Yapı Kredi Sigorta Anonim Şirketi

Transcription

1 (Convenience translation of independent auditors report and financial statements originally issued in Turkish) Yapı Kredi Sigorta Anonim Şirketi Unconsolidated financial statements as of December 31, 2011 together with independent auditors' report

2 (Convenience translation of independent auditors report originally issued in Turkish) Yapı Kredi Sigorta Anonim Şirketi Independent auditors report as of December 31, 2011 To the Board of Directors of Yapı Kredi Sigorta Anonim Şirketi. 1. We have audited the accompanying unconsolidated balance sheet of Yapı Kredi Sigorta Anonim Şirketi ( the Company ) as of December 31, 2011 and the related unconsolidated statement of income, unconsolidated statement of changes in equity, unconsolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Company Management s responsibility for the financial statements 2. The Company management is responsible for the preparation and fair presentation of these financial statements in accordance with the prevailing accounting principles and standards set out as per the insurance legislation. This responsibility includes designing, implementing and maintaining internal systems relevant to the preparation and fair presentation of the 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. Auditor s responsibility 3. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with the regulations regarding auditing principles set by insurance legislation. Those standards require that the ethical principles are complied with and that the audit is planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement. 4. Our audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The independent audit procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessment, the independent auditors consider internal systems relevant to the entity. However our purpose is not expressing an opinion on the effectiveness of the entity's internal control, but to consider the relation of the financial statements prepared by the Company management and the internal systems in order to design audit procedures that are appropriate in the circumstances. 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.

3 Opinion 5. In our opinion, the accompanying unconsolidated financial statements present fairly, in all material respects, the financial position of Yapı Kredi Sigorta Anonim Şirketi an as of December 31, 2011 and its financial performance and its cash flows for the year then ended in accordance with the prevailing accounting principles and standards (Note 2) set out as per the insurance legislation. Additional paragraph for convenience translation to English: 6. As of December 31, 2011, the accounting principles described in Note 2 to the accompanying unconsolidated financial statements differ from International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. The effects of differences between accounting principles and standards described in Note 2 and IFRS have not been quantified in the accompanying unconsolidated financial statements. Accordingly, the accompanying unconsolidated financial statements are not intended to present the financial position and results of operations of the Company in accordance with IFRS. Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A member firm of Ernst & Young Global Limited Şeyda Oltulu, SMMM Engagement Partner February 22, 2012 Istanbul, Turkey (2)

4 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2011 TABLE OF CONTENTS PAGES UNCONSOLIDATED BALANCE SHEET UNCONSOLIDATED STATEMENT OF INCOME UNCONSOLIDATED STATEMENT OF CASH FLOWS... 8 UNCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY... 9 NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS APPENDIX I - STATEMENTS OF PROFIT DISTRIBUTION... 83

5 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2011 ASSETS Audited Audited Note 31 December December 2010 I- Current Assets A- Cash and Cash Equivalents Cash Cheques Received Banks Cheques Given and Payment Orders (-) Other Cash and Cash Equivalents 2.12 and 47, B- Financial Assets and Financial Investments at Insurees' Risk Available for Sale Investments 2.8 and Held to Maturity Investments Trading Investments 2.8 and Loans Provision for Loans (-) Financial Assets at Insuree's Risk Company's Shares Provision for impairment of financial assets (-) - - C- Receivables from Operations 11.1,2.8 and Due from Insurance Operations Provision for Due from Insurance Operations (-) 12.1 ( ) ( ) 3- Due from Reinsurance Operations Provision for Due from Reinsurance Operations (-) Premium Reserves Loans to Insurees Provision for Loans to Insurees (-) Due from Private Pension Fund Operations Doubtful Receivables from Main Operations Provision for Doubtful Receivables from Main Operations (-) 12.1 ( ) ( ) D- Due from Related Parties Due from Shareholders Due from Subsidiaries Due from Equity Investments Due from Joint-Ventures Due from Personnel Due from Other Related Parties Rediscount on Due from Related Parties (-) Doubtful Receivables from Related Parties Provision for Doubtful Receivables from Related Parties (-) - - E- Other Receivables Leasing Receivables Unearned Leasing Interest Income (-) Deposits and Guarantees Given Other Receivables Rediscount on Other Receivables (-) Other Doubtful Receivables Provision for Other Doubtful Receivables (-) (41.528) (44.492) F- Deferred Expenses and Income Accruals Deferred Expenses 2.24 and Accrued Interest and Rent Income Deferred Income Other Deferred Expenses and Income Accruals - - G- Other Current Assets Prepaid Office Supplies Prepaid Taxes and Funds Deferred Tax Assets Job Advances Advances to Personnel Count Shortages Other Current Assets Provision for Other Current Assets (-) - - I- Total Current Assets The accompanying notes form an integral part of these unconsolidated financial statements. 1

