investor presentation - anadolu hayat emeklilik files... · 2017-09-08 · auto enrolment: basic...

Investor PresentationIstanbul, Turkey – June 2017

2

Agenda

1. Turkey at a Glance

2. Our Markets

• Private Pension System

• Life Insurance

3. Corporate Profile

4. Financial Results

Turkey at a Glance

4

Turkey at a GlanceA Fast Growing Economy

0%

1%

2%

3%

4%

5%

6%

1990-1999 2000-2009 2010-2016

GDP Average Annual Growth*

Turkey OECD Euro-15

Source: *OECD National Accounts Data, **IMF, ***Turkish Statistics Institute, ****World Bank National Accounts Data

Over the last decade and half, Turkey

successfully stabilized its macro economy.

After the 1999–2001 economic crises, Turkey

maintained a highly successful policy of

macroeconomic stabilization.

-5%

-4%

-3%

-2%

-1%

0%

2011 2012 2013 2014 2015 2016

Budget Balance (% of GDP)**

Euro Area EM Turkey

0%

10%

20%

30%

40%

50%

60%

70%

80% CPI*** and Interest Rates****

CPI Interest Rates

5

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2011 2012 2013 2014 2015 2016

Current Account Balance (% of GDP)*

Euro Area EM Turkey

Turkey at a GlanceUrgent Need to Increase Domestic Savings

* 2016 figures are IMF estimates

** All data represents 3rd quarter figures, except for 2012 which shows the year-end figures

Source: *IMF and **CBT Financial Stability Report

0%

1%

2%

3%

4%

5%

6%

7%

0

250

500

750

1,000

1,250

2011 2012 2013 2014 2015 2016

Weight of Pension Funds in Household Savings (TRY billion)**

Pension Funds Total Household Savings Weight of Pension Funds

Republic of Turkey – Medium Term Programme

Article 81: “Charging ratio will be converged

to international levels in the private pension

system and “auto enrolment system” will be

implemented. Life insurance and long-term

(over one year) private health insurance will

be developed.”

Medium Term Programme (2016-2018), prepared by Ministry

of Development was adopted by Cabinet Decree No.

2015/8355, 29.12.2015 and published in Official Gazette No.

29590, 11.01.2016.

10%

15%

20%

25%

30%

35%

2011 2012 2013 2014 2015 2016

Domestic Saving Rate (% of GDP)*

Euro Area EM Turkey

6

Turkey at a GlanceDemographic Opportunity Window

2016 2050

Population (millions) : 79.8 93.5

Median Age : 31,4 43

Fertility : 2.14 1.65

Proportion of Elderly Population : 8.3% 20.8%

2017April

Population 15 Years And Over (thousands) : 59,709

Labor Force (thousands) : 31,444

Employed (thousands) : 28,157

Labor Force Participation Rate : 52.7%

Unemployment Rate : 10.5%

Non-Agricultural Unemployment Rate : 12.4%

Source: Turkish Statistics Institute – The World Bank - IMF

Decreasing fertility and increasing longevity means a demographic transition.

• 48 percent of the population is under 30 years old.

• Only 8 percent of the population is over 64 years old.

• The youth dependency ratio is relatively high.

• More people are living off retirement savings, thus a decrease in the saving rate

is a common issue.

• In the interim period when the youth dependency ratio is falling fast and the old-

age dependency ratio is only increasing modestly; larger potential labor force and

higher private saving to fund investment is a major demoghraphic advantage.

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Population By Age

2016 2050

Our Markets

Private Pension System

Life Insurance

8

Our MarketsPrivate Pension System: Positioned in Pillar III

Three-Pillar System

Pillar I

State Pension

Mandatory

Securing a minimum

standard of living

Retirement, health,

disability and

unemployment

Pillar II

Occupational

Pension

Workplace Pensions

with Auto Enrolment

started in 2017

Maintenance of

current living

standards in terms of

replacement rate

Pillar III

Private Pension

Voluntary

Opportunity to

increase retirement

income

Available since 2003

9

Our MarketsPillar III Private Pension System: Important Features

Defined contribution and

voluntary participation.

Funds are managed by

asset companies.

Minimum retirement age: 56

Completion of 10 years.

Started in 2003.

18 companies in 2017.

Participants can switch funds,

pension plans and transfer

between companies.

Incentives for both

participant and employer.

