aksigorta investor presentation - delivering value in a competitive environment

Delivering Value in a Competitive Environment

2014

Investor Presentation Sabancı Holding

Golden Collar Awards 2013

Grand Prize Why Invest in Aksigorta

2

Great Potential in TR NL Insurance Market 1

Turkey increased insurance penetration to 1,3% in 2013 from 1,1% in 2012 while peer economies have 2-3

Turkey has 17th largest economy in the world, while TR NL insurance market is 24th in ranking

7% 8% 9%

3%

5%

2009 2011 2013 Akbank MS Benchmark MS

107% 104% 99% 97% 94%

83%

78% 72% 69% 66%

5%

6% 9%

12%

*17%

0%

5%

10%

15%

20%

60%

90%

120%

2009 2010 2011 2012 2013

Combined Ratio Loss Ratio ROE

499 667 817

5,8% 6,7%

7,4%

200

1.2 00

2011 2012 2013

Market Cap (M TL) Dividend Yield

Great Potential in Akbank 2

Increasing Profitability 3 Dividend

Yield 4

* Excluding one offs



Grand Prize

3

Background information Investment Proposition and Story

Latest Financial Results with 2014 Guidance



Grand Prize

4

Underpenetrated Market in Turkey

0

1

2

3

4

5

0 20.000 40.000 60.000 80.000

Non Life GWP / GDP (%)

(2013)

GDP / Capita ($) (2013)

S.Arabia

Turkey

Spain

Italy Portugal

Russia

Brazil

Hungary Romania

Switzerland

China

Greece

Indonesia

Source: Sigma No3/2014 World Insurance in 2013

Belgium

UK

Japan

South Africa

Czech Republic

USA

Canada Germany

Austria

Korea

Slovenia

France

Australia

Croatia

India

Mexico

8,5 10,0 10,5 10,7 10,9 11,5 12,1

13,1 14,2

15,3

2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E

GDP per Capita (X1000 $)

Source: World Economic Outlook Database, April 2014 web site www.imf.org

CAGR (09-18) 8%

25% 15% 15% 16% 15% 20% 15%

68% 72% 71% 68% 69% 62% 67%

8% 13% 14% 16% 17% 18% 19%

Turkey Russia Poland Romania Hungary Austria Greece

Younger population in Turkey

Age 0-14 Age 15-64 Age 65+

Source: Turkish Statistical Institute web site www.tuik.gov.tr

Argentina

Denmark

Finland

Ireland

Sweden

Slovakia



Grand Prize

5

Persistent market positions started to change after 2010

6,3 8,0 9,3 9,8 10,1 11,5 14,0 16,7 20,3 21,2

12,0% 11,8% 12,2%

12,6% 12,7% 13,2%

14,2% 14,3% 15,6% 14,6%

13,0% 13,2% 12,9%

11,8% 12,4% 12,3%

13,7% 13,4% 13,5%

14,2%

10,0% 9,7% 9,3% 9,2% 9,2%

8,6% 8,1% 8,1% 8,3%

8,6% 8,4% 8,5%

7,7% 8,1%

7,9% 7,5%

8,1%

4,7% 4,5% 4,5%

4,9% 5,4% 5,4% 5,1%

4,1% 3,9%

3,5%

7,4% 7,3% 6,8%

6,4%

6,0%

6,6% 6,9%

3,3% 3,3% 3,5% 3,5% 3,6% 3,6%

4,0%

5,3%

6,7%

6,7%

16,0% 15,8%

14,9%

6

8

10

12

14

16

18

20

22

1%

7%

12%

18%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014H1

Market GWP (billion TL) Axa Anadolu

Allianz Aksigorta Eureko

Yapı Kredi Mapfre Allianz & YK

AXA is a motor line and agency channel player; they have market shares 27% in MTPL and 15% in MOD LoBs, 19% in Agency channel

ANADOLU, there is no clear sign of a solid strategy after the change in the management of the company.