6 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2011 ASSETS Audited Audited Note 31 December December 2010 II- Non-Current Assets A- Receivables from Main Operations Due from Insurance Operations Provision for Due from Insurance Operations (-) Due from Reinsurance Operations Provision for Due from Reinsurance Operations (-) Premium Reserves Loans to Insurees Provision for Loans to Insurees (-) Due from Private Pension Fund Operations Doubtful Receivables from Main Operations Provision for Doubtful Receivables from Main Operations (-) - - B- Due from Related Parties Due from Shareholders Due from Subsidiaries Due from Equity Investments Due from Joint-Ventures Due from Personnel Due from Other Related Parties Rediscount on Due from Related Parties (-) Doubtful Receivables from Related Parties Provision for Doubtful Receivables from Related Parties (-) - - C- Other Receivables Leasing Receivables Unearned Leasing Interest Income (-) Deposits and Guarantees Given Other Receivables Rediscount on Other Receivables (-) Other Doubtful Receivables Provision for Other Doubtful Receivables (-) - - D- Financial Assets 11.4 and Investment Securities Subsidiaries Subsidiaries Capital Commitments (-) Equity Investments Equity Investments Capital Commitments (-) Joint-Ventures Joint-Ventures Capital Commitments (-) Financial Assets and Financial Investments at Insurees' Risk Other Financial Assets Provision for impairment of financial assets (-) - - E- Tangible Assets 2.5 and Investment Properties Provision for Diminution in Value of Investment Property (-) Property for Operational Usage Machinery and Equipment Furniture and Fixtures Motor Vehicles Other Tangible Assets (including leasehold improvements) Leased Assets Accumulated Depreciation (-) ( ) ( ) 10- Advances Given for Tangible Assets(including construction in progress) - - F- Intangible Assets 2.7, Rights Goodwill Start-up Costs Research and Development Expenses Other Intangible Assets Accumulated Amortization (-) 8 ( ) ( ) 7- Advances Given for Intangible Assets G- Deferred Expenses and Income Accruals Deferred Expenses Income Accruals Other Deferred Expenses and Income Accruals - - H- Other Non-Current Assets Effective Foreign Currency Accounts Foreign Currency Accounts Prepaid Office Supplies Prepaid Taxes and Funds Deferred Tax Assets 2.18,21 and Other Non-Current Assets Other Non-Current Assets Depreciation (-) Provision for Diminution in Value of Other Non-Current Assets (-) - - II- Total Non-Current Assets TOTAL ASSETS (I+II) The accompanying notes form an integral part of these unconsolidated financial statements. 3

7 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2011 LIABILITIES Audited Audited Note 31 December December 2010 III- Current Liabilities A- Financial Liabilities Due to Credit Institutions Leasing Payables Deferred Leasing Costs (-) Short Term Installments of Long Term Borrowings Issued Debt Securities Other Issued Debt Securities Value Differences of Other Issued Debt Securities (-) Other Financial Payables (Liabilities) B- Payables from Main Operations Payables from Insurance Operations Payables from Reinsurance Operations Premium Deposits Payables from Private Pension Operations Payables from Other Operations 19 and Rediscount on Payables from Other Operations (-) - - C- Due to Related Parties Due to Shareholders Due to Associates Due to Subsidiaries Due to Joint-Ventures Due to Personnel Due to Other Related Parties D- Other Payables Deposits and Guarantees Received Other Payables 19 and Rediscount on Other Payables (-) - - E- Insurance Technical Provisions Unearned Premium Reserve - Net 2.24,4 and Unexpired Risks Reserve - Net 2.24, 4 and Life Mathematical Reserve - Net Outstanding Claim Provision - Net 2.24, 4 and Bonus and Rebate Provision - Net Provision for Life Policies at Insuree's Risk Net Other Technical Reserves - Net F- Taxes and Other Fiscal Liabilities Taxes and Funds Payable Social Security Withholdings Payable Overdue, Deferred or Restructured Taxes and Other Fiscal Liabilities Other Taxes and Fiscal Liabilities Corporate Tax Provision and Other Fiscal Liabilities 2.18 and Prepaid Corporate Tax and Other Fiscal Liabilities (-) 2.18 ( ) ( ) 7- Other Taxes and Fiscal Liabilities Provision G- Provisions for Other Risks Provision for Employment Termination Benefits 2.19, Provision for Social Aid Fund Asset Shortage Provision for Expense Accruals - - H- Deferred Income and Expense Accruals Deferred Income Expenses Accruals Other Deferred Income and Expense Accruals - - I- Other Current Liabilities Deferred Tax Liabilities Count Overages Other Current Liabilities III- Total Current Liabilities The accompanying notes form an integral part of these unconsolidated financial statements. 4