10

Pillar III Private Pension System: Well Designed Structure

✓Pension

Monitoring Center

(EGM)

✓ ISE Settlement

and Custody

Bank

(Takasbank)

✓Capital Markets

Board (SPK)

✓Undersecretariat

of Treasury

✓Ministry of Labor

and Social

Security

✓Ministry of

Finance

✓Pension

Accounts

Administered by

Pension

Companies

✓Pension Funds

Managed by

Asset

Management

Companies

Our Markets

Regulation Administration Monitoring

11

Our MarketsPillar III Private Pension System: Incentives

For Participants For Employers

• Contributions with a cap of

annual legal minimum wage is

subject to 25% state

contribution.

• Vesting Period:

% 15 at the end of 3 years



% 100 at retirement date or

death/disability cases

• Investment income of

pension funds are tax

exempt.

• Transaction of pension

funds are exempt of fees

and taxes.

• Withholding tax applies only

on the investment income:

5% (completion of 10 years in

the system & 56 years of age)

10% (completion of 10 years in

the system)

15% (early leave, before

completion of 10 years in the

system)

Contribution Stage Investment Stage Benefit Payments Employer contributions are

tax deductible up to 15% of

gross salary with a cap of

annual legal minimum wage.

12

Our MarketsPillar III Private Pension System: Charging Structure

Management Fee / Entrance Fee Fund Management Fee

First 5 years of the contracts No change in fund management

fee levels. A new rebate structure

will be implemented by 2021.

Maximum limit: 8.5% of the

monthly legal minimum wage

• Applicable for the first 5 years of

the contract.

• One common cap for entrance fee

and management fee.

Fund Management Fees

• Money market funds: 1.09%

• Fixed income & index funds: 1.91%

• Equity and managed funds: 2.28%

• State contribution funds: 0.36%

Rebate Structure

• Beginning with 2.5% by the 6th

year of the contract.

• 2.5% gradual increase each year.

• Maximum 25% after the 15th year.

• Rebate is not applicable below

1.1% of pension assets.

13

Our MarketsPillar III Private Pension System: Growth Accelerated with Increased Government Support

Und

er

Dis

cu

ssio

n

Imp

lem

ente

d

• 25% State Contribution since 2013

• Withholding tax limited to capital

gains

• Pension fund transfers from

provident funds* by the end of 2017

• Fee Structure Efficiency

• Auto-Enrolment starting in 2017

• Severance Payments

* Funds from associations, foundations, provident funds and other organizations with retirement provisions.

Source: Pension Monitoring Center as of 30.06.2017

0

10

20

30

40

50

60

70

80

2009 2010 2011 2012 2013 2014 2015 2016 2017H1

AUM State Contribution

Pension AUM Growth(TRY billion)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2009 2010 2011 2012 2013 2014 2015 2016 2017H1

Number of Participants(Thousands)

14

Our MarketsPillar III Private Pension System: Big Growth Potential

123.6%

49.5%

5.5%

0% 25% 50% 75% 100% 125% 150% 175% 200%

Netherlands

United States

Weighted average

United Kingdom

Finland

Ireland

Simple Average

Japan

Spain

Portugal

Slovak Republic

Poland

Slovenia

Germany

Austria

Belgium

Turkey

Hungary

Pension Funds as a Percentage of GDP

Turkey

OECD Simple Average

OECD Weighted Average

Big Growth Potential

The Turkish pension market has a very low level of GDP

penetration compared to other countries with similar GDP

per capita.

This illustrates a huge growth potential when combined

with the demographic opportunity window.

Pension Participants

6.7 MillionSocial Security Participants

21.7 Million

Work Force

31.4 Million

Working-Age Population

59.7 MillionTotal Population

79.8 Million

Source: OECD; Turkish Statistics Institute as of 30.04.2017; Social Security Institution as of 30.04.2017;

Pension Monitoring Center as of 31.03.2017

15

Our MarketsAttractive Market

109

6 65

4 4

1314

1718

19 1918

2010 2011 2012 2013 2014 2015 2016

Life Private Pension

The Number of Companies*

61%

73% 74%69%

65% 65% 63%

36% 37% 39%

45%

52%54% 53%

2010 2011 2012 2013 2014 2015 2016

Paid-In Capital GWP

Foreign Investment Share

The pension system started with 11 companies in 2003.

Due to strong growth expectations and government support,

the system attracted more local and international groups.