AKSİGORTA has sustainable profitability focus, balanced business and channel mix

ALLIANZ + YKS has market share 43% in Health and started to be aggressive in Motor business since 2012.

EUREKO started to loose market share after 2011 due to the some regulation breaches.

MAPFRE started to grow very aggressive after 2011, they have the highest growth rates in MTPL and Health among top 10 in 2013.

Source: Ass. of the Insurance Companies of Turkey www.tsb.org.tr



Grand Prize

6

Aksigorta is an outperformer in profitability

16%

14%

10%

8%

7%

6%

5%

5%

4%

3%

Axa

Anadolu

Allianz

Aksigorta

Mapfre

Yapı Kredi

Güneş

Groupama

Eureko

Ziraat

As of 13’YE GWP MarketShare

3.168

2.750

1.942

1.526

1.077

976

789

1.353

568

1.257

70%

75%

67%

66%

80%

81%

87%

82%

64%

45%

93%

101%

95%

94%

102%

106%

111%

108%

94%

69%

Loss Ratio Commission Ratio Expense Ratio

Combined Ratio

100% level

212

67

113

160

78

88

-54

39

50

55

Net Profit (exc. dividend)

Source: Ass. of the Insurance Companies of Turkey www.tsb.org.tr



Grand Prize About Aksigorta

We revised our corporate outlook

7

• To make insurance EASY, LEAN and ACCESSIBLE for everyone. Our Vision

• We create a unique insurance experience for our customers to support the continuity and ease of life while creating value for all stakeholders.

Our Mission

• Respectful

• Solution Driven

• Success Driven

• People Focused

Our Values



Grand Prize Strong Shareholder Structure

8

Origin: Turkey Business Segments: Finance, energy, cement, retail, industry Operates in: Europe, Middle East, Asia, North Africa, North and South America Partnerships with: Ageas, Aviva, Bridgestone, Carrefour, Citi, E.ON, Heidelberg Cement, Philip Morris 2013 financial highlights; Consolidated revenue: EUR 8.2 billion Operating profit: EUR 1.7 billion Net profit: EUR 589 million Total equity: EUR 10.902 million

About Sabancı About Ageas

Origin: Belgium Business segments: Finance

Operates in: Belgium, United Kingdom, Continental Europe and Asia.

Partnerships in: Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India,

Thailand, France, and Hong Kong

2013 financial highlights; Gross inflows : EUR 23 billion.

Group net profit: EUR 570 million Insurance net profit: EUR 654 million

Total equity: EUR 9.422 million

Ageas has been in Turkish Non-Life market since 2011 July as main shareholder of Aksigorta with Hacı Ömer Sabancı Holding.



Grand Prize Country Wide Distribution in Aksigorta

Aksigorta has country-wide distribution with its channels and regional offices

9

Agencies

16 Regional Offices

64 Sales Representative

2.096 Agencies

Bank

3 Regional Offices


993 Bank Branches

Corporate Sales


100 Brokers &

Direct Customers

Aksigorta focuses on having close relationship with agencies through increasing the number of regional offices to 16 from 9.



Grand Prize

10





Grand Prize

5% 6% 9% 12% *17%

2009 2010 2011 2012 2013

ROE

107% 104%

99% 97%

94%

83%

78%

72%

69% 66%

Combined Ratio

Loss Ratio

13 2

32

49

*76

20

34

75

102

153

Net Profit (excluding one-offs)

UW Result

Technical margin and bottom line profitability is increasing

11

*Gain on HQ Building Sale and Merter BV impairment loss are excluded in 2013 results.



