Gazette issue 5684 dated 14 June 2007, and the Regulation on Technical Provisions of Insurance, Reinsurance and Pension Companies and Assets in Which Such Provisions Shall Be Invested issued in connection with the said law, certain arrangements have been introduced for the computation of technical provisions from 01 January 2008. These arrangements are summarized hereinbelow. Provision for unearned premiums: In line with the Regulation on Technical Provisions of Insurance, Reinsurance and Pension Companies and Assets in Which Such Provisions Shall Be Invested published on 07 August 2007, starting with the policies issued from the beginning of 2008, provision for unearned premiums was started
Turkey achieved significant progress in relation to the insurance business and private pension by accepting arrangements
regarding private pension plans, publishing financial statements and introducing regulations on insurance brokerage.
Anadolu Sigorta
2008
Annual Report
19
to be computed on the basis of the gross premium, without deducting the commission. Commission amounts are now followed-up under a separate account using the deferred commission account. Equalization provision: This provision is started to be set aside on credit and earthquake coverage to equalize the fluctuations that might arise in the indemnification ratios in the following fiscal years and to cover catastrophic risks. Actuarial chain ladder method and outstanding claims practices: It is set out that the amount of outstanding claims provision for the current fiscal period cannot be lower than the amount calculated using the actuarial chain ladder method described by the Undersecretariat, and that subrogation, residual value and any other similar income will be deducted in the calculation of outstanding claims provision.
Provision for unexpired risks: This is started to be set aside as a provision allocated in the event that the provision for unearned premiums remains inadequate for the risk borne by the company and for the anticipated expenses in insurance branches which are considered to present incompatibility among the time-dependent distribution of the level of risk underwritten during the validity of the insurance contract and the premiums earned. Investment income and expenses transferred to technical division: The distribution of operating expenses transferred to technical division takes into consideration the premium production, the number of claims files, and the number of policies. A standard approach has been introduced for determining the amount of investment income transferred to technical division,
and all income generated on the investment of assets covering technical provisions are ensured to be transferred to technical division. Within the frame of the Motorways Traffic Law no. 2918 and Motorways Traffic Regulation, the practice of Report on Accident Resulting in Material Damage was begun on 01 April 2008, which is to be filled in by the free will of the involved parties in traffic accidents that result only in material damage. The enforcement of the Insurance Agencies Regulation issued based on the Insurance Law no. 5684 on 14 April 2008 signifies an equally important development for the industry and for the agencies.
Branches
Premium Production of the Sector as of Year End 2007 (TRY) 1,482,841,577 234,387,215 364,887,256 3,574,502,836 1,650,517,911 523,356,482 95,331,476 1,217,976,563 39,216,024 400,666,470 13,784,873 9,597,468,685 1,331,031,955 10,928,500,640
Share (%) 13,57 2,14 3,34 32,71 15,10 4,79 0,87 11,14 0,36 3,67 0,13 87,82 12,18 100,00
Premium Production of the Sector as of Year End 2008 (TRY) 1,598,455,151 272,771,343 413,587,291 3,329,805,336 2,060,499,622 536,149,073 124,617,714 1,326,836,954 32,319,859 467,198,588 37,101,738 10,199,342,670 1,574,896,096 11,774,238,766
Share (%) 15.67 2.67 4.06 32.65 20.20 5.26 1.22 13.01 0.32 4.58 0.36 86.62 13.38 100.00
Fire TCIP Marine Accident Motor Third Party Liability Engineering Agriculture Health Legal Protection Personal Accident Credit Non-Life Total Life Total
20
Anadolu Sigorta
2008
Annual Report
An Assessment of 2008 at Anadolu Sigorta
Profitable growth...
As a result of its growth strategy established on solid foundations supported with profitability, Anadolu
Sigorta captured a success beyond its targets in 2008.
Anadolu Sigorta
2008
Annual Report
21

Anadolu Sigorta is mainly active in non-life branches that include fire, accident, marine, engineering, agricultural, health, legal protection and credit insurance categories. Technical Division Premium Productions In 2008, direct premiums written by Anadolu Sigorta stood at TRY 1,109 million. With the addition of TRY 52 million received in reinsurance premiums, total premium production amounted to TRY 1,161 million last year.
Premium Production Breakdown by Branches Fire Marine Accident Motor Third Party Liability Engineering Agriculture Legal Protection Personal Accident Health Credit Total
(TRY thousand) 225,172 67,557 442,403 186,246 49,992 7,315 5,015 43,594 133,920 172 1,161,386
(%) 19.4 5.8 38.1 16.0 4.3 0.6 0.4 3.8 11.5 0.0 100 Credit Personal Accident Fire
Health Legal Protection
Agriculture Engineering Motor Third Party Liability Accident Marine
Fire Up 1.4%, Anadolu Sigorta's fire insurance premium production was TRY 225,172 thousand in 2008, while claim payments amounted to TRY 67,016 thousand. Technical profit of the fire branch rose from TRY 507 thousand to TRY 26,640 thousand.

225,172
Claims Paid (TRY thousand)

94,262
Combined Loss Premium Ratio (%)

79.7
Technical Profitability Ratio (%)

11.8
221,897
67,016
59.8
0.2
07
08
07
08
07
08
07
08
22
Anadolu Sigorta
2008
Annual Report
Marine There was a year-on increase of 23.7% in marine branch, bringing the total premium production to TRY 67,557 thousand. The Company's claim payments in the marine branch totaled TRY 23,416 thousand in 2008. Technical profit of the marine branch went up 149% to TRY 23.318 thousand in the reporting period.

67,557 54,581

23,416 18,435

42.1

34.5
29.8 17.1
07
08
07
08
07
08
07
08
Accident In 2008, Anadolu Sigorta's premium production in accident insurance declined by 13.6% to TRY 442,403 thousand on a year-over-year basis. Down 6%, claims paid in the accident branch stood at TRY 325,150 thousand in the year under review. TRY 8,104 thousand in 2007, the technical profit of the accident branch stood at TRY 37,247 thousand in 2008.

512,562 442,403

344,687

80.5

8.4
325,150
74.4
1.6
07
08
07
08
07
08
07
08
Anadolu Sigorta
2008
Annual Report
23
Motor Third Party Liability Motor third party liability insurance premium production realized a 21.0% year-on increase in 2008 and amounted to TRY 186,246 thousand. At TRY 132,503 thousand, claim payments were up 20%. Technical division balance in the motor third party liability branch went down from -18.2% to -16.3%.

186,246 153,825

132,503 110,141

118.2 96.7
-16.3 -18.2 07 08 07 08 07 08 07 08
Engineering Engineering insurance premium production in 2008 sustained a 6.1% year-on decrease and stood at TRY 49,992 thousand. The Company paid TRY 27,256 thousand in claims in 2008. Technical profit dropped from TRY 4,280 thousand to TRY 1,359 thousand in the same period.

53,256 49,992

27,256 23,827

75.4

8.0
73.1
2.7
07
08
07
08
07
08
07
08
24
Anadolu Sigorta
2008
Annual Report
Agriculture Anadolu Sigorta's premium production in agricultural insurance grew 48.3% and amounted to TRY 7,315 thousand in 2008. Claims paid in the agricultural insurance totaled TRY 3,130 thousand. TRY 1,235 thousand in 2007, technical profit in the agriculture branch was TRY 154 thousand in 2008.

7,315

3,130

94.2

25.1
4,930
904
24.6
-2.1 07 08 07 08 07 08 07 08
Legal Protection In 2008, premium production in legal protection insurance had a 6.7% increase and reached TRY 5,015 thousand. TRY 20 thousand was paid in claims. TRY 3,475 thousand in 2007, technical profit generated in the legal protection branch in 2008 was TRY 725 thousand.

5,015 4,699

20 20

2.4

74.0
0.3
14.5
07
08
07
08
07
08
07
08
Anadolu Sigorta
2008
Annual Report
25
Personal Accident Down 5.3%, premium production in personal accident insurance amounted to TRY 43,594 thousand in 2008. Claims paid in the personal accident branch decreased 15% and went down to TRY 5,070 thousand. TRY 21,638 thousand in 2007, technical profit in the personal accident branch increased 58% in 2008 and reached TRY 34,324 thousand.

46,034

5,983 5,070

15.6 13.5

78.7
43,594
47.0
07
08
07
08
07
08
07
08
Health With a 4.8% decrease, Anadolu Sigorta registered TRY 133,920 thousand in premium production in health branch in 2008, and paid TRY 101,743 thousand in claims. Technical division balance in the health branch, which was TRY -2,000 thousand in 2007, stood at TRY 7,162 thousand in 2008.

140,722

109,746 101,743

80.3

5.3
133,920
77.8
-1.4 07 08 07 08 07 08 07 08
26
Anadolu Sigorta
2008
Annual Report
Credit Having achieved a significant increase of 112.3%, premium production in credit insurance branch amounted to TRY 172 thousand in 2008. Technical division balance in the credit branch declined from TRY 81 thousand to TRY -8 thousand.

172

100.6
81
0 07 08 07
0 08
0 07
0 -4.9 08 07 08
Total In 2008, total premium production decreased by 2.6% and was materialized as TRY 1,161,386 thousand. Claims paid went down from TRY 708,006 thousand to TRY 685,304 thousand. TRY 21,653 thousand in 2007, technical profit achieved a staggering expansion of 346% and reached TRY 96,671 thousand.

1,192,587 1,161,386

708,006

74.30 78.70

8.30
685,304
1.80
07
08
07
08
07
08
07
08
Anadolu Sigorta
2008
Annual Report
27
Investment Income While investment income grew 38% to reach TRY 176,944 thousand in 2008, the greatest contributor to the increase was the financial investment income which amounted to TRY 128,089 thousand. A sales revenue of TRY 16,391 thousand was derived on financial investments during the reporting
period; a substantial portion of this amount was constituted by the disposal of government bonds that totaled TRY 13,786 thousand, and disposal of securities subject to repo which were in the amount of TRY 2,326 thousand. Owing to the fact that they also included the reversals of 2007 valuation amounts, valuation of
financial investments account consisting of the valuation income of share certificates, government bonds, mutual funds, repo and time deposits created an expense impact of TRY 6,440 thousand in 2008. In 2008, TRY 19,776 was generated in foreign exchange gains, while dividend income from affiliates was up 372% to TRY 17,888 thousand.
Investment Income (TRY thousand) Income from Financial Investments Revenues from the sales from financial Investments Valuation of Financial Investments Foreign Exchange Gains Dividend Income from Affiliates Income from Real Estate Income from Derivatives Other investments Total
31 December 2007 100.652 15.630 -1.290 7.535 3.792 1.469 92 0 127.880
31 December 2008 128.089 16.391 -6.440 19.776 17.888 1.200 13 28 176.944
Change (%) 27 5 -399 162 372 -18 -86 38
Investment Expenses While investment expenses expanded 107% to reach TRY 117,741 thousand in 2008, investment expenses transferred to the technical division took the greatest share in this amount with TRY 99,397 thousand. Based on the Undersecretariat of Treasury Circular on the Procedures and Principles of
Keys Used in Financial Statements enacted with effect from 01 December 2008, investment income from assets covering technical provisions were transferred to the technical division. Investment income transferred to the technical division in line with the relevant transfer method registered a 187% growth.
Investment Expenses (TRY thousand) Investment Management Expenses (incl. interests) Devaluation of Investments Loss from the Sales from Financial Investments Investment Expenses Transferred to the Technical Division Foreign Exchange Losses Depreciation Expenses Total
31 December 2007 -279 -222 -1.285 -34.686 -13.025 -7.398 -56.895
31 December 2008 -108 -283 -3.347 -99.397 -9.500 -5.107 -117.741
Change (%) -61 27 161 187 -27 -31 107
28
Anadolu Sigorta
2008
Annual Report
Other Income and Expenses With 2% decrease year-on, the other income and expenses account registered TRY 15,152 thousand in 2008. The most significant portion
of the balance in this account comes from the provisions account with TRY 13,666 thousand.
Revenues, Income, Expenses and Losses from Other Operations (TRY thousand) Provisions Rediscounts Compulsory Earthquake Insurance Deferred Taxation Other Revenues and Income Other Expenses and Losses Total
31 December 2007 -12.501 -3.912 0 0 1.457 -456 -15.412
31 December 2008 -13.666 3.808 57 -2.122 1.124 -4.353 -15.152
Change (%) 9 197
-23 854 -2
Operating Results Some of the ratios of Anadolu Sigorta in 2008 in comparison with those of 2007 are presented below.
(%) Technical Profitability Ratio Loss-Premium Ratio (net) Return on Equity Return on Assets
2007 1.8 74.3 12.0 5.5
2008 8.3 *78.7 23.1 9.2
* In line with the amendment made by the Undersecretariat of Treasury in 2008, deferred commissions were deducted from the Unearned Premium Provisions. The loss-premium ratio according to the old method is 0.73.
(TRY thousand)
31 December 2007 21,653 127,879 -56,895 -15,412 77,225 77,225 -23,016 54,209
31 December 2008 96,671 176,944 -117,741 -15,151 140,723 140,723 -23,057 117,666
Change (%) 346 38 107 -2 82 82 0 117
Technical Division Balance Investment Income Investment Expenses Revenues, Income, Expenses and Losses from Other Operations Total Gross Income Tax Provisions Net Income
At the close of 2008, gross profit registered a year-on rise by 82% and reached TRY 140,723 thousand, a result particularly contributed to by the positive development in the technical division balance. Net profit after the tax provision in the amount of TRY 23,057 thousand had a year-on increase by 117% and went up to TRY 117,666 thousand.
Anadolu Sigorta in the Industry
Anadolu Sigorta
2008
Annual Report
29
Anadolu Sigorta in the Industry Anadolu Sigorta reinforced its uninterrupted leadership in the industry with high profitability attained in 2008 based on the awareness that sustainable and adequate technical profitability is as valuable as premium production. Fair competition in pricing, and maintaining its modern and highquality service will remain the primary goals of Anadolu Sigorta also in the period coming. Anadolu Sigorta continues to deliver high-quality service to its customers with the expert and experienced people in its organization, drawing upon its solid technological and financial infrastructure, constant development and improvement philosophy, and extensive agency network. The main reason for its achievements, the Company's team was further strengthened in 2008 and reached 779 people. Having adopted a customer-focused approach with its extensive agency network, Anadolu Sigorta team takes on an analytical and guiding role in providing the products that will respond to the demand by correctly and exactly determining the need, as well as informing the customers on the insurance business while creating broad public awareness of insurance. The sales organization brings service to customers in many cities across the country, under the coordination of ten regional branches. Two of the regional branches are located in stanbul, which is also responsible for the greater part of the portfolio.
Anadolu Sigorta Regional Branches: stanbul Regional Branch - stanbul Kadky Regional Branch - stanbul Western Anatolia Regional Branch - zmir Marmara Regional Branch - Bursa Central Anatolia Regional Branch Ankara Black Sea Regional Branch -Trabzon Western Black Sea Regional Branch - Zonguldak Mediterranean Regional Branch - Antalya Southern Anatolia Regional Branch -Adana Turkish Republic of Northern Cyprus Branch - Lefkoa The numbers of delivery channels operating under Anadolu Sigorta Regional Offices as of year-end 2008 are presented below: Delivery Channels: Professional/corporate agencies and brokers (1,512) All bank branches (1,029) Trkiye Snai Kalknma Bankas A.. (1) Arap Trk Bankas A.. branches (3) Alternatif Bank A.. branches (47) Anadolu Sigorta will stand by its customers also in the future with its maximum service concept, nationwide agencies, use of technology, pioneering identity in insurance services, and capability to constantly develop products. Anadolu Sigorta makes significant investments into technology with a view to capturing both profitability
and leadership in the industry, and to maximizing customer satisfaction. Structures designed to offer even better service to the customers via all of the delivery channels will be launched in the near future. During 2008, Anadolu Sigorta initiated the C2C (Closer to Customer) transformation program, whereby the Company will establish its future on much more solid foundations, in order to introduce a model that will give competitive edge based on customerfocused approach to service, as well as new work flows. The Company's efforts relating to the C2C (Closer to Customer) transformation program will be continued uninterruptedly in 2009. The pioneering role Anadolu Sigorta has undertaken in the industry is further reinforced by exemplary projects that are commenced with a view to enhancing productivity, quality and efficiency. These projects include the following: E-Invoice and E-Service Provision that will increase service quality SWEP now featuring upgraded technological infrastructure Process Analysis that will enhance productivity Claims Management that will enable correct determination of the performances of surveyors and services Pricing Model that will respond to the question what is the correct price? Digital Address Determination that enables direct viewing of address data by agencies
30
Anadolu Sigorta
2008
Annual Report
Research & Development Applications Regarding New Services and Activities
Research & Development Applications Regarding New Services and Activities
In line with the customer-focused approach to management, Corporate Insurance Department was set up to centralize the handling of relationships with corporate customers and to upgrade the service standard. Reorganization efforts were undertaken for stanbul Regional Branches. In this frame, the operations of ili Regional Branch were discontinued and Bakrky Regional Branch was renamed stanbul Regional Branch. Previously carried out by ili Regional Branch, claims, legal, subrogation and accounting activities were handed over to the stanbul Regional Branch. Two individual organization structures were formed under the name Risk Management and Internal Control Department and Actuarial Consultancy in order to carry out the activities of the Risk Management and Actuarial Department. A survey has been conducted among the Company's real person policyholders in an effort to assess the service quality as perceived by the customers. Providing information about products was added to the services offered by Anadolu Service and Claims line at the number 444 0 350 which has the objective of informing existing and potential policyholders on the products. Informative Form practice was introduced to inform the existing and potential customers on Anadolu Sigorta products within the scope of the Regulation on Disclosure in Insurance Contracts. Within the frame of new product development to respond to the customers' needs, a number of policies were introduced: Motor Own
Damage Insurance (for members of Kamu-Sen), Maximum Traffic Insurance (for members of KamuSen), Healthcare Specialists Individual Risks Insurance (for doctors that are members of Kamu- Sen), Life&PA Insurance for Turkish Soldiers, Motor Own Damage Insurance for Turkish Soldiers, Fishing Boat Insurance, Agency Professional Liability Insurance, and SME Package Policy. With a view to enabling more effective and efficient handling of marine and liability claims, the process was handed over to the Marine and Liability Insurance Department. Mystery customer initiative was realized to identify customer requirements relating to regional branches, Maximum Insurance Specialists and agencies. Based on the fact that companies having an insight into their portfolios lead by a large margin in competition under the current conditions, the necessary infrastructure work was started for data mining, and related training sessions for employees were held. Informative SMS/e-mail messages are started to be sent to the customers via bank so as to let them know when their policies are renewed. Further, analysis work is in progress on the notification of surveyor and missing document information to the customers via SMS/e-mail messages. The scope of the centralized letter printing and enveloping service was expanded with letters to health policyholders (policy renewal letters, premium receipt documents and credit card letters) to enhance the quality of service offered to customers with health policies. In addition, premium receipt documents
are started to be sent via e-mail to those health policyholders whose email addresses are available to the Company. Work was undertaken for the establishment of Information Security Management System. The Company's initiatives also covered the Business Model and Advanced Process Design project executed in cooperation with the consultant firm in order to sustain the Company's leadership in the country. One other goal of the project is to analyze and upgrade the Company's business model and processes so as to achieve international standards. Another initiative was the Functional Design and Detailed Analysis, the second phase of the C2C Program whereby the target business model and processes identified as a result of the Business Model and Advanced Process Design will be realized in line with the Company's corporate goals and vision. C2C (Closer to Customer) transformation program can be outlined as follows: Improvement of key insurance activities Betterment of delivery functions Enhancement of the effectiveness and productivity of business processes Development of performance management activities Amplification of the depth of customer data Improvement of claims and subrogation processes Acceleration of product development Upgrading sales and service model
Commitment to Social Responsibility
Anadolu Sigorta
2008
Annual Report
31
Commitment to Social Responsibility
Based on its commitment to its social responsibilities, Anadolu Sigorta extends support to educational and academic activities, sports organizations, and cultural and artistic events. Educational and academic activities Anadolu Sigorta sponsored during 2008 included organizations such as Marmara Educational Institutions April 23 Children's Festival and TEKSEM Children's Play Project. In 2008, the Company was also a sponsor at organizations contributing to the growth and development of the industry. These organizations were Health Insurance Symposium, Bursa Union of Insurance Agents Convention, Nart Risk Management Forum 2008 organized by Nart Insurance and Reinsurance Brokerage Company, and the Active Academy 6th International Finance Summit.
Anadolu Sigorta also sponsors and supports several sports organizations and clubs: the Turkish Basketball Federation, Efes Pilsen Premiere League Men's Basketball Team, Trabzonspor Club, Eczacba Women's Volleyball Team, and the Turkish Football Federation. During 2008, the Company also supported various foundations and associations including the Insurance Agents Association (SAB), and ITU Maritime Faculty Alumni Association (DEFAMED). Anadolu Sigorta was also a sponsor at the 19th Most Open Air Concerts organized in July and August.
Anadolu Sigorta also takes place among the founding members of foundations assuming social causes such as the Turkish Earthquake Foundation (TDV) and Economic Research Foundation (AV), and is a member of various commerce chambers including the Chamber of Shipping (DTO), stanbul Chamber of Commerce (TO) as well as others. Utmost care is paid to assure that the supported projects comply with applicable legislation with regard to environmental and public health, and until today, no charges were filed or no sanctions were imposed against Anadolu Sigorta on account of any environmental protection violation.
32
Anadolu Sigorta
2008
Annual Report
Annual Activity Report Compliance Opinion
Annual Activity Report Compliance Opinion
To the Board of Directors of Anadolu Anonim Trk Sigorta irketi: We have audited the accuracy and compliance of financial information provided in the accompanying annual activity report of Anadolu Anonim Trk Sigorta irketi (the Company) with the audit report issued as of December 31, 2008. The Board of Directors of the Company is responsible for the annual activity report. As independent auditors, our responsibility is to express an opinion on the audited annual activity report based on the compliance of financial information provided in the annual activity report with the audited financial statements and explanatory notes. Our audit was performed in accordance with the accounting standards and principles and procedures of preparing and issuing annual activity reports as set out by the Insurance Law No: 5684. Those standards require that we plan and perform our audit to obtain reasonable assurance whether the annual activity report is free from material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, the financial information provided in the accompanying annual activity report presents fairly, in all material respects, the financial position of Anadolu Anonim Trk Sigorta irketi as of December 31, 2008 in accordance with the prevailing accounting principles and standards set out in the Insurance Law No: 5684. The financial information provided in the annual activity report is in compliance with the audited financial statements and explanatory notes, and also includes the summary Management report and our audit opinion on these financial statements.
DRT BAIMSIZ DENETM VE SERBEST MUHASEBEC MAL MAVRLK A.. Member of DELOITTE TOUCHE TOHMATSU
Sibel Trker Partner stanbul, March 26, 2009
Anadolu Sigorta
2008
Annual Report
33
Corporate Governance Practices at Anadolu Sigorta
34 36 38 39 40 43 45 46 49 50 51 53 54
Board of Directors and Auditors Executive Committee Heads of Units Under the Internal Audit Systems Organization Chart An Assessment of the Board Directors by the Corporate Governance Committee Committees Operating within Anadolu Sigorta An Assessment of the Operation of the Independent Audit Firm in 2008 Activity Period via the Audit Committee Human Resources Practices The Companys Transactions with the Risk Group Agenda of the Annual General Meeting Board of Directors Report Dividend Distribution Proposal Corporate Governance Principles Compliance Report
34
Anadolu Sigorta
2008
Annual Report
Board of Directors and Auditors

BOARD OF DIRECTORS
Burhan Karagz Chairman Born on 22 December 1929 in stanbul, Burhan Karagz graduated from stanbul Higher Education School of Economics and Commerce in 1951. He started his career at bank in 1953 as an assistant inspector at the Board of Inspectors and was later promoted to the position of inspector. After serving as the manager of the Deposits Department, as the chairman of bank's Board of Inspectors and lastly as the manager of the Loans Department of bank; he was appointed as Deputy Chief Executive Officer in 1972. He was appointed as the Chief Executive Officer of bank in 1982. After his retirement in 1988; Burhan Karagz was appointed to bank's Board as a member. He served as the chairman of the Board of Directors from 1996 until 2002. Between 1966-1993, he served on the Boards of Directors of Anadolu Bankas A.., Ereli Demir elik Fabrikalar A., Trk Eximbank A., and Trkiye Snai Kalknma Bankas A.. as a member, and stanbul Segman ve Gmlek San. T.A.., Aslan imento A.., Trkiye Snai Kalknma Bankas A.., T. D Ticaret Bankas A.. and Trk Eximbank A.. as the chairman. Burhan Karagz was elected as the chairman of the Board at Anadolu Sigorta on 18 October 1993. He is also the head of the Anadolu Sigorta Corporate Governance Committee, and a member of Turkish Industrialists' and Businessmen's Association (TSAD).
Bahittin Daver Orhon Deputy Chairman Born on 11 December 1942 in Srmene/Trabzon, B. Daver Orhon graduated from the Department of Finance and Accounting, stanbul Academy of Economic and Commercial Sciences in 1975. He started his career at bank as a clerk at Beyazt branch in 1968 and became assistant chief at the same branch in 1972. He functioned as a chief at Airefendi, Yenimahalle/ Ordu, Ordu and zmit branches from 1974 until 1979, and as II. Manager in Emirda and Glck branches in 1980. He was branch manager in Hereke branch between 1980-1983, assistant branch manager in Sirkeci branch between 1983-1986, branch manager in Demirkap branch between 1986-1988 and in Fatih branch between 1988-1990, and regional manager in stanbul Deputy Chief Executive Officer's Office. He was appointed to bank's Board of Directors as a member in 1996 and rose to Deputy Chief Executive Officer in 1998. After his retirement in 2003, B. Daver Orhon was elected as Board member on 29 March 2004 and then as Deputy Chairman on 30 March 2005 in Anadolu Sigorta. He is also a member of Anadolu Sigorta Corporate Governance Committee.
Mustafa Ali Su Director and Chief Executive Officer Born on 28 September 1953 in Antalya, Mustafa Ali Su graduated from Middle East Technical University, Faculty of Administrative Sciences, Department of Business Administration in 1974. He started his career at bank in 1976 as an assistant inspector at the Board of Inspectors. Mustafa Ali Su was appointed to the Organization Department as assistant manager in 1986, as group manager to the IT Department in 1988 and then became the manager of the Department of Credit Cards in 1990, and the manager of the Organization Department in 1992. He became the director of the New Head Office Construction Project during the relocation of bank Head Office to stanbul in 1996. Having served as the Chief Executive Officer of Anadolu Hayat Emeklilik from 2001 until 2006, Mustafa Ali Su has become the Chief Executive Officer of Anadolu Sigorta on 01 February 2006. Mustafa Ali Su is a member of Middle East Technical University Graduates' Association, Vice President of TSRB (Association of the Insurance and Reinsurance Companies of Turkey), and .Head of the Management Committee of the Insurance Information Center.
Nilgn skender Director Born on 01 November 1956 in Trabzon, Nilgn skender graduated from stanbul University, Faculty of Economics, Department of Economics in 1978 and started her career at bank as a clerk in Ayaspaa branch the same year. After serving at Credit Information & Financial Analysis Department in various positions for 10 years; she was appointed as II. manager and then as assistant manager at ili branch. She functioned at Osmanbey, Maslak and Tevikiye branches as branch manager and at stanbul I. Regional Department as regional manager between 1995 and 2007. On 28 March 2007, she was appointed as manager of the Private Banking Sales Department. Nilgn skender has been appointed as Board Director of Anadolu Sigorta on 12 May 2005.
mer Karaku Director Born on 01 January 1965 in Gmhane, mer Karaku graduated from Gazi University, Faculty of Economic and Administrative Sciences, Department of Public Administration in 1986. He started his career at bank in 1988 as an assistant inspector at the Board of Inspectors, where he later became an inspector. He was appointed as assistant manager to the Accounting Department in 1998, where he subsequently rose to group manager and manager. He was appointed as the manager of bank Yeniehir branch in Ankara in 2007. Serving as the manager of Human Resources Department since 24 September 2008, mer Karaku has been elected to a seat on the Board of Anadolu Sigorta on 30 March 2006. mer Karaku is also a member on Anadolu Sigorta Audit Committee.
Aysel Tacer Director Born on 07 May 1959 in Siverek/anlurfa, Aysel Tacer graduated from Marmara University, Faculty of Economic and Administrative Sciences, Department of Business Administration in 1980 and started her career at bank as a clerk in Taksim branch the same year. After becoming assistant chief at stanbul Credit Information Department in 1983; she became assistant credit specialist in 1989 and then assistant manager in 1993 at ili branch. After serving at Akatlar, ar Bakrky, Bakrky and Gneli branches as branch manager between 1996 and 2005, she was appointed to Gneli Corporate/stanbul branch as branch manager. Aysel Tacer has been elected as a Board Director of Anadolu Sigorta on 30 March 2005.
Anadolu Sigorta
2008
Annual Report
35
Emre Duranl Director Born on 03 October 1972 in Dsseldorf/Germany, Emre Duranl graduated from Hacettepe University Faculty of Economic and Administrative Sciences, Department of Business Administration in 1994 and started his career at bank as an assistant inspector at the Board of Inspectors in 1996. Currently the Capital Market Unit Manager in the Equity Participations Department at bank, Duranl serves as a Board member at Milli Reasrans T.A.., Anadolu Hayat Emeklilik A.., Yatrm Menkul Deerler A.., Portfy Ynetimi A.., and Yatrm Finansman Menkul Deerler A.., and as an auditor at Avea letiim Hizmetleri A.. Appointed as a member to the Board of Directors at Anadolu Sigorta on 30 March 2006, he is the Board Director responsible for internal systems and a member on the Audit Committee at Anadolu Sigorta.
Yaar dirsel Director Born in 1946 in ivril/Denizli, Yaar dirsel graduated from Ankara University, Faculty of Political Sciences, the Department of Economics and Finance. He started his career at bank in 1973 as an assistant inspector at the Board of Inspectors. He was appointed as assistant manager to the Galata branch in 1985 and became the manager of Gayrettepe branch in 1988. He functioned at Levent, Yenicami and ili branches as branch manager between 1989-1997, then became the Deputy Chief Executive Officer in 1997. Between 1998-2004, he was appointed as Chief Executive Officer of Factoring Financial Services. After his retirement in 2004, Yaar dirsel has been elected as a Board Director of Anadolu Sigorta on 30 April 2008.
Mustafa Nail Yac Director Born on 07 May 1950 in Gdl/Ankara, Mustafa Nail Yac graduated from Ankara University, Faculty of Law. After completion of his internship in law, he joined bank as an assistant inspector at the Board of Inspectors in 1974. He became the assistant manager of Corporate Loans Department in 1985 and Non-Performing Loans Department in 1986. He was appointed to Mersin branch as a manager in 1988 and became the manager of Credit Information and Financial Analysis Department in 1990. He functioned at RhtmKadky and Yenicami branches as branch manager between 1993-2002. He was appointed to bank's Board of Directors as a member in 2002. After his retirement in 2008, Mustafa Nail Yac has been elected as a Board Director of Anadolu Sigorta on 30 April 2008.
AUDITORS
Mehmet ahin Karabilgin Auditor Born on 20 January 1957 in Adana, Mehmet ahin Karabilgin graduated from Anadolu University, Faculty of Economics, Department of Economics in 1993. He started his career at bank in 1983 as a clerk in Pozant branch and was promoted to assistant chief in Adliye branch in 1987, to chief in Pozant branch in 1989, to II. Manager in skenderun branch in 1996, and branch manager of Erzin branch in 1997. Having served as an assistant manager in Orta Anadolu Regional Department from 2001, and as the branch manager of Giresun branch from 2005, he was appointed as the group manager to the Financial Operations Department in 2006. Mehmet ahin Karabilgin has been appointed as the branch manager of Kdz. Ereli branch, a position he currently holds and has been elected as an auditor of Anadolu Sigorta on 27 March 2008.
Zeliha lke Selvi Auditor Born on 12 July 1962 in Grdes/Manisa, Zeliha lke Selvi graduated from Middle East Technical University, Faculty of Engineering, Department of Computer Engineering in 1985 and started her career at bank as a software specialist trainee at zmir Electronic Data Processing Center the same year. She became an assistant programmer at the Head Office Organization Department in 1986. After serving at zmir Electronic Data Processing Center from 1988 until 1992; she started working at the Head Office IT Department in 1992. She was appointed as an assistant manager at the Software Development Department in 1999, and promoted to group manager position on 29 March 2005. Zeliha lke Selvi has been appointed as an auditor of Anadolu Sigorta on 27 April 2006.
Ali Tolga nal Auditor Born in 1971 in zmir, Ali Tolga nal graduated from Bilkent University, Faculty of Engineering, Department of Industrial Engineering in 1993. He received his master's degree in economics from Bilkent University, Institute of Economics and Social Sciences in 1995. He joined bank in 1996 as an assistant inspector at the Board of Inspectors. He was appointed to the Accounting Department as an assistant manager in 2005 and then as group manager in 2008. Ali Tolga nal has been elected as an auditor of Anadolu Sigorta on 30 October 2008.
Information on Board of Directors Meetings The Board of Directors holds meetings on a monthly basis, while interim meetings are also convened as and when necessitated by the Company's business and affairs. Topics to be discussed at the meetings are determined in the meeting agenda and the agenda items are compiled according to proposals received from the head office departments. During the meetings, Executive Committee reports are also discussed, while other topics raised by the members so as to inform the Board of Directors are addressed in the time allocated for any other business. Consisting of the agenda, proposal, informative notes and reports, member files are distributed to all the members nearly four days in advance of the meeting date. The Board of Directors met 13 times during 2008. Seven of these meetings were held with full participation of the members, whereas two members were unable to attend three of the meetings, and one member was absent in three other meetings.
Ayen Ayan Board of Directors Reporter
36
Anadolu Sigorta
2008
Annual Report
Executive Committee
Mustafa Ali Su CEO Please see page 34 for Mustafa Ali Su's curriculum vitae.
Musa lken I. Deputy Chief Executive Officer Claim Management Motor Claims Legal Affairs and Subrogation Born on 20 August 1953 in Tarsus, Musa lken graduated from the stanbul Academy of Economic and Commercial Sciences, Department of Economics and Public Finance. He began his career at Anadolu Sigorta Claims Department as a clerk on 01 November 1978 and subsequently rose to the positions of assistant service officer on 01 January 1984, service officer on 01 January 1988, Accident Department service officer on 07 February 1990, II. manager on 01 January 1991, assistant manager on 01 August 1992, manager on 01 May 1993, Marmara Regional Manager on 06 June 1997 and Kadky Regional Manager on 01 June 2002. Having served in the last position until 31 July 2004, Musa lken became a Deputy Chief Executive Officer on 01 August 2004, and I. Deputy Chief Executive Officer on 01 February 2008.
Mehmet Metin Ouz Deputy Chief Executive Officer Motor Insurance Health Insurance Fire and Engineering Insurance Born on 04 April 1959 in anakkale, M. Metin Ouz graduated from Middle East Technical University, Faculty of Arts and Sciences, Department of Physics and Mathematics, and holds a master's degree from Marmara University Institute of Banking and Insurance, Department of Insurance. M. Metin Ouz began his career at Anadolu Sigorta as a clerk in the Accident Department on 16 October 1985 and subsequently rose to assistant service officer on 01 February 1989, service officer on 01 February 1992, II. manager on 01 February 1995, assistant manager on 01 May 1997, manager on 01 March 1998, and Motor Insurance Manager on 01 June 2002. Having served in the last position until 31 July 2004, M. Metin Ouz became a Deputy Chief Executive Officer on 01 August 2004.
Filiz Tayumruk Deputy Chief Executive Officer Human Resources and Training Public Relations Born on 26 June 1967 in stanbul, Filiz Tayumruk graduated from Anadolu University, Faculty of Business Administration, Department of Business Administration. She started her career at Anadolu Sigorta as a clerk at the Fire Department on 16 September 1985. She rose to assistant service officer at the same department on 01 January 1990. She was appointed to the Claims Department on 01 February 1993 as service officer, then rose to II. manager on 01 May 1996, and assistant manager on 01 March 1998 at the same department. She became a manager at the Training Department on 01 June 2000 and was then appointed as the Human Resources and Training Manager on 01 August 2004. She was appointed as Deputy Chief Executive Officer on 01 February 2008.
Mehmet Levent Snmez Deputy Chief Executive Officer Marine and Liability Insurance Corporate Insurance Born on 22 June 1962 in Ankara, M. Levent Snmez graduated from stanbul Technical University, Faculty of Maritime Studies, Department of Marine Engineering in 1985, got his master's degree in Contemporary Management Techniques from Marmara University & Maine University and completed the SITC (Swiss Re) Marine Insurance program. Having participated in various training programs in Turkey and abroad, M. Levent Snmez also holds Chartered Insurance Institute / London Dip. CII degree. He started his career at Anadolu Sigorta as assistant risk management specialist at the Marine Department on 01 May 1991, where he subsequently rose to senior assistant risk management specialist on 01 March 1994, II. manager on 01 May 1996, assistant manager on 01 October 1997, and manager on 01 May 1999. M. Levent Snmez has become Bakrky Regional Manager on 01 June 2002 and Kadky Regional Manager on 01 August 2004. He has been appointed as Deputy Chief Executive Officer on 01 February 2008.
Anadolu Sigorta
2008
Annual Report
37
H. Efe Gnde Deputy Chief Executive Officer Agencies and Marketing Regional Offices Born on 08 January 1960 in Ankara, H. Efe Gnde graduated from Gazi Teacher-Training Institute, Department of Mathematics and from Middle East Technical University Faculty of Economic and Administrative Sciences, Department of Political Science and Public Administration. Gnde began his career at bank as an inspector trainee at the bank's Board of Inspectors on 01 December 1986 and rose to the position of grade 3 inspector before becoming assistant accounting manager on 31 October 1996, and group manager in the same section on 24 February 2000. Having served in this last position at bank until 30 April 2005, H. Efe Gnde became a Deputy Chief Executive Officer at Anadolu Sigorta on 01 May 2005.
Tahsin Erdoan Deputy Chief Executive Officer IT Software Development Organization Born on 20 May 1956 in Srmene, Tahsin Erdoan graduated from Hacettepe University Faculty of Science, Department of Mathematics. He began his career at Anadolu Sigorta as a programmer in the Data Processing Department on 15 September 1980 and subsequently rose to senior programmer on 01 January 1987, chief programmer on 21 April 1989, Organization and Data Processing Department II. manager on 01 May 1991, assistant manager on 01 February 1993, manager on 01 May 1996, and Data Processing Manager on 01 June 2002. Having served in this position until 31 August 2005, Tahsin Erdoan became Deputy Chief Executive Officer on 01 September 2005.
Erdin Gkalp Deputy Chief Executive Officer Reinsurance Actuarial Consultancy Born on 26 July 1967 in Ankara, Erdin Gkalp graduated from Kuleli Military High School and Turkish Military Academy, Department of Business Administration. He then got his master's degree in insurance from Marmara University, Institute of Banking and Insurance. During his employment with Anadolu Sigorta, he earned the Atatrk scholarship granted by TSRB (Association of the Insurance and Reinsurance Companies of Turkey) and pursued his studies abroad. Having started his career at Anadolu Sigorta as assistant risk management specialist at the Marketing Department on 01 May 1991, Erdin Gkalp was appointed to the Reinsurance Department on 23 September 1991 with the same title. In that department, he rose to senior assistant risk management specialist on 01 March 1994, and to II. manager on 01 May 1996. Promoted to assistant manager position on 01 October 1997, he was appointed to the Marketing Department. Erdin Gkalp was appointed to the Accident Department on 26 December 1997 with the same title. He rose to the position of manager and was assigned to the Reinsurance Department on 01 July 2001. Erdin Gkalp has been appointed as Deputy Chief Executive Officer on 01 February 2008.
Fatih Gren Deputy Chief Executive Officer Accounting and Finance Purchasing Support and Premises Born on 11 November 1969 in Ankara, Fatih Gren graduated from Ankara University, Faculty of Political Sciences, Department of International Relations. He worked as a specialist at Retail Banking and Agricultural Loans Departments at Ziraat Bank between 1991 and 1994. Having joined Anadolu Sigorta as an assistant inspector on the Board of Inspectors on 01 November 1994, Fatih Gren rose to senior inspector on 01 November 1997 and grade 3 inspector on 01 November 1998. He was appointed as assistant manager to the Accounting and Finance Department on 01 June 2000, where he was promoted to manager position on 01 August 2004. Fatih Gren has been appointed as Deputy Chief Executive Officer on 01 February 2008.
38
Anadolu Sigorta
2008
Annual Report
Heads of Units Under the Internal Audit Systems
Dr. brahim Erdem Esenkaya Chairman of the Board of Inspectors Born on 03 November 1969 in stanbul, brahim Erdem Esenkaya graduated from stanbul University, Faculty of Political Sciences, Department of Public Administration. He then completed a master's degree without dissertation in the graduate program for the management of financial institutions at stanbul University, Faculty of Business Administration, Institute of Business Administration. He earned his master's degree in business management and organization, and his doctorate degree in accounting and auditing from the Institute of Social Sciences at the same university. He started his career at Anadolu Sigorta as an assistant inspector at the Board of Inspectors on 01 May 1995, and then rose to senior assistant inspector on 28 April 1998 and to grade 3 inspector on 01 May 1999. He was appointed to the Accounting and Finance Department on 01 June 2001 as an assistant manager and to Internal Audit Department on 01 January 2005 as a manager. brahim Erdem Esenkaya has been appointed as the chairman of the Board of Inspectors on 01 June 2007. mer Altun Risk Management and Internal Control Manager Born on 31 October 1970 in Malatya, mer Altun graduated from Hacettepe University, Faculty of Science, Department of Statistics. He began his career at Anadolu Sigorta as a clerk at the Accounting and Finance Department on 01 May 1997, where he subsequently rose to assistant risk management specialist on 01 February 1998, senior assistant risk management specialist on 03 March 2000, grade 3 specialist on 01 June 2002, grade 2 specialist on 01 July 2004, and assistant manager on 01 December 2005. On 01 February 2008, mer Altun has been appointed as a manager to the Risk Management and Actuarial Department, which was renamed to Risk Management and Internal Control Department within the scope of the restructuring of internal systems organization.
Board of Directors
Corporate Governance Committee Burhan Karagz B. Daver Orhon Coordination Department to the Board of Directors Board of Auditors
Organization Chart
Audit Committee Emre Duranl mer Karaku
Chief Executive Officer Mustafa Ali Su
Risk Management and Internal Control Department
Anadolu Sigorta
I. Deputy Chief Executive Officer Musa lken
Deputy Chief Executive Officer M. Metin Ouz
Deputy Chief Executive Officer H. Efe Gnde
Deputy Chief Executive Officer Tahsin Erdoan
Deputy Chief Executive Officer Filiz Tayumruk
Deputy Chief Executive Officer M. Levent Snmez
Deputy Chief Executive Officer Erdin Gkalp
Deputy Chief Executive Officer Fatih Gren
Legal Consultant Samim nan
Motor Insurance Department Agencies and Marketing Department Information Technologies Department Labor Law Counsellor mer Ekmeki
Marine and Liability Insurance Department
Actuarial Consultancy
Accounting and Finance Department
2008
Headquarters Consultant Ahmet Hamdi Baar
Health Insurance Department Regional Offices Software Development Department
Corporate Insurance Department
Reinsurance Department
Purchasing, Support and Premises Department
Fire and Engineering Insurance Department
Southern Anatolia Western Anatolia Marmara Central Anatolia Western Black Sea Black Sea Mediterranean stanbul Kadky Organization Department TRNC Branch
Annual Report
Claims Department
Legal Affairs and Subrogation Department
Motor Claims Department
Human Resources and Training Department
Public Relations Department
39
40
Anadolu Sigorta
2008
Annual Report
Anadolu Anonim Trk Sigorta irketi