8 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2011 LIABILITIES Audited Audited Note 31 December December 2010 IV- Non-Current Liabilities A- Financial Liabilities Due to Credit Institutions Leasing Payables Deferred Leasing Costs (-) Issued Debt Securities Other Issued Debt Securities Value Differences of Other Issued Debt Securities (-) Other Financial Payables (Liabilities) - - B- Payables from Operations Payables from Insurance Operations Payables from Reinsurance Operations Premium Deposits Payables from Private Pension Operations Payables from Other Operations Rediscount on Payables from Other Operations (-) - - C- Due to Related Parties Due to Shareholders Due to Subsidiaries Due to Equity Investments Due to Joint-Ventures Due to Personnel Due to Other Related Parties - - D- Other Payables Deposits and Guarantees Received Other Payables 2.25,4,17 and Rediscount on Other Payables - - E- Insurance Technical Provisions Unearned Premium Reserve - Net Unexpired Risks Reserve - Net Life Mathematical Reserve - Net Outstanding Claim Provision - Net Bonus and Rebate Provision - Net Provision for Life Policies at Insuree's Risk - Net Other Technical Reserves - Net 2.24,4,17and F- Other Liabilities and Related Provisions Other Payables Overdue, Deferred or Restructured Taxes and Other Fiscal Liabilities Other Payables and Expense Accruals - - G- Provisions for Other Risks Provision for Employment Termination Benefits 2.19 and Provision for Social Aid Fund Asset Shortage - - H- Deferred Income and Expense Accruals Deferred Income Expenses Accruals Other Deferred Income and Expense Accruals - - I- Other Non-Current Liabilities Deferred Tax Liabilities Other Non-Current Liabilities - - IV- Total Non-Current Liabilities The accompanying notes form an integral part of these unconsolidated financial statements. 4

9 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2011 SHAREHOLDERS EQUITY Audited Audited Note 31 December December 2010 V- Shareholders Equity A- Share Capital Nominal Capital 2.13 and Unpaid Capital (-) Adjustments to Share Capital Adjustments to Share Capital (-) - - B- Capital Reserves Share Premium Profit from Stock Abrogation Sales Profits to be Added to the Capital Foreign Currency Translation Differences Other Capital Reserves C- Profit Reserves Legal Reserves Statutory Reserves Extraordinary Reserves Special Funds (Reserves) Valuation of Financial Assets 15 ( ) Other Profit Reserves D- Retained Earnings Retained Earnings E- Accumulated Deficit (-) - ( ) 1- Previous Years' Losses - ( ) F- Net Profit for the Period Net Profit for the Period Net Loss for the Period (-) Profit for he period-not subject to distribution V- Total Shareholders Equity TOTAL LIABILITIES AND SHAREHOLDERS EQUITY (III+IV+V) The accompanying notes form an integral part of these unconsolidated financial statements. 5