Grand Prize Downward trends in loss ratios

12

104%

93%

84%

74% 75%

2009 2010 2011 2012 2013

Health – Loss Ratio

87% 86%

81% 80%

70%

2009 2010 2011 2012 2013

Motor – Loss Ratio

44%

33%

37%

33%

48%

2009 2010 2011 2012 2013

Non-Motor – Loss Ratio



Grand Prize Strategies defined to create the “Future Aksigorta”

13

Product

Service Excellence

Aksigorta Transformation

Program

“Sustainable Profitability”

Operational Excellence

Channel



Grand Prize Transform the business mix into a “profitable mix”

14

Right size

“Motor”

Underwriting and Segmentation Project

Develop pricing mechanism based on predictive modeling, improved risk

based pricing by segmentation

Grow in

Non-motor:

“Fire & Health”

Health Insurance Business Development Project

Program aims to support business development in Health at Aksigorta by three pillars; creating health

focus in organization, growing to more efficient scale and focusing on sources of profitability directly

50%

36%

14%

2009

Motor

Non-motor

Health

47%

41%

12%

2013

~40%

~45%

~15%

2017

Product

ServiceExcellence


Program

“SustainableProfitability”


Channel



Grand Prize Revised channel-mix for profitable growth

15

Right size “Agencies”

Agency Channel Profit and Effectiveness Optimization Project

Studies on agency format (auto dealer), optimization of geographic footprint,

product mix, agency incentivization and agency network management

Increase weight of “Bancassurance”

Bancassurance Target Operating Model Transformation Program

Projects on multi-channel sales and servicing, product management, operations effectiveness, customer relationship management, governance

structure

65%

13%

22%

2009

Agencies

Bank

Other63%

17%

20%

2013

~60% ~25%

~15%

2017

Product

ServiceExcellence


Program



Channel



Grand Prize Operational Excellence Strategy

16

Increased claims effectiveness & efficiency

• Fraud and leakage management • Network management

• Leaner claims processing

HR improvements IT transformation

Claims Transformation Program 5 strategic initiatives

improved front office capabilities, claims handling operations effectiveness, network and partnership management,

fraud management and post claims services

IT Infrastructure Data Analytics and CRM

Enterprise Performance Management

Better reporting functions to drive intelligence from data and decision

from intelligence

Product

ServiceExcellence


Program



Channel



Grand Prize Service Excellence Strategy

17

•Customer Experience Management

Customer based service model, loyalty programs, targeted

sales etc.

•Digital Aksigorta Developing digital sales and communication platforms for all stakeholders including websites, social media etc.

•Establishment of “innovation” culture in Aksigorta

•Brand Management From commodity to brand

Customer focus Innovation

culture

Differentiation with high service

level

Customer retention (renewal)

Product

ServiceExcellence


Program



Channel



Grand Prize

18





Grand Prize Technical margin and bottom line profitability is increasing

19

1.311

1.526

12'YE 13'YE

Excluding MTPL business

Aksigorta growth is %17 ≈ market

growth

26% GWP growth in bank channel

16% Premium Production (M TL)

Combined Ratio 3 pp

97 94

12'YE 13'YE

Combined Ratio

84 MTL is net PL impact of

- Gain on Sale of Building

- Merter BV Impairment

76 MTL is net profit, excluding one-offs

49 76

160

12'YE 13'YE

Net Income/Loss (M TL)

56%



Grand Prize Portfolio share increases in Non-Motor and Bank

20

06% 06% 11% 11%

14% 14%

69% 69% MARKET

Agency

Bank

Brokers

Direct Sales

Market almost stable

11% 11% 11% 10%

16% 17%

62% 62%

2012 December 2013 December

AKSİGORTA

Agencies

Banks

Brokers

Direct Sales

Aksigorta Bank 1pp

12% 11%

37% 38%

51% 51% MARKET

Motor

Non-Motor

Health

Market in non-motor 1pp

13% 12%

38% 41%

49% 47%

2012 December 2013 December

AKSİGORTA

Motor

Non-Motor

Health

Aksigorta in non-motor 3pp

CHANNEL SHARES (%) LOB SHARES (%)



Grand Prize

75

102

153

UW Result

9% 12% *17%

11'YE 12'YE 13'YE

ROE

99% 97%

94%

72% 69%

66%

Combined Ratio

Loss Ratio

Technical margin continues to improve

21

*Gain on HQ Building Sale and Merter BV impairment loss are excluded in 2013 results.