Source: Undersecretariat of Treasury, Insurance and Private Pensions Annual Reports

* Active companies

16

Our MarketsPillar III Private Pension System: Key Highlights

Key Figures

Participants : 6.8 Million

Participant Funds : 60.7 Billion TRY

State Contribution Funds : 9 Billion TRY

Assets Under Management : 69.7 Billion TRY

Intermediaries : 42,047

Pension Companies : 18

5.9%

28.8%

34.0%

22.9%

8.5%

0-25 25-34 35-44 45-55 56+

Participant Age Distribution

Individual75%

Non-Sponsored

Groups21%Employer Sponsored

Groups 4%

Contributions Total Amount by

Contract Type

Bank72%

Other2%

Direct Sales11%

Corporate Sales4%

Agent11%

Distribution of Contributions

by Marketing Channel(2016 total)

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Average of Total Amount of Regular Contributions per Year (TRY)

Source: Pension Monitoring Center

As of 30.06.2017

17

Our MarketsPrivate Pension System: Pension Funds*

Equity11.7%

Repo and Money Market Instruments

6.5%

International Securities

2.8%

Government Bonds49.6%

Corporate Bonds10.5%

Time Deposits18.9%

Asset Allocation of Pension Funds

Number of Funds : 292

Total AUM : 70.3 Billion TRY

Return on Pension Funds (2004-2017H1)

Nominal : 383.8%

Real : 62.6%

23.9%

19.6%

11.1%

18.4%

9.5%

23.3%

9.6%

0.1%

17.9%

-0.2%

14.5%

3.0%

10.9%9.0%

13.3%11.0%

1.3%

9.2%

-0.5%

15.8%

3.0%

-9.4%

11.0%

-7.1%

5.9%

-5.4%

2.2% 2.9%

Nominal & Real Investment Return of Pension Funds

Nominal Return Real Return

As of 30.06.2017 * Includes Auto Enrolment funds

18

Our MarketsPrivate Pension System: New Frontiers

Auto

Enrolment

Severance

Payments

Simplification

of Fund

Choices

19

Our MarketsAuto Enrolment: Basic Features*

Automatic

enrolment of

current and new

employees under

age 45

Gradual

implementation

based on

company

scale

Minimum

contribution

amount

set as

%3 of

monthly

wage

State contribution:• 25% on contributions

• 1,000 TRY initial bonus

• 5% of assets at

annuity phase

Simplified

fund menu

Simplified and

automated

enrolment and

collection

process

2 months of call

back period.

Voluntary opt-out

at any time

Law enacted

in August 2016;

in force by 2017.

Structural changes

in marketing, sales

and service model

SME & Corporate

* Based on the Law enacted in August 2016 and the complementary legislation.

Automatic re-

enrolment of

employees

that

withdraw

or leave the system

in every two years

20

Our MarketsAuto Enrolment System: Incentives

For Participants

• Contributions with a cap of annual legal

minimum wage is subject to 25% state

contribution. This limit is set independently

of Pillar III contracts.

• Initial 1,000 TRY bonus if the employee

stays in the system.

• Vesting Period For State Contribution




% 100 at retirement date or death/disability

cases

• State contributions are booked in a separate

account as a commitment and will be

subject to revaluation indexed to CPI. The

accrued amounts will be funded gradually

according to the vesting schedule.

• Investment income of auto enrolment funds

are tax exempt.

• Additional state contribution equal to 5% of savings at retirement date is provided in case of transfer into an annuity contract with a minimum term of ten years.

Contribution Stage Investment Stage Retirement Stage

21

Our MarketsAuto Enrolment System: Charging Structure

Management Fee / Entrance Fee Fund Management Fee

No management or entrance fee. Fund management fee level is

capped.

According to the Law enacted in

August 2016, no management or

entrance fee is allowed in Auto

Enrolment System.

Fund Management Fee is capped at

a maximum of 0.85%.