10 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2011 I- TECHNICAL PART Audited Audited Note A- Non-Life Technical Income Earned Premiums - (Net of Reinsurer's Share) Written Premiums - (Net of Reinsurer's Share) 2.21 and Gross Written Premium (+) Reinsurer s Share of Gross Written Premium (-) 10 and 24 ( ) ( ) 1.2- Change in Unearned Premiums Reserve (Net of Reinsurer's Share and Reserves Carried Forward)(+/-) 47.5 ( ) ( ) Unearned Premiums Reserve (-) ( ) ( ) Reinsurer s Share of Unearned Premiums Reserve (+) Change in Unexpired Risks Reserve (Net of Reinsurer's Share and Reserves Carried Forward)(+/-) 47.5 ( ) Unexpired Risks Reserve (-) ( ) Reinsurer s Share of Unexpired Risks Reserve (+) Investment Income Transferred from Non-Technical Part Other Technical Income - (Net of Reinsurer's Share) Other Gross Technical Income (+) Reinsurer s Share of Other Gross Technical Income (-) - - B- Non-Life Technical Expense ( ) ( ) 1- Incurred Losses - (Net of Reinsurer's Share) ( ) ( ) 1.1- Paid Claims (Net of Reinsurer's Share) ( ) ( ) Gross Paid Claims (-) ( ) ( ) Reinsurer s Share of Gross Paid Claims (+) Change in Outstanding Claims (Net of Reinsurer's Share and Returned Reserve) (+/-) 47.5 ( ) ( ) Outstanding Claims Provision (-) ( ) ( ) Reinsurer s Share of Outstanding Claims Provision (+) Change in Bonus and Rebate Provision (Net of Reinsurer's Share and Reserves Carried Forward) (+/-) ( ) Bonus and Rebate Provision (-) ( ) Reinsurer s Share of Bonus and Rebate Provisions (+) Change in Other Technical Reserves (Net of Reinsurer's Share and Reserves Carried Forward) (+/-) 47.5 ( ) ( ) 4- Operating Expenses (-) 31 and 32 ( ) ( ) C- Net Technical Income- Non-Life (A - B) D- Life Technical Income Earned Premiums (Net of Reinsurer's Share) Written Premiums (Net of Reinsurer's Share) Gross Written Premiums (+) Reinsurer s Share of Gross Written Premiums (-) Change in Unearned Premiums Reserve (Net of Reinsurer's Share and Reserves Carried Forward) (+/-) Unearned Premiums Reserve (-) Reinsurer s Share of Unearned Premiums Reserve (+) Change in Unexpired Risks Reserve (Net of Reinsurer's Share and Reserves Carried Forward) (+/-) Unexpired Risks Reserve (-) Reinsurer s Share of Unexpired Risks Reserve (+) Life Investment Income Unrealised Investment Income Other Technical Income - (Net of Reinsurer's Share) - - E- Life Technical Expense Incurred Losses - (Net of Reinsurer's Share) Paid Claims (Net of Reinsurer's Share) Gross Paid Claims (-) Reinsurer s Share of Gross Paid Claims (+) Change in Outstanding Claims (Net of Reinsurer's Share and Reserves Carried Forward) (+/-) Outstanding Claim Provisions (-) Reinsurer s Share of Outstanding Claim Provisions (+) Change in Bonus and Rebate Provision (Net of Reinsurer's Share and Reserves Carried Forward) (+/-) Bonus and Rebate Provisions (-) Reinsurer s Share of Bonus and Rebate Provisions (+) Change in Life Mathematical Reserves (Net of Reinsurer's Share and Reserves Carried Forward)(+/-) Life Mathematical Reserves (-) Reinsurer s Share of Life Mathematical Reserves (+) Change in Provision for Policies at Life Insurees' Risk (Net of Reinsurer's Share and Reserves Carried Forward)(+/-) Provision for Life Policies at Insuree's Risk (-) Reinsurer s Share of Provision for Life Policies at Insuree's Risk (+) Change in Other Technical Reserves (Net of Reinsurer's Share and Reserves Carried Forward) (+/-) Operating Expenses (-) Investment Expenses (-) Unrealised Investment Expense (-) Investment Income Transferred to Non-Life Technical Part (-) - - F- Net Technical Income- Non-Life (D -E) - - G- Pension Funds Technical Income Fund Management Income Management Expense Charge Entrance Fee Income Management Expense Charge in case of Suspension Special Service Expense Charge Capital Allowance Value Increase Income Other Technical Income - - H- Pension Funds Technical Expense Fund Management Expense (-) Capital Allowance Value Decrease Expense (-) Operating Expenses (-) Other Technical Expenses (-) - - I- Net Technical Income - Pension Funds (G - H) - - The accompanying notes form an integral part of these unconsolidated financial statements. 6

11 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED STATEMENT OF INCOME FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2011 II- NON-TECHNICAL PART Audited Audited Note C- Net Technical Income-Non-Life (A-B) F- Net Technical Income-Life (D-E) - - I- Net Technical Income-Pension Funds (G-H) - - J- Total Net Technical Income (C+F+I) K- Investment Income Income from Financial Investments Income from Sales of Financial Investments Valuation of Financial Investments Foreign Exchange Gains Income from Associates 26 and Income from Equity Subsidiaries and Joint-Ventures Income from Land and Buildings Income from Derivatives Other Investments Investment Income Transferred from Life Technical Part - - L- Investment Expense (-) ( ) ( ) 1- Investment Management Expenses (Interest incl.) (-) (150) (2.272) 2- Diminution in Value of Investments (-) (3.510) - 3- Loss from Realization of Financial Investments (-) Investment Income Transferred to Non-Life Technical Part (-) ( ) ( ) 5- Loss from Derivatives (-) ( ) - 6- Foreign Exchange Losses (-) ( ) ( ) 7- Depreciation Expenses (-) 6.1 ( ) ( ) 8- Other Investment Expenses (-) - - M- Income and Expenses from Other Operations and Extraordinary Operations (+/-) ( ) ( ) 1- Provisions (+/-) ( ) 2- Rediscounts (+/-) ( ) Special Insurance Account (+/-) Inflation Adjustment (+/-) Deferred Tax Assets (+/-) 47.5 ( ) Deferred Tax Liabilities Expenses (-) Other Income Other Expenses (-) ( ) ( ) 9- Prior Year's Income Prior Year's Expenses (-) - - N- Net Profit/(Loss) for the Period Profit/(Loss) for the Period Corporate Tax Provision and Other Fiscal Liabilities (-) 35 and 47.5 ( ) ( ) 3- Net Profit/(Loss) for the Period Inflation Adjustment - - The accompanying notes form an integral part of these unconsolidated financial statements. 7