An Assessment of the Board Directors by the Corporate Governance Committee
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. Taking into consideration that there are no non-corporate ultimate shareholders with a controlling interest in our Company, it is thought that the Board Directors naturally possess the advantage to act independently and therefore, to be impartial in their decisions, upholding the interests of our Company and stakeholders above everything else. The Board of Directors meets regularly and at least monthly as pre-scheduled, and at any time as and when deemed necessary. The Board of Directors met 13 times during the reporting period. The Board Directors, in principle, attend every meeting. Care is paid to determine the Board meeting date during the immediately preceding meeting, followed by written invitation. It is intended to set the meeting date so as to allow all Directors to participate, and save for unforeseeable exceptional events, the Board meetings are held with the participation of all Directors. The draft Board meeting agenda is prepared by the CEO and finalized in line with the proposals of the Chairman and the Board Directors. Utmost care is paid to ensure that the information and documents about the topics covered in the Board meeting agenda are made available for the examination of the Directors at least seven days in advance, and when such timing cannot be met, efforts are spent to ensure equal flow of information to the Board Directors. Each Director is entitled to one vote and none has weighted vote or affirmative/negative vetoing rights. Pursuant to the articles of association, the Board of Directors convenes on the basis of absolute majority and makes decisions with the absolute majority of Directors present in the meeting. Pursuant to the articles of association, our Board of Directors is authorized on matters of importance such as; Establishment and abolition of agencies, branches and representation offices, and determination of the terms and conditions applicable therefor, Being a proxy, leading insurer, representative or agency of other insurance and reinsurance companies, Setting the dates for commencing and terminating activities in various insurance branches, Determination of the essential conditions of insurance and reinsurance agreements, Execution and termination of all kinds of reinsurance agreements, Entering into financial and industrial undertakings and initiatives, founding companies in relation to insurance business, participating in companies that are or will be established for this purpose, Buying and selling immovables, and constructing buildings.
Anadolu Sigorta
2008
Annual Report
41

The Board of Directors fulfills its responsibilities remaining outside the scope of its basic functions taking into consideration the opinions and recommendations of executive bodies and committees. Such responsibilities include, but are not limited to the following: Approving the Companys annual budget and business plans, Preparing the Companys annual reports and finalizing the same to be presented to the General Assembly, Ensuring that the General Assemblies are held in compliance with the legislation and the Companys articles of association, Taking necessary action in relation to General Assembly decisions, Overseeing the use of substantial amounts that are in excess of 10% of the total assets in the Companys most recent balance sheet, Approving the executives career plans and rewarding provided to them, Determining the Companys policies about Shareholders, stakeholders and Public Relations, Determining the Companys disclosure policy, Setting the codes of ethics for the Company and its employees, Establishing the operating principles of committees; ensuring their efficient and productive functioning, Taking necessary action so as to ensure the Companys organizational structure responds to current circumstances, Examining the activities of former boards of directors. The Board of Directors consists of nine Directors, which number enables efficient organization of the activities of the Board. Since they represent legal entities, the Directors do not have to be shareholders pursuant to the legislation on account of their Board of Directors service. The obligation to deliver shares as collateral imposed on the Directors is fulfilled by the legal entities they represent. There are no Directors holding any shares in the Company. Although there are no set rules on the Directors undertaking other duties outside the Company, the 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. When fulfilling its decision-making function, the Board of Directors acts on the basic consideration of: Maximizing the fair value of the Company, Pursuing the Company operations so as to ensure long-term and stable earnings for our Shareholders, Maintaining the delicate balance between the Shareholders and the Companys need to grow. In the formation of the Board of Directors, care is given to; Ensure that the nominees are present in the meeting at the time of election to the seats on the Board of Directors, Inform the Shareholders about the nominees, Allow Shareholders to ask questions to the nominees, Inform the Shareholders, during the General Assemblies, on other companies on the boards of which Director nominees serve and on the compliance or non-compliance to internal regulations set exclusively on this topic.
42
Anadolu Sigorta
2008
Annual Report

Directors just starting to serve on the Board are offered an orientation program covering the following at a minimum: Introduction with our executives and visits to the Companys units, The CVs and performance assessments of our executives, Strategic goals, current status and issues of the Company, Market share, financial structure and performance indicators of the Company. Pursuant to legislation, general managers of insurance companies must have graduated from a four-year university minimum, and have at least ten years experience in any one of insurance, banking, economy, business management, accounting, law, finance, mathematics, statistics or engineering fields. More than half of the Board Directors must have graduated from a four-year university minimum, and have knowledge and experience in at least one of the fields mentioned above. The Directors possess these qualifications and have; Satisfactory knowledge and skills in banking and insurance business, The skill to read and analyze financial statements and reports, Basic knowledge about the legal regulations governing our Company, and about general market circumstances, The will and the opportunity to regularly attend the Board meetings for the period of time for which they are elected to serve. Board Directors allocate sufficient time for the Company affairs, and exercise their authorities cautiously and within the framework of good faith and equipped with all necessary knowledge to ensure full satisfaction of their duties. The Board of Directors adopted the necessary measures for preventing undisclosed information and/or trade secrets from being disseminated out of the Company.
B. Daver ORHON Deputy Chairman of the Board and Member of the Corporate Governance Committee
Burhan KARAGZ Chairman of the Board and Head of the Corporate Governance Committee
Anadolu Sigorta
2008
Annual Report
43

Committees Operating within Anadolu Sigorta
CORPORATE GOVERNANCE COMMITTEE Objective Overseeing the Companys compliance with corporate governance principles, undertaking improvement work thereon and submitting proposals to the Board of Directors. Members Burhan Karagz, Board Director (Head) B. Daver Orhon, Board Director Formation The Committee is formed, subject to corporate governance principles, by the Board of Directors and primarily from amongst Directors. As and when needed, non-Director individuals who are specialized in their respective fields can also be assigned to the committee. The CEO does not take place in this Committee. The Committee consists of a minimum of two members. The majority of the Committee members consist of non-executive Board Directors. The head of the Committee is elected from amongst independent Directors. The term of office for the Corporate Governance Committee is, in essence, parallel to that of the Board of Directors; the Committee, however, will remain in office until the completion of the predetermined compliance 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. Following the Committee meetings, the head of the Committee provides written reports on the activities of the Committee to the Board of Directors, and either informs the members of the Board Directors, or provides them to be informed, on the Committees meeting minutes. Activities In essence, the Corporate Governance Committee; Establishes whether the corporate governance principles are implemented in the Company, as well as the grounds for non-implementation, 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 the practices; Coordinates the tasks of the Investor Relations Unit; Works to create a transparent system regarding identification, assessment, training and rewarding of nominees eligible for the Board of Directors, and establishes related policies and strategies; Formulates recommendations regarding the number of Board Directors and executives (CEO, Deputy Chief Executives, Managers, Assistant Managers, personnel directly reporting to Chairman of the Board of Directors or the CEO, as well as other people such as advisors); Sets and oversees the approaches, principles and practices regarding performance evaluation, career planning and rewarding of Board Directors and executives.
44
Anadolu Sigorta
2008
Annual Report

Committees Operating within Anadolu Sigorta
AUDIT COMMITTEE Objective Overseeing the operation and efficiency of the Companys accounting system, public disclosure of financial information, independent auditing of the Company, and internal control system. Members Emre Duranl, Board Director (Chairman) mer Karaku, Board Director Formation The Audit Committee is formed, subject to corporate governance principles, by the Board of Directors from amongst its Directors. 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. Two employees holding titles are assigned by the Board of Directors for ensuring coordination between the Audit Committee and the Company. The term of office for the Corporate Governance Committee is, in essence, parallel to 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. Following the Committee meetings, the head of the Committee provides written reports on the activities of the Committee to the Board of Directors, and either informs the members of the Board Directors, or provides them to be informed, on the Committees meeting minutes. Activities In essence, the Audit Committee; Audits the conformity of periodical financial statements and notes to be publicly disclosed to applicable legislation and international accounting standards, and reports the same to the Board of Directors, by incorporating the opinion of the independent audit firm; Takes necessary action to ensure sufficient and transparent conduct of any and all internal and independent audits; Oversees the operation and efficiency of the Companys accounting system, public disclosure of financial information, independent auditing of the Company, and internal control system. The Committee also supervises the selection of the independent audit firm, preparation of audit contracts and initiation of independent audit process, and every phase of the work carried out by the independent audit firm; Gives approval to the selection of, from the independent audit firm and the services to be supplied from them which the Company will obtain service, and submits the same to the Board of Directors. The Committee prepares a report as to whether there exists any matter that might impair the independence of the independent audit firm prior to its submission to the Board of Directors. Examines the complaints received by the partnership regarding the Companys accounting, internal control system and independent audit, and ensures examination of related notifications by the Company employees subject to confidentiality principles; Oversees compliance with internal regulations and policies aimed at preventing conflicts of interest that might arise between the Directors, executives and other employees, and at preventing abuse of trade secret information.
Anadolu Sigorta
2008
Annual Report
45

An Assessment of the Operation of the Independent Audit Firm in 2008 Activity Period via the Audit Committee
Formation and Independence of the Independent (External) Audit Firm Periodic financial statements and their footnotes are prepared in a manner to represent the actual financial status and within the framework of existing legislation and insurance business accounting standards. They are subjected to independent auditing and publicly disclosed at time intervals stipulated by the legislation. The independent audit firm we work with is alternated at certain intervals, and an independent audit firm is selected for a maximum of 5 fiscal years for regular and/or special audit. At least two years are allowed to pass before re-signing a regular and/or special audit contract with the same independent audit firm. External auditing of our Company is conducted in a fully independent manner, and the external auditor performs the relevant tasks adhering strictly to the principles of accuracy, professional integrity and straightforwardness, without being involved in any conflicts of interests that might restrict its independence. The external auditor auditing our Company acts independently and also refrains from any activity that might lead third parties to doubt its independence. No service is obtained, directly or indirectly from the firms we obtain independent audit service, save for the audit service itself, and no fees are paid to these firms, apart from the reasonable audit fee at current market conditions. The factors that contribute to the independence of the firms we obtain independent audit service from are the existence of our Audit Committee, the efficient accounting and internal audit system in place at the Company, and strongly established ethical rules attaching importance to correct public disclosures. Independent conduct of the external auditing of our Company testifies to the accuracy and veracity of our financial statements in the face of the public, and is perceived as guarantee by our Shareholders. The independent opinion of the external auditor further strengthens our Companys corporate image in that they enhance the reliability of our financial statements. Having made it a principle to undertake public disclosure and to assure transparency in line with its ethical values, our Company earns the trust of its investors by giving importance to independence of the external auditor, and therefore, aims to serve the development of national economy by contributing to accumulation of capital.
mer KARAKU Board Director and Member of Audit Committee
Emre DURANLI Board Director and Member of Audit Committee
46
Anadolu Sigorta
2008
Annual Report

Human Resources Practices
HUMAN RESOURCES POLICY Our Company is proud to be the first national insurance company in Turkey, established in 1925 at the directives of Mustafa Kemal Atatrk. Ever since its establishment, our Company has continuously grown and developed and has been recognized and acknowledged as the grande cole of the Turkish insurance industry. Utmost importance is given to our employees as they are the ones to undertake the biggest duty in carrying out our Companys key policies. For this reason, the primary goal of our human resources policies and practices is to identify our Companys needs for personnel in line with its objectives and strategies and assist the creation of human resources that are open to change and are focused on continuous success by recruiting high-quality people, motivating them, evaluating their performance, and encouraging interaction and communication among individuals and groups. CAREER DEVELOPMENT There are three main career paths at our Company the startup positions of which are clerk, assistant specialist, and assistant inspector respectively. Anyone who starts out in one of these positions has opportunity to advance to the most senior of management positions in the Company. Employees who start out as an assistant specialist or assistant inspector may advance to full specialist or be promoted to a managerial position provided they demonstrate the performance required of them within clearly defined periods of time. Those who start out as clerks become entitled to sit for the assistant superintendent qualifying exam after they have worked for a specified period of time and have successfully satisfied performance criteria. Those who successfully pass this exam advance along a career path in line with the Companys promotion procedures and can rise to middle or senior management positions. In our awareness that newly recruited personnel are part of our team and that there may be a variety of competencies of which they will be in need in order to develop their careers in addition to the ones they already possess to support their personal development, we provide them with training opportunities. PERFORMANCE MANAGEMENT Our employees are evaluated twice a year in line with specific performance criteria. On the basis of the results of these performance evaluations, an employees training needs are identified and a career plan is developed. JOB SECURITY Our employees enjoy a substantial degree of job security within the framework of unionization composed by our Company and Union. COMPENSATION POLICY Our employees salaries are adjusted in accordance with the terms of a collective bargaining agreement that is renewed every two years period and with annual raises based on current conditions. Salaries are paid in advance at the beginning of every month. Employees also receive four bonuses a year, each equal to their one-month salary, as well as half pay on religious holidays. In addition to their salaries and bonuses, employees receive extensive fringe benefits as well.
Anadolu Sigorta
2008
Annual Report
47

SOCIAL BENEFITS Our Companys employees are entitled to a variety of social rights and benefits in keeping with current conditions. The healthcare costs of our employees and their dependant family members are covered by our Company under its Healthcare Assistance Regulations. All our personnel are able to fulfill all their healthcare needs free of charge through the Companys outsourced healthcare system. Employees are provided with free transportation services to and from work and with lunches as well. RETIREMENT BENEFITS Our employees are covered by two private pension funds that have been set up in accordance with the Companys special status. The pensions paid by these funds enable former employees to enjoy a good standard of living during their retirement years. TRAINING Technical and personal development trainings required by our employees jobs are provided in line with their career progression plans by in-house and external sources. Orientation trainings are organized for speeding up the adjustment of new-hires to the Company and for equipping them with the necessary knowledge base, while existing employees are offered development trainings aiming to enhance their knowledge and skills in line with corporate policies. Training has special importance at Anadolu Sigorta owing to the fact that our Company is an organization that fills management positions from its own resources. Therefore, the Human Resources and Training Department organizes training programs in every field and scope needed, and has espoused it as a primary objective to help employees to develop their existing job competencies while also readying them for their future responsibilities. E-LEARNING Within the scope of the e-learning project, the Companys training portal enabling remote learning via the web site has been online since 01 September 2008 and at the address www.supersigortaciokulu.com. Named Super Insurer School, the training portal offers training modules on insurance that can be accessed by our employees, agencies and bank branches at any time they might need without any time restrictions and from anywhere with internet access. The Super Insurer School covers a total of 15 training contents that break down as 11 insurance branch trainings, 3 screen trainings, and 1 personal development training. Total number of registered users at the Super Insurer School was 8033 as at 31 December 2008. The portal will be constantly updated and revised in line with the needs of our employees and delivery channels over time, and will offer almost the entirety of training requirements. HIRING REQUIREMENTS Personnel recruitments are made from the following sources: Job application pool Internet (Anadolu Sigorta website announcements) Newspaper advertisements HR consultancies, universities, etc.
48
Anadolu Sigorta
2008
Annual Report

The basic qualifications required of all candidates are indicated below: Turkish citizenship Male candidates for clerk positions must have completed their military service. Male candidates for Assistant Inspector or Assistant Specialist positions must have completed their military service or else have a deferment Educational background sufficient for the position Competencies sufficient for the position No compulsory service obligations towards any government office, agency, or organization No prior conviction and sentence to imprisonment for the commission of any infamous crime, including those that have been pardoned No mental or physical impairment that would prevent the performance of duties (except for those hired into disabled-person positions). The qualifications given above are general and are required of all candidates. Additional qualifications may be applicable depending on the specific position being recruited for. Every kind of insurance services to the companies that are in our Companys risk group are provided with the same procedure and policies of the services to all other third parties. The details of our Companys transactions in 2008 with the risk group and related explanations are presented in the notes 34.2, 34.4, 44 and 45 to the financial statements presented within the annual report.
Anadolu Sigorta
2008
Annual Report
49

The Companys Transactions with the Risk Group
Every kind of insurance services to the companies that are in our Companys risk group are provided with the same procedure and policies of the services to all other third parties. The details of our Companys transactions in 2008 with the risk group and related explanations are presented in the notes 34.3, 34.4, 44, 45 of the Auditors Report.
50
Anadolu Sigorta
2008
Annual Report

Agenda of the Annual General Meeting
1. Election of the Presiding Board and authorization of the Presiding Board to sign the minutes of the General Meeting 2. Presentation of and discussion on the Board of Directors and auditors reports for 2008 fiscal year 3. Examination and ratification of 2008 financial statements and individual acquittal of the Board of Directors and Auditors from their fiduciary responsibilities for the transactions and accounts in 2008 4. Presentation of information on dividend distribution policy and resolution related to dividend distribution 5. Approval of the memberships of individuals elected, as per Article 315 of the Turkish Commercial Code and article 18 of the articles of association, to the seats vacated during the reporting period on the Board of Directors 6. Informing the General Assembly on the changes that occurred with regard to statutory auditors during the reporting period 7. Election of the Board Directors and determination of their terms of office 8. Election of statutory auditors 9. Determination of remuneration for the members of the Board of Directors and for statutory auditors 10. Determination of the independent audit company 11. Wishes and closing
Anadolu Sigorta
2008
Annual Report
51

Board of Directors Report
Dear Shareholders, Before presenting the 2008 balance sheet and income statement covering the Companys 83rd period of operation for your review and comments, we deem it useful to recap the changes and developments in economic life and the insurance industry. The global crisis that has been going on since the last quarter of 2008 led to deceleration in economic growth. 5.2% in 2007, the worldwide growth figure is estimated to decline to 3.4% in 2008 and is projected to fall below 1% in 2009. Economic rescue packages with a total worth of approximately USD 6 trillion were formulated all over the world as a precaution against the crisis. The global economic crisis gave rise to layoffs in numerous sectors across the world from banking to automobile industry, from IT and pharmaceutical to manufacturing companies. In the process, China upped its GNP 9%, capturing the highest increase in the global economic market, while India and Russia followed with respective increases by 7.3% and 6.2%. During 2008, the economies of EU countries and USA grew nearly 1%. In the first nine months of 2008, the Turkish economy achieved 3% growth year-on. The growth in the GDP that stood at 6.7% in the first quarter of the year with the contribution of the low base in the same period of the prior year suffered a pronounced decline in the second and third quarters of the year with the added impact of the global crisis and was realized as 2.3% and 0.5%, respectively. Annual consumer inflation stood at 10.06% as of December 2008. Though the increase in food prices maintained its high level of the recent years in 2008, there was some decline owing to the combined effect of the betterment in domestic production and the decrease in international prices. As a result of the high increases in items other than fuel oil, energy prices continued to go up despite the significant reduction in oil prices in the last period of the year. Each of these developments has been a factor in the sustained increase in inflation in 2008, resulting in failure to reach the 4% target. In 2008, the course of exchange rates was affected by the increased risk perception, deterioration in funding conditions, and the developments in EUR/USD parity. As at year-end 2008, Turkish lira lost value by 34.77% against US dollar and by 17.46% against euro. On the other hand in the insurance sector, as the global crisis increased its depth, the companies started questioning the correctness of their asset management strategies, the reliability of their financial analysis models and credit ratings, and the adequacy of the provisions they set aside. The uncertainty of the market compels the insurance companies to act more cautiously both in their investments and in their underwriting policies. Based on the published data in 2008, the worldwide insurance industry continued to expand in 2007 and the worldwide premium production in real terms registered 3.3% increase year-on. The greater portion of this increase was contributed by the life branch that went up 5.4%, whereas premiums in non-life branches rose merely 0.7%. Having consistently achieved a growth above the inflation in the recent years, the Turkish insurance industry entered into a period of standstill in 2008 displaying a growth that lags behind inflation. TRY 9,600 million in nonlife branches as at year-end 2007, premium production increased by 6.24% and went up to TRY 10,199 million at the end of 2008.
52
Anadolu Sigorta
2008
Annual Report

Board of Directors Report
Another important development in the reporting period concerning the insurance industry was the increase in foreign capital inflow into the industry in a manner similar to the prior year. Following the agreement reached for the sale of 50% stake in AXA Oyak Holding A.. to the AXA Group, TEB Sigorta A.. has been acquired by Zurich Financial Services Group, Ko Allianz Sigorta A.. and Ko Allianz Hayat ve Emeklilik A.. by Allianz, and Ankara Emeklilik A.. by Aegon. For the insurance industry, 2008 has been a year in which numerous changes and new practices were introduced. Pursuant to the Insurance Law no 5684 published in the Official Gazette issue 5684 dated 14 June 2007, and the Regulation on Technical Provisions of Insurance, Reinsurance and Pension Companies and Assets in Which Such Provisions Shall Be Invested issued in connection with the said law, certain arrangements have been introduced for the computation of technical provisions from 01 January 2008. The primary new practices imposed in this frame include setting aside provision for unexpired risks, the changed calculation method for the provision for unearned premiums, and the implementation of actuarial chain ladder method in outstanding claims. While our Company registered TRY 1,161,386 thousand in premium production in 2008, its claim payments totaled TRY 685,304 thousand and the combined loss/premium ratio was in the order of 78.7%. In 2008, the Companys total shareholders equity stood at TRY 607,991 thousand, and its assets grew 9.4% and rose to TRY 1,534,376 thousand. Our investment income was TRY 176,944 thousand in value, 72% of which was generated on income from financial investments. As of end 2008, the Companys technical profit displayed a staggering increase by 346% and went up to TRY 96,671 thousand, whereas gross profit was also significantly up by 82% and reached TRY 140,723 thousand. Net profit also grew by 117% after deduction of TRY 23,056 thousand in tax provision, and registered TRY 117,666 thousand. Dear Shareholders, We would like to extend our grateful thanks to our founder bank and our other Shareholders for their great support that made it possible for us to achieve these positive results in 2008, to our policyholders for their trust, to all our agents and other production sources for their collaboration, to insurance and reinsurance companies for fruitful relationships, and to all our employees for their devoted and committed efforts.
Board of Directors
Anadolu Sigorta
2008
Annual Report
53

Dividend Distribution Proposal
The Companys Dividend Distribution Policy has been publicly disclosed in the previous years; it also takes place within the Corporate Governance Principles Compliance report in the 2008 annual report. Our proposal for dividend distribution has been formulated in strict compliance with the policy presented in the Corporate Governance Principles Compliance Report attached hereto. A net profit for the current period of TRY 117,666,276 has been posted on our operations during 2008. Of this profit, TRY 538,388 consists of gains on disposal of subsidiaries and real estate, which arose during 2008 and decided by the Board of Directors to be kept under a special fund account under the liabilities so as to benefit from the exemption provisions covered in Article 5 of the Corporate Tax Law no. 5520, and decided to be used in capital increase, when necessary. In this frame, it is proposed to transfer the retained amount of TRY 538,388 from gains on disposal of subsidiaries and real estates to capital reserves, and to distribute the remaining amount of TRY 117,127,888 as follows pursuant to applicable legislation and article 58 of the articles of association of Anadolu Anonim Trk Sigorta irketi. TRY 140,184,338 (23,056,450) (7,677,723) 109,450,165 (5,472,508) 103,977,657 (20,795,532) 83,182,125 (2,400,000) 80,782,125 (8,078,213) 72,703,912 (69,204,468) (3,490,000) 9.444
1- Balance Sheet Profit 2- Tax and Financial Liabilities Provision according to article 58 of the articles of the association 3- Prior Year Losses to be Deducted according to article 58 of the articles of association Net Profit 4- Legal Reserves according to article 58/a of the articles of association Distributable Profit 5- First Dividend to Shareholders according to article 58/b of the articles of the association Residue 6- Dividends to the Personnel according to article 58/c of the articles of the association Residue 7- Extraordinary Reserves according to article 58/d of the articles of the association Residue 8- Second Dividends according to article 58/e of the articles of the association 9- 10% Legal Reserves according to article 58/f of the articles of the association Residue
In the event this proposal is accepted by the General Assembly, profit share in the ratio of 25.71% (TRY 90,000,000.-) will be distributed as first and second dividends to the Companys shareholders out of 2008 profit; of this amount, TRY 50,000,000 will be paid in cash, and the balance in the amount of TRY 40,000,000 in share certificates. As per the communiqus of the Capital Markets Board of Turkey (CMB), dividend distribution to be made in cash will be completed by 31 March 2009, and that in share certificates by 30 June 2009; the amount of TRY 9,444 that remains after the distribution of the balance sheet profit as detailed above will be added to Extraordinary Legal Reserves. The Companys Board of Directors adopted a decision to increase the Companys issued capital by TRY 75,000,000 to TRY 425,000,000; in the event that our proposals in this meeting are accepted, TRY 40,000,000 of the increase will be covered from 2008 profit share, and TRY 35,000,000 from internal sources.
54
Anadolu Sigorta
2008
Annual Report

Corporate Governance Principles Compliance Report
1. STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES Our Company firmly believes that Corporate Governance Principles are as critical as financial performance, and that putting these principles into practice bears utmost importance both for the development of national and international capital markets and for the best interests of our Company. Our Company aims to achieve compliance with these principles to the highest extent possible, and the work is underway to attain this goal. Within this scope, our articles of association do not contain any provisions stipulating; Exercise of the request for appointment of a special auditor as an individual right, Distribution of advances on dividends, Participation of stakeholders in the management of the Company, Implementation of cumulative voting system for the election to the seats on the Board of Directors, Adoption of resolutions concerning demerger or share exchange that would result in a change in the Companys capital and management structure and in its assets, buying/selling, letting or renting tangible/intangible assets or making donations or grants in substantial amounts, and providing guarantee such as suretyship, mortgage in favor of third parties. Minority rights are not represented in our Board of Directors. It is desired that principles of exceptional nature that are not yet in practice are enforced within the framework a plan and as soon as possible, although they have not led to a conflict of interest among the stakeholders to date. The assessment and determinations of the level of compliance achieved by our Company to the corporate governance principles, and opinions regarding the scope of the compliance level and ideas on its qualitative improvement are presented below. 2. SHAREHOLDER RELATIONS UNIT A Shareholder Relations Unit has been set up in the Company in 2005. Fatih Gren, Murat Tetik, Bar Hseyin afak and Cem zer have been serving in this unit. The head of the unit is Fatih Gren, Deputy Chief Executive Officer. Contact information for our employees working in this unit is as follows. Name & Surname Fatih Gren Murat Tetik Bar H. afak Cem zer Title Deputy Chief Executive Officer Manager Specialist Assistant Specialist Phone No 0 212 350 0 212 350 0 212 350 0 212 350 Electronic Address fgoren@anadolusigorta.com.tr mtetik@anadolusigorta.com.tr bsafak@anadolusigorta.com.tr ccozer@anadolusigorta.com.tr
00 02 02 01
55 55 54 64
In his position as the head of the unit, Fatih Gren reports directly to the Head of Corporate Governance Committee. This unit is active in the exercise of shareholding rights and establishes the communication between the Board of Directors and the Shareholders. In its activities, the unit reports to the Board of Directors.
Anadolu Sigorta
2008
Annual Report
55