22

Our MarketsAuto Enrolment - New Target Market

DatePrivate

Sector

Public

Sector

Number of

Employees***%

2017 January 1,000+ - 2.2 Million 15

2017 April 250 – 999 Public administrations 4.0 Million 28

2017 July 100 – 249 - 1.5 Million 11

2018 January 50 – 99Public enterprises + local administrations

1.3 Million 9

2018 July 10 – 49 - 2.7 Million 19

2019 January 5 - 9 - 2.5 Million 17

Total 14.2 Million 100

WORKFORCE*

* Social Security Institution, Turkish Statistics Institute, April 2017

** Estimated as 75% of the 4a and 4c participants *** Target market estimated by Undersecretariat of Treasury

Eligible Employees

(age less than 45)**

12.6 Million

Social Security Participants

(4a&4c)

16.8 Million

Social Security Participants

21.7 MillionEmployed

28.1 MillionWork Force

31.1 Million

3.0 Million (4c public sector)

12.9 Million(4a private sector)

0.9 Million (4a public sector)

SOCIAL SECURITY PARTICIPANTS (4A&4C)

Staging Process

Staging process defined in the complementary legislation

Public sector in 2017

Gradual staging for private sector beginning with large scale

companies (+1,000 employees)

23

Our MarketsAuto Enrolment – Market Preview

Market Size*

Number of Employees 2,515.627

Number of Certificates 2,537,218

Total Funds (TRY) 600,136,238

*Source: Pension Monitoring Center as of 30.06.2017

Staging Process

Second phase of Auto Enrolment has been

completed.

The employees of private companies over 250

employees and public administrations has been

enrolled in one of auto enrolment plans.

Date Target

2017 January Private companies with 1,000+ employees

2017 AprilPrivate companies with 250-999 employeesPublic administrations

2017 July Private companies with 100-249 employees

2018 JanuaryPrivate companies with 50-99 employeesPublic enterprises and local administrations

2018 July Private companies with 10-49 employees

2019 January Private companies with 5-9 employees

24

Our MarketsLife Insurance: Underpenetrated Market

21

144 164

962

658

1,620

353285

638

Life Insurance Non Life Insurance Total Insurance

Turkey Europe World

Insurance Premium per Capita (USD)

Global Comparison (2016)

Source: Sigma, SwissRe

Country /

Region

Life GWP

(in % of GDP)

Share of World Market

(in %)

Turkey 0.2 0.06

Europe 4.0 32.8

OECD 4.0 75.7

World 3.5 100

Life insurance market has great potentials in Turkey.

Turkey’s life insurance market is extremely

underpenetrated as life premiums’ weight in GDP is only

1/20 of OECD average.

Low penetration level - when combined with favorable

demographics and strong government support for saving

and annuity products - demonstrates high growth

potential.

25

Our MarketsLife Insurance

Life Insurance Total GWP(TRY million)

2,679

3,350 3,229

3,701

4,963

2,245

3,314

1%

25%

-4%

15%

34%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

-500.00

500.00

1,500.00

2,500.00

3,500.00

4,500.00

5,500.00

2012 2013 2014 2015 2016 2016H12017H1

Life Total GWP (million TRY) Growth Rate

2012 2013 2014 2015 2016

Term Life Endowment / Saving Annuity

CAGR 17%

Life Insurance GWPby Product Category

Life Insurance Market in Turkey is dominated by credit linked products.

Term life market is dependant on consumer loan cycles. To offset this dependancy there is an increasing emphasis on stand alone products.

The saving product market is under pressure of expanding private pension products.

Annuity market is in a regulatory transition phase. New generation products will be launched after legal framework is finalized.

Source: Insurance Association of Turkey, Life Insurance Information and Monitoring Center

Anadolu Hayat Emeklilik

Corporate Profile

27

Anadolu Hayat EmeklilikAt a Glance

Free Float15%

İşbank64% Anadolu

Sigorta20%

Milli Reasürans

1%

Ownership Structure*

❖ Established in 1990 as a subsidiary of İşbank

❖ First life insurance company in Turkey

❖ The first publicly traded Life & Pension Company since 2000

❖ Operating in pension business since 2003

❖ Strong market position in life insurance and private pension

businesses

❖ Strong shareholder structure

❖ Sector’s leader in total assets with 16.1 Billion TRY

SECTOR’S

LEADERLife and Private

Pension Funds

14.7 Billion TRY

SECTOR’S

LEADERPrivate Pension

Contracts

1.3 Million

* The rate of publicly traded shares is 17%. As at 23 February 2017, İşbank owns the 1.89% of the publicly traded shares.