12 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2011 Audited Audited Note A- CASH GENERATED FROM MAIN OPERATIONS 1- Cash flows from insurance operations Cash flows from reinsurance operations Cash flows from private pension funds operations Cash outflows from insurance operations (-) ( ) ( ) 5- Cash outflows from reinsurance operations (-) ( ) ( ) 6- Cash outflows from private pension funds operations (-) Net Cash from main operations (A1+A2+A3-A4-A5-A6) Interest payment (-) Income tax payment (-) ( ) Other cash inflows Other cash outflows (-) ( ) ( ) 12- Net cash provided by main operations B- CASH FLOWS FROM INVESTING OPERATIONS 1- Sale of tangible assets Tangible assets purchases (-) ( ) ( ) 3- Financial assets purchases (-) ( ) ( ) 4- Sales of financial assets Interest received Dividends received Other cash inflows Other cash outflows (-) (4.311) - 9- Net Cash from investing activities ( ) C- CASH FLOWS FROM FINANCING OPERATIONS 1- Issue of shares Cash inflows due to the borrowings Leasing payments (-) Dividends paid (-) ( ) - 5- Other cash inflows Other cash outflows (-) Net cash used in financing activities - - D- EFFECT OF EXCHANGE DIFFERENCES ON CASH ( ) - AND CASH EQUIVALENTS ( ) ( ) E- Net increase in cash and cash equivalents ( ) F- Cash and cash equivalents at the beginning of the period G- Cash and cash equivalents at the end of the period (E+F) The accompanying notes form an integral part of these unconsolidated financial statements. 8

13 CONVENIENCE TRANSLATION OF THE UNCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2011 Statements of changes in Shareholders Equity - Audited (*) Inflation Foreign Other Net Own Shares Financial Adjustment Currency Reserves and Profit/ of the Assets Fair to the Share Translation Legal Statutory Retained (Loss) for Retained Capital Company (-) Value Reserve Capital Differences Reserves Reserves Profit the Period Earnings Total I- Balances at the prior period end (31/12/2009) ( ) A- Capital Increase (A1 + A2)) Cash From Internal Resources B- Own Shares of the Company C- Gain and Losses Not Included in the Income Statement (Note 15) - - ( ) ( ) D- Value Increase in the Assets E- Foreign Currency Translation Differences F- Other Income and Losses G- Inflation Adjustments H- Net Profit for the Period (Note 37) I- Dividends Paid (Note 38 and 45) J- Transfer ( ) - II- Balances at the period end (31/12/2010) (I+A+B+C+D+E+F+G+H+I+J) ( ) I- Balances at the prior period end (31/12/2010) ( ) A- Capital Increase (A1 + A2)) Cash From Internal Resources B- Own Shares of the Company C- Gain and Losses Not Included in the Income Statement (Note 15) - - ( ) ( ) D- Value Increase in the Assets E- Foreign Currency Translation Differences F- Other Income and Losses G- Inflation Adjustments H- Net Profit for the Period (Note 37) I- Dividends Paid (Note 38 and 45) ( ) - ( ) J- Transfer ( ) II- Balances at the period end (31/12/2011) (I+A+B+C+D+E+F+G+H+I+J) ( ) (*) Detailed explanations regarding the Shareholders Equity items are disclosed in Note 15. The accompanying notes form an integral part of these unconsolidated financial statements. 9