In essence, the Shareholder Relations Unit works to; Ensure maintenance of the records about Shareholders in a healthy, secure and up-to-date manner, Respond to the Shareholders and potential investors written information requests about the Company, apart from those that are not publicly disclosed, are of a confidential and/or commercial secret nature, Ensure that the General Assembly Meetings are convened in accordance with the applicable legislation, the articles of association and other internal regulations, Prepare the documents the Shareholders could make use of in the General Assembly, Ensure that the results of the voting are recorded and the reports thereon are sent to the Shareholders, Observe and comply with all considerations related to public disclosure, including the legislation and the Companys disclosure policy, Ensure representation of our Company in investor relations meetings organized in Turkey or abroad by international establishments through participation in such events, Prepare, and update as necessary, the presentation materials to be used in the meetings. 3. SHAREHOLDERS EXERCISE OF THEIR RIGHT TO OBTAIN INFORMATION In 2008, all oral information queries received from researchers and our investors in relation to our Company and/or to 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 16 investor meetings were held in 2008, out of which 11 were made with foreign investment companies. In addition, the Company participated in two investors conferences in the reporting period, one in Turkey and one abroad, during which 24 one-on-one meetings were held with fund managers from various international investment companies. All information queries of our Shareholders are answered, apart from those that are trade secrets or undisclosed information. Information queries received from our Shareholders are evaluated by our employees in the Shareholder Relations Unit and are fully and prudently responded to as soon as possible and in a manner to fairly represent the truth, subject to the limits of trade secrets and confidentiality. Information on the topics our Shareholders frequently need and developments that might affect the exercise of their rights are posted in English and Turkish languages on our website accessible at www.anadolusigorta.com.tr. Pursuant to applicable legislation, minority Shareholders are entitled to request the General Assembly to appoint a special auditor for examining certain events. In 2008, our Shareholders did not request appointment of a special auditor from the General Assembly of Shareholders. Our articles of association contain no provisions stipulating the request for appointment of a special auditor as an individual right. 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, inclusion of a provision in the articles of association stipulating such request as an individual right will be
56
Anadolu Sigorta
2008
Annual Report

taken into consideration depending on the developments, based on the concern that problems might arise in practice with regard to protection of the confidentiality of such information that is of commercial secret nature or that is not yet publicly disclosed. 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 in general, and through individual queries, in particular. The Shareholders queries in relation to the legal and commercial relationships between our Company and the real persons or legal entities with which our Company is directly or indirectly associated in terms of capital, management or auditing are also fulfilled to the extent permitted by the applicable legislation. All information that might affect the Shareholders exercise of their rights is made available to the same on the electronic medium in an updated manner, with a view to expand their right of obtaining information. 4. INFORMATION ABOUT GENERAL ASSEMBLY MEETINGS In 2008, one General Assembly meeting was convened which was the 2007 annual General Assembly meeting held on 27 March 2008. The said meeting was held with the participation of Shareholders representing 58.1% or a portion of TRY 159.9 million of our paid-in capital of TRY 275 million. While an official from the Independent Audit Company auditing the financial statements of the Company and some employees participated in the meeting, other stakeholders or media representatives did not attend the meeting. The announcement on the meeting place, date, hour, agenda, including a specimen of a proxy statement was published at least two weeks prior to the meeting date in the Turkish Trade Registry Gazette, Radikal and Referans daily newspapers, and in the ISE bulletin. Care will be paid to extend this period to three weeks minimum. Information about the meeting was also sent to holders of registered shares by registered mail return receipt requested within the same period of time. To provide direct access by all Shareholders to the information on the meeting, the same can be accessed in Turkish and English languages at our Company website at www.anadolusigorta.com.tr. Although the entries into the shareholders register are made based on a Board of Directors resolution, no deadlines were set for registration in the shareholders register so as to achieve maximum participation of the holders of registered shares to the General Assembly. Financial statements and reports including the annual report, proposal on dividend distribution, the informative document prepared on the agenda items necessary for the General Assembly, and other documents forming the basis of the agenda items, along with the latest version of the articles of association, and the amendment text and grounds if the articles are to be amended, are made available for examination by our Shareholders at our Company headquarters and branches from the announcement date of invitation to the General Assembly.
Anadolu Sigorta
2008
Annual Report
57

The said information and documents are accessible at our website at www.anadolusigorta.com.tr. During the Ordinary General Assembly held in 2008, no Shareholders exercised their right to raise questions. During the meeting, the Shareholders unanimously agreed to the proposals on; The formation of the presiding board, Not reading the annual report on the grounds that it was made available for examination by our Shareholders in advance, Reading the entirety of the statutory auditors report, the opinions section of the independent auditors report and the dividend distribution policy, Reading the headlines from the balance sheet and statement of income-loss, Dividend distribution for the year 2007, Election of the members of the Board of Directors, Election of the members of the Board of Auditors, Determination of the remuneration to be paid to the Directors and Auditors, Decision about the independent audit firm. According to our articles of association, the Board of Directors is authorized in making material decisions like; Setting up or disposing of subsidiaries and partnerships, Buying or selling real property or constructing buildings on behalf of the Company. Our articles of association contain no provisions on the adoption of resolutions concerning demerger or share exchange that would result in a change in the Companys capital and management structure and in its assets, buying/selling, letting or renting tangible/intangible assets or making donations or grants in substantial amounts,, and providing guarantee such as suretyship, mortgage in favor of third parties by the general assembly. It is believed that inclusion of provisions to that effect in the articles of association would: Decrease the efficiency in management, Adversely affect the competitive edge and result in missing important opportunities, and therefore would not bring out consequences beneficial to our Companys stakeholders. To facilitate participation in the General Assemblies, utmost attention is paid to fully comply with the points stipulated by the legislation at a minimum, and it is believed that our Shareholders are not faced with any difficulties with regard to participation in General Assemblies. To date, no feedback to the contrary was received from our Shareholders, either. Minutes of the General Assembly are delivered to the Shareholders upon conclusion of the meeting, and are made available in Turkish and English languages for electronic access at our website at www.anadolusigorta.com.tr, in order to keep non-participating Shareholders informed. Care is taken that General Assembly announcements cover: The meeting date and hour, The meeting place in a manner to avoid any confusion, Agenda, Necessary information about the agenda items, Former and current versions of the amended article(s) as approved by the related authorities, if the agenda covers any amendments to the articles of association, The body making the invitation,
58
Anadolu Sigorta
2008
Annual Report

The reason for postponement of the original meeting and the meeting quorum for the current one, if the General Assembly is summoned to reconvene upon postponement of the original one for any reason, In ordinary meeting announcements, the address at which the annual report, financial statements, and other documents related to the General Assembly can be examined. Prior to the General Assembly, our Company informs our Shareholders on the changes in the management and operational organization that took place in the previous fiscal year or are planned for the future periods. Within this scope, the following are made available at the General Assembly to be presented for examination by our Shareholders: The Companys explanation and grounds for organizational structure change, Report by the firm, if any, from which consultancy is obtained; in the absence of such a firm, information and documents prepared by our Company in relation to this matter, In the case of organization changes in subsidiaries and affiliates, annual reports and annual financial statements and proforma financial statements for the latest three fiscal years of all enterprises that are subject to organizational structure change In the preparation of the General Assembly agenda, care is paid to include each proposal under a separate heading, to word the agenda headings clearly and in a manner to avoid different interpretations, and not to insert any agenda items like others or various as also prohibited by the applicable legislation. For Shareholders who will have themselves represented in the General Assemblies in proxy, a specimen of a proxy statement is publicized along with the meeting announcements, and is also made available to Shareholders on the electronic medium. An authorized person from the Independent Audit Firm auditing the Companys financial statements is invited to the General Assemblies. The procedures and principles of voting in our Companys General Assemblies are listed below: Each Class (A) share is entitled to ten, and each Class (B) share is entitled to one vote. In the case where one share is held by multiple owners, such votes may be cast only via a joint representative. Our Shareholders may participate in the General Assemblies personally or have themselves represented in proxy. Open voting by raise of hands is employed in General Assemblies. However, upon demand by participating Shareholders representing one tenth of the capital, secret voting will be carried out. The procedures and principles of voting are also announced to the Shareholders at the beginning of the meeting. Topics that are communicated by our Shareholders to the Companys Shareholder Relations Unit, which they would like to be included in the agenda, are taken into consideration by the Board of Directors in the preparation of the agenda, as much as possible. Pursuant to the applicable legislation and to the articles of association, ordinary general meetings must be held within three months following the end of each fiscal year. Ordinary General Assembly is convened as soon as possible, and within no later than three months following the end of each fiscal year.
Anadolu Sigorta
2008
Annual Report
59

In line with our articles of association, 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. Total number of votes that may be cast during the General Assembly and the privileges enjoyed are classified on the basis of Shareholders and are provided to the Shareholders at the beginning of the meeting by means of their insertion in the list of attendants. During General Assemblies, our Shareholders are informed on the news and analyses about disputed topics on the Company that were covered by the media. Questions posed by our Shareholders to the Board of Directors or Auditors are answered, provided that such questions are essential for exercise of shareholder rights and are not trade secrets. The General Assembly Chairman chairs the meeting efficiently and in a manner to ensure that Shareholders can exercise their rights. Care is paid to answer every question raised during the General Assembly by the Shareholders during the same meeting, and to provide written answers within no more than one week, 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 auditors, and other relevant people to offer explanations on the agenda topics that are of specialty spend their best efforts to be present in the meeting. In General Assemblies, each agenda item is voted individually, and for the avoidance of doubt in relation to voting results, the votes are counted and the results are announced to the Shareholders before the General Assembly is concluded. Minutes of the General Assemblies are accessible in electronic medium in Turkish and English languages at the website at www.anadolusigorta.com.tr or in written form. 5. VOTING RIGHTS AND MINORITY RIGHTS The issued capital of our Company as of end-2005 consisted of Class (A) shares with a nominal value of TL 50 and Class (B) shares with a nominal value of TL 500, and by means of granting equal voting rights to shares that did not have equal nominal values, Class (A) shares were granted privilege in voting. While the articles of association section related to capital was amended within the framework of the Law no. 5083 on the Currency of the Republic of Turkey and Law no 5274 Concerning the Amendment of the Turkish Commercial Code during the 2005 Ordinary General Assembly held on 30 March 2006, nominal values of Class (A) and (B) shares were equalized at Kr 1. At the same General Assembly, the articles of association section concerning votes was amended as follows so as to maintain the existing privilege: Each Class (A) share is entitled to ten, and each Class (B) share is entitled to one vote. In the present situation, the Companys issued capital in the amount of TL 350,000,000 consists of Class (A) shares divided into 150 shares each with a nominal value of Kr 1 and all with a value of TL 1.5, and Class (B) shares divided into 34,999,999,850 shares each with a value of Kr 1 and all with a value of TL 349,999,998.5. Class (A) shares have no privileges other than the voting right privilege mentioned above.
60
Anadolu Sigorta
2008
Annual Report

In capital increases, new Class (A) shares are not created. There are no cross-shareholding interests between any Shareholder and the Company. Minority shares are not represented in our Board of Directors which is elected under the discretion of the General Assembly. Our articles of association do not cover the cumulative voting method. There are no upper limits with regard to the number of votes that our Shareholders are allowed to cast in the General Assemblies. Voting right arises at the time the share is acquired and there are no provisions stipulating exercise of the voting right after lapse of a certain period of time after the date of acquisition. Our articles of association contain no provisions preventing non-Shareholders from casting votes in proxy in the capacity of representatives. Shareholders may exercise their voting rights personally in the General Assemblies or via a third party that may or may not be a Shareholder. Each real person Shareholder is represented in the General Assemblies by one person only; in the case that legal entity Shareholders are represented by several people, only one may cast votes. The person empowered to vote is named in the certificate of authority. 6. DIVIDEND DISTRIBUTION POLICY AND TIMING The articles of association set the principle of distributing first dividends in the ratio and amount as determined by the Capital Markets Board (CMB) from out of the attributable profit. The dividend distribution proposals presented by the Board of Directors for the approval of the General Assembly are based on a dividend distribution policy that takes into consideration: Preserving the delicate balance between the expectations of our Shareholders and the Companys need to grow, The profitability of the Company. The dividend policy espoused by the Board of Directors is based on the principle of proposing to the General Assembly the distribution of at least 30% of the attributable profit as bonus shares or in cash. No shares are privileged in terms of getting share from the profit. No founders bonus certificates are given, nor are dividends paid to the Board Directors. Pursuant to the articles of association, our employees are paid dividends up to three times of their salaries maximum from the amount remaining after the first dividend is set aside. Care is paid to effect the dividend payments as soon as possible, and in any case, until no later than the end of the fifth month, as stipulated by the applicable legislation.
Anadolu Sigorta
2008
Annual Report
61

The articles of association contain no provisions stipulating payment of advances on dividends. There are no material donations or grants made during the reporting period or planned to be made at year-end by our Company. Our Company has made no donations for political causes. 7. TRANSFER OF SHARES The Companys articles of association contain no provisions restricting the transfer of shareholding interests. All our Shareholders including minority and foreigner Shareholders are treated equally. 8. COMPANY DISCLOSURE POLICY The disclosure policy approved by the Board of Directors is presented below. In case of any changes to the disclosure policy, the matters subject to change and the grounds therefore will be presented for information to the General Assembly after the approval of the Board of Directors, and will be disclosed to the public. General Framework Anadolu Anonim Trk Sigorta irketi makes the announcements and disclosures in relation to all necessary financial information as required primarily by regulations in relation to the Insurance Law no 5684, and by the Capital Market Legislation, the Turkish Commercial Code (TCC) and the regulations of the stanbul Stock Exchange (ISE), where the shares of the Company are traded, while observing the generally accepted accounting principles and corporate governance principles; the Company follows a detailed public disclosure and information policy within the scope above. The principal purpose of the disclosure policy is to secure that the necessary information and announcements apart from trade secrets are disclosed to Shareholders, investors, employees, customers, creditors, reinsurers and other related parties on a timely manner and on the principles of being accurate, complete, intelligible, conveniently accessible at low cost and equally available to all. Having an active approach to the adoption and implementation of corporate governance principles, the Company spends maximum effort to put into life the requirements of applicable legislation and international best practices with regard to public disclosure. Anadolu Anonim Trk Sigorta irketi Disclosure Policy has been prepared within the framework described above, approved by the Board of Directors, and put into implementation. Authority and Responsibility In our Company, the Board of Directors is authorized and responsible for monitoring, observing and improving the public disclosure policy. Executives in charge of financial management and reporting, and the Shareholder Relations Unit have been assigned with the coordination of disclosure function. The said people fulfill these responsibilities in close cooperation with the Audit Committee and the Board of Directors. Public Disclosure Work and the Methods and Tools Used The work carried out in relation to public disclosure and the tools and methods used within the framework of insurance legislation, Capital Market Legislation, TCC and other applicable legislation are presented below: Quarterly financial statements and footnotes and descriptions on related financial statements prepared in
62
Anadolu Sigorta
2008
Annual Report

accordance with the legislation along with independent auditors report published by the Turkish Treasury, Directorate General of Insurance and by the CMB, along with the independent auditors report issued at the middle and end of the year are submitted to the ISE within the legal periods stipulated, and also posted on the Companys website. The Companys financial statements are signed by independent auditors and our executives in charge of financial reporting; furthermore, members of the Audit Committee and the Company executives in charge of financial reporting provide written statement of accuracy for relevant financial statements. Quarterly financial statements and footnotes and descriptions on related financial statements prepared in accordance with the insurance legislation are provided to reinsurers upon request. Material event disclosures required to be made under the CMB legislation are submitted to the ISE within the prescribed periods of time, and to the CMB, if necessary. Necessary announcements and promulgations are made in the cases of amendments of articles of association, General Assemblies, capital increases, etc. in the Turkish Trade Registry Gazette and daily newspapers. Covering the necessary information and explanations in line with insurance regulations, an annual report is prepared every year before the General Assembly meeting and presented for examination by the Shareholders and posted on our website (www.anadolusigorta.com.tr); the related report in hard copy can be obtained from the Companys Shareholder Relations Unit at any time. There are no regular contacts or meetings set with the press. Press releases are given to the printed and visual media when deemed necessary or when responding to the demands from the members of the press is considered necessary. Press releases in printed and visual media may be given by the Chairman of the Board, Chief Executive Officer or his deputy and other authorized persons to be named thereby. Information is provided to Shareholders and other related parties through investor meetings and road shows in and out of Turkey. Such meetings and road shows carried out by the Shareholder Relations Unit are attended by the CEO, executives in charge of financial management and reporting, and Shareholder Relations Unit managers, depending on their work schedules. In necessary cases, the said contact teams can be expanded. Relevant information and primarily the financial statements are provided by the Shareholder Relations Unit via email to Shareholders, reinsurers, national and international investors, as well as to institutions issuing research reports on our Company. Investor Relations section in our corporate website (www.anadolusigorta.com.tr) covers detailed information and data. The related website is monitored and updated by the Shareholder Relations Unit. All questions forwarded by Shareholders and other concerned parties by email, mail, phone, etc. are answered as quickly as possible, under the coordination of the Shareholder Relations Unit. Other Announcements Made Announcements in addition to those mentioned above are signed within the scope of authorizations set in the Companys certificate of authorized signatures and disclosed to the public. Anadolu Sigorta Corporate Website (www.anadolusigorta.com.tr) The Companys website is actively used in providing information and public disclosure. The website contains the information and data as required by the Corporate Governance principles and regulatory authorities. The announcement for the General Assembly to be held, agenda items and information on methods of participation in the General Assembly are also available on the website, in addition to the Companys disclosure policy and codes of ethics. Utmost care is paid to keep the website up-to-date. Other Matters A Corporate Governance Committee is set up in the Company. The members of the committee are Burhan Karagz, the Chairman of the Board, and Daver Orhon, Deputy Chairman of the Board.
Anadolu Sigorta
2008
Annual Report
63

The head of the Committee is Burhan Karagz. Shareholder Relations Unit is responsible for the implementation of disclosure policy. Contact details for the members of this unit are provided on page 54, under the heading Shareholder Relations Unit. The basic principle of the Company is to secure timely public disclosure of information that is not of commercial secret nature and that remains outside the scope of the legislation, to all our Shareholders and other persons and entities that will make use of the disclosures, on the principles of being accurate, complete, intelligible, interpretable, conveniently accessible at low cost, and equally available to all. There are no relationships between the Company and the Directors and executives, apart from those arising out of their respective positions. Relationships between the Company and the Shareholders are publicly disclosed under the provisions of applicable legislation. Periodic financial statements and their footnotes are prepared in a manner to represent the actual financial status and within the framework of existing legislation and insurance business accounting standards. They are subjected to independent auditing and publicly disclosed at time intervals stipulated by the legislation. The independent audit firm we work with is alternated at certain intervals and an independent audit firm is selected for a maximum of 7 fiscal years for regular and/or special audits. At least 2 fiscal years are allowed to pass before re-signing a constant and/or special audit contract with the same independent audit firm. Care is paid to avoid obtaining consultancy service directly or indirectly from the firms we obtain independent audit service during the time we receive such audit service. The annual report is prepared in detail so as to ensure the public opinion gains access to all information about the Companys operations. The annual report is prepared by the Companys CEO and the executive of the unit responsible for the preparation of financial statements and reports, and approved by the Board of Directors. The report also includes the declaration that the financial statements fully represent the Companys financial status and that the Company fully complies with applicable legislation. The annual report covers, at a minimum: The Companys field of activity, Information on the sector in which it operates and its position in the sector, Analysis and assessments on its financial status and operating results, Degree of actualization of planned activities, Degree of satisfaction of predetermined strategic goals, Statement on the internal control system and whether this system operates healthily, Rating of the credit rating agency, if applicable, Detailed description on foreseeable risks related to operations, Analysis of transactions in substantial amount carried out within the past one year with group companies and other affiliated persons and entities, Commercial and non-commercial tasks and transactions between the Directors, executives, and Shareholders directly or indirectly possessing at least 5% of the Companys capital with the companies in which they own
64
Anadolu Sigorta
2008
Annual Report

more than 5% of the capital, or irrespective of this ratio, hold the control over or have an influence on the management. CVs, duties and responsibilities of Directors and executives, other duties undertaken thereby outside of the Company, and whether the rules set by the Company exclusively in relation to this matter are complied with, Capital market instruments of the Company that are held by the Directors and executives. Lawsuits filed against the Directors and executives in relation to their activities, Directors and executives shareholding ratios and amounts in the capital, Transactions carried out with the Directors and executives, Changes in the organization, capital, shareholding structure and administrative structure, Fines, if any, imposed due to practices contradicting with the provisions of applicable legislation, and explanation on the grounds therefore, Amendments to the legislation which might materially affect its operations, Material lawsuits brought against it, any warnings, notices or administrative fines issued by public authorities, and similar information, Dividend distribution proposal, Future expectations with regard to sales, profitability and efficiency level, market share, income generation capacity, debt/equity ratio and similar subjects, Access details for texts describing the function of General Assemblies, rights enjoyed by Shareholders and the principles regarding the exercise of these rights, Statistical data and graphs related to operations. 9. DISCLOSURE OF MATERIAL EVENTS Pursuant to CMB regulations, our Company made 28 material event disclosures in 2008. ISE or CMB required no additional explanations, nor are there any material event disclosures not made in due time. Bar Hseyin afak from Shareholder Relations Unit is assigned with monitoring and observing any matter exclusively related to public disclosure. Investors, financial analysts, members of the press and similar persons are also referred to this unit. The following are also disclosed to the public: Accounting policies implemented and the operating results representing the truth, in line with the transparency principle, Developments that are likely to affect the value of our Companys capital market instruments, without delay and within the period of time prescribed by the legislation, Provisions of relevant regulations being reserved, necessary information in case of any material changes in the Companys financial status and/or operations, or in cases where a material change is regarded imminent, Updates to reflect the subsequent changes and developments in relation to the Companys public disclosures. 10. COMPANY INTERNET SITE AND ITS CONTENT The Company has an internet site prepared in Turkish and English languages, accessible at the address www.anadolusigorta.com.tr. The Company website is actively used in providing information and public disclosure. The Company website basically features information on the Company profile, our products, agencies, online transactions, investor relations, human resources and contact information.
Anadolu Sigorta
2008
Annual Report
65

The Investor Relations section on the website covers the Companys trade registry data, shareholding and management structure, organization chart, the articles of association, Company history, policies, codes of ethics, corporate governance compliance report, financial statements and independent audit reports, annual reports, General Assemblies, privileged shares, capital increases and dividend amounts, news about our Company and frequently asked questions. The Investor Relations section is also made available in the English language, so as to allow foreign investors to make use of the same. Attention is paid to comments and suggestions received via our website and are taken into consideration at the Company. Care is paid to keep the website up-to-date. A substantial part of the information contained on the website prepared in Turkish language is also available in the website prepared in the English language. The Companys letterhead contains the website address. 11. DISCLOSURE OF NON-CORPORATE ULTIMATE SHAREHOLDERS WHO HAVE A CONTROLLING INTEREST There are no non-corporate ultimate Shareholders with a controlling interest in the Company. The current shareholding structure of the Company is presented below: Shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Others Total TRY 124,355,077 76,229,997 149,414,926 350,000,000 Ratio (%) 35.53 21.78 42.69 100.00
66
Anadolu Sigorta
2008
Annual Report

12. PUBLIC DISCLOSURE OF THOSE WHO MAY HAVE ACCESS TO INSIDER INFORMATION All necessary action is taken to prevent the use of insider information. The Company executives who are in a position to have access to information that might affect the value of capital market instruments and other persons/entities from which the Company obtains service are identified below: Entity Anadolu Anonim Trk Sigorta Trkiye Bankas A.. Trkiye Bankas A.. Trkiye Bankas A.. Trkiye Bankas A.. Trkiye Bankas A.. Trkiye Bankas A.. Trkiye Bankas A.. Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Anadolu Anonim Trk Sigorta Person Burhan Karagz Daver Orhon Mustafa Ali Su Emre Duranl Yaar dirsel Mustafa Nail Yac Nilgn skender mer Karakufl Aysel Tacer Mehmet ahin Karabilgin Ali Tolga nal Zeliha lke Selvi Musa lken Mehmet Metin Ouz Efe Gnde Tahsin Erdoan Filiz Tayumruk M. Levent Snmez Erdin Gkalp Fatih Gren Ayen Ayan Ufuk Ulualp Sadi Ufuk Sunal Macit Bal Murat Tetik mer Altun Elif Banu Kocaolu Bar Hseyin afak Cem zer Position Chairman Deputy Chairman Director and CEO Director Director Director Director Director Director Auditor Auditor Auditor I. Deputy Chief Executive Officer Deputy Chief Executive Officer Deputy Chief Executive Officer Deputy Chief Executive Officer Deputy Chief Executive Officer Deputy Chief Executive Officer Deputy Chief Executive Officer Deputy Chief Executive Officer Board of Directors Reporter IT Manager Software Development Manager Agencies and Marketing Manager Accounting and Finance Manager Risk Management and Internal Control Manager PR II. Manager Accounting and Finance Specialist Accounting and Finance Assistant Specialist Independent Audit Tax Consultant
irketi
irketi irketi irketi irketi irketi irketi irketi irketi irketi irketi irketi irketi irketi irketi
Anadolu Anonim Trk Sigorta irketi Anadolu Anonim Trk Sigorta irketi Anadolu Anonim Trk Sigorta irketi DRT Bamsz Denetim ve SMMM A.. Baflaran Nas Yeminli Mali Mavirlik A..
13. KEEPING STAKEHOLDERS INFORMED In matters concerning our Shareholders, employees, creditors, customers, suppliers, various NGOs, the Government and potential investors that might consider investing in our Company, i.e. the stakeholders, care is taken to provide information in writing and to base the relations with such parties on written contracts as much as possible. In cases where the rights of stakeholders are not regulated by the legislation or contractually, the interests of the stakeholders are protected within the framework of the rules of good faith and to the extent permitted by the
Anadolu Sigorta
2008
Annual Report
67

Companys facilities, observing the Companys credibility at the same time. 14. STAKEHOLDER PARTICIPATION IN MANAGEMENT The articles of association contain no provisions on the stakeholder participation in the Companys management. An employee proposal guideline has been formulated. Proposals that are innovative and aimed at improvement are assessed within the framework of this guideline and put into life across the Company. Agency Consultancy Council consisting of selected agencies meets several times a year, general agency meetings are held biannually, and the executive council meetings are held 3 times a year with the participation of all departments and regional managers. 15. HUMAN RESOURCES POLICY The basic principles of the Companys human resources policy are stated below. Job descriptions and distributions, along with the performance criteria are set by the Company management and announced to the employees. Hiring activities are based on the principle of giving equal opportunities to people of equal qualities. Criteria for hiring are put into writing on the basis of titles and are followed in practice. In decisions on training, transfer and promotion, objective data are used and the Companys interests are observed as much as possible. Training plans are formulated aimed at developing our employees knowledge and skills. Company employees are members of the Bank and Insurance Employees Union. Safe working environment and conditions are provided for our employees; work is undertaken to improve these conditions depending on social and technological necessities. Decisions made in relation to our employees or developments concerning them are shared with the employees. Measures are adopted to prevent discrimination on the basis of race, religion, language and sex among the employees, to ensure human rights are respected and to protect the employees against internal physical, mental and emotional abuse. There is no exercise of appointing representatives to carry the relationship with the employees. 16. RELATIONS WITH CUSTOMERS AND SUPPLIERS The Companys quality policy pledges delivering and sustaining high quality products and services with the expert and experienced people in its organization, drawing upon its solid technological and financial infrastructure, constant development and improvement philosophy, and experienced and extensive agency network. With the ISO 9001 quality certification obtained in 2004, these pledges are made permanent by the Companys General Management. The Company observes permanence of service quality and standard in every phase of insurance service.
68
Anadolu Sigorta
2008
Annual Report

Customers demands are fulfilled quickly and they are informed on any delays at every phase of the service. Utmost care is paid to protect the confidentiality of the customers and suppliers data that are of commercial secret nature. 17. SOCIAL RESPONSIBILITY Attention is paid that the projects offered with cover are in compliance with the applicable environmental safety and public health legislation. Various informative, advertising and similar activities are undertaken to develop public awareness on insurance in our country. We hold founding member status in social foundations like the Earthquake Foundation, Economic Research Foundation, and memberships with various Chambers of Commerce such as the Chamber of Shipping and stanbul Chamber of Commerce. Until today, no charges were filed or no sanctions were imposed against our Company on account of any environmental protection infringement. 18. STRUCTURE AND FORMATION OF THE BOARD OF DIRECTORS; INDEPENDENT BOARD DIRECTORS 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. Taking into consideration that there are no non-corporate ultimate Shareholders with a controlling interest in the Company, it is thought that the Board Directors all naturally possess the advantage to act independently, and therefore, to be impartial in their decisions, upholding the interests of our Company and the stakeholders above everything else. Information about our Board Directors and CEO is presented below.
Education Name & Surname Burhan Karagz Daver Orhon Mustafa Ali Su Emre Duranl Yaar dirsel Mustafa Nail Yac Nilgn skender mer Karaku Aysel Tacer Title Chairman Deputy Chairman Degree Bachelor's Bachelor's Discipline Higher School of Economy and Commerce Academy of Economic and Commercial Sciences Faculty of Economic and Administrative Sciences Faculty of Economic and Administrative Sciences Faculty of Political Sciences Faculty Law Faculty of Economics Faculty of Economic and Administrative Sciences Member Bachelor's Faculty of Economic and Trkiye Bankas A.. Trkiye Bankas A.. Division Manager 21 years Branch Manager 29 years Entity Worked Anadolu Anonim Trk Sigorta irketi Trkiye Bankas A.. Trkiye Bankas A.. CEO Unit Manager Title Held in the Entity Professional Experience 56 years 41 years 33 years 13 years 32 years 35 years
Member & CEO Bachelor's Member Member Member Member Member Bachelor's Bachelor's Masters Bachelor's Bachelor's
Division Manager 31 years
Anadolu Sigorta
2008
Annual Report
69

When fulfilling its decision-making function, the Board of Directors acts on the basic considerations of; Maximizing the fair value of the Company, Pursuing the Company operations so as to ensure long-term and stable earnings for our Shareholders, Maintaining the delicate balance between the Shareholders and the Companys need to grow. In the formation of the Board of Directors, care is given to; Ensure that the nominees are present in the meeting at the time of election to the seats on the board of directors, Inform the Shareholders about the nominees, Allow Shareholders to ask questions to the nominees, Inform the Shareholders, during the General Assemblies, on other companies on the boards of which Director nominees serve and on the compliance or non-compliance to internal regulations set exclusively on this topic. Our Board of Directors takes care to hold regular monthly meetings. Since they represent legal entities, the Directors do not have to be Shareholders pursuant to the legislation on account of their Board of Directors service. The obligation to deliver shares as collateral imposed on the Directors is fulfilled by the legal entities they represent. There are no Directors holding any shares in the Company. The articles of association contain no provisions on the implementation of cumulative voting system in the election of Board Directors. 19. QUALIFICATIONS OF BOARD DIRECTORS Because it is regulated by the law, the articles of association contain no other provisions in relation to the minimum qualifications required in Board Director elections. Pursuant to legislation, general managers of insurance companies must have graduated from a four-year university minimum, and have at least ten years experience in any one of insurance, banking, economy, business management, accounting, law, finance, mathematics, statistics or engineering fields. More than half of the board directors must have graduated from a four-year university minimum, and have knowledge and experience in at least one of the fields mentioned above. The Directors possess these qualifications and have; Satisfactory knowledge and skills in banking and insurance business, The skill to read and analyze financial statements and reports, Basic knowledge about the legal regulations governing our Company, and about general market circumstances, The will and the opportunity to regularly attend the board meetings for the period of time for which they are elected to serve. The Board of Directors consists of nine Directors, which number enables efficient organization of the activities of the Board.
70
Anadolu Sigorta
2008
Annual Report

Directors just starting to serve on the Board are offered an orientation program covering the following at a minimum: Introduction with our executives and visits to the Companys units, The CVs and performance assessments of our executives, Strategic goals, current status and issues of the Company, Market share, financial structure and performance indicators of the Company. Although there are no set rules on the Directors undertaking other duties outside the Company, the 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. 20. MISSION, VISION AND STRATEGIC GOALS OF THE COMPANY The Companys, Vision is identified as to make our Company the insurance brand preferred by everyone who needs insurance, and to achieve a strength that makes it a reference point in the worldwide insurance industry as well. Mission is identified as in keeping with the deeply-rooted, pioneering, honest and solid corporate values of Anadolu Sigorta, to lead the sector, to help create a broad public awareness of insurance in Turkey, to implement a customer-focused approach to service, to increase our financial strength to international standards, to enhance the value of our Company. Our Companys vision and mission are publicly disclosed on our website accessible at ww.anadolusigorta.com.tr. Our strategic goals are set by our executives with a keen eye on competitive conditions, general economic conjuncture, overall expectations in national and international financial markets, and the Companys medium and long term targets. Strategies and targets proposed are negotiated comprehensively by the Board of Directors on a broad perspective. Actualizations in relation to approved strategies and targets are reviewed during Board meetings and monthly within the scope of the assessment of Company operations, financial structure and performance level. In principle, the Board of Directors meets monthly in order to efficiently and continuously fulfill its monitoring and supervision function. In the meetings, the basic topics of assessment are the Company activities, approved annual budget and target realizations, the Companys place in the sector, financial structure and performance level, reporting, and compliance of operations to international standards. 21. RISK MANAGEMENT AND INTERNAL CONTROL MECHANISM From 2005 onwards, the inspection work previously performed by the Inspection Board was started to be carried out by the Internal Audit Department under the name auditing, in line with the new regulation and requirements imposed thereby. In line with the clearance received from the Turkish Treasury General Directorate of Insurance, the name of the Internal Audit Department was changed to the Board of Inspectors. In this frame, the Board of Inspectors conducts on-site audits of all the units in the Headquarters, regional branches, and the branches at least once a year, of all agencies at least once in every three years, of those agencies that
Anadolu Sigorta
2008
Annual Report
71

take an exceptionally high share in total premium production or low share in collection at least once a year, within the scope of the inspection program prepared by the head of the Board of Inspectors and approved by the Board of Directors. Apart from these inspection activities, investigations and examinations are also carried out by the Board of Inspectors. Set up in 2006 in order to restructure the risk management systems and processes, the Risk Management Departments activities were expanded in scope to cover internal control activities within the frame of the provisions of the Regulation on the Internal Systems of Insurance, Reinsurance and Pension Companies published in the Official Gazette issue 26913 dated 21 June 2008. Along the same line, the Department was renamed to Risk Management and Internal Control Department. The primary objectives of the Departments activities are as follows: Measure and evaluate risks and keep them under control independently from executive units, Protect the Companys assets, Conduct the activities efficiently and effectively while achieving compliance with the Law and other applicable legislation as well as internal policies and rules and insurance business customs, Ensure reliability, integrity and time availability of the accounting and financial reporting system. The basic strategy directed towards the ultimate goal is to carefully plan, conduct and manage risk management and internal control activities independently, impartially, purposefully, effectively and efficiently, employing a riskfocused approach and within the frame of applicable legislation and internationally accepted principles and standards. The basic principle in achieving this goal is to employ the most advanced tools and methods that are available and possible to use. 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 outcomes 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. 22. AUTHORITIES AND RESPONSIBILITIES OF BOARD DIRECTORS AND EXECUTIVES The authorities of the Board of Directors are stated in the articles of association. Pursuant to the articles of association, the Board of Directors is authorized on matters of importance such as: Establishment, abolition of agencies, branches and representation offices, and determination of the terms and conditions applicable therefor, Being a proxy, leading insurer, representative or agency of other insurance and reinsurance companies, Setting the dates for commencing and terminating activities in various insurance branches, determination of the essential conditions of insurance and reinsurance agreements, Execution and termination of all kinds of reinsurance agreements, Entering into financial and industrial undertakings and initiatives, founding companies in relation to insurance business, participating in companies that are or will be established for this purpose, Buying and selling immovables, and constructing buildings. The Board of Directors may delegate part or all of its authorities to the CEO, save for those that are not permissible to be delegated by law or due to the nature of the business.
72
Anadolu Sigorta
2008
Annual Report