28

Anadolu Hayat EmeklilikAt a Glance*

I OrganizationHeadquartered in Istanbul

11 District Sales Offices

Branch Office in TRNC

IIHuman

Resources

HQ and Regions :

Direct Sales Team :

Total :

525

500

1,025

IIIFinancial

Metrics

Total Assets :

Shareholders’ Equity :

Gross Profit :

Market Value :

16,103 million TRY

840 million TRY

141 million TRY

2,382 million TRY

IV Brand ValueHighest brand value in the sector

First remembered private pension company

Private Pension NPS 38 (sector benchmark 5)**

38% ***

VMarket

Position

Private Pension

Contracts :

Participants :

Assets Under Management :

#1 – 16%

#2 – 17%

#2 – 19%

Life Insurance

AUM (Mathematical Reserves)**** :

Gross Written Premium :

#1 – 29%

#3 – 9%

*As of 30.06.2017 **IPSOS ***TNS

**** As of 31.05.2017

29

Anadolu Hayat EmeklilikFinancial Highlights

(Million TRY) 2015 2016 Change 2016H1 2017H1 Change

Total GWP and Net Contributions 1,736.8 1,859.3 7% 833.4 933.8 12%

Life Mathematical Reserves 1,700.2 1,682.4 -1% 1,695.3 1,713.9 1%

Pension AUM 8,933.6 11,359.4 27% 10,233.3 13,078.3 28%

Total Assets 11,889.2 14,391.7 21% 13,212.7 16,102.7 22%

Shareholders Equity 778.2 860.9 11% 789.1 840.4 7%

Total Technical Profit 108.5 133.0 23% 62.7 95.0 51%

Life 86.5 112.0 29% 51.5 63.9 24%

Private Pension 22.0 21.0 -5% 11.2 31.1 177%

Financial Income 87.5 123.4 41% 56.3 65.7 17%

Profit for the Period 175.8 229.8 31% 109.0 141.2 29%

Net Profit 145.1 190.3 31% 86.3 114.8 33%

Key Financial Metrics

ROAE* 20% 23%

Expense Ratio 15.6% 17.2%

P/E Ratio* 17.1 11.2

P/B Ratio 3.2 2.5

Earnings per Share* 0.35 0.44

20% 27%

17.6% 17.8%

14.6 10.9

2.8 2.8

0.34 0.51

*H1 calculations are based on trailing four quarters’ data.

30

Anadolu Hayat EmeklilikLines of Business

Private

Pension

Individual

Plans

Non-

Sponsored

Group Plans

Employer

Sponsored

Group Plans

Income

Drawdown

Plans

Life

InsuranceAnnuities Term Life

Savings &

Endowment

Personal

Accident

Insurance

Group

Accident

Insurance

Personal

Accident

Insurance

Low RiskMedium

Risk

High

Risk

Bond Fund

Bond Fund(HSBC)

Money Market Fund

ConservativeFund

Group Bond Fund

GroupConservativeFund

Standard Fund

State ContributionFund

Alternative StateContribution Fund

Initial Fund

Initial AlternativeFund

Eurobond $ Fund

Eurobond € Fund

International

Mixed Fund

Balanced Fund

Alternative Income

Fund

Dynamic Flexible

Fund

Private Sector

Bonds Fund

Group Mixed

Eurobond Fund

Gold Fund

Equity Fund

Equity Fund

(HSBC)

Aggressive Fund

BRIC Plus Fund

Group Equity

Fund

Isbank

Subsidiaries Fund

Lines of Business Pension Funds

Auto

Enrolment

Auto

Enrolment

Plans

31

Anadolu Hayat EmeklilikDistribution Network


1,371 Branches

1,923 Licensed Intermediaries

55 Licensed Tele-Sales Agents


Branch in Northern Cyprus

45 Regional Sales Managers

455 Direct Sales Team

284 Agencies

617 Licensed Intermediaries

111 Branches

3 Branches

1 Branch

Private Pensions New Business

Channel Mix (Contributions) – 2017H1

(Branch+DS+TS)