14 UNCONSOLIDATED FINANCIAL STATEMENTS AS OF 31 DECEMBER General information 1.1 Name of the parent company: As of December 31, 2011 and 2010, the immediate parent of Yapı Kredi Sigorta A.Ş. ( the Company ) is Yapı ve Kredi Bankası A.Ş. and the ultimate parents are Koç Holding A.Ş. and Unicredit S.P.A 1.2 Legal residence of the Company, its legal structure, the country of incorporation and the address of it s registered office: The Company was established on 24 December The headquarters of the Company is in Istanbul and it operates as a joint stock company at the address Yapı Kredi Plaza A Blok Büyükdere Cad Levent-İstanbul. The Company has Istanbul, Middle Anatolia, Marmara, South, Agean, Mediterranean, Bakırköy and Kadıköy regional offices. 1.3 Nature of operations: The Company mainly operates in fire, marine, accident, personal accident, engineering, agriculture, health branches. 1.4 Explanation of the activities and characteristics of main operations of the corporation: Disclosed in Notes 1.2 and Average number of employees during the period by category: 1 January - 1 January - 31 December December 2010 Top and middle management Other personnel Total Total salaries and benefits paid to the members of the Board of Directors, General Manager, General Coordinator, Assistant General Managers and other executive management during the current period: 1 January - 1 January - 31 December December 2010 Short Term Benefits Provided to Top and Middle Management Salary and other short term payments Bonuses Company pension plan Total Total Benefits Provided to Top and Middle Management Provision for employee termination benefits in Balance Sheet

15 UNCONSOLIDATED FINANCIAL STATEMENTS AS OF 31 DECEMBER General information (Cont.) 1.7 Criteria set for the allocation of investment income and operating expenses (personnel, management, research and development, marketing and sales, outsourcing utilities and services and other operating expenses) in the financial statements: All the income that is generated by the Company investment of assets backing non-life technical reserve is transferred from non-technical to technical part. Other investment income is classified under non-technical part. The Company allocates general expenses transferred to technical part to branches based on the weighted average of the number of policies, amount of premium and number of claim notifications in last three years. 1.8 Whether financial statements include only one firm or company of firms: The financial statements include the accounts of one company (Yapı Kredi Sigorta A.Ş.). The unconsolidated financial statements including Yapı Kredi Emeklilik A.Ş., the subsidiary of the Company, will also be published separately. 1.9 Name and other identification information of the reporting firm and changes in this information since the previous balance sheet date: Name and other identification information of the Company are disclosed in Notes 1.1, 1.2 and 1.3 and there are no changes in this information since the previous balance sheet date Events occurred after the balance sheet date: Unconsolidated financial statements for the period 1 January - 31 December 2011 have been approved by the Board of Directors on 22 February The events occurred after the balance sheet date are explained in Note Summary of significant accounting policies Basis of preparation In accordance with the Capital Market Law part (VII.) article (a) of clause 50, insurance companies are subject to their specific legislation in respect of establishment, audit, supervision, accounting, financial statements and financial reporting standards. Therefore, the Company prepares its unconsolidated financial statements in accordance with the Insurance Law numbered 5684 and the regulations issued for insurance and reinsurance companies by the Undersecretariat of Treasury ( The Treasury ). The financial statements are prepared in accordance with the Insurance Chart of Accounts included in the communiqué issued by the Treasury regarding the Insurance Chart of Accounts and Prospects, published in the Official Gazette (No:25686) dated 30 December 2004 (Insurance Accounting System Communiqué No.1). Content and the format of the financial statements prepared and explanations and notes thereof are determined in accordance with the Communiqué on Presentation of Financial Statements published in the Official Gazette numbered dated 18 April

