1/20 Istanbul, 5 July 2011 Speaker: Mehmet Ali Özdemir / Reinsurance Manager

2/20 ► Sector ► Outline of the Company ► Relations with Lloyd’s

3/20 Non Life 31 Life26 Reinsurance1 Total 58 Number of companies Premium production of the sector (1 USD = 1.546TRY) (Million USD) Change (%)Share ( ) (%) Non Life 7,728 6, Life 1,411 1, Total 9,139 8, Non Life25 Life19 Reinsurance- Total 44 Number of companies with foreign capital Turkish insurance companies

4/20 Insurance premiums per person in Turkey

5/20 ► Sector ► Outline of the Company ► Relations with Lloyd’s

6/20

7/20 ►Founded in 1925 with the initiative of the first president of the Turkish Republic, Kemal Atatürk (see photograph on the previous slide) ►Private – a part of the Isbank group ►First locally capitalized insurance company ►Main activity: Non-life insurance

8/20 ► Accident ► Land vehicles liability ► Sickness\Health ► Air vehicles liabillity ► Land vehicles ► Water vehicles liabillity ► Industrial vehicles ► General liability ► Air vehicles ► Credit ► Water vehicles ► Financial loss ► Marine ► Legal protection ► Fire and natural disaster ► General losses

9/20 Headquarters:Istanbul Regional Branches:Istanbul (Europe) Istanbul (Asia) Ankara Antalya Izmir Adana Bursa Samsun Trabzon Overseas :Northern Cyprus Distribution Channels :2197 professional agencies 1158 İşbank branches 65 brokers direct sales Distribution channels

10/20 Premium growth (2010)

11/20 Market share

12/20 Split of premium

13/20 Return on equity

14/20 ► Sector ► Outline of the Company ► Relations with Lloyd’s

15/20 An entity composed of many – both advantageous and disadvantageous for cedents. Lloyd’s being an institution that grew out of a coffehouse, has a natural appeal for the Turkish insurers who love coffee. But there is room for improvement in our relations.

16/20 ► Counterparty credit risk: Syndicates enjoy the same financial security, but each are considered as a separate risk, which means we can cede a good deal more to them than otherwise. Without Lloyd’s scheme, such a performance would have a very high capital cost to achieve. ► Risk appetite: We see Lloyd’s syndicates boldly work in lines of business and territories where they think they can raise a profit and where continental reinsurers can not due to their global underwriting guidelines. This flexible approach to risk acceptance is more in line with our style and needs. ►Underwriting speed: We have mixed response from our technical departments when they compared Lloyd’s underwriters with other reinsurers. Lloyd’s seem to be faster in liabilities but slower in some other lines. Major issues

17/20 ►International sanctions: x Since we both want to comply with the European Union sanctions, yet not naming a foreign legislation, we asked for indicating exactly which territories were subject to the sanctions also accepting to add more territories in the future if need arise. This was acceptable for continental reinsurers, including the largest ones, but not for Lloyd’s underwriters. Possible reason: Usually a market representative acts as an intermediary between us and the legal personnel of reinsurers. In case of Lloyd’s, there are too many people in between us and the compliance officers who do not know our point of view. ► Too many clauses: x Facultative reinsurance cover should be parallel to the policy conditions which we shape according to the customer needs. Asking for standardized clauses forces us to consider alternatives to Lloyd’s. Feedback from our technical departments indicate that continental reinsurers are more flexible in following direct policy conditions. Why not cover the policies as they are and price them accordingly? Major issues

18/20 ►Legal issues (1) – local jurisdiction: x Thanks to some of the Lloyd’s syndicates who accept Turkish legislation, which is the correct thing to do in order for the reinsurence and policy covers to be back to back. However some syndicates ask for UK legislation, which may cause gaps in the reinsurance cover. ►Legal issues (2) – are we dealing with a syndicate or Lloyd’s? x We would very much like to see Lloyd’s own legal and organizational guarantee as well as financial one to the transactions made by the syndicates. ► Claims payment speed: x We evaluate the performance of our reinsurers and one important criterion is claims payment speed. Our past data indicates an overall slower payment time from Lloyd’s compared to the other reinsurers involved in the same claim. I am glad to hear during my presentation that Lloyd’s is monitoring and improving its performance in this respect. Major issues

19/20 We are happy to work with Lloyd’s and would like to increase our business volume. There are things to improve. Conclusion