The Board of Directors exercises its authorities cautiously and within the framework of good faith and equipped with all necessary knowledge to ensure full satisfaction of the duty. Pursuant to the articles of association, the CEO is responsible for the execution of the Companys day-to-day business on the principles and within borders set by the Board of Directors. Delegation of authority to executive bodies for execution of Company activities is made under the certificate of authorized signatures. Put into force upon approval by the Collective Bargaining Agreement and the Board of Directors, the Personnel Regulation states the sanctions to be imposed against transactions violating the procedures and/or the legislation. Board Directors allocate sufficient time for the Company affairs. The Board of Directors adopted the necessary measures for preventing the information that is not in the public domain and/or is of trade secret nature from being disseminated out of the Company. The Board of Directors adopts an individual decision for the approval of periodic financial statements and annual report. The Board of Directors fulfills its responsibilities remaining outside the scope of its basic functions taking into consideration the opinions and recommendations of executive bodies and committees. Such responsibilities include, but are not limited to the following: Approving the Companys annual budget and business plans, Preparing the Companys annual reports and finalizing the same to be presented to the General Assembly, Ensuring that the General Assemblies are held in compliance with the legislation and the Companys articles of association, Taking necessary action in relation to General Assembly decisions, Overseeing the use of substantial amounts that is in excess of 10% of the total assets in the Companys most recent balance sheet, Approving the executives career plans and rewarding provided to them, Determining the Companys policies about Shareholders, stakeholders and public relations, Determining the Companys disclosure policy, Setting the codes of ethics for the Company and its employees, Establishing the operating principles of committees; ensuring their efficient and productive functioning, Taking necessary action so as to ensure the Companys organizational structure responds to current circumstances, Examining the activities of former boards of directors. 23. OPERATING PRINCIPLES OF THE BOARD OF DIRECTORS The draft Board meeting agenda is prepared by the CEO, and finalized in line with the proposals of the Chairman and the Board Directors. The Board of Directors met thirteen times in 2008.
Anadolu Sigorta
2008
Annual Report
73

Care is paid to determine the meeting date so as to allow all Directors to participate. Save for unforeseeable exceptional events, the Board meetings are held with the participation of all Directors. Attention is given to set the Board meeting date during the immediately preceding meeting, followed by written invitation. The existing secretariat responsible for execution of the Board activities, keeping the Directors and auditors informed, and establishing communication with them was transformed into Board of Directors Reporting Unit in 2005. No dissenting votes were cast by any Director against the Board decisions made in the reporting period. All Board Directors spend their best efforts to be personally present in meetings concerning matters of importance such as: Determination of the fields in which the Company will be engaged and approval of business and financing plans, Matters related to inviting the General Assembly for ordinary/extraordinary meeting and its organization, Finalization of the annual report to be presented to the General Assembly, Election of the chairman, deputy chairman of the Board and appointment of new directors, Formation of administrative units or termination of their activities, Appointment or discharging of the CEO, Establishment of committees, Merger, demerger, restructuring, selling the Company in its entirety or selling 10% of its fixed assets or making investments in amounts in excess of 10% of the fixed assets, outlays in excess of 10% of total assets, Determination of the Companys dividend policy, the amount to be distributed from the profit for the period, Increasing or decreasing the capital. The Board of Directors holds its first meeting preferably on the date the same is elected. During the first meeting, the chairman and the deputy chairman of the board are elected, and decisions are made on the job distribution and establishment of committees. Board Directors, in principle, attend every meeting. The Board of Directors meets regularly and at least monthly as pre-scheduled, and at any time as and when deemed necessary. Utmost care is paid to ensure that the information and documents about the topics covered in the Board meeting agenda are made available for the examination of the Directors at least five days in advance, and when such timing cannot be met, efforts are spent to ensure equal flow of information to the Board Directors. Each Director is entitled to one vote and none has weighted vote or affirmative/negative vetoing rights. Pursuant to the articles of association, the Board of Directors convenes on the basis of absolute majority and makes decisions with the absolute majority of Directors present in the meeting.
74
Anadolu Sigorta
2008
Annual Report

24. PROHIBITION ON DOING BUSINESS OR COMPETING WITH THE COMPANY Company Directors are not engaged in any transaction or activity that would fall under the prohibition on doing business or competing with the Company, therefore that would require obtaining the approval of the General Assembly. 25. CODES OF ETHICS AND IMPLEMENTATION PRINCIPLES The Association of the Insurance and Reinsurance Companies of Turkey called insurance and reinsurance companies to pay attention to conform with the Codes of Ethics adopted by the Association by the decision made in its Board of Directors meeting of 18 January 2007, which codes are posted on the Associations official website accessible at www.tsrsb.org.tr. In addition to the said, our codes of ethics as approved by the Board of Directors are presented below: Purpose These principles set the codes of professional ethics that Anadolu Anonim Trk Sigorta irketi (the Company) and its employees must conform to in their activities within the scope of existing laws and regulations, and form the grounds for the sanctions applicable by the Company in case of violation of the provisions of these principles. Scope All Company employees, executives and Board Directors (Employees) comply with these principles. General Principles With a view to ensure trust and stability in the insurance sector and to prevent transactions and practices that might harm the economy during the activities, all Company employees will fulfill their duties in line with the following general principles: a) Full compliance with the legislation on insurance business b) Integrity in relationships with the customers, agencies, and their employees, Shareholders, group companies and other entities and establishments with which insurance business relationships are established c) Providing clear, intelligible and accurate information in all services provided to all parties with which there is a relation, and keeping the parties fully and accurately informed on their rights and obligations d) Paying attention to pursue operations with an eye on the requirements of economic development, as well as profitability e) Refraining from creating unfair competition conditions, in line with the principles of ensuring the sustainability of the trust held in the insurance sector and observing the common interests of the sector f) Observing social benefit in all activities and paying attention to protecting the environment; ensuring timely and full implementation of the measures to be adopted in this matter g) Full and timely satisfaction of the requirements of the combat against money laundering; cooperating with authorized entities and organizations on this under the provisions of international and national legislation
Anadolu Sigorta
2008
Annual Report
75

Prohibitions The employees will refrain from the following in their activities: a) Being engaged in activities that are incompatible with the interests and benefits of the sector b) Using the advantages granted to the sector under the laws for the purpose of drawing advantages for customers in activities in a manner that would contradict with the considerations covered in the preamble of legal regulations on insurance and those that are described under these principles, even if such advantages conform to the law in appearance c) Acting in a manner to lead to unfair competition in the sector d) Engaging in acts and activities that contradict with the rules that are set by the Companys authorized bodies and are binding for all employees and executives Obligation of Secrecy All Employees will treat the information provided by the customers and information created in the Company in confidence and they may not disclose the confidential information they have about the customers to customers and other third parties to draw an advantage. Work Harmony All Employees must act in a manner that befits the Companys respectability in their relations among themselves and with the customers. No Employee may utter any words, write anything, and make any announcements, advertisements or implications that would lead to the creation of a negative image about the other companies operating in the sector and about their executives. Audit The Company prepares its accounts in accordance with the principles governing insurance and reinsurance companies stipulated by the Turkish Treasury, and the regulations of the CMB, if necessary, and has the same audited by an independent audit firm. 26. NUMBERS, STRUCTURES AND INDEPENDENCE OF COMMITTEES WITHIN THE BOARD OF DIRECTORS There is an Audit Committee and a Corporate Governance Committee in our Company. There are two non-executive Board Directors in each one of the Committees. As a matter of principle, Board Directors do not undertake roles in several committees. The structures and operating principles of the committees are formulated in writing. Taking into consideration that there are no non-corporate ultimate Shareholders with a controlling interest in the Company, it is thought that the Board Directors all naturally possess the advantage to act independently, and therefore, to be impartial in their decisions. 27. FINANCIAL RIGHTS PROVIDED TO THE BOARD OF DIRECTORS Apart from the attendance fee, no remunerations are paid to the Board Directors. Amounts of attendance fees are set by the General Assembly in line with the proposals brought by the Shareholders. The Board Directors have never utilized, directly or indirectly, cash or non-cash loans from the Company.
76
Anadolu Sigorta
2008
Annual Report
Financial Information and Assessment on Risk Management
77 78 79 80 177 179 180 181 184
Summary of Statutory Auditors Report An Assessment of 2008 by the Board of Inspectors 2008 Annual Report Compliance Statement Independent Auditors Report An Assessment of Financial Standing, Profitability and Solvency Information on Financial Structure Summary Financial Information for the Last 5 Years Including the Reporting Period Risk Management Policies Adhered to by Types of Risks Directory
Anadolu Sigorta
2008
Annual Report
77

Summary of Statutory Auditors Report
TO THE GENERAL ASSEMBLY OF THE SHAREHOLDERS OF ANADOLU ANONM TRK SGORTA RKET Company Name Head Office Capital Sector - Statutory auditors names, surnames, term of office, and nature of association with the company: Anadolu Anonim Trk Sigorta irketi stanbul TRY 350,000,000 Insurance Selcan Rengin Aln (until 27 March 2008) Kemal Sa (until 30 March 2008) Mehmet ahin Karabilgin (after 27 March 2008 Ali Tolga nal (after 30 March 2008) Zeliha lke Selvi Auditors are neither a shareholder nor an employee. The auditors attended all the monthly Board of Directors meetings.
- Number of Board of Directors meetings attended and Board of Auditors meetings held: - Scope, dates and outcome of the examination of Company accounts, books and records: - Number and results of the cash counts held in the Companys pay desk pursuant to article 353, section 1.3 of the Turkish Commercial Code:
As a result of the examination of accounts, books and records conducted every three months (January, April, July and October), no irregularities were established. Four cash counts were made. Dates and results of cash counts: 31.03.2008: TRY 50,270 30.06.2008: TRY 70,582 30.09.2008: TRY 41,429 31.12.2008: TRY 57,170 - Dates and results of the examinations as As a result of examinations conducted subsequent to monthly Board required by article 353, section 1.4 of of Directors meetings, no irregularities were established. the Turkish Commercial Code: - Complaints or irregularities brought to None received. the auditors attention and actions taken. We have audited the accounts and transactions of Anadolu Anonim Trk Sigorta irketi for the period between 01 January 2008 and 31 December 2008 with respect to their compliance with the Turkish Commercial Code, the Companys articles of association, other applicable legislation and with generally accepted accounting principles and standards. In our opinion, the attached balance sheet drawn up on 31 December 2008, the contents of which we acknowledge, fairly and accurately presents the Companys financial status on the date, and the income statement for the period 01 January 2008 31 December 2008 fairly and accurately presents the operating results for the period. The profit distribution proposal was also found to conform to the laws and the Companys articles of association. We propose that the balance sheet and the statement of income be approved and that the members of the Board of Directors be acquitted of their fiduciary responsibilities for the accounts of 2008.
Auditor Zeliha lke Selvi
Auditor Mehmet ahin Karabilgin
Auditor Ali Tolga nal
78
Anadolu Sigorta
2008
Annual Report

An Assessment of 2008 by the Board of Inspectors
Pursuant to the Circular on the Internal Audit Systems of Insurance and Reinsurance Companies enforced by the Turkish Treasury decision dated 29 September 2004 and numbered B.02.1.HM.0.SGM.0.3.1.1, the internal audit activity at our Company is carried out by the Board of Inspectors reporting to our Companys Board of Directors. In 2008, 16 headquarters units, 9 regional branches and 1 branch adding up to 26 units in total were audited and their results were reported. Auditing of agencies was carried on pursuant to the Circular on Internal Audit Systems of Insurance and Reinsurance Companies during 2008, and 440 agencies were audited, exceeding the targeted 327, and their results were reported. On the other hand, based on Article 5/e of the Circular on Internal Audit Systems of Insurance and Reinsurance Companies, audits were conducted at all of the agencies that remain after eliminating those that were dissolved during the reporting period from the 1,262 agencies that were listed in the audit programs approved by the Board of Directors and planned to be audited in the 2006-2008 period. In 2008, 28 studies were completed: 13 investigations, 7 examinations and 8 others that do not fall under either investigation or examination scope. The Board of Inspectors informs the Board of Directors via monthly activity summaries relating to the reports prepared after the audits, investigations and examinations conducted. This system enables close follow-up of the activities of the Board of Inspectors by the Board of Directors. In 2008, the Board of Inspectors was staffed by 15 board members consisting of inspectors, senior assistant inspectors and assistant inspectors. With a view to supporting professional development and expanding the professional knowledge of the Board members, their participation in various seminars, meetings and training programs is facilitated. Developments are carefully monitored to ensure that the audits conducted and the audit reports subsequently issued are in line with International Standards for Internal Audit, are risk-based, and contribute added value to our Company, and necessary revisions and changes are made accordingly. In line with the experiences derived from agency audits, starting from the second half of 2007, agencies were started to be assessed according to criteria, which can be described as core criteria, within the frame of efforts to further expand and strengthen the central auditing of agencies and to create early warning systems that correctly identify and reveal the risk elements in advance. These criteria were taken forward from the second half of 2008, and transformed into a system whereby the agencies are evaluated by way of scoring. The Board of Inspectors spends its best efforts in carrying out the activities within the context of the inspection program prepared, as well as other activities outside of this scope, based on the fundamental approach for maximizing the benefits expected from the prescribed auditing. BOARD OF INSPECTORS
Anadolu Sigorta
2008
Annual Report
79

2008 Annual Report Compliance Statement
Our Companys 2008 annual report has been prepared in line with the principles and procedures set forth in the Regulation on the Financial Structures of Insurance, Reinsurance and Pension Companies enforced upon its publication in the Official Gazette issue 26606 dated 7 August 2007.
Murat Tetik Fatih Gren Accounting and Deputy Chief Financial Affairs Manager Executive Officer
Mustafa Su CEO
Burhan Karagz Chairman
80
Anadolu Sigorta
2008
Annual Report

Independent Auditors Report
To the Board of Directors of Anadolu Anonim Trk Sigorta irketi, 1. We have audited the accompanying financial statements of Anadolu Anonim Trk Sigorta irketi, which comprise the balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Managements Responsibility for the Financial Statements 2. Management is responsible for the preparation and fair presentation of these financial statements in accordance with the applicable accounting principles and standards issued based on insurance laws and regulations. This responsibility includes; designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility 3. Our responsibility is to express a conclusion on these financial statements based on our audit. We conducted our audit in accordance with standards on auditing issued based on insurance laws and regulations. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from 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 the auditors 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, the auditor considers internal control relevant to the entitys 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies 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 audit opinion. Basis of Qualified Opinion 4. As of the balance sheet date, the Companys management has provided TRY 13,702,761 of free provision charged to the prior years income statement as expense for the purpose of the precautionary principle to consider any potential risks which may arise from any changes in the economy or market conditions. Qualified Opinion 5. In our opinion, except for the effects of the matter set out in paragraph 4 above, the accompanying financial statements give a true and fair view of the financial position of Anadolu Anonim Trk Sigorta irketi as of 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with the applicable accounting principles and standards issued (Note 2) based on insurance laws and regulations. Additional paragraph for the English translation: The effect of the differences between the accounting principles summarized in Note 2 and the accounting principles generally accepted in countries in which the accompanying financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying financial statements are not intended to present the Companys financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS. 6 March 2009, stanbul DRT BAIMSIZ DENETM VE SERBEST MUHASEBEC MAL MAVRLK A.. Member of DELOITTE TOUCHE TOHMATSU Sibel Trker Partner
Anadolu Sigorta
2008
Annual Report
81

Unconsolidated Year-End Financial Report as of 31 December 2008
We hereby represent that the unconsolidated year-end financial statements prepared in line with the legislation of the T.R. Prime Ministry Undersecretariat of Treasury and related explanations and notes are in compliance with the Regulation on the Financial Reporting of Insurance, Reinsurance and Pension Companies and with the Companys accounting records. stanbul, 6 March 2009
Fatih Gren Deputy CEO, Financial Affairs
Murat Tetik Accounting and Finance Manager
Mustafa Su Board Director, CEO
Zeliha lke Selvi Statutory Auditor
Ali Tolga nal Statutory Auditor
82
Anadolu Sigorta
2008
Annual Report

Detailed Balance Sheet
ASSETS I- Current Assets A- Cash and Cash Equivalents 1- Cash 2- Cheques Received 3- Banks 4- Cheques Given and Payment Orders (-) 5- Other Cash and Cash Equivalents B- Financial Assets and Investments with Risks on Policy Holders 1- Financial Assets Available for Sale 2- Financial Assets Held to Maturity 3- Financial Assets Held for Trading 4- Loans 5- Provision for Loans (-) 6- Investments with Risks on Policy Holders 7- Equity Shares 8- Diminution in Value of Financial Securities (-) C- Receivables From Main Operations 1- Receivables From Insurance Operations 2- Provision for Receivables From Insurance Operations (-) 3- Receivables From Reinsurance Operations 4- Provision for Receivables From Reinsurance Operations (-) 5- Cash Deposited For Insurance & Reinsurance Companies 6- Loans to Policyholders 7- Provision for Loans to Policyholders (-) 8- Receivables from Pension Operations 9- Doubtful Receivables From Main Operations 10- Provisions for Doubtful Receivables From Main Operations (-) D- Due from Related Parties 1- Due from Shareholders 2- Due from Affiliates 3- Due from Subsidiaries 4- Due from Enterprises Subject to Joint Management 5- Due from Personnel 6- Due from Other Related Parties 7- Discount on Receivables Due from Related Parties (-) 8- Doubtful Receivables Due from Related Parties 9- Provisions for Doubtful Receivables Due from Related Parties (-) E- Other Receivables 1- Lease Receivables 2- Unearned Lease Interest Income (-) 3- Deposits and Guarantees Given 4- Other Receivables 5- Discount on Other Receivables (-) 6- Other Doubtful Receivables 7- Provisions for Other Doubtful Receivables (-) F- Prepaid Expenses and Income Accruals 1- Prepaid Expenses 2- Accrued Interest and Rent Income 3- Income Accruals 4- Other Prepaid Expenses and Income Accruals G- Other Current Assets 1- Inventories 2- Prepaid Taxes and Funds 3- Deferred Tax Assets 4- Business Advances 5- Advances Given to Personnel 6- Stock Count Differences 7- Other Current Assets 8- Provision for Other Current Assets (-) I- Total Current Assets
Note 2.12,14 14 14
11.1 11.1 11.1 11.1
11.1, 11.7 4.2.3, 12.1 12.1, 17.16 12.1, 17.16
2.1.1.c, 12.1, 42 2.1.1.c, 12.1, 42 12.1
12.1
47.2 47.2
2.1.1.c, 12.1
TRY Audited Current Period 31/12/2008 681,610,191 57,170 15,912 633,357,943 (7,470,138) 55,649,304 221,022,027 48,262,948 106,772,583 88,923,623 (22,937,127) 432,563,671 410,543,183 17,656,888 4,363,600 57,499,314 (57,499,314) 173,259 82,029 91,230 1,144,914 14,544 1,130,370 87,401,332 87,401,332 449,268 313,175 26,067 6,225 103,801 1,424,364,662
Anadolu Sigorta
2008
Annual Report
83

ASSETS II- Non Current Assets A- Receivables From Main Operations 1- Receivables From Insurance Operations 2- Provision for Receivables From Insurance Operations (-) 3- Receivables From Reinsurance Operations 4- Provision for Receivables From Reinsurance Operations (-) 5- Cash Deposited for Insurance & Reinsurance Companies 6- Loans to Policyholders 7- Provision for Loans to Policyholders (-) 8- Receivables From Pension Operations 9- Doubtful Receivables from Main Operations 10-Provision for Doubtful Receivables from Main Operations B- Due from Related Parties 1- Due from Shareholders 2- Due from Affiliates 3- Due from Subsidiaries 4- Due from Enterprises Subject to Joint Management 5- Due from Personnel 6- Due from Other Related Parties 7- Discount on Receivables Due from Related Parties (-) 8- Doubtful Receivables Due from Related Parties 9- Provisions for Doubtful Receivables Due from Related Parties (-) C- Other Receivables 1- Leasing Receivables 2- Unearned Leasing Interest Income (-) 3- Guarantees Given 4- Other Receivables 5- Discount on Other Receivables (-) 6- Other Doubtful Receivables 7- Provisions for Other Doubtful Receivables (-) D- Financial Assets 1- Investments In Associates 2- Affiliates 3- Capital Commitments to Affiliates (-) 4- Subsidiaries 5- Capital Commitments to Subsidiaries (-) 6- Enterprises Subject to Joint Management 7- Capital Commitments to Enterprises Subject to Joint Management (-) 8- Financial Assets and Investments with Risks on Policy Holders 9- Other Financial Assets 10- Diminution in Value of Financial Assets (-) E- Tangible Assets 1- Investment Properties 2- Diminution in Value for Investment Properties (-) 3- Owner Occupied Property 4- Machinery and Equipments 5- Furnitures and Fixtures 6- Vehicles 7- Other Tangible Assets (Including Leasehold Improvements) 8- Leased Tangible Fixed Assets 9- Accumulated Depreciation (-) 10- Advances Paid for Tangible Assets (Including Construction In Progresses) F- Intangible Assets 1- Rights 2- Goodwill 3- Establishment Costs 4- Research and Development Expenses 6- Other Intangible Assets 7- Accumulated Amortization (-) 8- Advances Regarding Intangible Assets G- Prepaid Expenses and Income Accruals 1- Prepaid Expenses 2- Income Accruals 3- Other Prepaid Expenses and Income Accruals H- Other Non-current Assets 1- Effective Foreign Currency Accounts 2- Foregin Currency Accounts 3- Inventories 4- Prepaid Taxes and Funds 5- Deferred Tax Assets 6- Other Non-current Assets 7- Other Non-current Assets Amortization (-) 8- Provision for Other Non-current Assets (-) II- Total Non-current Assets TOTAL ASSETS
Note
11.4, 28
2.6, 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3
2.7, 8
12.1
21, 35
TRY Audited Current Period 31/12/2008 71,999,994 71,999,994 21,758,407 6,831,991 10,311,518 13,791,891 11,929,614 729,746 9,513,674 4,339,065 (35,689,092) 16,250,000 16,250,000 2,624 2,624 110,011,025 1,534,375,687
84
Anadolu Sigorta
2008
Annual Report

LIABILITIES III-Short Term Liabilities A- Borrowings 1- Loans to Financial Institutions 2- Finance Lease Payables 3- Deferred Finance Lease Borrowing Costs (-) 4- Current Portion of Long Term Borrowings 5- Principal, Installments and Interests on Issued Bills (Bonds) 6- Other Issued Financial Assets 7- Value Differences on Issued Financial Assets (-) 8- Other Financial Borrowings (Liabilities) B- Payables From Main Operations 1- Payables Due To Insurance Operations 2- Payables Due To Reinsurance Operations 3- Cash Deposited by Insurance & Reinsurance Companies 4- Payables Due To Pension Operations 5- Payables from Other Operations 6- Discount on Other Payables From Main Operations, Notes Payable (-) C- Due to Related Parties 1- Due to Shareholders 2- Due to Affiliates 3- Due to Subsidiaries 4- Due to Enterprises Subject to Joint Management 5- Due to Personnel 6- Due to Other Related Parties D- Other Payables 1- Guarantees and Deposits Received 2- Other Payables 3- Discount on Other Payables (-) E- Insurance Technical Reserves 1- Unearned Premiums Reserve - Net 2- Unexpired Risk Reserves - Net 3- Life Mathematical Reserves - Net 4- Oustanding Claims Reserve - Net 5- Provision for Bonus and Discounts - Net 6- Reserve for Policies Investment Risk, Belonging to Life Insurance Policyholders - Net 7- Other Technical Reserves - Net F- Taxes and Other Liabilities and Provisions 1- Taxes and Dues Payable 2- Social Security Premiums Payable 3- Overdue, Deferred or By Installment Taxes and Other Liabilities 4- Other Taxes and Liabilities 5- Corporate Tax Liability Provision on Period Profit 6- Prepaid Taxes and Other Liabilities on Period Profit (-) 7- Provisions for Other Taxes and Liabilities G- Provisions for Other Risks 1- Provision for Employement Termination Benefits 2- Pension Fund Deficit Provision 3- Provisions for Costs H- Deferred Income and Expense Accruals 1- Deferred Income 2- Expense Accruals 3- Other Deferred Income and Expense Accruals I- Other Short Term Liabilities 1- Deferred Tax Liability 2- Inventory Count Differences 3- Other Short Term Liabilities III - Total Current Liabilities
Note
2.22, 32.2 2.22, 32.2
19.1 17.16, 19.1 19.1
47.2, 19.1 19.1, 47.2
2.1.1.c 2.1.1.c 2.1.1.c, 4.1.2.2
23.1
35 35
2.1.1.c, 19.1 19.1
TRY Audited Current Period 31/12/2008 88,079 1,850 (1,850) 88,079 116,073,704 96,276,171 1,792,582 18,004,951 14,164 5,657 8,507 13,474,347 1,326,874 12,147,473 716,655,472 458,316,484 8,164,367 250,174,621 11,497,605 9,389,968 1,386,978 23,056,450 (22,335,791) 34,782,669 27,558,111 7,224,558 345,977 345,977 892,932,017
Anadolu Sigorta
2008
Annual Report
85

LIABILITIES IV- Long Term Liabilities A- Borrowings 1- Loans to Financial Institutions 2- Finance Lease Payables 3- Deferred Finance Lease Borrowing Costs (-) 4- Bonds Issued 5- Other Issued Financial Assets 6- Value Differences on Issued Financial Assets (-) 7- Other Financial Borrowings (Liabilities) B- Payables From Main Operations 1- Payables Due To Insurance Operations 2- Payables Due To Reinsurance Operations 3- Cash Deposited by Insurance & Reinsurance Companies 4- Payables Due To Pension Operations 5- Payables from Other Operations 6- Discount on Other Payables From Main Operations (-) C- Due to Related Parties 1- Due to Shareholders 2- Due to Affiliates 3- Due to Subsidiaries 4- Due to Enterprises Subject to Joint Management 5- Due to Personnel 6- Due to Other Related Parties D- Other Payables 1- Guarantees and Deposits Received 2- Other Payables 3- Discount on Other Payables (-) E- Insurance Technical Reserves 1- Unearned Premiums Reserve - Net 2- Unexpired Risk Reserves - Net 3- Life Mathematical Reserves - Net 4- Oustanding Claims Reserve - Net 5- Provision for Bonus and Discounts - Net 6- Reserve for Policies Investment Risk, Belonging to Life Insurance Policyholders - Net 7- Other Technical Reserves - Net F- Other Liabilities and Provisions 1- Other Liabilities 2- Overdue, Deferred or By Installment Other Liabilities 3- Other Liabilities and Expense Accruals G- Provisions for Other Risks 1- Provision for Employement Termination Benefits 2- Provisions for Employee Pension Fund Deficits H- Deferred Income and Expense Accruals 1- Deferred Income 2- Expense Accruals 3- Other Deferred Income and Expense Accruals I- Other Long Term Liabilities 1- Deferred Tax Liability 3- Other Long Term Liabilities IV- Total Non Current Liabilities
Note
47.2
2.19, 22
21, 35
TRY Audited Current Period 31/12/2008 29,099,764 29,099,764 3,154,041 3,154,041 1,199,199 1,199,199 33,453,004
86
Anadolu Sigorta
2008
Annual Report

SHAREHOLDERS' EQUITY V- Shareholders' Equity A- Paid in Capital 1- (Nominal) Capital 2- Unpaid Capital (-) 3- Positive Inflation Adjustment on Capital 4- Negative Inflation Adjustment on Capital (-) B- Capital Reserves 1- Equity Share Premiums 2- Cancellation Profits of Equity Shares 3- Profit on Sale to be Transferred to Capital 4- Translation Reserves 5- Other Capital Reserves C- Profit Reserves 1- Legal Reserves 2- Statutory Reserves 3- Extraordinary Reserves 4- Special Funds (Reserves) 5- Revaluation of Financial Assets 6- Other Profit Reserves D- Previous Years' Profits 1- Previous Years' Profits E- Previous Years' Losses (-) 1- Previous Years' Losses F- Net Profit of the Period 1- Net Profit of the Period 2- Net Loss of the Period 3- Net Income not subject to distribution Total Shareholders' Equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Note 1.1, 2.13, 15
15.2 15.2 11.6, 15, 16 15.2 15.2 15.2 15
15
TRY Audited Current Period 31/12/2008 350,000,000 350,000,000 129,910,768 16,708,714 16,947,698 218,199 96,036,157 18,091,345 18,091,345 (7,677,723) (7,677,723) 117,666,276 117,127,888 538,388 607,990,666 1,534,375,687
Anadolu Sigorta
2008
Annual Report
87

Detaled Income Statement
I-TECHNICAL PART Note A- Non-Life Technical Income 1- Earned Premiums (Net of Reinsurer Share) 1.1 - Premiums (Net of Reinsurer Share) 2.1.1.e, 24 1.1.1 - Gross Premiums (+) 1.1.2 - Ceded Premiums to Reinsurers (-) 17.16 1.2- Change in Unearned Premiums Reserve (Net of Reinsurers Shares and Reserves Carried Forward) (+/-) 1.2.1 - Unearned Premiums Reserve (-) 2.1.1.c 1.2.2 - Reinsurance Share of Unearned Premiums Reserve (+) 17.16 1.3- Changes in Unexpired Risks Reserve (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 1.3.1 - Unexpired Risks Reserve (-) 2.1.1.c 1.3.2 - Reinsurance Share of Unexpired Risks Reserve (+) 17.16 2- Investment Income Transfered from Non-Technical Part 3- Other Technical Income (Net of Reinsurer Share) 3.1 - Gross Other Technical Income (+) 3.2 - Reinsurance Share of Other Technical Income (-) B- Non-Life Technical Expense (-) 1- Total Claims (Net of Reinsurer Share) 1.1- Claims Paid (Net of Reinsurer Share) 1.1.1 - Gross Claims Paid (-) 1.1.2 - Reinsurance Share of Claims Paid (+) 17.16 1.2- Changes in Outstanding Claims Reserve (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 1.2.1 - Outstanding Claims Reserve (-) 2.1.1.c 1.2.2 - Reinsurance Share of Outstanding Claims Reserve (+) 17.16 2- Changes in Bonus and Discount Reserve (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 2.1 - Bonus and Discount Reserve (-) 2.2 - Reinsurance Share of Bonus and Discount Reserve (+) 3- Changes in Other Technical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 2.1.1.c, 47.1 4- Operating Expenses (-) 47.1 C- Non Life Technical Net Profit (A-B) II-NON TECHNICAL PART C- Non Life Technical Net Profit (A-B) J- General Technical NetProfit (C) K- Investment Income 1- Income From Financial Investments 2- Income from Sales of Financial Investments 3- Revaluation of Financial Investments 4- Foreign Exchange Gains 5- Dividend Income from Participations 6- Income from Affiliated Companies 7- Income Received from Land and Building 8- Income from Derivatives 9- Other Investments 10- Investment Income transfered from Life Technical Part L- Investment Expenses (-) 1- Investment Management Expenses (Including Interest) (-) 2- Valuation Allowance of Investments (-) 3- Losses On Sales of Investments (-) 4- Investment Income Transfered to Life Technical Part (-) 5- Losses from Derivative Products (-) 6- Foreign Exchange Losses (-) 7- Depreciation Expenses (-) 8- Other Investment Expenses (-) M- Other Income and Expenses (+/-) 1- Provisions Account (+/-) 2- Discount Account (+/-) 3- Speciality Insurances Account (+/-) 4- Inflation Adjustment Account (+/-) 5- Deferred Tax Asset Accounts(+/-) 6- Deferred Tax Liability Accounts (+/-) 7- Other Income and Revenues 8- Other Expense and Losses (-) 9- Prior Period Income 10- Prior Period Losses (-) N- Net Profit / (Loss) 1- Profit /(Loss) Before Tax 2- Corporate Tax Liability Provision (-) 3- Net Profit (Loss) 4- Inflation Adjustment Account (+/-)
TRY Audited Current Period 01/01/2008 - 31/12/2008 932,498,168 822,807,792 872,199,140 1,161,386,191 (289,187,051) (42,860,837) (90,478,681) 47,617,844 (6,530,511) (7,521,469) 990,958 99,397,266 10,293,110 10,389,900 (96,790) (835,826,669) (647,270,036) (595,760,563) (685,304,251) 89,543,688 (51,509,473) (63,872,437) 12,362,964 (5,444,952) (183,111,681) 96,671,499
96,671,499 96,671,499 176,944,315 128,088,722 16,390,548 (6,439,850) 19,776,678 17,888,252 1,199,623 12,800 27,542 (117,741,481) (108,031) (282,743) (3,346,990) (99,397,266) (9,499,637) (5,106,814) (15,151,607) (13,665,702) 3,808,326 57,447 (2,122,323) 1,123,980 (4,353,335) 117,666,276 140,722,726 (23,056,450) 117,666,276 -
26 26 26 36 26, 45 26 26
34.1 26 26
36 6.1, 32.1
4.2.3 2.1.1.g
2.1.1.l, 21, 35 47.1 47.1
35
88
Anadolu Sigorta
2008
Annual Report