16 2. Summary of significant accounting policies (Cont.) According to the Regulation on Financial Reporting of Insurance and Reinsurance Companies and Pension Companies issued on 14 July 2007 and effective from 1 January 2008, except for the communiqués which may be issued by the Treasury, operations of insurance companies shall be accounted for in accordance with the Turkish Accounting Standards ( TMS ) and the Turkish Financial Reporting Standards ( TFRS ) as issued by the Turkish Accounting Standards Board ( TMSK ) and other regulations, communiqués and explanations issued by the Treasury regarding accounting and financial reporting issues. With reference to the notice of the Treasury No. 9 dated 18 February 2008, TMS 1- Financial Statements and Presentation, TMS 27- Unconsolidated and Separate Financial Statements, TFRS 1 - Transition to TFRS and TFRS 4- Insurance Contracts have been scoped out of this application. In addition, the companies are obliged to comply with the Communiqué on the Preparation of the Consolidated Financial Statement of Insurance and Reinsurance Companies and Pension Companies" ( Consolidation Communiqué ) dated December 31, 2008 and published in official gazette numbered effective from 31 March Unconsolidated financial statements were prepared on a TL and historical cost basis, being adjusted for inflation until December 31, 2004, other than the financial assets and derivatives which are measured at their fair values. It was announced with the article of the Treasury numbered 19387, dated 4 April 2005, insurance companies are required to restate their financial statements as of December 31, 2004 in accordance with Financial Reporting in Hyperinflationary Economies included in the regulations of Capital Markets Board ( CMB ) Communiqué XI No.25 (which came into force as published in the Official Gazette No: dated 15 January 2003). In line with the decree of CMB dated 17 March 2005, the Treasury also announced that inflation accounting is not required effective from 1 January Based on the above mentioned notification of the Treasury, the Company has restated its financial statements as of December 31, 2004 in accordance with the regulations regarding Financial Reporting in Hyperinflationary Economies and not continued to apply standard No. 29 Financial Reporting in Hyperinflationary Economies issued by TMSK. The Company calculated insurance technical reserve and accounted for in the unconsolidated financial statements in accordance with the Regulation Regarding the Technical Reserves of Insurance, Reinsurance and Pension Companies and the Assets to which These Reserves are Invested dated 1 January 2008 and related legislations issued in accordance with Insurance Law numbered Accounting policies and measurement principles that are used in the preparation of the unconsolidated financial statements are explained in the notes from 2.4 to 2.24 below. 12

17 2. Summary of significant accounting policies (Cont.) New and amended standards and interpretations: The accounting policies adopted in preparation of the unconsolidated financial statements as at December 31, 2011 are consistent with those of the previous financial year, except for the adoption of new and amended IFRS and IFRIC interpretations effective as of 1 January The effects of these standards and interpretations on the Company s financial position and performance have been disclosed in the related paragraphs. The new standards, amendments and interpretations which are effective as at 1 January 2011 are as follows: IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Prepayments of a Minimum Funding Requirement (Amended) The amendment removes an unintended consequence when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognised as a pension asset. The Company is not subject to minimum funding requirements, therefore the amendment of the interpretation has no effect on the financial position or performance of the Company. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments This interpretation addresses the accounting treatment when there is a renegotiation between the entity and the creditor regarding the terms of a financial liability and the creditor agrees to accept the entity s equity instruments to settle the financial liability fully or partially. IFRIC 19 clarifies such equity instruments are consideration paid in accordance with paragraph 41 of IAS 39. As a result, the financial liability is derecognized and the equity instruments issued are treated as consideration paid to extinguish that financial liability. This interpretation does not apply when the creditor is acting in the capacity of a shareholder, in common control transactions or when the issue of equity shares was part of the original terms of the liability. The adoption of the interpretation did not have any impact on the financial position or performance of the Company. IAS 32 Financial Instruments: Presentation - Classifications on Rights Issues (Amended) The amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity s non-derivative equity instruments, to acquire a fixed number of the entity s own equity instruments for a fixed amount in any currency. The amendment has no effect on the financial position or performance of the Group because the Company does not have these types of instruments. IAS 24 Related Party Disclosures (Revised) Amended standard clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. In addition, the revised standard introduces a partial exemption of general disclosure requirements for transactions with governmentrelated entities. The adoption of the amendment did not have any impact on the financial position or performance of the Company. 13

18 2. Summary of significant accounting policies (Cont.) Improvements to IFRSs In May 2010 the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The adoption of the following amendments resulted in changes to accounting policies and disclosures, but no impact on the financial position or performance of the Company. There are separate transitional provisions for each standard. The amendments that are effective as at 1 January 2011 are as follows: IFRS 3 Business Combinations i) Transition requirements for contingent consideration from a business combination that occurred before the effective date of revised IFRS This improvement clarifies that the amendments to IFRS 7 Financial Instruments: Disclosures, IAS 32 Financial Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement, that eliminate the exemption for contingent consideration, do not apply to contingent consideration that arose from business combinations whose acquisition dates precede the application of IFRS 3 (as revised in 2008). ii) Measurement of non-controlling interests This improvement limits the scope of the measurement choices (fair value or at the present ownership instruments proportionate share of the acquiree s identifiable net assets) only to the components of non-controlling interest that are present ownership interests that entitle their holders to a proportionate share of the entity s net assets. iii) Unreplaced or voluntarily replaced share-based payment awards This improvement requires an entity (in a business combination) to account for the replacement of the acquiree s share-based payment transactions (whether obliged or voluntarily), i.e., split between consideration paid and post combination expenses. IFRS 7 Financial Instruments: Disclosures This improvement gives clarifications of disclosures required by IFRS 7 and emphasizes the interaction between quantitative and qualitative disclosures and the nature and extent of risks associated with financial instruments. Among others, the improvement remove the disclosure requirement of the collateral held as security and other credit enhancements and estimate of their fair value for financial assets that are past due but not impaired and that are individually impaired; and instead include a disclosure requirement of financial effect of collateral held as security and other credit enhancements for all financial assets. IAS 1 Presentation of Financial Statements This amendment clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements. 14