83%

Tele Sales7%

Agency12%

Others5%

İşbank

Anadolu Hayat EmeklilikDeep Bench with Lots of Talent

Total Number

of Employees: 1,025

4%

26%

35%

21%

9%

4%

2%

18-24

25-29

30-34

35-39

40-44

45-49

50+

Young & Energetic

0.5%

3%

89%

8%

Primary Level

High School

University

Graduate

Educated

61%

39%

Female

Male

Diverse

33

Anadolu Hayat EmeklilikCorporate Strategy

Finance

Become the market leader among private

pension and life insurance companies

Customer

Optimize customer and product portfolio to

make the best use of sales potential

Process

Design cost oriented simple processes for

top-notch customer experience

Improvement

and Learning

Continuously develop business model and human

resources to become the leader in all arenas

Become both the private

pension and life insurance

market leader

Optimize operational

profitability and efficiency

Optimize ROE and risk

portfolio

Utilize the Bancassurance

channel in the most

effective way

Make the best use of up

and cross selling

opportunities

Extend quality customer

base

Develop integrated, agile

and solution focused

systems

Optimize acquisition and

service related costs by

digitalization

Become a superb service

provider

Differentiate through new

infrastructure and

business model

Execute sales-oriented

transformation

Become the first choice for

employees through high

performance teams

34

Anadolu Hayat EmeklilikStrong Infrastructure

Core System Transformation

Project

The first phase of the transformation project to serve private pension operations established in February 2017 including a huge migration from the old legacy system. Second phase of the project covering life insurance operations is scheduled in 2017.

New IT infrastructure is flexible, modular and state of the art which will reduce reliance on IT resources, reduce the time to market for new products, gain process efficiencies with automation for a unique customer experience, reduce operational risk, increase the ability to deal with regulatory change.

CRM

Hardware Architecture

Transformation(Exadata)

Payment and Collection

Processes Module(Payment HUB)

Commission and

Intermediary Campaigns

Rule Engine

Mechanization of

Operational Processes

Digital Corporate Identity(AHEŞUBE, AHEMOBİL, AHEPAD)

Financial Systems

Transformation(GL / FAH)

Insurance Applications Transformation

Integrated BI and

Reporting Platform(Atlas)

35

Anadolu Hayat EmeklilikFocus on Customer Retention

Lowest churn rate

in peer group• 0.9% monthly churn rate* (1.1%

sector average)

Extensive use of

CRM

• Campaign, lead and customercomplaints management, keyaccount management

Predictive

Modeling

• Churn risk ratios based warning & action processes

• Customer profiling• Offers based on customer behaviors

VIP segment

focus

• Campaigns to raise regular andadditional contributions

• Automated collection warningmechanisms.

Collections

Performance

• Key account management• Consultancy through investment

managers• Exclusive customer service on call center• Special customer loyalty programs

97

98

99

100

Oct-

03

Jan

-04

Ap

r-04

Jul-0

4

Oct-

04

Jan

-05

Ap

r-05

Jul-0

5

Oct-

05

Jan

-06

Ap

r-06

Jul-0

6

Oct-

06

Jan

-07

Ap

r-07

Jul-0

7

Oct-

07

Jan

-08

Ap

r-08

Jul-0

8

Oct-

08

Jan

-09

Ap

r-09

Jul-0

9

Oct-

09

Jan

-10

Ap

r-10

Jul-1

0

Oct-

10

Jan

-11

Ap

r-11

Jul-1

1

Oct-

11

Jan

-12

Ap

r-12

Jul-1

2

Oct-

12

Jan

-13

Ap

r-13

Jul-1

3

Oct-

13

Jan

-14

Ap

r-14

Jul-1

4

Oct-

14

Jan

-15

Ap

r-15

Jul-1

5

Oct-

15

Jan

-16

Ap

r-16

Jul-1

6

Oct-

16

Jan

-17

Ap

r-17

Continuity Index (%)

AHE System Sector Average

* Pension Monitoring Center data as of May 2017

36

Anadolu Hayat EmeklilikA Strong Brand Name

Turkey’s best life

insurance company

- 2nd time -

Turkey’s most admired

private pension company *

-5th time-

Awarded by Middle East

Insurance Forum (MEIF)

as the best performing

insurance company in

Levant region **

* «Turkey’s Most Admired Companies 2016» survey conducted by Capital Magazine.

** MEIF Awards takes into account key financial metrics and provides industry participants an objective peer-to-peer ranking.

Levant region: Turkey, Cyprus, Egypt, Iraq, Israel, Jordan, Palestine, Syria.