Statement of Changes in Equty (31/12/2008)
TRY Equity Shares Owned Audited CURRENT PERIOD I - Closing Balance of Prior Period (31/12/2007) II - Effect of changes in accounting policy III - As restated (I+II) (01/01/2008) A- Capital increase (A1 + A2) 1- Cash 2- Internal Sources B- Equity shares purchased by the company C- Income / (expense) recognized directly in the equity D- Revaluation of Financial Assets E- Translation reserves F- Other income / (expenses) G- Inflation adjustment differences H- Period net profit I- Dividends distributed J- Transfer IV - Closing Balance at 31/12/2008 (III+A+B+C+D+E+F+G+H+I+J) 350,000,000 218,199 275,000,000 275,000,000 75,000,000 75,000,000 142,581,854 142,581,854 (142,363,655) Capital by the Company Revaluation of Financial Assets Inflation Adjustment on Capital
Anadolu Sigorta
2008
Annual Report
89

Statement of Changes in Equty (31/12/2008)
Translation Reserves
Legal Reserves
Statutory Reserves
Other Reserves and Retained Earnings
Net Profit / (Loss) for the Period
Previous Years' Profits / Losses (-) Total
13,207,066 13,207,066 3,501,648
159,090,661 (539,332) 158,551,329 (51,460,668) (51,460,668) 5,893,194
54,208,548 54,208,548 (23,000,000) (23,000,000) 117,666,276 (21,813,706) (9,394,842)
10,952,954 10,952,954 (539,332) (539,332) -
644,088,129 10,413,622 654,501,751 (142,363,655) 117,666,276 (21,813,706) -
16,708,714
112,983,855
117,666,276
10,413,622
607,990,666
90
Anadolu Sigorta
2008
Annual Report

Cash Flow Statement
Note A. CASH FLOWS FROM THE OPERATING ACTIVITIES 1. Cash inflows from the insurance operations 2. Cash inflows from the reinsurance operations 3. Cash inflows from the pension operations 4. Cash outflows due to the insurance operations (-) 5. Cash outflows due to the reinsurance operations (-) 6. Cash outflows due to the pension operations (-) 7. Cash generated from the operating activities (A1+A2+A3-A4-A5-A6) 8. Interest payments (-) 9. Income tax payments (-) 10. Other cash inflows 11. Other cash outflows (-) 12. Net cash generated from the operating activities B. CASH FLOWS FROM THE INVESTING ACTIVITIES 1. Sale of tangible assets 2. Purchase of tangible assets (-) 3. Acquisition of financial assets (-) 4. Sale of financial assets 5. Interest received 6. Dividends received 7. Other cash inflows 8. Other cash outflows (-) 9. Net cash generated from the investing activities C. CASH FLOWS FROM THE FINANCING ACTIVITIES 1. Issue of equity shares 2. Cash inflows from the loans to policyholders 3. Payments of financial leases (-) 4. Dividends paid (-) 5. Other cash inflows 6. Other cash outflows (-) 7. Cash generated from the financing activities D. EFFECTS OF EXCHANGE RATE DIFFERENCES ON CASH AND CASH EQUIVALENTS E. Net increase/(decrease) in cash and cash equivalents (A12+B9+C7+D) F. Cash and cash equivalents at the beginning of the period G. Cash and cash equivalents at the end of the period (E+F)
TRY Audited Current Period (01/01/2008 - 31/12/2008)
1,107,622,086 354,787 (921,013,429) (6,790,724) 180,172,720 (27,793,974) 40,124,620 (54,329,127) 138,174,239 6 6 387,636 (6,678,733) 89,728,496 76,278,039 3,692,172 15,085,994 (112,724,838) 65,768,766 (401,412) (21,813,706) (22,215,118) 181,727,887 495,876,384 677,604,271
14
Anadolu Sigorta
2008
Annual Report
91

Statement of Profit Distribution
Note I. DISTRIBUTION OF PERIOD PROFIT 1.1 PERIOD PROFIT 1.2 TAXES AND DUTIES PAYABLE (-) 1.2.2 Corporate tax (Income tax) 1.2.2. Income witholding tax 1.2.3 Other taxes and duties A. NET PERIOD PROFIT (1.1-1.2) 1.3 PRIOR PERIODS LOSSES (-) 1.4 FIRST LEGAL RESERVES (-) 1.5. COMPULSORY LEGAL FUNDS TO BE RETAINED AND INVESTED IN THE COMPANY (-) B. NET PROFIT AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)] 1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) 1.6.1 To Holders of Ordinary Shares 1.6.2 To Holders of Preferred Shares 1.6.3 To Holders of Participating Redeemed Shares 1.6.4 To Holders of Bonds Participating to Profit 1.6.5 To Holders of Profit and Loss Sharing Certificates 1.7 DIVIDENDS TO PERSONNEL (-) 1.8 DIVIDENDS TO SHAREHOLDERS (-) 1.9 DIVIDENDS TO BOARD OF DIRECTORS (-) 1.10 SECOND DIVIDEND TO SHAREHOLDERS (-) 1.10.1 To Holders of Ordinary Shares 1.10.2 To Holders of Preferred Shares 1.10.3 To Holders of Participating Redeemed Shares 1.10.4 To Holders of Bonds Participating to Profit 1.10.5 To Holders of Profit and Loss Sharing Certificates 1.11 SECOND LEGAL RESERVES (-) 1.12. STATUTORY RESERVES (-) 1.13. EXTRAORDINARY RESERVES 1.14 OTHER RESERVES 1.15 SPECIAL FUNDS II. DISTRIBUTION OF RESERVES 2.1 DISTRIBUTED RESERVES 2.2. SECOND LEGAL RESERVES (-) 2.3 DIVIDENDS TO SHAREHOLDERS (-) 2.3.1 To Holders of Ordinary Shares 2.3.2 To Holders of Preferred Shares 2.3.3 To Holders of Participating Redeemed Shares 2.3.4 To Holders of Bonds Participating to Profit 2.3.5 To Holders of Profit and Loss Sharing Certificates 2.4 DIVIDENDS TO PERSONNEL (-) 2.5 DIVIDENDS TO BOARD OF DIRECTORS (-) III. EARNINGS PER SHARE 3.1 TO OWNERS OF ORDINARY SHARES 3.2 TO OWNERS OF ORDINARY SHARES ( % ) 3.3 TO OWNERS OF PREFERRED SHARES 3.4 TO OWNERS OF PREFERRED SHARES ( % ) IV. DIVIDEND PER SHARE 4.1 TO OWNERS OF ORDINARY SHARES 4.2 TO OWNERS OF ORDINARY SHARES ( % ) 4.3 TO OWNERS OF PREFERRED SHARES 4.4 TO OWNERS OF PREFERRED SHARES ( % )
TRY Audited Current Period (01/01/2008 - 31/12/2008) (*) 140,184,338 (23,056,450) (23,056,450) 117,127,888 (7,677,723) (5,472,508) 103,977,657 -
(*) Since 2008 profit distribution proposal has not been approved by the General Assembly, just net profit available for distribution is shown on the profit distribution table. (**) As per No. 5520 Corporate Tax Law Article 5 of the first paragraph (e), 75 % of the sales income from subsidiaries and real estate ,is exempted from corporate tax. Because of the fact, TRY 538.388 sales income from subsidiaries and real estate, presented in "Net Income not subject to distribution" line of balance sheet, deducted from the Period Profit.
92
Anadolu Sigorta
2008
Annual Report

Detailed Income Statement
I-TECHNICAL PART A- Non-Life Technical Income 1- Earned Premiums (Net of Reinsurer Share) 1-1. Premiums (Net of Reinsurer Share) 1.2- Change in Unearned Premium Provisions (Net of Reinsurers Shares and Reserves Carried Forward) (+/-) 1.3- Changes in Unexpired Risk Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 2- Investment Income Transfered from Non-Technical Divisions 3- Other Technical Income (Net of Reinsurer Share) B- Non-Life Technical Expense (-) 1- Realized Claims (Net of Reinsurer Share) 1.1- Claims Paid (Net of Reinsurer Share) 1.2- Changes in Outstanding Claims Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 2- Changes in Bonus and Discount Provisions (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 3- Changes in Other Technical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 4- Operating Expenses (-) C- Non Life Technical Profit (A-B) II- NON TECHNICAL PART C- Non Life Technical Profit (A-B) J- Total Technical Profit (C) K- Investment Income 1- Income From Financial Investments 2- Income from Sales of Financial Assets 3- Revaluation of Financial Assets 4- Foreign Exchange Gains 5- Dividend Income from Affiliates 6- Income form Subsidiaries and Joint Ventures 7- Real Estate Income 8- Income from Derivative Instruments 9- Other Investments 10- Investment Income transferred from Life Technical Division L- Investment Expenses (-) 1- Investment Management Expenses (including interest) (-) 2- Valuation Allowance of Investments (-) 3- Losses On Sales of Investments (-) 4- Investment Income Transferred to Non - Life Technical Division (-) 5- Losses from Derivative Instruments (-) 6- Foreign Exchange Losses (-) 7- Depreciation Expenses (-) 8- Other Investment Expenses (-) M- Other Income and Expenses (+/-) 1- Reserves (Provisions) account (+/-) 2- Rediscount account (+/-) 3- Mandatory Earthquake Insurance Account (+/-) 4- Inflation Adjustment Account (+/-) 5- Deferred Tax Asset Accounts(+/-) 6- Deferred Tax Liability Expense (+/-) 7- Other Income and Revenues 8- Other Expense and Losses (-) 9- Prior Period Income 10- Prior Period Losses (-) N- Net Profit / (Loss) 1- Profit /(Loss) Before Tax 2- Taxes Provisions (-) 3- Net Profit (Loss) after Tax 4- Inflation Adjustment Account (+/-) FRE 87,361,486 70,834,672 72,896,790 -2,062,118 0 12,811,359 3,715,456 -60,721,327 -42,357,468 -37,266,228 -5,091,240 0 -3,344,740 -15,019,119 26,640,159 MARINE 43,248,569 32,635,468 37,341,484 -4,706,016 0 9,165,693 1,447,407 -19,930,284 -9,711,733 -11,850,137 2,138,404 0 -13,009 -10,205,542 23,318,284 ACCIDENT 441,306,184 404,431,009 401,294,758 2,768,382 367,869 34,564,064 2,311,112 -404,058,187 -325,621,380 -305,168,313 -20,453,067 0 -619,941 -77,816,866 37,247,997
Anadolu Sigorta
2008
Annual Report
93

Detailed Income Statement
MOTOR THIRD PARTY LIABILITY 142,521,483 126,774,780 164,081,029 -30,446,292 -6,859,957 13,835,986 1,910,717 -176,464,740 -149,882,572 -125,600,805 -24,281,767 0 0 -26,582,168 -33,943,257
ENGINEERING 20,265,138 17,582,207 15,914,241 1,667,966 0 1,906,771 776,160 -18,905,726 -13,264,537 -10,611,187 -2,653,351 0 -197,805 -5,443,383 1,359,412
AGRICULTURE 5,599,005 4,590,775 5,910,441 -1,281,243 -38,424 999,574 8,656 -5,753,419 -4,322,775 -3,130,458 -1,192,317 0 0 -1,430,645 -154,415
LEGAL PROECTION 6,336,577 4,540,626 5,015,308 -474,682 0 1,795,948 3 -5,611,465 -106,995 -20,472 -86,523 0 0 -5,504,470 725,111
PERSONAL ACCIDENT 50,336,350 36,718,248 42,557,640 -5,839,392 0 13,590,519 27,583 -16,012,073 -4,952,175 -4,760,103 -192,072 0 -1,248,816 -9,811,083 34,324,277
HEALTH 135,499,294 124,678,653 127,179,863 -2,501,210 0 10,724,625 96,016 -128,336,989 -97,050,401 -97,352,861 302,460 0 0 -31,286,588 7,162,306
CREDIT 24,083 21,355 7,587 13,768 0 2,728 0 -32,458 0 0 0 0 -20,641 -11,817 -8,375
TOTAL 932,498,168 822,807,792 872,199,140 -42,860,837 -6,530,511 99,397,266 10,293,110 -835,826,669 -647,270,036 -595,760,563 -51,509,473 0 -5,444,952 -183,111,681 96,671,499
96,671,499 96,671,499 176,944,315 128,088,722 16,390,548 -6,439,850 19,776,678 17,888,252 0 1,199,623 12,800 27,542 0 -117,741,481 -108,031 -282,743 -3,346,990 -99,397,266 0 -9,499,637 -5,106,814 0 -15,151,607 -13,665,702 3,808,326 57,447 0 0 -2,122,323 1,123,980 -4,353,335 0 0 117,666,276 140,722,726 -23,056,450 117,666,276
94
Anadolu Sigorta
2008
Annual Report

Notes to the Financial Statements as of 31 December 2008
(Amounts expressed in New Turkish Lira (TRY) unless otherwise stated)
1. General Information 1.1 Parent Company and the ultimate owner of the Group (holding) Anadolu Anonim Trk Sigorta irketi (the Company), operating since 1 April 1925, is the subsidiary of Trkiye Bankas A.. and its ultimate shareholding structure is detailed below: 31 December 2008 Participation Amount Participation rate TRY % 124,355,077 35.53 76,229,997 21.78 149,414,926 42.69 350,000,000 100.00
Trkiye Bankas A.. Milli Reasrans T.A.. Other
1.2 The Companys address and legal structure and address of its registered country and registered office (or, if the Companys address is different from its registered office, the original location where the Companys actual operations are performed) The Company is a corporation, which was established in accordance with the requirements of Turkish Commercial Code, is located at Kuleleri Kule 2 Kat: 23-26 34330, 4.Levent, stanbul. 1.3 Main operations of the Company The Companys main operation is insurance business on non-life insurance branches. 1.4 Details of the Companys operations and nature of field of activities In accordance with Article 50(a) 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 performs its operations accordingly. Principles of operations are determined based on the Insurance Law No: 5684 and standards and policies set out in applicable regulations. 1.5 Average number of the Companys personnel based on their categories 31 December 2008 Number 8 374 251 87 720
Key management personnel Directors Officers Contracted personnel Total
1.6 Remuneration and fringe benefits provided to top management As of 31 December 2008, remuneration and fringe benefits provided to top management such as; chairman and members of the board of directors, managing director and assistant managing director (including operational leasing, depreciation and other expenses in addition to monetary rights, such as; compensation, bonuses, premiums, ...etc) in total amount to TRY 3,332,918.
Anadolu Sigorta
2008
Annual Report
95

1.7 Distribution keys used in the distribution of investment income and operating expenses in the financial statements (personnel expenses, administration expenses, research and development expenses, marketing and selling expenses and other operating expenses) The Companys distribution of indirect general administrative, research and development, marketing, selling and advertising expenses to technical accounts by the number of policies based on each branch, gross amount of premiums written and numbers of claim reports is made based on the standards and policies set out in relation to distribution keys used in the financial statements prepared in accordance with the Undersecretariat of Treasurys Circular on the Insurance Uniformed Chart of Accounts issued on 4 January 2008. The Companys distribution of investment income to technical branches by the rates calculated by dividing the net cash flow amount into the total net cash flow amount, less any reinsurance share for each branch is made based on the standards and policies set out in relation to the distribution keys used in the financial statements prepared in accordance with the Undersecretariat of Treasurys circular on the Insurance Uniformed Chart of Accounts issued on 4 January 2008. 1.8 Stand-alone or consolidated financial statements Article 4(1) of the Decree on Financial Reporting of Insurance and Reinsurance Companies and Pension Funds which requires the recognition of company operations in accordance with the preparation and presentation of financial statements requirements in the Decree and Turkish Accounting Standards Board (TASB), except for any Decrees issued by the Undersecretariat of Treasury in relation to the matters specified in 4(2), and Article 4(2) of the Decree on Financial Reporting of Insurance and Reinsurance Companies and Pension Funds which requires the determination of principles and procedures on insurance contracts, accounting of subsidiaries, associates and entities under common control, consolidated financial statements, publicly available financial statements and the related disclosures and notes in accordance with decrees issued by the Undersecretariat of Treasury should be applicable in accordance with the Undersecretariat of Treasurys Sector Announcement made in regards to Preparation of Decrees In Relation to Financial Reporting by the Undersecretariat of Treasury issued at 18 February 2008. In this respect, the accompanying financial statements only include financial information of Anadolu Anonim Trk Sigorta irketi based on Article 3 of the Undersecretariat of Treasurys Sector Announcement made in relation to Article 4(2). In accordance with Article 3, draft decree on the consolidated financial statements is expected be prepared in 2008 and its first-time application will be in 2009. Therefore, the Company will not apply TAS 27 (Turkish Accounting Standards) in its financial statements. In addition, the Decree on Preparation of Consolidated Financial Statements of Insurance and Reinsurance Companies and Pension Funds was issued as of 31 December 2008 and it will be applicable as of 31 March 2008. 1.9 Name and other information of the reporting company and subsequent changes to the prior balance sheet date Name / Trade name Headquarter address Phone Fax Web page address E-mail address Anadolu Anonim Trk Sigorta irketi Kuleleri Kule 2 Kat: 23-26 34330, 4. Levent / stanbul (212) 350 03 50 (212) 350 03 55 www.anadolusigorta.com.tr bilgi@anadolusigorta.com.tr
There has been no change in the above information as of the prior balance sheet date.
96
Anadolu Sigorta
2008
Annual Report

1.10 Subsequent Events There has been no change in the Companys operations, documentation and records or Companys policies subsequent to the balance sheet date. 2. Summary of the Accounting Policies 2.1 Basis of Preparation 2.1.1 Basis of Preparation of Financial Statements and Specific Accounting Policies Used Accounting Standards In accordance with Article 50(a) of 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 Companys financial statements are prepared in accordance with the prevailing accounting principles and standards for Insurance and Reinsurance Companies and Pension Funds set out by the Undersecretariat of Treasury. The Decree on Financial Reporting of Insurance and Reinsurance Companies and Pension Funds was published in the Official Gazette No: 26852 on 14 July 2007 and has become effective as of 1 January 2008. Article 4(1) of the Decree on Financial Reporting of Insurance and Reinsurance Companies and Pension Funds requires the recognition of company operations in accordance with the preparation and presentation of financial statements requirements in the Decree and TASB, except for any Decrees issued by the Undersecretariat of Treasury in relation to the matters specified in 4(2), and Article 4(2) of the Decree on Financial Reporting of Insurance and Reinsurance Companies and Pension Funds requires the determination of principles and procedures on insurance contracts, accounting of subsidiaries, associates and entities under common control, consolidated financial statements, publicly available financial statements and the related disclosures and notes in accordance with the decrees issued by the Undersecretariat of Treasury. Within this respect, the below requirements are set out in regards to Article 4(2) of the Decree in the Sector Announcement No: 2008/9 issued on 18 February 2008: 1. TFRS 4 (Turkish Financial Reporting Standards) Insurance Contracts is applicable for the annual periods beginning on or after 31 December 2005. The Standard is effective as of 25 March 2006; however, it is not applicable for the current period since International Accounting Standards Board has not yet completed the second phase of its project. Principles and procedures on the preparation of notes and disclosures in relation to insurance contracts will be set out by a decree that will be issued by the Undersecretariat of Treasury in case of need. 2. Accounting of subsidiaries, entities under common control and associates is prescribed by the circular no: 2007/26 issued by the Undersecretariat of Treasury. In this respect, subsidiaries, entities under common control and associates should be accounted for in accordance with the specific standards issued by the TASB until a related decree is issued by the Undersecretariat of Treasury. 3. A draft decree on the consolidated financial statements will be prepared in 2008 and expected to be applied in 2009. Therefore, TAS 27 will not be applied.
Anadolu Sigorta
2008
Annual Report
97

4.The Decree on Presentation of Publicly Available Financial Statements and Related Notes and Disclosures issued by the Undersecretariat of Treasury was published and has become effective in the Official Gazette No: 26851 on 18 April 2008. In this respect, TAS 1 will not be applicable. a. Preparation of Financial Statements in Hyperinflationary Periods In accordance with the Undersecretariat of the Treasurys statement no: 19387 issued on 4 April 2005, the Companys financial statements as of 31 December 2004 are adjusted and its 2005 openings are prepared based on the requirements set out in the preparation of financial statements in hyperinflationary periods specified in the CMBs Decree Volume: XI, No: 25 Accounting Standards in Capital Markets which was published in the Official Gazette No: 25290 on 15 November 2003. In addition, the preparation of financial statements in hyperinflationary periods has not been applied in accordance with the statement of the Undersecretariat of the Treasury. b. Comparative Information and Restatement of Prior Period Financial Statements Based on the above-mentioned explanations, the Companys retained earnings/accumulated loss account has been restated as below in the opening financial statements as of 31 December 2007 in accordance with the requirements set out in the Decree Financial Reporting of Insurance and Reinsurance Companies and Pension Funds: Restated Balance Sheet / Income Statement Item Goodwill Accumulated Amortization Unused Vacation Provisions Discounted Retirement Pay Provision Difference Discounted Receivable -Payable Difference Unexpired Risk Reserves Deferred Tax Retained Earnings/Accumulated Losses TRY 10,020,833 (96,501) 5,564,305 (4,364,283) (1,633,856) 923,124 10,413,622
In accordance with the Decree on Presentation of Publicly Available Financial Statements and Related Notes and Disclosures issued on 18 April 2008, no comparative information is required for the Companys financial statements as of 31 December 2008 and 31 December 2007. c. Technical Reserves Unearned premiums reserve, outstanding claims reserve and their reinsurance shares included under technical reserves in the financial statements are recognized based on the below principles in accordance with the Insurance Law No: 5684 effective at 14 June 2007 and the requirements set out in the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions issued in the Official Gazette No: 26606 on 7 August 2007. Unearned premiums reserve is the carried forward portion of unearned gross premiums written in the current period and is calculated on a daily pro-rata basis. Previously, unearned premium reserve was calculated on the net retained premiums written except the earthquake guarantees given in fire and engineering insurance branches, net-of-commissions. However, the Circular Compliance of Technical Provisioning of Insurance and Reinsurance Companies and Pension Funds with the Legal Provisions of Insurance Law No: 5684 issued by the Undersecretariat of the Treasury on 4 July 2007 prohibits the application of deducting the earthquake premiums in the calculation of unearned premium reserve for insurance policies prepared subsequent to 14 June 2007, and net-of-commissions application has been ceased in the calculation of unearned premium reserve of the insurance
98
Anadolu Sigorta
2008
Annual Report

policies prepared after 1 January 2008 in accordance with the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions. In accordance with the related Decree, for the transportation policies issued after 1 January 2008 with indefinite expiration dates, 50% of the remaining portion of the premiums accrued in the last three months, is provided as unearned premium reserves. In addition, the Circular no: 2007/25 issued by the Prime Ministry Undersecretariat of Treasury of the Turkish Republic on 28 December 2007 requires the recognition of carried forward portions of commissions paid to intermediaries, commissions received due to the premiums ceded to reinsurers, production expense shares and the amounts paid for the non-proportional reinsurance treaty agreements under new account codes, while the related income and expenses in the current period should be recognized under the old account codes. Following the above-mentioned amendments, the Company has calculated a deferred commission expense amounting to TRY 85,249,553 and deferred commission income amounting to TRY 27,558,111 as of 31 December 2008. As of 31 December 2008, the Company has calculated TRY 603,146,185 of unearned premium reserve and TRY 144,829,701 of reinsurer share of the unearned premium reserve. Insurance companies are required to provide unexpired risk reserves for insurance branches of which are inconsistent with the risk level assumed over the insurance period and the distribution of premiums earned over time in accordance with the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held for Such Provisions. Insurance companies are also required to provide unexpired risk reserves if unearned premium reserve is inadequate for the Companys risks and estimated expenses. In accordance with the Decree, insurance companies should apply an adequacy test covering the last 12 months for each period for the possibility of exceeding claim compensations from existing insurance contracts against the unearned premium reserves provided for these contracts. The related Decree, which was published in the Official Gazette No: 26674 on 18 October 2007, requires the multiplication of unearned premium reserves by the estimated claim premium ratio in adequacy test application. Estimated claim premium ratio is calculated by dividing the occurred claims (outstanding claims (net) + claims paid (net) outstanding claims reversal (net)) into earned premiums (premiums written (net) + carried forward unearned premiums reserve (net) unearned premiums reserve (net)). In addition, if the estimated claim premium ratio exceeds 100% in 2008 and 95 % in future periods for the estimated claim premium ratio of insurance branches that will be determined by the Undersecretariat of Treasury, the amount calculated subsequent to the multiplication of the exceeding rate by unearned premiums reserve will be used in the calculation of unexpired risks reserve of the related branch. In accordance with the Circular issued by the Undersecretariat of the Treasury on 6 November 2007, unexpired risks reserve should be calculated for each sub-branches specified in the Insurance Uniformed Chart of Accounts. The Company has calculated TRY 9,556,144 of unexpired risks reserve and TRY 1,391,777 of reinsurance share of unexpired risks reserve as a result of the adequacy test as of 31 December 2008. Based on Article 1 of the Undersecretariat of Treasurys Sector Announcement No: 2008/33 issued on 28 July 2008, which requires the inclusion of unexpired risks reserve in the opening balance sheet and the presentation of its effects in retained earnings/accumulated losses, the Company has calculated TRY 2,034,675 of unexpired risks reserve and TRY
Anadolu Sigorta
2008
Annual Report
99

400,819 of reinsurance share as of 31 December 2007 and the effects are reflected in retained earnings/accumulated losses in the financial statements as of 31 December 2008 in relation to the abovementioned test. Outstanding claims reserve is provided for the outstanding claims reported but not paid as of the period-end. If the amount of claims paid is below or above the amount of reserves provided, the resulting difference is reflected to the accounts at the payment date. Reinsurance shares of outstanding claims are offset under the outstanding claims reserve. In accordance with the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions published in the Official Gazette No: 26606 on 7 August 2007, insurance companies are required to provide outstanding claims reserve for both occurred and calculated but not actually paid claims and, if such claims could not be calculated, not reported but incurred claims carried at estimated amounts in the prior or current period. For outstanding claim files opened in the last 5 or over 5 years, weighted average ratio is considered in the calculation of subrogation, salvage and the other related incomes to be deducted from the occurred outstanding claims reserve. Weighted average ratio is calculated by dividing the subrogation, salvage and other related incomes received following the period in which the claims are incurred into the occurred outstanding claims reserve. Subrogation, salvage and other related incomes to be deducted from the related branchs outstanding claims reserve for the current period is calculated by multiplying the calculated weighted average ratio of the branch by the related branchs occurred outstanding claims reserve of the current period. Based on the calculations mentioned above, the Companys subrogation, salvage and other related incomes to be deducted from outstanding claims reserve amounts to TRY 20,850,812 and the reduced amount from its reinsurance share for outstanding claims reserve amounts to TRY 1,175,217 for the 12 month period in 2008. In accordance with the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions published in the Official Gazette No: 26606 on 7 August 2007, insurance companies should consider the weighted average ratio calculated by dividing the claims incurred prior to the related periods but reported after the related period for the last 5 years or over, after the deduction of subrogation, salvage and other related incomes, to the related periods premium, in the calculation of incurred but not reported claims. The current periods incurred but not reported claim should be measured by multiplying the weighted average ratio by the total premium production for 12 months prior to the current period. Based on the calculations mentioned in detail above, as of 31 December 2008, the Companys net incurred but not reported claim amount presented under the outstanding claims reserve in the financial statements amounts to TRY 53,567,224. In accordance with Article 7(7) of the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions published in the Official Gazette No: 26606 on 7 August 2007, insurance companies are required to prepare an adequacy table for their outstanding claims reserve at the end of each period using the format designated by the Undersecretariat of the Treasury and such companies are also required to present the tables to the Undersecretariat of the Treasury. The Undersecretariat of the Treasury denotes that an adequacy table should present the outstanding claim adequacy ratio, which is the proportion of outstanding claim reserves provided for the last 5 years to the total of actually paid claims including all expense
100
Anadolu Sigorta
2008
Annual Report

shares in relation to the related claims. If the average of the last five years outstanding claim adequacy ratio, except for the current year, is below 95%, in order to calculate the adequacy ratio, the difference is multiplied by the current years outstanding claim reserve. As of 31 December 2008, the Companys additional outstanding claim reserve as calculated for the outstanding claim adequacy ratio presented under the outstanding claims reserve in the accompanying financial statements amounts to TRY 6,057,043. In accordance with Article 7(6) of the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions published in the Official Gazette No: 26606 on 7 August 2007, outstanding claim reserve provided for the current period cannot be below the amount calculated by using the actuarial chain method developed by the Undersecretariat of the Treasury. In the Decree on the Actuarial Chain Method issued by T.C. Prime Ministry Undersecretariat of Treasury on 29 November 2007, the application principles of the Actuarial Chain Method as of 31 March 2008 for the first time is based on the claims paid. The method is used for the statistical calculation of minimum outstanding claim reserves provided for the period-end by reducing the subrogation, salvage, and other related items from the net (less reinsurance share) and gross (including reinsurance share) claims paid in the last six years based on top-level branches in accordance with the Decree on Insurance Branches published in the Official Gazette No: 26579 on 11 July 2007. As of 31 December 2008, the Companys additional outstanding claim reserve as calculated based on the actuarial chain method presented under the outstanding claims reserve in the accompanying financial statements amounts to TRY 1,199,319 and the reinsurers share for the outstanding claims reserves amounts to TRY 31,206. These additional amounts are calculated on the total amount of the results of the actuarial chain method. As of 31 December 2008, the Companys total outstanding claim reserve amounts to TRY 333,640,312 and total reinsurers share for the outstanding claims reserves amounts to TRY 83,465,691. In accordance with Article 9 of the Decree Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions published in the Official Gazette No: 26606 on 7 August 2007, insurance companies are required to provide equalization reserves for earthquake and credit insurances in order to equalize the possible fluctuations in the claims compensation rates and to cover the catastrophic risks in subsequent periods. Also, in accordance with the related article, equalization reserves should be calculated as 12% of the earthquake and credit net premiums of each year and amounts paid for non-proportional reinsurance contracts should be considered as premiums ceded in the calculation of net premium, and companies should continue to provide reserves to the extent that reserves exceed 150 % of the maximum amount of net premiums received in the last five financial periods. The Company has provided TRY 5,444,952 of equalization reserve as of 31 December 2008 for the current period based on the calculation mentioned above. d. Subrogation Income Accruals The Undersecretariat of the Treasury made some disclosures on accounting for subrogation income accruals in order to establish the uniformity considering various applications in the sector under the statement no: B.02.1.HM.0.SGM.0.3.1.1-3534 published on 18 January 2005 and under the supplementary Article No: 2005/24 of the related statement. In accordance with the requirements set out in the related statements, insurance companies should recognize the subrogation amounts from insurance companies as income, irrespective of having furnished the certificate of release from the counter insurance companies, as long as the insurance
Anadolu Sigorta
2008
Annual Report
101

company settles the claim payment to the policyholder and receives the relevant payment document from the policyholder. The Company has determined the amount of its subrogation receivables in accordance with the recent statement made by the Undersecretariat of the Treasury through the Union of the Turkish Insurance and Reinsurance Companies as of 3 February 2005 and has calculated the total subrogation receivable from the insurance companies amounting to TRY 20,247,019 and the reinsurance share of TRY 1,118,698 and presented these amounts in receivables and payables from operating activities and technical income accounts, respectively. The Company also presented the retention amount of subrogation receivables under litigation and execution amounting to TRY 51,498,650 and TRY 8,522,315 of their reinsurance share in doubtful receivables from operating activities and technical income accounts, respectively. e. Premium Income and Claims Premium income represents premiums on policies written during the year. Unearned premium reserves are determined from premiums written during the year on a daily pro-rata basis. Claims are recognized as expense as they are paid. Outstanding claims provision is provided for both reported unpaid claims at period-end and incurred but not reported claims. Reinsurers shares of claims paid and outstanding loss provisions are off-set against these reserves. f. Receivables from Insurance Activities For allowance for doubtful receivables, the Company has provided provision for receivables that are subject to administrative and legal follow-up, considering the nature and extent of such receivables, in accordance with Article 323 of the Tax Procedure Law. As of 31 December 2008, the amount of doubtful receivables that are subject to administrative and legal follow-up amounts to TRY 57,499,314. TRY 42,976,335 of this provision includes subrogation transactions under litigation. g. Discount of Receivables and Payables Receivables and payables are carried at book values in the financial statements. Receivables and payables are subject to discount. As of the balance sheet date, 20% of discount rate is used to discount receivables and payables in TRY. The rates used to discount receivables and payables in foreign currencies vary on the currency type. h. 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 periods 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. i. Subsequent Events Subsequent events cover the events between the balance sheet date and the issuance of the financial statements, even if they are occurred subsequent to the disclosures made on profit or other selected financial information.
102
Anadolu Sigorta
2008
Annual Report

The Company adjusts its financial statements in the occurrence of any subsequent events. j. Provisions, Contingent Liabilities and Assets Provisions are recognized when the Company has a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. If provision is measured using the cash flows estimated to settle the present obligation, its carrying amount will be equal to the present value of such cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. k. Change in Accounting Policies, Accounting Estimates and Errors Changes in accounting policies or accounting errors are applied retroactively and prior year financial statements are adjusted accordingly. If estimated changes in accounting policies are only for one period, changes are applied on the current year but if estimated changes are for the following periods, changes are applied both on the current and following years prospectively. l. Taxation and deferred tax Income tax expense represents the sum of the current tax payable and deferred tax expense. Current tax The current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companys liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases which is used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable
Anadolu Sigorta
2008
Annual Report
103

profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. 2.1.2 Other related accounting policies for the understanding of financial statements All accounting policies are explained in Note 2.1.1. 2.1.3. Functional currency The Companys 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 Turkish Lira, which is the functional and presentation currency of the Company. In accordance with Law No: 5083 Monetary Unit of the Turkish Republic (Law No: 5083), the name of the Turkish Republics monetary unit and its sub-currency unit is changed to the New Turkish Lira and the New Turkish Cent, respectively. However, in accordance with the additional resolution of the Council of Ministers in regards to the order on the removal of the phrase New in the New Turkish Lira and the New Turkish Cent and Its Application Principles, the phrase New used in the Turkish Republics monetary unit is removed both from New Turkish Lira and the New Turkish Cent as of 1 January 2009. 2.1.4. Rounding degree used in the financial statements All the balances presented in the financial statements are expressed in full in New Turkish Lira (TRY). 2.1.5. Valuation method(s) used in the presentation of financial statements Financial statements, except for revaluation of financial instruments, are prepared based on the historical cost method. 2.1.6 Adoption of New and Revised Standards In the current year, the Company has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2008. The following standards, amendments and interpretations to published standards should be applicable for accounting periods beginning on or after 1 January 2008, but they are not relevant to the Companys operations: IFRIC 11 IFRS 2 Group and Treasury Share Transactions, IFRIC 12 Service Concession Arrangements, IFRIC 14 IAS 19- The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction, Amendments to IAS 39 and IFRS 7 Reclassification of Financial Instruments Standards, revised standards and interpretations to existing standards that are not yet effective and have not been early adopted by the Company:
104
Anadolu Sigorta
2008
Annual Report