19 2. Summary of significant accounting policies (Cont.) IAS 27 Consolidated and Separate Financial Statements This improvement clarifies that the consequential amendments from IAS 27 made to IAS 21 The Effect of Changes in Foreign Exchange Rates, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures apply prospectively for annual periods beginning on or after 1 July 2009 or earlier when IAS 27 is applied earlier. IAS 34 Interim Financial Reporting This improvement provides guidance to illustrate how to apply disclosure principles in IAS 34 and add disclosure requirements on i) the circumstances likely to affect fair values of financial instruments and their classification, ii) transfers of financial instruments between different levels of the fair value hierarchy, iii) changes in classification of financial assets, and iv) changes in contingent liabilities and assets. IFRIC 13 Customer Loyalty Programmes This improvement clarifies that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be taken into account. Standards issued but not yet effective and not early adopted Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the unconsolidated financial statements are as follows. The Company will make the necessary changes if not indicated otherwise, which will be affecting the unconsolidated financial statements and disclosures, after the new standards and interpretations become in effect. IAS 1 Presentation of Financial Statements (Amended) Presentation of Items of Other Comprehensive Income The amendments are effective for annual periods beginning on or after 1 July 2012, but earlier application is permitted. The amendments to IAS 1 change only the grouping of items presented in other comprehensive income. Items that could be reclassified (or recycled ) to profit or loss at a future point in time would be presented separately from items which will never be reclassified. The amendments will be applied retrospectively. This standard has not yet been endorsed by the EU. The amendment affects presentation only and will have no impact on the financial position or performance of the Company. IAS 12 Income Taxes: Recovery of Underlying Assets (Amendment) The amendments are mandatory for annual periods beginning on or after 1 January 2012, but earlier application is permitted. IAS 12 has been updated to include i) a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale and ii) a requirement that deferred tax on non-depreciable assets, measured using the revaluation model in IAS 16, should always be measured on a sale basis. These amendments will be applied retrospectively. This standard has not yet been endorsed by the EU. The Company does not expect that this amendment will have significant impact on the financial position or performance of the Company. 15

20 2. Summary of significant accounting policies (Cont.) IAS 19 Employee Benefits (Amended) Amended standard is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. With very few exceptions retrospective application is required. Numerous changes or clarifications are made under the amended standard. Among these numerous amendments, the most important changes are removing the corridor mechanism and making the distinction between short-term and other long-term employee benefits based on expected timing of settlement rather than employee entitlement. This standard has not yet been endorsed by the EU. The Company is in the process of assessing the impact of the amended standard on the financial position or performance of the Company. IAS 27 Separate Financial Statements (Amended) As a consequential amendment to IFRS 10 and IFRS 12, the IASB also amended IAS 27, which is now limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. Transitional requirement of this amendment is similar to IFRS 10. This standard has not yet been endorsed by the EU. This amendment will not have any impact on the financial position or performance of the Company. IAS 28 Investments in Associates and Joint Ventures (Amended) As a consequential amendment to IFRS 11 and IFRS 12, the IASB also amended IAS 28, which has been renamed IAS 28 Investments in Associates and Joint Ventures, to describe the application of the equity method to investments in joint ventures in addition to associates. Transitional requirement of this amendment is similar to IFRS 11. This standard has not yet been endorsed by the EU. The Company does not expect that this amendment will have any impact on the financial position or performance of the Company. IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial liabilities (Amended) The amendments clarify the meaning of currently has a legally enforceable right to set-off and also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. This standard has not yet been endorsed by the EU. These amendments are to be retrospectively applied for annual periods beginning on or after 1 January The Company does not expect that these amendments will have significant impact on the financial position or performance of the Company. IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements (Amended) The purpose of this amendment is to allow users of financial statements to improve their understanding of transfer transactions of financial assets (e.g. securitizations), including understanding the possible effects of any risks that may remain with the entity which transferred the assets. The amendment also requires additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. This amendment has not yet been endorsed by the EU. The amendment is effective for annual periods beginning on or after 1 July 2011.Comparative disclosures are not required. The amendment affects disclosures only and will have no impact on the financial position or performance of the Company. 16