Grand Prize Increase in technical profit by the decrease in loss ratio

22

Income Statement (TRL Million) 10’YE 11’YE 12’YE 13’YE

Gross Written Premiums 886 1.137 1.311 1.526

Net Written Premiums 619 838 930 1.082

Net Earned Premiums 590 750 891 1.007

Claims (net) -462 -544 -623 -663

Commissions (net) -95 -131 -166 -191

G&A Expenses -66 -73 -97 -115

Technical Profit -33 3 16 38

Net Financial Income 36 37 55 *60

Profit (Loss) Before Tax 4 40 60 181

Tax -2 -8 -12 -21

Net Profit 2 32 49 160

Combined Ratio 104% 99% 97% 94%

Loss Ratio 78% 72% 69% 66%

Commission Ratio 16% 18% 19% 19%

Expense Ratio 10% 9% 9% 9%

*Gain on HQ Building Sale and Merter BV impairment loss impairment are adjusted in Net Financial Income



Grand Prize Improving ROE thanks to strong profit generation

23

* Excluding Gain on HQ Building Sale and Merter BV impairment loss.

(TL Million) 10’YE 11’YE 12’YE 13’YE

Cash and Marketable Securities 501 591 627 901

Receivables 413 452 475 462

Other Assets 71 93 116 147

Participations 30 30 30 8

Fixed Assets 44 43 44 31

Total Assets 1.059 1.206 1.292 1.549

Payables 88 95 110 116

Technical Reserves 527 627 671 796

Taxes Payable 7 6 15 26

Other Liabilities 65 75 72 78

Total Shareholders' Equity 372 403 424 533

Total Liabilities and Sh.s’ Equity 1.059 1.206 1.292 1.549

ROE 0% 9% 12% *17%

Solvency Ratio 155% 146% 167% 172%



Grand Prize Top line grows far ahead of the market

24

765 951

13'H1 14'H1

Aksigorta growth is 15pp over than the Market growth (9%)

Non-Motor business growth is 29% while the Market growth is 17%

24%

Premium Production (M TL)

Combined ratio realized at 98%

95

*98

13'H1 14'H1

Combined Ratio

Better profitability in line with improved margins in MOD and higher EP effect is expected in H2 26 22

13'H1 14'H1

120


* 17 mTL one off loss impact of severe climate conditions and big loss is adjusted in Combined Ratio of 14’H1.



Grand Prize Slow-down in banking industry impacted our portfolio shares unfavourably however portfolio share of non-motor continues to increase

25

6% 6% 11% 12% 14% 14%

69% 68% MARKET

Agencies

Banks

Brokers

Direct Sales

Agency in Market 1pp

11% 12% 10% 12% 18% 15%

61% 61%

2013 June 2014 June

AKSİGORTA

Agencies

Banks

Brokers

Direct Sales

Broker in Aksigorta 2pp

11% 11%

38% 40%

51% 49% MARKET

Motor

Non-Motor

Health

Non-motor in Market 2pp

13% 12%

41% 43%

46% 45%

2013 June 2014 June

AKSİGORTA

Motor

Non-Motor

Health

Non-motor in Aksigorta 2pp

L12Ms CHANNEL SHARES (%) L12Ms LOB SHARES (%)



Grand Prize

12% **16% 16%

12'H1 13'H1 14'H1

ROE

*98%

95%

***98%

73%

66%

***70%

Combined Ratio

Loss Ratio

*48

69

***63

UW Result

ROE is flat even UW Result decreases

26

*10,4 MTL one off SSI impact is adjusted in UW result, LR and CoR in 2012 results. **Excluding one-offs in 2013 results. ***17 mTL one off loss impact of severe climate conditions and big loss is adjusted in Combined Ratio of 14’H1.