*** Voice of the Customer Survey carried out by Turkish Society for Quality and Ipsos in 2016 **** SocialBrands Data Analytics Awards

evaluate brands’ performance according to the SocialBrands social media brand index which is consolidated from independent data

The life insurance and

private pension

company with the

highest customer

loyalty in Turkey ***

Received golden prize in 2017

SocialBrands Data Analytics

Awards among private pension

and life insurance firms ****

37

Anadolu Hayat EmeklilikStrong Market Positioning in Private Pensions

629,123733,137

863,365

1,026,5931,120,399 1,086,839 1,132,761

0.00

200,000.00

400,000.00

600,000.00

800,000.00

1,000,000.00

1,200,000.00

2012 2013 2014 2015 2016 2016H1 2017H1

20% 18% 17% 17% 17%

Market Share

Participants

Technical Profit (mio TRY)

4,2785,243

7,394

8,945

11,36610,247

13,061

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

2012 2013 2014 2015 2016 2016H1 2017H1

21% 20% 20% 19% 19%

Market Share

Assets Under Management (mio TRY)

3,3404,333

5,497

6,831

8,1897,449

8,843

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

8,000.00

9,000.00

10,000.00

2012 2013 2014 2015 2016 2016H1 2017H1

Contributions (mio TRY)

Source: Pension Monitoring Center

21% 20% 19% 18% 18%

Market Share

19.5

-11.1

3.7

22.0 21.1

11.2

31.1

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2012 2013 2014 2015 2016 2016H1 2017H1

17% 17% 19% 19%

19% 18%

38

367.0 394 364.7402.1

500.6

215.3

282.6

0.00

100.00

200.00

300.00

400.00

500.00

600.00

2012 2013 2014 2015 2016 2016H1 2017H1

Anadolu Hayat Emeklilik»Strong Market Positioning in Life Insurance

14% 12% 11% 11% 10%

Market Share

Life Insurance GWP (mio TRY)


153.3186.2 198.2

259.0

395.0

165.1

227.8

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

2012 2013 2014 2015 2016 2016H1 2017H1

7% 6% 7% 8% 9%

Market Share

Term Life GWP (mio TRY)

Mathematical

Reserves –

Life Insurance

Fund Size*

Market Share

AHE29%

Others71%

Market

Leader with

1.7 bio TRY

AUM

Source: Insurance Association of Turkey , Life Insurance Information and Monitoring Center

* As of 31.05.2017

33.4

63.4 63.8

86.5

112.5

51.8

63.9

0.00

20.00

40.00

60.00

80.00

100.00

120.00

2012 2013 2014 2015 2016 2016H1 2017H1

10% 9% 8% %8*

Term Life

80.6%

Saving15.8%

Annuity3.6%

2017H1

39

Anadolu Hayat EmeklilikStatutory Financials

105.7 99.0

134.8

175.9

229.8

109.0

141.2

0.00

50.00

100.00

150.00

200.00

250.00

2012 2013 2014 2015 2016 2016H1 2017H1

52.9 52.3

67.5

108.3

133.0

62.7

95.0

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

2012 2013 2014 2015 2016 2016H1 2017H1

Gross Profit for the Period (mio TRY)


121 124 128 184 215

525620

710

789

877

0

200

400

600

800

1000

1200

2012 2013 2014 2015 2016

Required Capital Total Capital

433% 500% 553% 430% 408%

Capital Adequacy Ratio

Shareholders’ Equity and Capital Adequacy Ratio (mio TRY)

2012 2013 2014 2015 2016

ROAE 17% 15% 16% 20% 23%

40


Net Distributable Profit / Dividend to Shareholders (mio TRY) Dividend Payout Ratio (%)

79 8290

142

186

4050

60

100

140

0

20

40

60

80

100

120

140

160

180

200

2012 2013 2014 2015 2016

Net Distributable Profit Dividend to Shareholders

51

61

6770

75

2012 2013 2014 2015 2016

Cash Dividend / Net Distributable Profit (%)

0.13 0.14 0.16 0.24 0.33

Dividend per Share Gross (TRY)

41


52.9 52.367.5

108.3

133.0

62.8

95.0

175.4

215.4

241.7

270.4

318.9

147.1166.0

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

2012 2013 2014 2015 2016 2016H1 2017H1

Technical Profit Operating Expenses

Technical Profit / Operating Expenses (mio TRY)

MarketingExpenses

8%

Employee BenefitExpenses

33%

Commission Expenses

39%

Administration Expenses

20%

Operating Expenses – 2017 H1

16.215.5 15.8 15.6

17.2 17.6 17.8

2012 2013 2014 2015 2016 2016H1 2017H1

Expense Ratio (%) (*)