At the date of authorization of these financial statements, the following Standards and Interpretations were in issue but not yet effective: Effective for annual 1 January 2009 * IFRIC 13 Customer Loyalty Programs Effective for annual 1 July 2008 * IFRIC 15 Agreements For the Construction of Real Estate Effective for annual 1 January 2009 * IFRIC 16 Hedges of a Net Investment in a Foreign Effective for annual Operation 1 October 2008 * IFRIC 17 Distributions of Non-Cash Assets To Owners Effective for annual 1 July 2009. * IFRIC 18 Transfers of Assets From Customers Effective for annual 1 July 2009. * IFRS 2 Share-based Payments Amendment relating to Effective for annual vesting conditions and cancellations 1 January 2009 * IFRS 1 First-time Adoption of International Financial Effective for annual Reporting Standards Amendment relating to cost of an 1 January 2009 investment on first-time adoption * IFRS 3 Business Combinations Effective for annual * IAS 27 Consolidated and Separate Financial Statements , 1 July 2009 IAS 28 Investments in Associates * IAS 31 Interests in Joint Ventures Comprehensive revision on applying the acquisition method * IAS 23 (Revised) Borrowing CostsComprehensive Effective for annual revision to prohibit immediate expensing 1 January 2009 * IAS 27 Consolidated and Separate Financial Statements Effective for annual Amendment relating to cost of an investment on 1 January 2009 first-time adoption * IAS 1 Presentation of Financial Statements Effective for annual * IAS 32 Financial Instruments: Presentation Amendments 1 January 2009 relating to disclosure of puttable instruments and obligations arising on liquidation * IAS 1 Presentation of Financial Statements Effective for annual Comprehensiverevision including requiring a statement of 1 January 2009 comprehensive income * IAS 39, Financial Instruments: Recognition and Effective for annual Measurement Amendments for eligible hedged items 1 January 2009 * IFRS 8 Operating Segments periods beginning on or after periods beginning on or after periods beginning on or after periods beginning on or after periods beginning on or after periods beginning on or after periods beginning on or after periods beginning on or after
periods beginning on or after
periods beginning on or after periods beginning on or after
Amendments to IFRS 1 First-time Adaptation of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements
Anadolu Sigorta
2008
Annual Report
105

The amendment determines the cost of a subsidiary, jointly controlled entity or associate on transition to IFRS under IAS 27 or as a deemed cost. The amendment to IAS 27 requires the recognition of dividends from a subsidiary, jointly controlled entity or associate as income in the unconsolidated financial statements. The adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Company. IFRS 2 Share-Based Payments The amendments clarify the definition of vesting conditions and introduce the concept of a non-vesting condition which is a condition that is neither a service condition nor a performance condition. The standard also requires the application of similar criteria to be used in the recognition of awards cancelled by either an entity or the counterparty (employer or employee). The adoption IFRS 2 in future periods will have no material impact on the financial statements of the Company. IFRS 8 Operating Segments IFRS 8 Operating Segments supersedes IAS 14 Segment Reporting. The standard specifies how an entity should report information about its operating segments based on the segment criteria used in internal reporting which are prepared by the management. The Company will apply IFRS 8 for annual periods beginning from 1 January 2009. IAS 32 and IAS 1 Puttable Instruments and Obligations Arising On Liquidation Under the revised IAS 32, subject to specified criteria are being met, puttable instruments and obligations arising on liquidation will be classified as equity while, the amendment to IAS 1 requires the definition and disclosure of such instruments, which are classified as equity. The adoption of these standards in future periods will have no material impact on the financial statements of the Company. IAS 23 (Revised) Borrowing Costs The amendment requires an entity to capitalize borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The amendment will eliminate the expensing option of borrowing costs in the period in which they are incurred. The Company will apply IAS 23 (Revised) for annual periods beginning from 1 January 2009. IFRS 3 Business Combinations The amendments require the recognition of an acquisition related cost of a business combination as an expense in the period in which the cost is incurred. It also requires subsequent changes in the fair value of a contingent consideration recognized in business combination to be recognized in the income statement rather than in equity. IFRIC 13 Customer Loyalty Programs Under IFRIC 13, customer loyalty programs should be recognized as a separately identifiable component of the sales transaction(s). A portion of the fair value of the consideration received in respect of the initial sale shall be allocated to the award credits and the consideration allocated to award credits should be recognized as revenue when awards credits are redeemed. The adoption IFRIC 13 in future periods will have no material impact on the financial statements of the Company because the interpretation is not relevant to its operations.
106
Anadolu Sigorta
2008
Annual Report

IFRIC 15 Agreements for the Construction of Real Estate IFRIC 15 provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and when revenue from the construction should be recognized. The adoption of the Interpretation in future periods will have no material impact on the financial statements of the Company. IFRIC 16 Hedges of a Net Investment in a Foreign Operation IFRIC 16 provides guidance on three main issues: The presentation currency used in the entitys financial statements cannot be used as a basis for the application of hedge accounting. Therefore, a hedged risk can be considered as the exchange differences arising between the functional currency of the foreign operation and the presentation currency used in the financial statements of the parent entity. A hedging instrument can be held within the Company or companies. The adoption of the Interpretation in future periods will have no material impact on the financial statements of the Company. IFRIC 17 Distributions of Non-Cash Assets to Owners IFRIC 17 applies to all reciprocal non-cash distributions of assets by an entity to its owners, including the distributions that give owners a choice of receiving either non-cash assets or a cash alternative. The adoption of the Interpretation in future periods will have no material impact on the financial statements of the Company. IFRIC 18 Transfers of Assets from Customers The Interpretation clarifies the accounting for cash received from a customer that must be used only to acquire or construct the item of property, plant, and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services. The adoption of the Interpretation in future periods will have no material impact on the financial statements of the Company. IAS 1 (Revised) Presentation of Financial Statements IAS 1 has been revised in order to improve users' ability to analyze and compare the information given in financial statements. Changes made to the revised standard are summarized below: the statement of changes in equity can only include transactions with shareholders; in addition to income statement, presentation of a new Statement of Other Comprehensive Income showing all income and expense items as profit and loss; and interpretation of prior financial statements in the current period, or presentation of the prior effects of the retrospective application of new accounting policies in a newly formed column in the financial statements. IAS 39, Financial Instruments: Recognition and Measurement Amendments for eligible hedged items The amendment clarifies that inflation may only be hedged if changes in inflation are a contractually specified portion of cash flows of a recognized financial instrument. The Companys management anticipates that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Company.
Anadolu Sigorta
2008
Annual Report
107

2.2 Consolidation Article 4(1) of the Decree on Financial Reporting of Insurance and Reinsurance Companies and Pension Funds which requires the recognition of company operations in accordance with the preparation and presentation of financial statements requirements in the Decree and Turkish Accounting Standards Board (TASB), except for any Decrees issued by the Undersecretariat of Treasury in relation to the matters specified in 4(2), and Article 4(2) of the Decree on Financial Reporting of Insurance and Reinsurance Companies and Pension Funds which requires the determination of principles and procedures on insurance contracts, accounting of subsidiaries, associates and entities under common control, consolidated financial statements, publicly available financial statements and the related disclosures and notes in accordance with decrees issued by the Undersecretariat of Treasury should be applicable in accordance with the Undersecretariat of Treasurys Sector Announcement made in regards to Preparation of Decrees In Relation to Financial Reporting by the Undersecretariat of Treasury issued at 18 February 2008. In this respect, the accompanying financial statements only include financial information of Anadolu Anonim Trk Sigorta irketi based on Article 3 of the Undersecretariat of Treasurys Sector Announcement made in relation to Article 4(2). In accordance with Article 3, draft decree on the consolidated financial statements is expected be prepared in 2008 and its first-time application will be in 2009. Therefore, the Company will not apply TAS 27 (Turkish Accounting Standards) in its financial statements. In addition, the Decree on Preparation of Consolidated Financial Statements of Insurance and Reinsurance Companies and Pension Funds was issued as of 31 December 2008 and it will be applicable as of 31 March 2008. 2.3 Segment Reporting The Company has no different operations or geographical segments other than its main line of activity; therefore, no segment reporting is required. 2.4 Reserves in Foreign Currencies The Companys financial statements are presented in the currency of the primary economic environment in which the entity operates (its functional currency). In preparing the financial statements of the Company, transactions in currencies other than YTL (foreign currencies) are recognized at exchange rates prevailing at the transaction date. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising from exchange rate transactions are recognized in the income statement. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences, except for those detailed below, are recognized in profit and loss in the period in which they are incurred: Exchange differences treated as restatements of interest costs on liabilities associated with assets in foreign currencies held for the construction of a future use which are included in the cost of such assets,
108
Anadolu Sigorta
2008
Annual Report

Exchange differences arising from foreign currency hedging transactions (accounting policies for hedging are explained below), Exchange differences arising from unpaid receivables and payables from foreign operations that are part of the net investment in foreign operations, accounted in translation reserves and associated with profit and loss in the sale of net investment. 2.5 Property, Plant and Equipment Property, plant and equipment purchased prior to 1 January 2005 are carried at restated cost based on the effects of inflation as of 31 December 2004 and property, plant and equipment purchased subsequent to 1 January 2005 are carried at cost, less any accumulated depreciation and impairment loss. Assets held for use in the construction, or leasing, administrative or any other purposes are carried at cost, less any impairment. Legal charges are also added to costs. For assets that need substantial time to be ready for use or sale, borrowing costs are capitalized based on the Companys accounting policy. Such assets are depreciated, on the same basis used for other fixed assets, when they are ready to use. Assets, other than land and ongoing constructions, are depreciated over their expected useful lives by using the straight line method. Estimated useful life, residual value, and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. (%) 2 20 20 2-25
Buildings Leasehold Improvements Vehicles Furniture and Office Equipments
Assets acquired under finance lease are depreciated as the same basis as property, plant and equipment or, where shorter, the term of the relevant lease. Gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. 2.6 Investment Properties Investment property is held to earn rentals and/or for capital appreciation is carried at cost less accumulated depreciation and any accumulated impairment losses. Carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Depreciation is provided on investment property on a straight line basis. Depreciation period for investment property is nil for land, and 50 years for buildings. 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 year of retirement or disposal.
Anadolu Sigorta
2008
Annual Report
109

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Company accounts for such property in accordance with the policy applied to Property, Plant and Equipment up to the date of change in use. Real estates rented under operational lease are classified as investment properties. 2.7 Intangible Assets Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Companys share of the net identifiable assets of the acquired subsidiary/associate at the date of the acquisition. Goodwill on acquisitions of associates is included in investments in associates and is tested for impairment as part of the overall balance. Separately recognized goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity disposed of. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocations made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arises. The Company has acquired the health portfolio of Anadolu Hayat Emeklilik A.. at 31 August 2004 with all of its rights and liabilities. The value at acquisition of the portfolio amounting to TRY 16,250,000 is capitalized as goodwill by the Company. Intangible assets acquired separately Intangible assets acquired separately are reported at cost less accumulated amortization and accumulated impairment losses. Amortization is charged on a straight-line basis over their estimated useful lives. Estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Computer software Acquired computer software licenses are capitalized on the basis of the costs incurred from the date of acquisition to the date to bring the specific software in use. These costs are amortized over their estimated useful lives (3 to 15 years). Costs associated with developing or maintaining computer software programs are recognized as expense as 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 Investments are recognized and derecognized on a trade date where the purchase or sale of an investments under a contract whose terms require delivery of the investment within the timeframe established by the market
110
Anadolu Sigorta
2008
Annual Report

concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are classified into the following specified categories: financial assets as at fair value through profit or loss (FVTPL), held-to-maturity investments, available-for-sale (AFS) financial assets and loans and receivables. Effective interest method Effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Financial assets at fair value through profit and loss (Held-for-trading financial assets) Income related to the financial assets except for the financial assets at fair value through profit and loss is calculated by using the effective interest method. Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset can be classified as financial asset at fair value through profit and loss, if it is acquired principally for the purpose of selling in the short-term. Derivatives are also classified as held for trading unless they are designated as hedging instruments. Financial assets at fair value through profit and loss are classified as current assets. Held-to-maturity investments Investments in debt securities with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-tomaturity investments are recorded at amortized cost using the effective interest method less impairment, with revenue recognized on an effective yield basis. Available-for-sale financial assets Investments other than held-to-maturity debt securities are classified as either investments held for trading or as available-for-sale, and are measured at subsequent reporting dates at fair value except available-for-sale investments that do not have quoted prices in an active market and their fair values cannot be reliably measured are stated at cost and restated to the equivalent purchasing power. Where securities are held for trading purposes, gains and losses arising from changes in fair value are included in profit or loss for the period. For available-for-sale investments, gains and losses arising from changes in fair value are recognized directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included in the profit or loss for the period. Impairment losses recognized in profit or loss for equity investments classified as available-for-sale are not subsequently reversed through profit or loss. Impairment losses recognized in profit or loss for debt instruments classified as available-for-sale are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment loss. Loans and receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method, less any impairment.
Anadolu Sigorta
2008
Annual Report
111

Associates An associate is an entity that retains at least 20% of voting rights or has significant power over another entity. The difference between carrying value and fair value (to the extent that it is measured reliably) of such assets are recognized in shareholders equity and assets that have fair value are carried at fair value while the other assets are carried at book value. 2.9 Impairment of Assets Impairment of Non-financial Assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Impairment of financial assets The Company assesses its financial assets, other than those at FVTPL, at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets classified as held-to-maturity, availablefor-sale or loans and receivables is impaired. A financial asset or portfolio of financial assets is impaired and an impairment loss incurred if there is objective evidence that an event or events since initial recognition of the asset have adversely affected the amount or timing of future cash flows from the asset. For loans and receivables, the amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial except for trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. For AFS equity securities, any increase in fair value subsequent to an impairment loss is recognized directly in equity. 2.10 Derivative Financial Instruments As of 31 December 2008, the Company has no derivative financial instruments.
112
Anadolu Sigorta
2008
Annual Report

2.11 Offsetting Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. 2.12 Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 2.13 Share Capital As of 31 December 2008, the Companys nominal capital is TRY 350,000,000. Share capital of the Company is composed of Group A and Group B shares. TRY 1.50 of Group A share is represented by 150 of equity shares having a nominal amount of TRY 0.01 each. TRY 349,999,998.5 of Group B share is represented by 34,999,999,850 shares having a nominal amount of TRY 0.01 each. In accordance with the Article Voting rights specified in the Articles of Association of the Company, Group A shares have 10 voting rights whereas Group B shares have 1 voting right. 31 December 2008 Participation Amount Participation Rate % 124,355,077 35.53 76,229,997 21.78 149,414,926 42.69 350,000,000 100.00
Trkiye Bankas A.. Milli Reasrans T.A.. Other
2.13 Share Capital As of 31 December 2008, the Companys registered capital is TRY 500,000,000. As per the decision no: 5925 made by the Board of Directors on 10 March 2008, the Company decided to increase its capital from TRY 275,000,000 to TRY 350,000,000. Increased capital was registered on 16 June 2008 and disclosed in the Turkish Trade Registry Gazette No: 7087 on 19 June 2008. The details of the capital increase are summarized below: Increase Amount 75,000,000 Profit Share 23,000,000 Gain on Sale Added to Capital 539,332 Extraordinary Reserves 51,460,668
2.14 Insurance and Investment Contracts - Classification The Company issues insurance contracts that provide insurance risk transfer. Insurance Contracts: Insurance contracts are contracts in which one part accepts a significant insurance risk and pays compensation (insurer) to the other part (insuree) when any uncertain case affects the insuree. The Company makes reinsurance agreements in which the Company (ceding company) is compensated by the insurer (reinsurer company) for one or more claims. Insurance contracts entered into by the Company under which the contract holder is another insurer (reinsurance) are included with insurance contracts.
Anadolu Sigorta
2008
Annual Report
113

Insurance contracts are accounted when the insurance risk is transferred, and classified as an insurance contract as of the maturity date and/or amortization of the all contractual rights and liabilities. Investment Contracts: Investment contracts are those that transfer financial risks, excluding signi?cant insurance risks. The Company has no investment contracts. 2.15 Insurance and Investment Contracts With Discretionary Participation Features The Company neither has investment contracts nor investment contracts with discretionary participation feature. 2.16 Investment Contracts without Discretionary Participation Features The Company has no investment contracts. 2.17 Borrowings The Company has no short-term or long-term borrowings. 2.18 Income Tax Income tax expense represents the sum of the current tax payable and deferred tax. Current tax The current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companys liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases which is used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
114
Anadolu Sigorta
2008
Annual Report

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirers interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities over cost. 2.19 Employee Benefits Under the Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily leaving the Group. Such payments are considered as being part of defined retirement benefit plan in accordance with IAS 19 Employee Benefits. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses. 2.20 Provisions Provisions are recognized when the Company has a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. 2.21 Accounting of Income Premium and Commission Income Premium income represents premiums on policies written during the year. Unearned premiums, set aside to provide for the period of risk extending beyond the end of the financial year, are determined from premiums written during the year on a daily pro-rata basis.
Anadolu Sigorta
2008
Annual Report
115

Commissions received in the current period but relate to subsequent financial periods in return for the premiums ceded to the reinsurance companies are accounted as deferred commission income. Interest income and expense Interest income and expense are accounted in the income statement in the related period on an accrual basis. Interest income includes income gains from the coupons of the fixed return investment instruments and valuation of discounted government bonds based on internal rate of return method. Dividend income Dividend income from the equity share investments are recognized when the shareholder has the right to receive dividends. 2.22 Leasing Leasing the Company as lessee Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companys general policy on borrowing costs. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. 2.23 Profit Share Distribution The Company has no announced profit share distribution after the balance sheet date. 3. Significant Accounting Estimates and Requirements The Company has no significant accounting estimates or requirements. 4. Insurance and Financial Risk Management 4.1 Insurance Risk 4.1.1 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. Main reasons of insurance risk exposure result from the risk selection and inaccurate calculation of insurance coverage, policy terms and fee or inaccurate calculation of coverage portion kept within the company and coverage portion transfers to policyholders and transfer conditions.
116
Anadolu Sigorta
2008
Annual Report

Potential risks that may be exposed in transactions are managed based on the requirements set out in the Companys Risk Management Policies issued by the approval of the Board of Directors. The main objective of risk management policies is to determine the risk measurement, assessment, and control procedures and maintain consistency between the Companys asset quality and limitations allowed by the insurance standards together with the Companys risk tolerance of the accepted risk level assumed in return for a specific consideration. In this respect, instruments that are related to risk transfer, such as; insurance risk selection, risk quality follow-up by providing accurate and complete information, effective monitoring of level of claims by using risk portfolio claim frequency, treaties, facultative reinsurance contracts and coinsurance agreements, and risk management instruments, such as; risk limitations, are used in achieving the related objective. Risk tolerance is determined by the Companys Board of Directors by considering the Companys long-term strategies, equity resources, potential returns and economical expectations, and it is presented by risk limitations. Authorization limitations during policy issuing include authorizations for risk acceptances granted based on geographical regions in relation to unacceptable special risks or pre-approved acceptable special risks, insurance coverages to agencies, district offices, technical offices, assistant general managers and top management in the policy issuance period and authorizations for claim payment granted to district offices, claim management administration, automobile claims administration and Claim Committee established by the managing director and assistant managing director in the claim payment period. Whatsoever, risk acceptance is based on technical income expectations under the precautionary principle. In determining insurance coverage, policy terms and fee, these expectations are based accordingly. It is essential that all the authorized personnel in charge of executing policy issuance transactions, which is the initial phase of insurance process, should ensure to gather or provide all the accurate and complete information to issue policies in order to obtain evidence on the acceptable risks that the Company can tolerate from the related insurance transactions. On the other hand, decision to be made on risk acceptance will be possible by transferring the coverage to the reinsurers and/or coinsurers and considering the terms of the insurance policy. In order to avoid destructive losses over companys financial structure, company transfers the exceeding portion of risks assumed over the Companys risk tolerance and equity resources through treaties, facultative reinsurance contracts and coinsurance agreements to reinsurance and coinsurance companies. Insurance coverage and policy terms of reinsurance are determined by assessing the nature of each insurance branch. 4.1.2.1. Sensitivity to insurance risk Insurance risks do not generally have significant unrecoverable losses in the course of ordinary transactions, except for risks associated with earthquake and other catastrophic risks. Therefore, there is a high sensitivity to earthquake and catastrophic risks. The case of potential claims arising from earthquake and other catastrophic risks exceeding the maximum limit of the excess of loss agreements, such risks are treated as the primary insurance risks and are managed based on the precautionary principle. Maximum limit of excess of loss agreements is determined based on the worst case scenario on the possibility of an earthquake that stanbul might be exposed to in terms of its severity and any potential losses incurred in accordance with the generally accepted international earthquake models. In 2008, maximum limit of excess of loss agreement is calculated as EUR 400 million including the retention amount of EUR 5 million.
Anadolu Sigorta
2008
Annual Report
117

4.1.2.2. Insurance risk concentrations The Companys gross and net insurance risk concentrations (after reinsurance) in terms of insurance branches are summarized as below: Total Claims Liability (*) 31 December 2008 Accident Health Motor Vehicles Air Crafts Water Crafts Marine Fire and Natural Disasters General Losses Motor Vehicles Liability Air Crafts Liability General Liability Financial Losses Legal Protection Total Gross Total Claims Liability 2,978,002 17,358,304 71,935,659 617,105 6,543,755 9,339,500 54,654,269 47,552,193 89,515,469 136,752 31,735,664 1,139,086 134,554 333,640,312 Reinsurance Share of Total Claims Liability (423,840) (636,027) (3,446,490) (4,433,401) (564,223) (32,450,406) (31,732,616) (2,800,127) (6,947,355) (31,206) (83,465,691) Net Total Claims Liability 2,554,162 16,722,277 68,489,169 617,105 2,110,354 8,775,277 22,203,863 15,819,577 86,715,342 136,752 24,788,309 1,107,880 134,554 250,174,621
(*) Total claims liability includes outstanding claims reserve, incurred but not reported claims, additional reserves from the actuarial chain method, subrogation reduction and outstanding claims reserve adequacy difference. Gross and net insurance risk concentrations of the insurance contracts (after reinsurance) based on geographical regions are summarized as below: Total Claims Liability (*) 31 December 2008 Turkey Europe America Africa Asia Total Gross Total Claims Liability 267,974,295 7,191,982 1,001,363 563,015 584,142 277,314,797 Reinsurance Share of Total Claims Liability (80,705,338) (2,334,861) (900,038) (422,569) (246,895) (84,609,701) Net Total Claims Liability 187,268,957 4,857,121 101,325 140,446 337,247 192,705,096
118
Anadolu Sigorta
2008
Annual Report

Total Claims Liability (*) 31 December 2008 Mediterranean Region East Anatolian Region Aegean Region South East Anatolian Region Middle Anatolian Region Black Sea Region Marmara Region Total
Gross Total Claims Liability 20,001,931 7,565,822 20,438,334 10,392,466 34,102,174 30,103,003 145,370,565 267,974,295
Reinsurance Share of Total Claims Liability (5,475,343) (2,063,897) (2,819,792) (4,408,056) (6,238,732) (20,143,085) (39,556,433) (80,705,338)
Net Total Claims Liability 14,526,588 5,501,925 17,618,542 5,984,410 27,863,442 9,959,918 105,814,132 187,268,957
(*) Total claims liability includes the actual estimated compensation amounts. Net incurred but not reported claims amounting to TRY 53,567,224, additions of net Actuarial Chain Method calculations amounting to TRY 1,168,113, net subrogation reduction amounting to TRY (19,675,595), net outstanding claim reserve adequacy difference amounting to TRY 6,057,043 and outstanding claims of treaty activities which could not be distributed to geographical regions amounting to TRY 16,352,740 are excluded from the calculation. Gross and net (reinsurance deducted) insurance risk concentrations of the company based on the type of currency are summarized as below: Total Claims Liability (*) 31 December 2008 New Turkish Lira U.S. Dollar Euro Great Britain Pound Japanese Yen Swedish Krona Total Gross Total Claims Liability 197,999,838 68,732,519 9,397,766 593,926 590,357 391 277,314,797 Reinsurance Share of Total Claims Liability (60,410,433) (20,970,529) (2,867,291) (181,209) (180,120) (119) (84,609,701) Net Total Claims Liability 137,589.405 47,761,990 6,530,475 412,717 410,237 272 192,705,096
(*) Total claims liability includes the actual estimated compensation amounts. Net incurred but not reported claims amounting to TRY 53,567,224, additions of net Actuarial Chaining Method calculations amounting to TRY 1,168,113, net subrogation reduction amounting to TRY (19,675,595), net outstanding claim reserve adequacy difference amounting to TRY 6,057,043 and outstanding claims of treaty activities which could not distributed to geographical regions amounting to TRY 16,352,740 are excluded from the calculation. 4.1.2.3. Comparison of incurred claims with past estimations Outstanding claims reserve adequacy table in terms of branches is presented below. The table shows outstanding claims reserve adequacy rate which is the proportion of total outstanding claims reserve that the Company provided in the last 5 years to total compensation amount actually paid including all expenses related to the claims. When the arithmetical average of the last 5 years of the separately calculated outstanding claims reserve adequacy rate, excluding the current financial year, is below 95%, the amount of adequacy rate difference is calculated by multiplying the difference between the related rate and 95% by the current years outstanding claims reserve. The final outstanding claims amount of the current year is calculated by adding adequacy rate difference for each branch separately.
Anadolu Sigorta
2008
Annual Report
119

As of 31 December 2008, outstanding claims reserve adequacy table is presented as below: Accrual Rate % Outstanding claims adequacy rates Accident Illness-Health Motor Vehicles Air Crafts Water Crafts Marine Fire and Natural Disasters General Losses Motor Vehicles Liability Air Crafts Liability General Liability Financial Losses Legal Protection 158 100 134 119 166 207 140 158 121 107,723 189 105 773 Incurred but not reported claim and compensation amount % 104 82 90 39 427 97 92 137 85 825 66 55
The claims development table is assessed based on the claims paid in accordance with the Technical Reserves Regulations. As of 31 December 2008, the Companys claims development table prepared based on the claims in retention is summarized below:
Paid in after 1 period Paid in the incurred Period of Claims Incurred 1 January 2003-31 December 2003 1 January 2004-31 December 2004 1 January 2005-31 December 2005 1 January 2006-31 December 2006 1 January 2007-31 December 2007 1 January 2008-31 December 2008 Total period 180,429,019 243,398,163 357,393,586 452,657,156 515,744,779 496,795,435 2,246,418,139 298,207,797 596,636 443,115 736,899 222,258 following the incurred period 32,779,511 44,047,662 53,223,053 74,155,181 94,002,390 Paid in after 2 period following the incurred period (445,191) (209,316) (470,753) 1,721,895 Paid in after 3 period following the incurred period (53,569) (258,625) 755,309 Paid in after 4 period following the incurred period (498,441) 1,235,340 Paid in after 5 period following the incurred period 222,258 Total Payment 212,433,588 288,213,223 410,901,196 528,534,232 609,747,169 496,795,435 2,546,624,842
Upon the Technical Reserves Regulations, insurance companies should consider 80% of the outstanding claim amount calculated based on the actuarial chain method in their 2008 calculations; therefore, the Company has provided net TRY 1,168,113 of additional reserve for the aircraft vehicle liability, financial loss and legal protection branches as the Company considers 100% of the outstanding claim amount calculated based on the actuarial chain method as of the balance sheet date.
120
Anadolu Sigorta
2008
Annual Report

4.1.2.4 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 Specific changes are made in some of the technical reserve calculations which are effective as of 1 January 2008 in accordance with the Decree on Technical Provisions of Insurance and Reinsurance Companies and Pension Funds, and Assets Held for Such Provisions issued on 7 August 2007. Accordingly, the above-mentioned Decree requires the measurement of unearned premium reserves, that were previously calculated on the net premiums written, at gross amounts on a daily pro-rata basis without reducing any commissions or other related allowances as of 1 January 2008. In addition, commissions paid to the intermediaries, commissions received from the reinsurers, premium production expenses and the future corresponding portion(s) of amounts paid for non-proportional reinsurance treaties are accounted for under the deferred expense/income and other related accounts. The effect of this change on the financial statements has increased the unearned premiums reserve to TRY 57,691,442 and the corresponding portion of commissions paid amounting to TRY 85,249,553 is reflected as deferred commission expense, and the corresponding portion of the commission received amounting to TRY 27,558,111 is reflected as deferred commission income to the financial statements. As of 1 January 2008, unexpired risk reserves should be calculated for insurance branches which are inconsistent with the risk level assumed over the insurance period and the distribution of premiums earned over time in accordance with the Decree mentioned-above. As of the balance sheet date, the effect of unexpired risk reserve recognized as expense in the financial statements amounts to net TRY 8,164,367 (TRY 9,556,144 of unexpired risks reserve and TRY 1,391,777 of unexpired risks reserve reinsurance share). Based on Article 1 of the Undersecretariat of Treasurys Sector Announcement No: 2008/33 issued at 28 July 2008, (...unexpired risks reserve is included in the opening balance sheet and its effects are presented in retained earnings/accumulated losses), the Company has calculated net TRY 1,633,856 of unexpired risks reserve (TRY 2,034,675 of unexpired risks reserve and TRY 400,819 of unexpired risks reserve reinsurance share) as of 31 December 2007 and recognized the related amount under the retained earnings/accumulated losses account in the financial statements as of 31 December 2008. Different than prior period, starting from 1 January 2008, subrogation, salvage and other related income items are reduced from the outstanding claims reserve calculations. As of the balance sheet date, subrogation, salvage and other related income items amounting to net TRY 19,675,595 is reduced from the outstanding claims reserve. In addition, as of 1 January 2008, an additional reserve should be provided for each respective insurance branch when the outstanding claims reserve in the current period is below the amount calculated by the actuarial chain method designated by the Undersecretariat of Treasury. Upon the Technical Reserves Regulations, insurance companies should consider 80% of the outstanding claim amount calculated based on the actuarial chain method in their 2008 calculations; therefore, the Company has provided net TRY 1,168,113 of additional reserve for the aircraft vehicle liability, financial loss and legal protection branches as the Company considers 100% of the outstanding claim amount calculated based on the actuarial chain method as of the balance sheet date. When the arithmetical average of the last 5 years separately calculated outstanding claims reserve adequacy rate, excluding the current financial year, is below 95%, the amount of adequacy rate difference is calculated by multiplying the difference between the related rate and 95% by the current years outstanding claims reserve. The amount of adequacy rate difference is calculated based on each branch and included to the related branches reserves separately for the provision of final outstanding claims reserve in the current year. In this respect, the
Anadolu Sigorta
2008
Annual Report
121

Company has provided TRY 6,057,043 of additional reserve based on the outstanding claims reserve adequacy test as of the balance sheet date. As of 1 January 2008, the Company is required to provide equalization reserves for earthquake and credit insurances in order to equalize the possible fluctuations in the claim compensation rates and to cover the catastrophic risks in subsequent periods. Accordingly, TRY 5,444,952 of equalization reserve is provided as of the balance sheet date. 4.2 Financial Risk 4.2.1 Capital structure and management The Companys capital structure consists of equity items which include issued shares, reserves and retained earnings, respectively. While the Company maintains to continue its capital management on a going concern basis, it expects to boost its earnings by optimizing its technical reserve and equity balance. The Companys capital structure is reviewed by the Board of Directors annually in order to determine the amount of dividends paid to shareholders and the value of shares to be issued. 4.2.2 Capital requirement In accordance with the Decree Measurement and Assessment of Capital Adequacy of Insurance and Reinsurance Companies and Pension Funds published in the Official Gazette No: 26761 on 19 January 2008, all insurance and reinsurance companies and pension funds should provide adequate equity for their current liabilities and possible losses that may arise from their potential risks. Based on the requirements of the abovementioned Decree, the Company prepares capital adequacy tables within the format and content requirements of the Undersecretariat of Treasurys twice a year for June and December period end. The Companys recent capital adequacy table prepared as of the report date for December 2008 is summarized below. As of 31 December 2008, the Companys current equity exceeds its capital requirement calculated for the same period by TRY 233,363,864.
122
Anadolu Sigorta
2008
Annual Report

31 December 2008 1. According to Premium Base 2. According to Claim Base REQUIRED CAPITAL BASED ON THE FIRST METHOD 1. 2. 3. 4. 5. 6. Asset Risk Reinsurance Risk Excessive Premium Increase Outstanding Claims Risk Underwriting Risk Exchange Rate Risk 155,064,450 141,456,865 155,064,450 155,048,977 10,573,255 19,328,987 135,457,318 4,218,269 324,626,806 324,626,806 607,990,666 49,999,996 233,363,864
REQUIRED CAPITAL BASED ON THE SECOND METHOD REQUIRED CAPITAL AMOUNT FOR THE COMPANY CAPITAL AMOUNT OF ASSOCIATES DEDUCTED FROM CAPITAL CAPITAL ADEQUACY RESULT
4.2.3 Financial risk factors The Company is exposed to market risk (exchange rate risk, interest rate risk, and equity shares price risk), credit risk, liquidity risk and operational risk due to its assets and liabilities at a specific time. These risks are managed, as part of the risk management policies, through considering the quality of the Companys receivables by providing detailed information about the debtors and their operations, using risk minimizing factors by receiving guarantees for receivables, measuring periodically market risks arising from the Companys marketable security portfolio, reliability testing of measurement results, assessing and monitoring carefully all risk factors inherent to the Company, and assessing and reporting different scenario trends. The Companys risk exposure is gradually reported to the Board of Directors through the independent review of Risk Management and Internal Control Department. Credit Risk Credit risk is the risk that the debtor defaults on its obligations under the terms of the transaction. Risk management under this group is maintained by considering the due receivables, doubtful receivables, guarantees received for receivables, technical performances of the debtors and related parties with deposit and partnership relations. It is essential to identify and define credit risks on an early basis for the effective risk management. Therefore, information should be provided and shared timely with the respective departments. Factors that may have an adverse effect on the credit risk and create credit risks on the Companys risk tolerance such as; disruption in collection rates of insurance intermediaries, decreases in production performance, violations in compliance with the Company policies, other informative data, and any negative ratings or developments inquired by reinsurance companies and other counterparties are considered as indicators of credit risk.
Anadolu Sigorta
2008
Annual Report
123

As of 31 December 2008, The Company has classified TRY 57,499,314 of its trade receivables as doubtful receivables. TRY 8,382,883 of the related amount is under guarantee, whereas provision for doubtful receivable is provided for the total amount including the guaranteed portion based on the precautionary principle. Provision for Doubtful Receivables Agency Receivables under Litigation Other Receivables under Litigation Subrogation Receivables under Litigation and Execution Total Movement table of provision for doubtful receivables is below: Provision for Doubtful Receivables Opening balance Charge for the period (*) Collections Closing balance 31 December 2008 40,156,927 17,755,538 (413,151) 57,499,314 Total Receivable 14,173,799 349,180 42,976,335 57,499,314 Guaranteed Portion 8,382,883 8,382,883
(*) TRY 17,755,538 of total doubtful receivable period charge includes TRY 13,665,702, which is presented under the Provisions Account in the income statement, and the remaining amount, which is recognized as nondeductible expenses under the Other Expense and Losses account. Aging table of due receivables as of 31 December 2008 is presented below. TRY 9,952,052 of premium receivable provision, which was provided in prior periods for the portion of uncollectible receivables overdue for two months (+61 days), is not compulsory to provide for the current year because the accounting of the related amount is out scoped from the Insurance Law No: 5684 effective on 14 June 2007 and the related amounts accounting left at discretion of the companies and has been classified under other long-term technical provisions based on the precautionary principle. Due Receivables 0-30 days 31-60 days 61-90 days 90+ Due Receivables Not Due Receivables Total (*) 31 December 2008 37,168,742 13,614,715 5,780,462 16,150,422 72,714,341 270,988,356 343,702,697
(*) Except for TRY 343,702,697 presented under receivables from insurance operations in the financial statements, this amount also includes TRY 36,583,000 of untransferred amount collected by intermediaries and TRY 30,257,486 of subrogation salvage receivables.
124
Anadolu Sigorta
2008
Annual Report