Grand Prize Technical Profit drives the bottom line

27

*10,4 MTL one off SSI impact is adjusted in Technical profit, CoR and LR in 2012 results. **Excluding one-offs ***17 mTL one off loss impact of severe climate conditions and big loss is adjusted in Combined Ratio of 14’H1.

Income Statement (TRL Million) 11’YE 12’YE 13’YE 12’H1 13’H1 14’H1

Gross Written Premiums 1.137 1.311 1.526 706 765 951

Net Written Premiums 838 930 1.082 494 526 634

Net Earned Premiums 750 891 1.007 433 483 562

Claims (net) -544 -623 -663 -316 -321 -410

Commissions (net) -131 -166 -191 -79 -93 -107

G&A Expenses -73 -97 -115 -48 -56 -59

Technical Profit 3 *16 38 *-1 14 ***3

Net Financial Income 37 55 **60 27 **20 46

Profit (Loss) Before Tax 40 60 181 16 130 28

Tax -8 -12 -21 -3 -10 -6

Net Profit 32 49 160 13 120 22

Combined Ratio 99% *97% 94% *98% 95% ***98%

Loss Ratio 72% *69% 66% *71% 67% ***70%

Commission Ratio 18% 19% 19% 18% 19% 19%

Expense Ratio 9% 9% 9% 9% 9% 9%



Grand Prize Improving ROE thanks to strong profit generation Solvency ratio had a break after high dividend pay-out which is assumed to increase in the remaining quarters

28

*Excluding one-offs

(TL Million) 11’YE 12’YE 13’YE 2012 H1 2013 H1 14’H1

Cash and Marketable Securities 591 627 901 604 741 856

Receivables 452 475 475 490 537 646

Other Assets 93 116 135 114 141 160

Participations 30 30 8 30 20 8

Fixed Assets 43 44 31 43 27 37

Total Assets 1.206 1.292 1.549 1.281 1.465 1.707

Payables 95 110 116 103 120 189

Technical Reserves 627 671 796 710 749 942

Taxes Payable 6 15 26 4 12 7

Other Liabilities 75 72 78 76 89 75

Total Shareholders' Equity 403 424 533 388 495 495

Total Liabilities and Sh.s’ Equity 1.206 1.292 1.549 1.281 1.465 1.707

ROE 9% 12% *17% 12% *16% 16%

Solvency Ratio 146% 167% 172% 139% 171% 138%



Grand Prize Investment Portfolio

29

81%

15%

4%

December 2013

Time Deposit

Corporate Bond

Government Bond

Eurobond

73%

17%

6%

5%

June 2014

•Total Portfolio: TL 900,0m

•Average Yield: 8,4%

•Duration: 10 months

2013YE

•Total Portfolio: TL 854,3m

•Average Yield (annualized): 10,2%

•Duration: 12 months

2014H1



Grand Prize Aksigorta share continues to perform over the index

30

10% positive performance relative to index in 2014

Current MCap – TL 894M

+51% positive performance relative to index in 2013

13YE MCap – TL 817M

12YE MCap – TL 667M

Broker Date Target

Burgan Sec. 31/07 4,14

Ak Investment 31/07 3,84

Deniz Invest 31/07 3,93

TEB Investment 31/07 3,50

Integras 02/07 4,00



Grand Prize 2014 Guidance follows the strategic plan

31

1.526

13'A 14'E

Benefitting from the profitable UWP base ~15-18% Premium

Production (M TL)

Sustainable UWP level is achieved

94

13'A 14'E

Combined Ratio

Technical Profit growing in line with

Top Line growth combined with

higher Financial Income stemming

from higher cash and interest rate.

*76

13'A 14'E


~20-30%

~1pp Imp.