(*) G&A Expenses / Contributions+GWP

42


Summary of Income Statement

(mio TRY) 2012 2013 2014 2015 2016 CAGR 2016 H1 2017 H1 YOY

Non-Life Technical Profit / Loss 0.01 0.02 -0.03 -0.24 -0.57 - -0.27 -0.02 -93%

Life Technical Profit / Loss 33.42 63.41 63.80 86.48 112.49 35% 51.75 63.87 23%

Pension Technical Profit / Loss 19.50 -11.14 3.69 22.02 21.09 2% 11.26 31.15 177%

General Technical Profit / Loss 52.93 52.29 67.46 108.26 133.01 26% 62.74 95.00 51%

Net Investment Income 56.33 48.39 69.61 72.07 101.88 16% 45.21 52.57 16%

Other Income/Expenses -3.58 -2.20 -2.30 -4.48 -5.09 9% 1.07 -6.40 -

Profit Before Taxes 105.68 98.48 134.77 175.85 229.80 21% 109.02 141.17 29%

43


Pension Technical Profit


Pension Technical Income 139.03 132.00 166.57 209.06 236.76 14% 113.33 140.95 24%

1- Fund Management Income 88.47 90.76 113.57 144.26 173.82 18% 82.03 101.75 24%

2- Management Fee 33.95 17.77 21.58 26.38 21.20 -11% 9.62 15.22 58%

3- Entrance Fee Income 16.12 20.24 26.13 32.05 37.08 23% 19.54 20.86 7%

4- Other Technical Income 0.49 3.23 5.29 6.37 4.66 76% 2.14 3.12 46%

Pension Technical Expense -119.53 -143.14 -162.88 -187.04 -215.67 16% -102.07 -109.80 8%

1- Total Fund Expenses -15.07 -16.30 -16.99 -22.34 -24.57 13% -12.26 -14.24 16%

2- Operating Expenses -102.99 -125.96 -144.11 -157.26 -181.71 15% -85.99 -89.54 4%

3- Other Technical Expenses -1.47 -0.88 -1.78 -7.44 -9.39 59% -3.82 -6.02 58%

Pension Technical Profit 19.50 -11.14 3.69 22.02 21.09 2% 11.26 31.15 177%

44


Life Technical Profit


Life Technical Income 502.68 598.51 550.43 602.51 700.85 9% 275.26 345.90 20%

1- Earned Premiums (Net of Reinsurer Share) 346.81 382.88 353.32 391.78 475.43 8% 202.81 261.50 22%

2- Investment Income 149.64 206.89 188.62 202.87 214.83 9% 68.61 80.54 15%

3- Other Technical Income 6.23 8.74 8.49 7.86 10.59 14% 3.84 3.86 1%

Life Technical Expense -469.26 -535.10 -486.63 -516.03 -588.36 6% -223.51 -282.03 21%

1- Incurred Losses (Net of Reinsurer Share) -454.75 -527.63 -542.81 -426.60 -448.86 -0,33% -245.67 -213.34 -15%

2- Change in Provision for Bonus and Discounts -0.26 0.13 -0.03 -0.15 -0.14 - -0.04 -0.08 47%

3- Change in Life Mathematical Provisions 59.54 83.43 155.52 26.54 2.27 - 85.09 10.43 -

4- Change in Other Technical Reserves -1.71 -2.00 -2.19 -3.11 -4.96 - -2.03 -2.88 29%

5- Operating Expenses -72.08 -89.03 -97.12 -112.71 -136.67 17% -60.86 -76.16 20%

Life Technical Profit 33.42 63.41 63.80 86.48 112.49 35% 51.75 63.87 19%

Technical Margin

(Technical Profit / Earned Premiums)9.6% 16.6% 18.1% 22.1% 23.7% 25.5% 24.4%

45

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DISCLAIMER

The information in this document has been obtained by Anadolu Hayat Emeklilik A.Ş. from sources believed to be reliable, however, Anadolu Hayat Emeklilik A.Ş. cannot guarantee the accuracy, completeness or correctness of such information. This document has been issued for information purposes only. The financial reports and statements announced by AnadoluHayat Emeklilik A.Ş. to the public and relevant corporations are accepted to be the sole material. Anadolu Hayat Emeklilik A.Ş. does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents due to the misleading information in this document. All estimations contained in this document are opinions of Anadolu Hayat Emeklilik A.Ş. and can be subject to change without notice. This document cannot be interpreted as an advice to the investors and Anadolu Hayat EmeklilikA.Ş. cannot be held responsible for the results of investment decisions made on account of this document. This document has been issued specially to the person, whom the document is concerned and may not be reproduced, distributed or shared with third parties for any purpose.

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