The details of guarantees for due and not due receivables amounting to TRY 115,130,023 as of 31 December 2008 are presented in the below table: Types of Guarantees Letters of Guarantees Government Bonds and Equity Shares Real Estate Pledges Blocked Deposits TOTAL 31 December 2008 38,657,254 2,925,661 71,906,337 1,640,771 115,130,023
Market risk Market risk is defined as the risk exposed due to fluctuations in the financial markets and changes in interest, exchange rates, price changes in bills-bonds and equity shares in the Companys financial position. Generally accepted international Value at Risk Method (VAR) is used in the calculation of market risk. Because the calculations include estimations for the following days, reliability of the estimations is reviewed on a daily basis by comparing the actual figures. Under regular market conditions, the Company performs scenario analysis supporting the VAR method used in measuring inclines in the market prices of the Companys marketable security portfolio and reports the results gradually to the Board of Directors. As part of Risk Management Policies, VAR limits determined for Fund Management Unit Risk and limits related to the proportion of each financial asset group to total portfolio and shareholders equity are reviewed on a daily basis and assessed by considering the market conditions. The Companys total Value Subjected to Risk is TRY 1,732,125 and presented based on the financial asset group in the below table: Value At Risk Total TRY Marketable Securities TRY Marketable Securities Repo and Reverse Repo TRY Money Market Effect of Portfolio Diversity Total FC/TRY Transactions Foreign Currency Position Forward Effect of Portfolio Diversity Total Equity Shares Held-for-trading Securities Effect of Portfolio Diversity Total Effect of Portfolio Diversity Total 31 December 2008 2,266,641 2,266,641 4 (4) 1,061,566 1,061,566 592,907 760,317 (167,410) (2,188,989) 1,732,125
Anadolu Sigorta
2008
Annual Report
125

Interest rate risk Interest rate risk represents the potential for losses in the value of interest sensitive assets or liabilities arising from changes in interest rates. Interest rate risk is managed through the diversification of marketable security portfolio as marketable securities with fixed and variable interest rates. Sensitivity to Interest rate If the Companys government bonds classified as held-for-trading and held-to-maturity investment securities increase by +1,+5 and +10 points and other variables remain constant, negative changes that would occur in the market value of the Companys sensitive financial assets for interest rate and net profit and loss are presented in the below table. Change in Interest Rates +1 point +5 points +10 points Change in Portfolio Value (2,366,544) (11,273,825) (21,283,681) Change in Net Profit and Loss (723,627) (3,483,704) (6,657,524)
Exchange rate risk Exchange rate risk is defined as the loss risk exposure due to changes from exchange rates based on the differences between the Companys foreign currency denominated assets and liabilities. On the other hand, value changes of different currency types compared to each other is another aspect of an exchange rate risk. Exchange rate risk is managed by keeping the net foreign currency position without any deficits. The details of foreign currency denominated assets and liabilities as of 31 December 2008 are presented below: 31 December 2008 114,009,400 57,765,816 56,243,584
A. Foreign currency denominated assets B. Foreign currency denominated liabilities Net foreign currency position (A-B)
126
Anadolu Sigorta
2008
Annual Report

Foreign currency position detailed in terms of currency types is as follows: 31 December 2008 Cash and Banks Currency Types USD EURO GBP CHF JPY Amount in Original Currency 19,217,173 3,392,997 33,309 588,683 33,696 Amount in TRY 29,062,131 7,263,728 73,027 841,817 564 37,241,267 52,692,485 22,935,818 1,084,403 33,930 4,680 4,191 12,552 74 76,768,133 40,864,516 16,483,501 386,353 26,415 3,473 1,558 57,765,816
Total Receivables USD EURO GBP CHF JPY DKK SEK AUD 34,842,614 10,713,667 494,619 23,727 279,685 14,589 64,530 71
Total Liabilities USD EURO GBP CHF SEK DKK 27,021,435 7,699,692 176,224 18,472 17,855 5,425
Total
Sensitivity to exchange rate risk If all exchange rates decrease by 1%, 5% and 10%, market value decreases due to the foreign currency denominated deposits and negative changes in profit and loss are presented in the below table: Change in Exchange Rates -%1 -%5 -%10 Change in Market Value (562,436) (2,812,179) (5,624,358) Net Change in Profit and Loss (562,436) (2,812,179) (5,624,358)
Other price risks Price risks are the loss risks due to the price fluctuations in the Companys equity share positions. Other price risk is managed by diversifying the equity share portfolio and limits designated for the equity share investments. Sensitivity to equity share price If equity shares held by the Company decrease by 1%, 5% and 10 % and all other variables remain constant, negative changes that would occur in the market values of such equity shares and profit and loss are presented in the below table.
Anadolu Sigorta
2008
Annual Report
127

Change in Prices of Equity Shares -%1 -%5 -%10
Change in Market Value (1,082,342) (5,411,712) (10,823,425)
Net Change in Profit and Loss (144,561) (722,805) (1,445,609)
Liquidity risk Liquidity risk is the possibility of non-performance of the Companys due liabilities. Liquidity risk includes risks such as; failure in converting the Companys assets at an appropriate price at short notice because of some difficulties and inconsistencies in markets, inconsistencies in cash inflows and outflows and failure to perform its funding liability at reasonable cost and potential due to inconsistencies in maturities of cash flows. Liquidity risk assessments are performed based on deferrals in collections or possible inconsistencies between the compensation maturities and maturities of reinsurance shares of compensations and gradually reported to the Board of Directors when the types and maturities of assets and liabilities are due, and/or any insurance risks associated with economical crisis, earthquake or other catastrophic events occur. Since insurance agreements cover the prospective liabilities, there is an uncertainty about the timing and amount of such liabilities. Therefore, the Companys ability to pay claims is highly related with the liquidity of the financials assets held. Liquidity risk is managed through arranging the maturity structure of cash and marketable security portfolio with the current and possible liabilities and creating the portfolio with highly liquid public sector borrowing securities. As of 31 December 2008, the distribution of the Companys assets and liabilities with known maturities in terms of remaining maturities are presented in the below table:
Up to 1 month 510,387,751 85,102 90,880,088 6,681,214 608,034,155 32,780,847 32,780,847 575,253,308 3 months 1 year 18,984,284 150,548,084 72,000,843 241,533,211 67,961,056 67,961,056 173,572,155 1 year No maturity 112,046,300 60,939,860 43,749,126 216,735,286 760,144,090 658,970,157 1,419,114,247
Cash and Cash Equivalents Financial Assets Receivables Other Assets Total Assets Payables/Technical Reserves Other Liabilities Total Liabilities Net liquidity surplus / (deficit)
1-3 months 171,222,440 129,968,585 3,430,448 304,621,473 14,519,537 14,519,537 290,101,936
and over 161,906,335 1,545,227 163,451,562 -
Total 681,610,191 293,022,021 433,881,844 125,861,631 1,534,375,687 875,405,530 658,970,157 1,534,375,687
163,451,562 (1,202,378,961)
128
Anadolu Sigorta
2008
Annual Report

Categories of Financial Instruments: 31 December 2008 Current Financial Assets 1- Financial Assets Available-for-sale 2- Financial Assets Held-to-maturity 3- Financial Assets Held-for-trading Book value Fair value
25,608,563 106,772,583 88,640,881 221,022,027
25,608,563 (*) 109,022,024 88,640,881 223,271,468
Non Current Financial Assets 1- Affiliates
71,999,994
71,999,994
(*) Available-for-sale financial assets with market value are carried at their market value and available-for-sale financial assets with no market value are carried at restated cost adjusted for inflation till 31 December 2004. Fair value of financial assets Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arms length transaction. The Company determines the estimated fair value of its financial instruments by using the current market information and appropriate valuation methods. Additionally, ability to estimate the market values through assessing the market information requires interpretation and judgment. As a result, the estimations presented herein cannot be an indicator of the amounts obtained by the Company in a current market transaction. The following methods and assumptions are used in fair value estimations for financial instruments of which their fair value cannot be practically measured: Financial assets It is anticipated that fair value of the financial assets including cash and cash equivalents and other financial assets carried at cost will approximate to their book value based on their short term nature and having insignificant potential losses. Market value is taken as a basis in the measurement of fair value of government bonds and equity shares. Financial liabilities It is anticipated that fair value of monetary liabilities will approximate to their carrying value based on their short term nature. A unit-linking feature embedded in a host financial instrument or host insurance contract is closely related to the host instrument or host contract if the unit-denominated payments are measured at current unit values that reflect the fair values of the assets of the fund. A unit-linking feature is a contractual term that requires payments denominated in units of an internal or external investment fund. A derivative embedded in an insurance contract is closely related to the host insurance contract. In those types, embedded derivative instrument is not being accounted independent from the host contract. There are no subsequent events after the balance sheet date.
Anadolu Sigorta
2008
Annual Report
129

5 Segment Information The Company has no operational or geographical segments in order to present information on segmental reporting. 6. Tangible Assets 6.1 Total amount of all depreciation and amortization expenses for the period is TRY 5,106,814. 6.1.1. Amount of depreciation expenses is TRY 5,106,814. 6.1.1.1 Amount of normal depreciation expenses is TRY 5,106,814. 6.1.2. There is no amortization expense. 6.2 Costs of tangible fixed assets, except for land and construction in progress, are amortized based on their estimated useful lives. Estimated useful life, residual value, and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. (%) 2 20 20 2-25
Buildings Leasehold Improvements Vehicles Furniture and Office Equipments
6.3 Movements of tangible fixed assets in the current period: 6.3.1 Cost of acquired or constructed tangible fixed assets: TRY 6,678,733 6.3.2 Cost of tangible fixed assets disposed of or become scrap: TRY 387,636 6.3.3. Revaluation in the current period: None. 6.3.3.1 In the cost of assets (+): None. 6.3.3.2 In the accumulated depreciations (-): None.
130
Anadolu Sigorta
2008
Annual Report

6.3.4 There is no construction in progress. Current Period: 31 December Additions TRY 642,244 1,655,513 2,108,528 232,627 2,039,821 6,678,733 2008 Disposals TRY (262,225) (125,411) (387,636)
Opening Balance TRY Held-for-use Properties 9,669,274 Investment Properties 7,094,216 Machinery and Equipments 12,136,378 Furniture and Fixtures 9,821,086 Vehicles 622,530 Other Tangible Assets 7,473,853 Tangible Assets acquired under leasing transactions 4,339,065 Total 51,156,402
Cost Values:
Closing Balance TRY 10,311,518 6,831,991 13,791,891 11,929,614 729,746 9,513,674 4,339,065 57,447,499
Accumulated Depreciations: Depreciation of Held-for-use Properties Depreciation of Investment Properties Depreciation of Machinery and Equipments Depreciation of Furniture and Fixtures Depreciation of Vehicles Depreciation of Other Tangible Assets Depreciation of Tangible Assets acquired under leasing transactions Total Net Book Value
Opening Balance TRY 2,354,705 2,864,603 10,830,816 7,799,513 251,208 4,188,077 2,497,762 30,786,684
31 December 2008 Additions Disposals TRY TRY 160,376 136,639 (118,706) 598,404 1,506,214 113,107 (85,700) 1,737,546 854,528 5,106,814 (204,404)
Closing Balance TRY 2,515,081 2,882,536 11,429,220 9,305,727 278,615 5,925,623 3,352,290 35,689,092 21,758,407
Tangible fixed assets are not subject to revaluation. The Company has no tangible fixed assets given as guarantees for liabilities and there are no mortgages or pledges on tangible fixed assets. Total operational lease payments in the current period are amounting to TRY 5,057,900.
Anadolu Sigorta
2008
Annual Report
131

7. Investment Properties The Company prefers to choose the cost method under TAS 40 Investment Property. Current Period: Buildings Cost Value Opening balance as of 1 January 2008 Additions Disposals Closing balance as of 31 December 2008 Accumulated Depreciation Opening balance as of 1 January 2008 Charge for the period Impairment loss Disposals Closing balance as of 31 December 2008 Net book value as of 31 December 2007 Net book value as of 31 December 2008 7,094,216 (262,225) 6,831,991 Total 7,094,216 (262,225) 6,831,991
2,864,603 136,639 (118,706) 2,882,536 4,229,613 3,949,455
2,864,603 136,639 (118,706) 2,882,536 4,229,613 3,949,455
The Companys rent income from its investment properties leased under operational lease is amounting to TRY 1,093,141. The Company has no direct expenses associated with the investment properties in the current period. The Companys fair value of investment properties is TRY 27,000,252 as of 31 December 2008. Fair value of the real estate is measured based on the valuation study made by an independent valuation company in 2008. The valuation company, which was authorized by the Turkish Capital Market Board, is an independent valuation company having the necessary qualifications and experience in the valuation of the related real estate. Valuation study, which was undertaken in accordance with International Valuation Standards, is performed based on by the reference prices of similar real estate transactions in the market.
132
Anadolu Sigorta
2008
Annual Report

8. Intangible Assets The Company has no intangible assets, except for goodwill. Goodwill Current Period: Cost Value Opening balance as of 1 January 2008 Translation differences of foreign currency Closing balance as of 31 December 2008 Accumulated Impairment Opening balance as of 1 January 2008 Translation differences of foreign currency Net book value as of 31 December 2007 Net book value as of 31 December 2008 The Company has not recognized any impairment loss for its intangible assets in the current period. The Companys goodwill is amounting to TRY 16,250,000 in the financial statements. There is no impairment in goodwill in the current period. 16,250,000 16,250,000 Goodwill 16,250,000 16,250,000
Anadolu Sigorta
2008
Annual Report
133

9. Investments in Affiliates An affiliate is an entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. As of 31 December 2008, the details of the Companys affiliates are as follows: Location of foundation Affiliates and operation Anadolu Hayat Emeklilik A.. stanbul Participation in shareholders equity 20
Voting rights% 20
Main operation % Life Insurance and Individual Pension
As of 31 December 2008, there is no impairment in the Companys affiliates. 10. Reinsurance Assets Amounts accounted in profit or loss as a result of various reinsurance agreements are disclosed in Note 17.16. The Companys income and losses due to its purchased reinsurance agreements as a ceding company are not deferred and depreciated in the financial statements. 11. Financial Assets 11.1 Subcategories of Financial Assets 31 December 2008 TRY 48,262,948 106,772,583 88,923,623 (22,937,127) 221,022,027
Financial Assets Financial Assets Financial Assets Impairment loss Total Financial Assets:
Available-for-sale Held-to-maturity Held-for-trading on Financial Assets (-)
31 December 2008 Held-for-trading Financial Assets Government Bonds Repurchase Agreements Equity Shares Investment Funds Total Cost Value 69,206,743 85,037 5,809,321 4,567,893 79,668,994 Fair Value 74,118,036 85,102 6,358,679 8,079,064 88,640,881 Book Value 74,118,036 85,102 6,358,679 8,079,064 88,640,881
134
Anadolu Sigorta
2008
Annual Report

Available-for-sale Financial Assets Equity Shares Total
Cost Value 48,156,110 48,156,110
Fair Value(*) 25,608,563 25,608,563
Book Value 25,608,563 25,608,563
(*) Available-for-sale financial assets with market value are carried at their market value and available-for-sale financial assets with no market value are carried at restated cost adjusted for inflation till 31 December 2004. Held-to-maturity Financial Assets Government Bonds Total TOTAL Cost Value 98,008,801 98,008,801 225,833,905 Fair Value 109,022,025 109,022,025 223,271,469 Book Value 106,772,583 106,772,583 221,022,027
11.2 Securities issued other than equity shares in the current period None. 11.3 Securities issued representing the amortized borrowing in the current period None. 11.4 Fair value of securities and long-term financial assets that are carried at cost in the balance sheet and cost of securities and long-term financial assets that are carried at fair value in the balance sheet Cost, fair value and book value of marketable securities are presented in Note 11.1. Cost, fair value and book value of long-term financial assets are presented below: 31 December 2008 AFFILIATES Listed: Anadolu Hayat Emeklilik A.. Total Cost Value 55,031,863 55,031,863 Fair Value 71,999,994 71,999,994 Book Value 71,999,994 71,999,994
The Company has no unlisted associates as of the balance sheet date. 11.5 Marketable securities issued by the shareholders, affiliates and subsidiaries of the company classified under marketable securities and associates and their issuers None.
Anadolu Sigorta
2008
Annual Report
135

11.6 Value increases of financial assets in the last three periods 31 December 2008 31 December 2007 Diminution in Value of Financial Assets Financial Assets Available-for-sale Affiliates Total (16,749,932) 16,968,131 218,199 11,217,647 131,364,207 142,581,854 31 December 2006 22,167,958 128,564,207 150,732,165
Value increases reflect the difference between the carrying value and cost of the financial assets. 11.7 i) Information that enables the financial statement users to evaluate the financial position and performance of the Company is disclosed in Note 11.1. ii) Information on the book values of the financial assets is disclosed in Note 11.1. iii) Comparison of the fair values and book values of financial assets is disclosed in Note 11.1. iv) Financial assets overdue or impaired are summarized as follows: Type of Financial Assets Diminution in Value of Short-Term Financial Assets Financial Assets Available-for-sale Financial Assets Held-for-trading Total 11.8 The Company does not apply any hedge accounting. 11.9 Exchange rate differences arising from the payments of monetary items or different conversion rates used in the current period or at initial recognition are recognized in profit or loss. Amount TRY
(22,654,385) (282,742) (22,937,127)
136
Anadolu Sigorta
2008
Annual Report

12. Receivables and Payables 12.1 Details of the Companys receivables 31 December 2008 410,543,183 17,656,888 4,363,600 57,499,314 (57,499,314) 173,259 1,144,914 87,401,332 2,624 521,285,800
Receivables from insurance operations Receivables from reinsurance operations Cash deposited for insurance and reinsurance companies Doubtful receivables from operating and insurance operations Provisions for doubtful receivables from operating and insurance operations (-) Due from related parties Other receivables Pre-paid expenses and income accruals Non-current pre-paid expenses and income accruals Total
Aging of overdue but not impaired receivables from insurance activities is as follows: 31 December 2008 0-30 days 31-60 days 61-90 days 90+ Not due receivables Total (*) 37,168,742 13,614,715 5,780,462 16,150,422 270,988,356 343,702,697
(*) Except for TRY 343,702,697 presented under receivables from insurance operations in the financial statements, this amount also includes TRY 36,583,000 of untransferred amount collected by intermediaries and TRY 30,257,486 of subrogation salvage receivables. The details of guarantees for the Companys receivables are presented below: Types of Guarantees Letters of Guarantees Government Bonds and Equity Shares Real Estate Pledges Blocked Deposits Total 31 December 2008 38,657,254 2,925,661 71,906,337 1,640,771 115,130,023
Anadolu Sigorta
2008
Annual Report
137

1 January31 December 2008 Movement of provision for doubtful receivables Opening balance Charge for the period (*) Collections Closing balance (40,156,927) (17,755,538) 413,151 57,499,314
(*) TRY 17,755,538 of total doubtful receivable period charge includes TRY 13,665,702, which is presented under the Provisions Account in the income statement, and the remaining amount, which is recognized as nondeductible expenses under the Other Expense and Losses account. The Company provides TRY 8,382,883 of guarantee amount for its doubtful receivables. 12.2 Receivable-payable relationship with shareholders, affiliates and subsidiaries of the Company Trade Receivables(*) 34,560,157 155,912 Trade Payables(*) 19,749,861 8,998
Shareholders Affiliates
(*) Trade receivables and payables from shareholders and affiliates are presented under the receivables and payables from insurance activities in the balance sheet 12.3 Total amount of pledges and other guarantees received for receivables is TRY 115,130,023. 12.4 Details of the Companys foreign currency denominated receivables without exchange rate guarantees are presented below: 31 December 2008 Receivables Foreign currency USD EURO GBP CHF JPY DKK SEK AUD Total
Amount 34,842,614 10,713,667 494,619 23,727 279,685 14,589 64,530 71
Exchange rate 1.5123 2.1408 2.1924 1.4300 0.0167 0.2873 0.1945 1.0443
Amount (TRY) 52,692,485 22,935,818 1,084,403 33,930 4,680 4,191 12,552 74 76,768,133
138
Anadolu Sigorta
2008
Annual Report

Payables: Foreign currency USD EURO GBP CHF SEK DKK Total 12.5 Credit risk is disclosed in Note 4.
Amount 27,021,435 7,699,692 176,224 18,472 17,855 5,425
Exchange rate 1.5123 2.1408 2.1924 1.4300 0.1945 0.2873
Amount (TRY) 40,864,516 16,483,501 386,353 26,415 3,473 1,558 57,765,816
Book value and fair value of the Companys receivables are the same. 13. Derivative Financial Instruments As of 31 December 2008, the Company has no derivative financial instruments. 14. Cash and Cash Equivalents 31 December 2008 57,170 633,357,943 19,668,025 613,689,918 48,195,078 681,610,191 (4,005,920) 677,604,271 (96,970,963) 580,633,308 In other cash and cash equivalents, credit card receivables, cheques received, cheques given (-) and payment orders (-) are presented.
Cash Cash at banks Demand deposits Time deposits Other cash and cash equivalents Total Interest accruals on cash and cash equivalents (-) Cash flow based grand total Blocked deposits
Anadolu Sigorta
2008
Annual Report
139

15 Share Capital 15.1 Transactions between the Company and its shareholders, showing each distribution made to the shareholders separately The Companys shareholders and its shareholders equity structure as of 31 December 2008 is below: 31 December 2008 124,355,077 76,229,997 149,414,926 350,000,000
Shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Other Total
% 35.53 21.78 42.69 100.00
The details of the transactions between the Company and its shareholders and the related balances as of the end of the period are presented in Related Parties note. 15.2 Reconciliation of carrying values of each capital account and each reserve as of the beginning and end of the period showing each change separately
Other Revaluation Share of Financial CURRENT PERIOD I - Closing Balance of Prior Period (31/12/2007) II - Effect of changes in accounting policy III - As Restated ( I + II) (01/01/2008) A- Capital Increase (A1 + A2) 1- Cash 2- Internal Sources B- Equity shares purchased by the company C- Profit Net Period D- Dividends distributed I- Transfer IV- Closing Balance 350,000,000 218,199 -(142,363,655) 3,501,648 16,708,714 5,893,194 112,983,855 117,666,276 (21,813,706) (9,394,842) 117,666,276 - (142,363,655) - 117,666,276 - (21,813,706) 10,413,622 607,990,666 75,000,000 275,000,000 142,581,854 75,000,000 13,207,066 158,551,329 (51,460,668) (51,460,668) 54,208,548 (23,000,000) (23,000,000) 10,952,954 654,501,751 (539,332) (539,332) (539.332) 10,952,954 10,413,622 275,000,000 142,581,854 13,207,066 159,090,661 54,208,548 - 644,088,129 Capital Assets Legal Reserves Reserves and Retained Earnings Net Profit / (Loss) for the Period Previous Years' Profits / Losses (-) Total
140
Anadolu Sigorta
2008
Annual Report

15.3 For each class of share capital; 15.3.1 Number of capital shares Share capital of the Company is composed of Group A and Group B shares. TRY 1.50 of Group A share is represented by 150 of equity shares having a nominal amount of TRY 0.01 each. TRY 349,999,998.5 of Group B share is represented by 34,999,999,850 shares having a nominal amount of TRY 0.01 each. 15.3.2 Number of issued and fully paid shares and issued but not fully paid shares The Company has issued 7.5 billion fully paid equity shares in 2008. 15.3.3 Nominal value of an equity share or equity shares without having nominal value Nominal value of equity shares is TRY 0.01 per share. 15.3.4.Reconciliation of the number of the equity shares at the beginning and ending of the period Equity shares (number) Beginning of the period, 1 January 2008 Issued in the current period End of the period, 31 December 2008 27,500,000,000 7,500,000,000 35,000,000,000
15.3.5 Rights, privileges and limitations on dividend payments and repayment of share capital Group A shares having TRY 1.5 nominal value each have only voting rights. Group A shares have 10 voting rights and Group B shares have 1 voting right. 15.3.6 Equity shares held by the Company, its associates or its subsidiaries There is no equity shares held by the Company. There is no equity shares held by the Companys affiliates or subsidiaries. 15.3.7 Equity shares held for future sale for forward transactions and contracts The Company has no sales of shares in relation to forward transactions or contracts. 15.4 Share Based Payments None. 15.5 Subsequent Events The Company has no share transactions subsequent to the balance sheet date.
Anadolu Sigorta
2008
Annual Report
141

16. Other Provisions and Capital Component of Discretionary Participation 16.1 Each income and expense item and their total amounts accrued under shareholders equity in the current period in accordance with other standards and interpretations 31 December 2008 Affiliates Valuation Difference Financial Assets Available-for-sale Valuation Difference 16,968,131 (16,749,932) 218,199 16.2 Net exchange differences classified separately as an equity item and reconciliation of exchange differences at the beginning and end of the period The Company has no exchange differences classified separately as an equity item. 16.3 Hedging for forecasted transactions and net investment hedging None. 16.4 Hedging transactions None. 16.5 Gains and losses from available-for-sale financial assets recognized directly in equity for in the current period and amounts recognized in the current profit or loss recycled from shareholders equity: Increase/decrease in value 11,217,648 (27,967,580)
Beginning of the period, 1 January 2008 Increase/decrease in value recorded in shareholders equity in the current period Increase/decrease in value recycled to income statement from shareholders equity in the current period Ending of the period, 31 December 2008
(16,749,932)
16.6 Income and loss related to the affiliates recognized directly in equity in the current period The amount of increase in value from affiliates recognized in the equity is TRY 16,968,131. 16.7 Revaluation increases in tangible fixed assets As of 31 December 2008, the Company carries its tangible fixed assets at cost. 16.8 Current and deferred tax in relation to debit and credit items directly charged to equity None.
142
Anadolu Sigorta
2008
Annual Report

17 Insurance Liabilities and Reinsurance Assets 17.1 Guarantees to be provided for life and non-life insurances and guarantees provided for life and non-life insurances based on assets The Companys guarantees to be provided for non-life insurances based on asset are below: 31 December 2008 Current Blockage Non Life Government Bonds Time Deposits Total 83,162,241 97,925,908 181,088,149
The Companys blockage amount to be provided as of 31 December 2008 is TRY 116,164,416 and the Company meets the requirements for its blockage liability. 17.2 Number of life insurance policies, additions, disposals in the current period, and current life insurees and their mathematical reserves. None. 17.3 Insurance Guarantees given to non-life insurances based on branches Insurance Branches Accident Health Motor Vehicles Air Crafts Water Crafts Marine Fire and Natural Disasters General Losses Motor Vehicles Liability General Liability Total 17.4 Pension investment funds established by the Company and their unit prices None. 17.5 Number and amount of participation certificates in portfolio and circulation None. 17.6 Numbers and portfolio amounts of additions, disposals, reversals and current individual and group pension participants None. 31 December 2008 39,044,118,604 143,230,385,091 14,678,164,249 156,704,932 7,912,772,088 10,041,552,155 101,700,612,070 17,967,524,927 1,232,202,692,001 12,265,270,532 1,579,199,796,649
Anadolu Sigorta
2008
Annual Report
143

17.7 Valuation methods used in profit share calculation for life insurances with profit shares None. 17.8 Number of additions and their group or individual gross and net share participations in the current period None. 17.9 Number of additions from the other companies and their group or individual gross and net share participations in the current period None. 17.10 Number of transfers from the Companys life portfolio to individual pension portfolio and their group or individual gross and net share participations None. 17.11 Number of transfers from the Companys individual pension portfolio to other company or not, and together their personal and corporate allocation and gross and net share participations None. 17.12 Number of additions of life insurances and their group or individual allocation and gross and net premiums None. 17.13 Number of disposals of life insurances and their group or individual allocation and gross net premiums and net mathematical reserves None. 17.14 Profit share distribution rate of life insurances in the current period None. 17.15 Amounts from insurance contracts in the financial statements None.
144
Anadolu Sigorta
2008
Annual Report

17.16 Assets, liabilities, income and expense and cash flows from insurance contracts recognized when the insurer is a ceding company: As of 31 December 2008, the details of reinsurance receivables and payables are summarized as below; 31 December 2008 Reinsurance Assets Receivables from Reinsurance Operations Cash Deposited For Insurance and Reinsurance Companies Reinsurance Share of Unearned Premiums Reserve Reinsurance Share of Outstanding Claims Reserve Reinsurance Share of Unexpired Risks Reserve Total Reinsurance Payables Payables due to Insurance Operations(Payables to Reinsurers) Cash Deposited by Insurance and Reinsurance Companies Total 17,656,888 4,363,600 144,829,701 83,465,691 1,391,777 251,707,657
(73,242,473) (1,792,582) 75,035,055
The details of the amounts recognized in profit or loss due to the various purchased reinsurance agreements are presented in the below table: Income and Expenses from Reinsurance Agreements 1 January 31 December 2008 (289,187,051) 25,295,526 144,829,701 (97,211,857) 990,958 89,543,688 83,465,691 (71,102,727) (113,376,071)
Ceded Premiums to Reinsurers (-) Reinsurance Commissions Received Reinsurance Share of Unearned Premiums Reserve Reinsurance Share of Unearned Premiums Reserve Carried Forward (-) Reinsurance Share of Unexpired Risks Reserve Reinsurance Share of Claims Paid Reinsurance Share of Outstanding Claims Reserve Reinsurance Share of Outstanding Claims Reserve Carried Forward (-) Total
The Company, as a ceding company, does not defer or depreciate any of its income or losses due to the purchased reinsurance agreements. 17.17 Comparison of the incurred claims with past estimates Disclosed in Note 4.1.2.3. 17.18 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 Disclosed in Note 4.1.2.4.
Anadolu Sigorta
2008
Annual Report
145

17.19 Reconciliation of insurance payables, reinsurance assets and changes in deferred acquisition costs, if any Insurance Payables Beginning of the period, 1 January 2008 Change in the current period Ending of the period, 31 December 2008 18. Investment Contract Liabilities The Company has no investment contracts. 19. Trade and Other Payables, Deferred Income 19.1 Sub-classifications of presented items in line with the Companys operations 31 December 2008 TRY 96,276,171 1,792,582 18,004,951 14,164 1,326,874 12,147,473 27,558,111 7,224,558 164,344,884 89,060,704 27,013,001 116,073,705 Reinsurance Assets 183,945,167 67,162,490 251,707,657
Payables from Insurance Operations Cash Deposited by Insurance and Reinsurance Companies Other Payables from Main Activities Due to Shareholders Guarantees and Deposits Received Other Payables Deferred Income Other Deferred Income and Expense Accruals Total
19.2 Related Parties Transactions and balances between the Company and its shareholders as of the period-end are presented in Related Parties note. 20. Payables The Companys payables are disclosed in Note 19. 21. Deferred Income Tax Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. The Company has no current or deferred tax debited or credited directly in equity. The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial statements as reported for TAS purposes and its statutory tax financial statements. These differences usually result in the recognition of revenue and expenses in different reporting periods for TAS and tax purposes and they are given below.
146
Anadolu Sigorta
2008
Annual Report

20% is applied in the calculation of deferred tax asset and liabilities. 1 January31 December 2008 (2,122,323)
Deferred Tax income / (expense) is formed by the items below: Deferred tax income / (expense) related to the occurrence and removal of temporary differences No deferred tax is recognized directly in equity.
Deferred tax assets / (liabilities): Economical life differences of tangible fixed assets Retirement pay and unused vacation provisions differences Valuation differences of the financial assets Insurance technical reserves Doubtful receivable provision differences Deferred tax liabilities
31 December 2008 204,583 700,035 (347,194) (2,068,623) 312,000 (1,199,199) 1 January31 December 2008 923,124 (2,122,323) 1,199.199
Movement of deferred tax asset / (liability): Opening balance at 1 January Charge to income Closing balance at 31 December
22. Retirement Benefits Provisional Article 23 of the Banking Act No: 5411 requires the transfer of pension funds, which are established for employees of financial institutions, insurance and reinsurance companies under Social Security Act, to Social Security Institution (SSI) as of the effective date of the Act within 3 years and principles and procedures of fund transfer are also prescribed in accordance with the Council of Ministers order no: 2006/11345 issued on 30 November 2006. However, transfer requirement in the related Act was annulled based on the application made by the Turkish President on 2 November 2005 in accordance with the order of the Constitutional Court (no: E.2005/39, K.2007/33) issued on 22 March 2007 as effective from the date of publishment in the Official Gazette no: 26479 on 31 March 2007. On the other hand, the Act No: 5754 Amendments in Social Securities and General Health Insurance Acts Specific Laws and Related Requirements published in the Official Gazette No: 26870 on 8 May 2008, requires the transfer of participants or beneficiaries of pension funds to SSI as of the effective date of the Act within 3 years and prescribes the extension period of the transfer as maximum of two years upon the order of Council of Ministers. The Act prescribes that, as of the transfer date, present value of fund liabilities should be measured by considering the fund income and expense based on the insurance branches presented in the related act using
Anadolu Sigorta
2008
Annual Report
147

9,8% of technical interest rate in the actuarial calculation. The Act also specifies that the uncovered other rights and compensations of participants or beneficiaries of pension funds should be covered by institutions that made the fund transfers. As the result of the actuarial calculations made in relation to the Pension Fund of Anadolu Anonim Trk Sigorta irketi established in accordance with Article 20 of the Social Securities Act No: 506, the Company has no deficits by the end of the current period and no payments have been made in relation to any deficit amount by the Company. Fund assets are adequate in covering all the funds liabilities; therefore, the Company management anticipates no liabilities to be assumed in relation to the above-mentioned matter. Retirement pay provision: 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 amount payable consists of one months salary limited to a maximum of TRY 2,260.05 for each period of service as of 31 December 2008 (1 January 2008: 2,087.92). The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of employees. IAS 19 (Employee Benefits) requires actuarial valuation methods to be developed to estimate the enterprises 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 2008, 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 balance sheet dates have been calculated assuming an annual inflation rate of 5.4% and a discount rate of 12%, resulting in a real discount rate of approximately 6.26% (31 December 2007: %5, %11 and %5.71, respectively). The anticipated rate of forfeitures is considered and estimated rate of the Companys retirement pay is also taken into account. As the maximum liability is updated semi annually, the maximum amount of TRY 2,260.05 effective from 31 December 2008 has been taken into consideration in calculation of provision from employment termination benefits. 1 January31 December 2008 3,245,753 386,488 185,980 (664,180) 3,154,041
Provision at 1 January Service cost Interest cost Retirement pay paid Provision at 31 December
148
Anadolu Sigorta
2008
Annual Report