*Excluding one-offs



Grand Prize Keep flight altitude and enjoy technical margins in 2014

32

21% 19%

17% 20%

62% 61%

2013'A 2014'E

AKSİGORTA

Banks

Brokers

Direct Sales&Brokers

11% 10%

38% 38%

51% 52% MARKET

Motor

Non-Motor

Health

12% 12%

41% 41%

47% 47%

2013'A 2014'E

AKSİGORTA

Motor

Non-Motor

Health

CHANNEL SHARES (%) LOB SHARES (%)

17% 17%

14% 14%

69% 69%

MARKET

Agencies

Bank

Direct Sales&Brokers



Grand Prize News from Aksigorta

33

“Keep living Turkey”

“Keep Living Turkey” is a 5-year long social responsibility project developed by Aksigorta and AKUT (Search and Rescue Association) – Turkey’s most trusted organizations in their

own fields. We aim to raise the awareness of “risk”

among Turkish society, educate people against natural disasters and encourage the public to

ensure their safety and future As Aksigorta and AKUT teams, we move

around the country by the Turkey’s first 3D Earthquake Simulator truck and education

convoy. Overall 5 years results are 52 provinces, 174 districts visited and 5,4M people touched.

“Aksigorta receives Grand Prize at

Sabancı Golden Collar Awards”

Aksigorta won three awards including the grand prize at the Sabancı Golden Collar

Awards, which are organized with a view to rewarding the achievements of Sabancı Group companies and employees and encouraging a

mutual exchange of best practices.

“Aksigorta won Bronze Awards in 2013 Vision Awards

Annual Report Competition”

Aksigorta is presented with the Bronze Awards for excellence within its industry on

the development of the organization’s annual report for the past fiscal year.



Grand Prize Contact Information & Disclaimer

34

For further information please contact with;

(Mr.) Osman Akkoca, Financial Control Manager and (Mr.) Necip Çakmakoğlu, Financial Control Unit Manager

(T) +90 216 280 88 88

[email protected]

www.aksigorta.com.tr/en/yatirimci_iliskileri.php

Poligon Cad. Buyaka 2 Sitesi No:8, Kule:1, Kat:6 34771 Ümraniye İstanbul Türkiye

Disclaimer

The information and opinions contained in this document have been compiled by Aksigorta A.Ş. (“Company”) from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. No undue reliance may be placed for any purposes whatsoever on the information contained in this document is published for the assistance of recipients , but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. The Company does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. This document is strictly confidential and may not be reproduced, distributed or published for any purpose. The information and opinions contained in this document have been compiled by Aksigorta A.Ş. (“Company”) from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. No undue reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. This document contains forward-looking statements by using such words as "may", "will", "expect", "believe", "plan" and other similar terminology that reflect the Company management’s current views, expectations, assumptions and forecasts with respect to certain future events. As the actual performance of the companies may be affected by risks and uncertainties, all opinions, information and estimates contained in this document constitute the Company’s current judgment and are subject to change, update, amend, supplement or otherwise alter without notice. Although it is believed that the information and analysis are correct and expectations reflected in this document are reasonable, they may be affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially. Company does not undertake any obligation, and disclaims any duty to update or revise any forward looking statements, whether as a result of new information or future events. Neither this document nor the information contained within can construe any investment advice, invitation or an offer to buy or sell Company’s shares. Company cannot guarantee that the securities described in this document constitute a suitable investment for all investors and nothing shall be taken as an inducement to any person to invest in or otherwise deal with any shares of Company and its group companies. The information contained in this document is published for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. You must not distribute the information in this document to, or cause it to be used by, any person or entity in a place where its distribution or use would be unlawful. Neither Company, its board of directors, directors, managers, nor any of Its employees shall have any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents.

http://www.aksigorta.com.tr/en/yatirimci_iliskileri.php









35

Evini güvenceye alır

Eşyanı güvenceye alır

Senin ve ailenin canını

güvenceye alır

Komşunu ve çevreni, hatta

misafirini güvenceye alır

THANKS Published by AKSİGORTA Finance Team

aksigorta investor presentation - delivering value in a competitive environment

Business

turkey age

underpenetrated market

market cap

market shares

golden collar awards

grand prize

tr nl insurance market

loose market share