23. Other Liabilities and Expense Accruals 23. Other Liabilities and Provisions 23.1 Provisions related to employee benefits and others 31 December 2008 346,135 1,386,978 Unused Vacation Social Security Premiums Provision Payable 96,501 99,435 249,634 346,135 1,287,543 1,386,978
Unused vacation provision Social security premiums payable
At 1 January Charge for the period At 31 December
23.2 Off-balance sheet commitments Total TRY 7,782,646 of commitments given consists of TRY 7,334,172, TRY 382,914 of USD amounts and TRY 65,560 of EUR amounts as of 31 December 2008. In addition, the Companys finance lease liabilities are under the guarantee by the lessor. Carrying value of these liabilities is TRY 1,850. The Company as lessor Leasing agreements: All operating lease contracts contain market review update clauses in the event that the Company exercises its renewal option. The Company has no option to purchase any of the assets leased at the expiry date of the lease period. Total amount of payments recognized as expense in the current period amounts to TRY 5,057,900. The Company has no liabilities recognized in relation to non-reversible operating lease agreements, commitments, and operating activities from non-reversible operating leases. The Company as lessee Operational lease agreements Operating lease term is for one year. All operating lease contracts contain market review update clauses in the event that the lessee exercises its renewal option. The Company has no option to purchase any of the assets leased at the expiry date of the lease period. The Company recognizes TRY 1,093,141 of operating lease income. The Company has no direct operating expenses associated with the related real estate in the current period.
Anadolu Sigorta
2008
Annual Report
149

The Company has no non-reversible operating lease commitments. 23.3 Provisions, Contingent Assets and Liabilities As of the balance sheet date, total amount of litigations filed against the Company amounts to TRY 178,770,000. The Companys total amount of litigations filed against third parties is TRY 91,487,000. The Company has provided outstanding claims reserve for the litigations filed against the Company. As of the balance sheet date, the Company has no contingent assets. 23.4 Disclosures on goodwill are presented in Note 8. 24. Net Insurance Premium Revenue 1 January31 December 2008 43,177,547 127,179,863 331,392,921 389,061 9,862,051 27,479,433 70,195,789 38,913,857 195,557,458 117,112 20,210,153 7,587 2,701,001 5,015,307 872,199,140
Accident Illness/Health Motor Vehicles Air Crafts Water Crafts Marine Fire and Natural Disasters General Losses Motor Vehicles Liability Air Crafts Liability General Liability Credit Financial Losses Legal Protection Total Amounts are presented at net gross premiums, less reinsurance shares. 25. Fee Income
Service Income/(Expense) Commissions received from reinsurers Commissions paid to agencies (-)
1 January31 December 2008 25,295,526 (92,782,463) (67,486,937)
150
Anadolu Sigorta
2008
Annual Report

26. Investment Income/Expense 1 January31 December 2008 Financial assets held-for-trading (Assets held at fair value through profit or loss) Interest discount income/ (expenses) Dividend income Gain on sale / (loss) Financial assets available-for-sale Interest discount income/ (expenses) Dividend income Gain on sale / (loss) Financial assets held-to-maturity Interest discount income/ (expenses) Dividend income Gain on sale / (loss) Affiliates Dividend income Other income / (expenses) Investment Properties Rent income Deposit interest discount income / expenses Other Total(*) (4,842,139) 272,542 13,043,558 2,261,788 23,290,397 17,196,079 692,173 1,093,141 100,383,540 10,423,866 163,814,945
(*) TRY 282,743 of diminution in value of investments, TRY 3,346,990 of losses arising from the investment conversion into cash and TRY 9,499,637 of foreign exchange losses are deducted from total investment income. 27. Net Income Accrual on Financial Assets 1 January31 December 2008 Financial assets available-for-sale Valuation differences recognized in shareholders equity Valuation differences recognized in profit and loss (16,749,932) -
28. Assets Held At Fair Value through Profit and Loss Net gain/loss of assets held at fair value through profit and loss reflected to the income statement as of the balance sheet date is TRY 8,473,961. Real estates classified as investment property in the accompanying financial statements are valued by using the cost method.
Anadolu Sigorta
2008
Annual Report
151

29. Insurance Rights and Demands Amounts of subrogation income/(expense) for the period between 1 January 31 December 2008 based on each branch are presented in the below table: 1 January31 December 2008 Accident Illness-Health Motor Vehicles Water Crafts Marine Fire and Natural Disasters General Losses Motor Vehicles Liability General Liability Total 30. Investment Agreement Rights The Company has no investment allowances to be used in current and subsequent periods. 31. Other Expenses 31.1 1 January31 December 2008 46,702,626 39,027,732 13,952,212 99,682,570 9,343 15,378 1,575,984 (19,323) 1,442,168 3,577,541 749,939 1,895,421 8,348 9,254,799
Personnel Expenses Administrative Expenses Marketing and Selling Expenses Total
31.2 The Company has no agreements with discretionary participation feature that their fair value cannot be measured reliably.
152
Anadolu Sigorta
2008
Annual Report

32 Expense Types 32.1 1 January31 December 2008 46,702,626 5,057,900 1,428,690 2,790,592 10,788,909 3,163,303 5,106,814 29,750,550 104,789,384
Personnel wages and expenses Rent expenses Transportation expenses Communication expenses Advertisement expenses Marketing expenses Depreciation expenses Other Total (*)
(*) While, TRY 25,295,526 of reinsurance commission and TRY 5,106,814 of depreciation expense in the income statement are included, TRY (92,782,463) of production commission expense and TRY (15,942,174) of other expenses recognized in operating expenses are not included. 32.2 Leasing Transactions Other information on financial leasing is disclosed in Note 23. 33. Employee Benefit Expenses Employee benefit expenses are detailed in Note 22 (Employee Benefits). The Company has no share-based payments in the current period. 34. Finance Costs 34.1 Current finance costs include TRY 88,079 of portfolio management cost and TRY 19,952 of interest expense of finance lease of fixed assets. 34.2 There is no finance expense related to shareholders, affiliates or subsidiaries in the current period.
Anadolu Sigorta
2008
Annual Report
153

34.3 Technical income from the transactions with shareholders, affiliates and subsidiaries is amounting to TRY 148,254,682 and technical expense is TRY 137,276,099. Technical Income: Shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Affiliates Anadolu Hayat Emeklilik A.. 1 January 31 December 2008 92,645,380 55,037,670 147,683,050 571,632 571,632
Technical Expenses: 1 January31 December 2008 Shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Affiliates Anadolu Hayat Emeklilik A.. 68,111,838 68,778,141 136,889,979 386,120 386,120
34.4 The Companys rent expense paid to Gayrimenkul Yatrm Ortakl A.. is amounting to TRY 3,250,588 and interest received from Trkiye Bankas A.. amounts to TRY 80,039,449. 34.5 The Company does not apply any hedge accounting. 34.6 The Company has no exchange differences, other than those arising from financial assets held at fair value through profit and loss. 35. Income Tax 31 December 2008 Current tax provision: Corporate Tax Liability Provision Prepaid Taxes and Other Liabilities on Period Profit (-) 23,056,450 (22,335,791)
154
Anadolu Sigorta
2008
Annual Report

Tax expense in the income statement 1 January31 December 2008 23,056,450 2,122,323
Income tax expense/(income) is formed by the items below: Current tax expense / (income) Deferred tax expense/(income) related to the occurrence and disappearance of the temporary differences
Corporate Tax The Company is subject to Turkish corporate taxes. Provision is made in the accompanying financial statements for the estimated charge based on the Companys results for the years and periods. Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses, and by deducting dividends received from resident companies, other exempt income and investment incentives utilized. The effective tax rate used in 2008 is 20%. In Turkey, advance tax returns are filed on a quarterly basis. The advance corporate income tax rate used in 2008 is 20%. Losses are allowed to be carried 5 years maximum to be deducted from the taxable profit of the following years. Tax carry back is not allowed. In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns between 1-25 April following the close of the accounting year to which they relate. Tax authorities may, however, examine such returns and the underlying accounting records and may revise assessments within five years. Income Withholding Tax In addition to corporate taxes, companies should also calculate income withholding taxes and funds surcharge on any dividends distributed, except for companies receiving dividends who are resident companies in Turkey and Turkish branches of foreign companies. The rate of income withholding tax is 10% starting from 24 April 2003 by the end of 22 July 2006. However, this rate was changed to 15% commencing from 22 July 2006 upon the order no: 2006/10731 of the Council of Ministers. Undistributed dividends incorporated in share capital are not subject to income withholding taxes. Withholding tax at the rate of 19.8% is still applied to investment allowances relating to investment incentive certificates obtained prior to 24 April 2003. Subsequent to this date, companies can deduct 40% of their investments within the scope of the investment incentive certificate and that are directly related to production facilities of the Company. Investments without investment incentive certificates do not qualify for tax allowance. Investment incentive certificates are revoked commencing from 1 January 2006. If companies cannot use investment incentive due to inadequate profit as of 31 December 2005, such outstanding investment incentive can be carried forward to following years so as to be deducted from taxable income of subsequent profitable years. However, companies can deduct carried forward outstanding allowance from the 2006, 2007 and 2008s taxable income. Investment incentive amount that cannot be deducted from the 2008s taxable income will not be carried forward to following years.
Anadolu Sigorta
2008
Annual Report
155

Tax rate that can be used by companies in the case of deducting the tax investment incentive amount in 2006, 2007 and 2008 is 30%. If the Company cannot apply investment incentive carried forward, the effective tax rate will be 20% and unused investment incentive will be forfeited. Since the Company has not benefit from investment incentives, it applied 20% of corporate tax rate as of 31 December 2008. Inflation Adjusted Legal Tax Calculation The Company has adjusted its statutory financial statements as of 31 December 2004 in accordance with Law No: 5024 published in the Official Gazette No: 25332 on 30 December 2003 which requires the application of inflation accounting in Turkey in 2005 and future years for tax purposes, if the actual rate of inflation meets certain thresholds, using principles which do not differ substantially from the principles in IAS 29, and inflation adjusted balances as at 31 December 2004 were taken as opening balances as of 1 January 2005. However, as inflation did not meet the required thresholds as at 31 December 2005, 2006, 2007, and 2008 no further inflation adjustment was made to the Companys statutory financial statements in 2005, 2006, 2007, and 2008. Deferred Tax The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial statements prepared in accordance with TAS and its statutory tax financial statements. These differences usually result in the recognition of revenue and expenses in different reporting periods for TAS and tax purposes and they are given below. Tax rate is applied as 20% for the calculation of deferred tax asset and liabilities. Items that are subject to deferred tax and corporate tax are summarized as follows: Deferred tax assets (liabilities); Economical life differences of tangible fixed assets Retirement pay and unused vacation provisions differences Valuation differences of financial assets Insurance technical reserve differences Doubtful receivable provision differences Deferred tax liabilities 31 December 2008 204,583 700,035 (347,194) (2,068,623) 312,000 (1,199,199) 2008 Movement of deferred tax asset/(liability); Opening balance at 1 January Deferred tax expense recognized in the income statement Closing balance at 31 December 923,124 (2,122,323) (1,199,199)
156
Anadolu Sigorta
2008
Annual Report

Reconciliation of period tax with net income for the period is below: 1 January 31 December 2008 Reconciliation of tax provision Income before tax Tax calculated %20 Effect of additions Effect of allowances Corporate Tax Liability Provision on Period Profit (-) Deferred tax expense 36. Net Income from the Changes in Foreign Exchange Rates 1 January31 December 2008 Recognized in profit/loss Foreign exchange rate income Foreign exchange rate expense Total 37. Earnings per Share For an equity share having TRY 1 of nominal value: 2008 Number of ordinary shares outstanding As of 1 January (total) Number of equity shares issued from internal sources Number of ordinary shares outstanding As of 31 December (total) Net profit for the period (TRY) Earnings per share (TRY) 117,666,276 0.34 19,776,678 (9,499,637) (10,277,041)
140,722,726 (28,144,545) (4,786,015) 9,874,110 (23,056,450) (2,122,323)
275,000,000 75,000,000
350,000,000
Anadolu Sigorta
2008
Annual Report
157

38. Dividends per Share In 2008, the Company has paid TRY 0.072727 of gross cash dividend having TRY 1 nominal value each (total cash dividend is TRY 20,000,000) and TRY 0.083636 of bonus share (total bonus share is TRY 23,000,000) to shareholders. 39. Cash Generated from the Operations Statement of cash flow is presented with the financial statements. The Companys net cash from operating activities, net cash from investing activities, and net cash from financing activities is amounting to TRY 138,174,239, TRY 65,768,766 and TRY (22,215,118), respectively. 40. Equity Share Convertible Bonds None. 41. Cash Convertible Privileged Equity Shares None. 42. Risks In accordance with Article 323 of the Tax Legislation, the Company provides provision for doubtful receivables under the legal and management follow up considering the nature and amount of its receivables. As of 31 December 2008, the amount of doubtful receivables under legal and management follow up is TRY 57,499,314. TRY 42,976,335 of the related provision amount includes subrogation transactions under litigation. Information on the provisions provided in the financial statements is presented in Note 2.1.1. 43. Commitments Total amount of commitments not included in liabilities: The Company has given TRY 7,782,736 of commitments in total as of 31 December 2008. Total amount consists of TRY 7,334,172, TRY 382,914 of USD amounts and TRY 65,560 of EUR amounts. The Company has no tangible and intangible fixed assets held for commitment. The Companys TRY 1,850 of finance lease payable has a maturity period having less than one year. 44. Business Combinations The Company has no business combinations in the current period.
158
Anadolu Sigorta
2008
Annual Report

45. Related Parties The details of receivable and payable relationships between the Company and its shareholders and affiliates are presented below: Due from shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Due from affiliates Anadolu Hayat Emeklilik A. Due to shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Due to affiliates Anadolu Hayat Emeklilik A. 31 December 2008 33,482,477 1,077,680 34,560,157 155,912 155,912 4,984,903 14,764,958 19,749,861 8,998 8,998
The details of technical income and expenses due to the transactions between the Company and its shareholders and affiliates are presented below: Technical Income: 1 January31 December 2008 Shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Affiliates Anadolu Hayat Emeklilik A.. 92,645,380 55,037,670 147,683,050 571,632 571,632
Technical Expenses: 1 January31 December 2008 Shareholders Trkiye Bankas A.. Milli Reasrans T.A.. Affiliates Anadolu Hayat Emeklilik A.. 68,111,838 68,778,141 136,889,979 386,120 386,120
No provision for doubtful receivables is provided for due from shareholders, affiliates and subsidiaries.
Anadolu Sigorta
2008
Annual Report
159

Bonus share amount obtained due to the Anadolu Hayat Emeklilik A..s capital increase from its internal sources is amounting to TRY 14,196,079 and presented under the dividend income in the accompanying financial statements. The Company has no liabilities, such as; guarantees, commitments, advances given to shareholders or affiliates. Remuneration, fringe benefits provided to top management in the financial year is as follows: As of 31 December 2008, remuneration and fringe benefits provided to top management such as; chairman and members of the board of directors, managing director and assistant managing director (including operational leasing, depreciation and other expenses in addition to monetary rights, such as; compensation, bonuses, premiums, ...etc) in total amount to TRY 3,332,918. 46. Subsequent Events None. 47. Other 47.1 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 Technical Division Changes in Other Technical Reserves Change in Equalization Reserve Technical Division Operating Expenses Commissions (Net) Personnel Expenses Administration Expenses Marketing and Selling Expenses Other Expenses Other Operations Other Income and Revenues Income from the Collections of Doubtful Receivables Other Income and Revenues Other Operations Other Expense and Losses Non-deductible Expenses Other Expenses and Losses 31 December 2008 5,444,952
67,486,937 46,702,626 39,027,732 13,952,212 15,942,174 183,111,681 413,151 710,829 1,123,980 4,344,596 8,739 4,353,335
160
Anadolu Sigorta
2008
Annual Report

47.2 Total amount of each due to/from personnel items classified under Other Receivables and Other Short and Long Term Payables exceeding one percent of total assets in the balance sheet Current Assets Other Receivables Deposits and Guarantees Given Agency Receivables from Compulsory Earthquake Insurance Agency Receivables from Agriculture Insurance Total Current Liabilities Other Payables 31 December 2008 14,544 760,955 369,415 1,144,914 31 December 2008 2,527,291 1,326,874 5,531,039 69,179 149,175 70,946 492,106 3,307,737 13,474,347 31 December 2008 TRY 13,702,761 9,952,051 5,444,952 29,099,764
Institution of Natural Disaster Insurances Current Account(*) Deposits and Guarantees Received Invoices Payable Tarm Sigortalar A.. Current Account (*) Agency Payables for Compulsory Earthquake Insurance Agency Commissions Payable for Agriculture Insurances Temporary Collection Account Other Payables Total Non Current Liabilities Other Technical Reserves Free Provision Premium Receivable Reserves booked as per Revoked Decree Equalization Reserve Total
47.3 Subrogation receivables followed under the off-balance sheet accounts Subrogation receivables followed under the off-balance sheet accounts is amounting to TRY 681,147. 47.4 Descriptive disclosure in relation to amounts and resources of income, expenses, and losses for the prior periods None.
Anadolu Sigorta
2008
Annual Report
161

An Assessment of Financial Standing, Profitability and Solvency
Premium Production Gross Premiums (TRY thousand)

1,192,587 1,161,386 1,060,160
06
07
08
In 2008, the premium production of Anadolu Sigorta materialized as TRY 1,161,386 thousand. Branches with the most significant share in premium production were, in order, accident, fire, motor third party liability, and health. A portion in the amount of TRY 289,187 thousand of premiums were ceded through reinsurance in 2008, thus significantly reducing retained risk in branches likely to present high claim settlements in particular, such as fire and machinery erection. Solvency Having adopted it as a duty to make claim payments fully and timely to its policyholders, Anadolu Sigorta attained this goal once again in 2008 drawing on its sound asset structure and balanced liquidity ratio. A big part of the risk was ceded through reinsurance contracts made in branches under which high-amount coverage is provided such as fire and machinery erection, thus making it possible for the Company to remain unaffected by claims paid in big amounts. Down 3.2% in 2008, claims paid stood at TRY 685,304 thousand. A large part of the claims paid arose from losses in accident, motor third party liability, health and fire branches. Combined loss/premium ratio was 78.7%; this ratio would have been 73%, had its computation employed the provision for unearned premium which is calculated by deducting the commission, as did the method in 2007. Claims Paid Conversation Share Combined Loss Premium Ratio
588,381 708,006 628,429 685,304 505,584
595,761 81% 74% 79%
06
07
08
06
07
08
06
07
08
162
Anadolu Sigorta
2008
Faaliyet Raporu Annual Report

An Assessment of Financial Standing, Profitability and Solvency
Assessment of Profitability Gross Profit (TRY thousand) Gross Profit/Premiums Received
140,723
12.12%
77,225 2.93%
6.47%
31,081
06
07
08
06
07
08
Gross profit for 2008 was significantly up by 82% on a year-to-year basis and rose to TRY 77140,723 thousand. Return on equity and return on assets grew as compared with 2007 and stood at 23.1% and 9.2% respectively. The profit-focused growth policy also served to achieve significant increase in technical profit, which went up to TRY 96,671 thousand at the end of the year.
Anadolu Sigorta
2008
Annual Report
163

Information on Financial Structure
Assets Performance Total Assets (TRY thousand)

1,534,376 1,401,538 1,229,093
06
07
08
As of year-end 2008, total assets reached TRY 1,534,376 thousand, which signifies a year-on rise by 9,48%. Representing the largest item in total assets, total cash and financial assets grew 30% year-on to TRY 902,632 thousand, boosting confidence with respect to payment of possible losses to policyholders with this large volume. Capital Performance Nominal Capital (TRY thousand)
350,000 275,000 200,000
06
07
08
At the end of 2008, the Companys nominal capital augmented by 27.3% year-on and rose to 350,000 thousand. Expanded nominal capital is an indication of the Companys financial strength.
164
Anadolu Sigorta
2008
Annual Report

Summary Financial Information for the Last 5 Years Including the Reporting Period
(TRY thousand) Gross premiums Technical division balance Investment income Investment expenditure Period gross income (loss) Tax Provisions Period net income (loss) Shareholders' equity Total Assets
2004 696,429 52,810 118,140 -27,556 81,611 -3,436 78,175 183,847 734,702
2005 825,932 21,413 86,891 -35,343 55,922 -15,649 40,273 466,405 1,028,147
2006 1,060,160 -15,151 102,576 -44,274 31,081 -5,882 25,199 506,457 1,229,093
2007 1,192,587 21,653 127,880 -56,895 77,225 -23,017 54,209 644,088 1,401,538
2008 1,161,386 96,671 176,944 -117,741 140,722 -23,056 117,666 607,990 1,534,375
Anadolu Sigorta
2008
Annual Report
165

Risk Management Policies Adhered to by Types of Risks
The Companys risk policies and related implementation procedures include written standards devised and enforced by the Board of Directors and implemented by senior management. Determined and enforced by the Board of Directors in parallel with international practices on the basis of insurance underwriting risk, credit risk, market risk, operational risk and the risk of use of the Companys services for laundering proceeds from crime and for financing terrorism, these are general standards that define the organization and scope of the risk management function, risk measurement procedures, the duties and responsibilities of the Board of Directors, senior management and all employees, as well as the procedures for determining risk limits, actions to be taken in possible limit violations, and the compulsory approvals and confirmations that are required to be given in various cases and circumstances. In setting the Companys risk tolerance, the Board of Directors takes into account long-term strategies, shareholders equity capabilities, returns to be derived and general economic expectations, and then risk tolerance is expressed in terms of risk limits. In line with the procedures set in the Policies and in view of the market conditions in the relevant period, the Risk Management and Internal Control Department reports violations of limits submitted to the CEO and the Board of Directors. Senior Management is responsible for implementation of Risk Management Policies. For purposes of ensuring compliance with policies, Senior Management means the CEO, Deputy Chief Executive Officers, and relevant Unit Managers and Regional Managers. On the other hand, all authorized employees performing the transactions regarded as a part of risk management processes are individually responsible for the accuracy and reliability of all kinds of data and information they provide in relation to their respective jobs within the process, which form the basis of the making of decisions. 1- Insurance Underwriting Risk Policy Insurance underwriting risk is defined as a risk that might arise from failure to correctly and effectively implement the insurance technique within the process of turning coverage provision for natural risks which are not known certainly if they will occur and for risks which are known for sure to occur but are unknown time-wise into sustainable commercial earnings. The scope of Insurance Underwriting Risk Policies consists of the conditions and price of the coverage to be provided for the risk; the principles applied in determining which of the coverages provided will be ceded up to what amounts and to whom in the case of risks decided to be transferred; conducting effective monitoring of risk portfolio loss frequency so as to allow formulation of fitting reinsurance strategies at sufficient frequency, and related monitoring and reporting system. Management of insurance underwriting risk is based on the principle of forming the risk portfolio with risks that represent a low potential to cause loss. In order to avoid poor risk selection and incorrect pricing of insurance policies and to create accurate reinsurance policies, effective monitoring is carried out on loss frequency and loss severity of the risk portfolio. The risk portfolio is separately overseen on the basis of agents, industry, branches, regions, brands, models, tariffs, products, customers and other parameters. A comprehensive insurance underwriting risk reporting system is used to ensure measurement of loss performance, oversee compliance with applicable legislation and ensure reporting on the effectiveness of insurance underwriting risk controls. The risk of the portfolio is regularly reported by executive departments and the Risk Management and Internal Control Department to the CEO and the Board of Directors. 2- Credit Risk Policy Credit risk means the possibility of the Companys sustaining loss due to failure on the part of policyholders, agents, reinsurers, fronting companies, coinsurers, and other parties to partially or totally fulfill their obligations
166
Anadolu Sigorta
2008
Annual Report

towards the Company. It also indicates to the loss of market capitalization caused by the deterioration in the financial standing of companies with which there are subsidiary or affiliate relationships. The Credit Risk Policy sets out the procedures and responsibilities related to the management, control and monitoring of credit risk, as well as matters in relation to credit risk limits. Early identification and definition of issues are of the essence for effective management of credit risk. For this purpose early warning signals are determined; these are indicators pointing at cases that will adversely influence the credit risk and lead to a credit risk that is above the Companys risk tolerance. For insurance brokers, these are declined collection ratios, reduced production performances, slackened discipline in conforming to Company guidelines, and other data from intelligence. For reinsurance companies and other counterparts, these cover all kinds of data and information obtained in relation to negative ratings and developments. It is the duty and responsibility of executive units to obtain data and information in relation to credit risk. All kinds of information obtained are urgently considered within the frame of decision-making, monitoring, reporting and auditing processes. A credit risk scoring system used, which has the capability to be made use of in the management of credit risk and decision-making, to enable monitoring risk on the basis of counterparties, to take notice of expected and unexpected losses, and to allow for making the decisions based not only on the return derived or anticipated to be derived from the counterparty at any time, but also on the risk underwritten. The risks of counterparties are regularly reported by the Risk Management and Internal Control Department to the CEO and the Board of Directors. The Risk Management and Internal Control Department is also responsible for undertaking daily followup of regional, sectoral and market trends that have an actual or possible impact on the Companys credit risk, and for reporting the results to the CEO and the Board of Directors. 3- Market Risk Policy Market Risk means the risk of loss in the value of the Companys placements in financial borrowing instruments whose return is linked to interest rate; stock, other investment securities, all FX or FX-indexed assets and liabilities in or off the balance sheet, derivative agreements based on the said instruments, which loss might result from the volatilities in interest rates, stock prices and exchange rates. The basic and ultimate purpose of the Companys activities in money and capital markets is to generate returns. The basis of Market Risk policies is to measure, report and keep under control the risk that the Company is exposed to by reason of such activity. The top priority is to ensure that the Market Risk the Company exposed to is within the limits stipulated by applicable legislation and is compliant with the companys risk appetite. In market risk management, risk appetite is expressed in terms of market risk limits assigned to the executive fund management unit and the contracted asset management companies. Market risk limits are categorized into two groups: limits set employing the value at risk method, and limits determined based on the ratio of each group of investment securities to the total portfolio and shareholders equity. The Risk Management and Internal Control Department and executive fund management unit closely and constantly monitor limit violations. In case limits are exceeded, the amount at which a limit is exceeded and its reasons are reported to the CEO and the Board of Directors, along with the assessments of the executive body. If limit violations are above the ratios or durations set by the Board of Directors, necessary action is determined by the Board of Directors. Market risk is calculated employing internationally accepted statistical methods. Since these calculations cover risk prediction for the following days, the accuracy of predictions are compared subsequently with actual values and monitored on a daily basis. On the other hand, the portfolio is tested under different scenarios for determining the effects of occurrences which pose a low probability in terms of occurrence, but big volume in
Anadolu Sigorta
2008
Annual Report
167

terms of loss. The assessments, which include the possible mismatches among types and maturities of the Companys assets and liabilities, are regularly reported in detail to the CEO and the Board of Directors. 4- Operational Risk Policy Operational risk is defined as any risk other than absolute insurance underwriting, credit and market risks which might occur in the organization, business continuity, insufficient or inoperative business processes, technology, human resource, underperformance by individuals, administrative mistakes, unfortunate events, misconduct, accident and fraud, systems or external factors, legislation, management and business environment, and which might cause physical or reputational loss to the Company. Operational risks that might be faced during the activities are classified based on the Company Risk Catalogue, which is the basic document used in defining and classifying all risks that may be faced with. The Risk Catalogue is updated in parallel with the changing conditions. Self-Assessment Methodology is used in the identification of operational risks. In this method, the risks in relation to activities conducted are exposed with the involvement of the personnel performing the job. Qualitative and quantitative methods are used jointly in the measurement and evaluation of operational risk. The measurement process uses data obtained from impact - likelihood analysis, control culture profile surveys and internal and external loss database. When managing operational risk, efforts are spent to develop controls to eliminate or mitigate the possibility of sustaining loss due to risks that the Company may be exposed to in relation to its activities. Effectiveness and adequacy of existing or subsequently developed controls, and the implementation of action plans adopted in this regard are evaluated in coordination with the Risk Management and Internal Control Department and the Board of Inspectors. The Risk Management and Internal Control Department monitors all operational risks that the Company may be exposed to during the course of its activities, and regularly reports on the same to the CEO and the Board of Directors. 5- Policy for Combating the Legalization (Laundering) of Proceeds from Crime and Financing of Terrorism These policies are intended to define, rate, monitor, assess and mitigate the risks the Company is exposed to with respect to the use of the insurance service offered by the Company in laundering proceeds from crime or financing of terrorism. The ultimate goal can be achieved by effectively monitoring and supervising customers and transactions in full compliance with the applicable legislation and regulations. The overall scope of the Policy covers the activities centrally executed for defining, measuring, monitoring, controlling and reporting the risks that the Company is exposed to for reasons of the use of the insurance service offered by the Company in laundering proceeds from crime or in financing of terrorism, or the Companys failure to fully comply with the liabilities imposed by the Law no 5549 on Prevention of Laundering Proceeds from Crime and by related regulations and communiqus. The basic strategy of the Company to achieve the ultimate goal is to carefully plan, conduct and manage risk management activities independently, impartially, purposefully, productively and efficiently, employing a riskfocused approach and in line with applicable legislation and internationally accepted principles and standards. The basic principle in achieving this goal is to employ the most advanced tools and methods that are available and possible to be used. Findings from risk management, monitoring and control activities are regularly reported to the Board of Directors by the Board Director who is delegated by the Board of Directors in respect of this matter.
168
Anadolu Sigorta
2008
Annual Report

Directory
Headquarters Bykdere Caddesi Kuleleri Kule 2 Kat:23-26 34330 4. Levent/STANBUL Phone: (90 212) 350 0 350 Fax: (90 212) 350 0 355 E-mail: bilgi@anadolusigorta.com.tr Corporate Insurance Department Beytem Plaza Bykdere Caddesi No:22 34394 ili/STANBUL Phone: (90 212) 368 38 68 Fax: (90 212) 350 01 80 E-mail: ksm@anadolusigorta.com.tr stanbul Regional Branch Merter Merkezi 2/22 General Ali Rza Grcan Caddesi 34173 Merter/STANBUL Phone: (90 212) 484 24 24 Fax: (90 212) 350 0 120 E-mail: bolge11@anadolusigorta.com.tr Kadky Regional Branch K2 Plaza Sarkanarya Sokak No:14 34742 Kozyata/STANBUL Phone: (90 216) 571 88 00 Fax: (90 216) 571 88 48 E-mail: bolge12@anadolusigorta.com.tr Mediterranean Regional Branch Konyaalt Caddesi No: 78 07050 ANTALYA Phone: (90 242) 248 26 80 Fax: (90 242) 241 42 80 E-mail: bolge08@anadolusigorta.com.tr Western Anatolia Regional Branch Atatrk Caddesi 92 Anadolu Sigorta Binas 2 35210 ZMR Phone: (90 232) 455 33 33 Fax: (90 232) 455 33 43 E-mail: bolge03@anadolusigorta.com.tr Western Black Sea Regional Branch lhami Soysal Caddesi 44/4 Ervaksan Binas Kat:3 67320 Kdz. Ereli/ZONGULDAK Phone: (90 372) 322 72 40 Fax: (90 372) 312 11 00 E-mail: bolge06@anadolusigorta.com.tr
Southern Anatolia Regional Branch Reatbey Mah. 62029. Sokak 16/A 01120 Seyhan/ADANA Phone: (90 322) 455 32 00 Fax: (90 322) 455 32 32 E-mail: bolge02@anadolusigorta.com.tr Central Anatolia Regional Branch Cinnah Caddesi Farabi Sok. No:43 06690 Kavakldere/ANKARA Phone: (90 312) 457 17 17 Fax: (90 312) 457 17 49 E-mail: bolge05@anadolusigorta.com.tr Black Sea Regional Branch Karyaka Mah. 4 Nolu Sok. No: 479 61040 TRABZON Phone: (90 462) 230 61 61 Fax: (90 462) 230 70 20 E-mail: bolge07@anadolusigorta.com.tr Marmara Regional Branch Yalova Caddesi 424 Buttim Plaza Kat:8 Kap: 1617-20 16350 BURSA Phone: (90 224) 270 05 55 Fax: (290 24) 270 05 88 E-mail: bolge04@anadolusigorta.com.tr Turkish Republic of Northern Cyprus Branch Memduh Asaf Sokak 8 Kkliftlik Lefkoa/TRNC Phone: (90 392) 227 95 95 Fax: (90 392) 227 95 96 E-mail: bolge50@anadolusigorta.com.tr
Produced by Tayburn Kurumsal Tel: (90 212) 227 04 36 Fax: (90 212) 227 88 57 www.tayburnkurumsal.com
www.anadolusigorta.com.tr

Anadolu Insurance Annual Report 2008

Caricato da

Informazioni sul documento

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Anadolu Insurance Annual Report 2008

Caricato da

Copyright:

Formati disponibili

Annual Report 2008

Y Never Lose With Anadolu Sigorta ou

Never Lose Energy

Never Lose Time

Our Vision, Mission and Corporate Values

Never Lose a Customer

Our Vision, Mission and Corporate Values

Our Vision, Mission and Corporate Values

Our Corporate Values

Never Lose Financial Strength

Breakdown of Premium Production by Branches (%)

Legal Protection 0.43

Personal Accident 3.75

Shareholder Structure (%)

Capital Increases in 2008 and their Financial Resources

Changes Made in the Articles of Association During the Year 2008

Capital Adequacy Ratios

Asset Quality and Liquidity Ratios

Premium Production (TRY thousand)

Increase in Premium Production (%)

Message from the Chairman

We lead the sector in product creation, service and technology.

Message from the Chairman

Message from the Chairman

Burhan Karagz Chairman of the Board

Message from the CEO

Innovative products and solutions...

Message from the CEO

Message from the CEO

Message from the CEO

Public awareness of insurance...

Message from the CEO

Mustafa Su Chief Executive Officer

An Overview of the Economy and the Industry in 2008

Developments in the World...

An Overview of the Economy and the Industry in 2008

An Overview of the Economy and the Industry in 2008

An Overview of the Economy and the Industry in 2008

2007 GNP Growth (%) 4.6

2008 Quarter I Quarter II 6.7 2.3

Quarter III 6 Months 9 Months 0.5 4.2 3

Inflation (%) PPI Annual change CPI Annual change

Source: Turkish Statistical Institute

An Overview of the Economy and the Industry in 2008

Changes, new practices...

An Overview of the Economy and the Industry in 2008

An Assessment of 2008 at Anadolu Sigorta

An Assessment of 2008 at Anadolu Sigorta

An Assessment of 2008 at Anadolu Sigorta

Health Legal Protection

Agriculture Engineering Motor Third Party Liability Accident Marine

Premium Production (TRY thousand)

Claims Paid (TRY thousand)

Combined Loss Premium Ratio (%)

Technical Profitability Ratio (%)

An Assessment of 2008 at Anadolu Sigorta

An Assessment of 2008 at Anadolu Sigorta

Premium Production (TRY thousand)

Claims Paid (TRY thousand)

Combined Loss Premium Ratio (%)

Technical Profitability Ratio (%)

Premium Production (TRY thousand)

Claims Paid (TRY thousand)

Combined Loss Premium Ratio (%)