ANADOLU HAYAT EMEKLİLİK A.Ş. COMPANY PRESENTATION. December 2011

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1 ANADOLU HAYAT EMEKLİLİK A.Ş. COMPANY PRESENTATION December 2011

2 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. can not 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 Anadolu Hayat 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 can not be interpreted as an advice to the investors and Anadolu Hayat Emeklilik A.Ş. can not 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. 2

3 Contents Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 3

4 Turkish Economy 2010 Population (End of 2010 ) Urban Population (%) 76,3 Civil Employment (Age15+) Unemployment Rate (%) 11,9 Gross Domestic Product-Current Prices (TL billion) Gross Domestic Product (USD billion) 735 GDP Growth Rate (%) 8,9 GDP per Capita - Current Prices (USD) Budget Deficit to GDP (%) 3,6 Current Deficit to GDP (%) 6,5 Consumer Price Index (%) 6,4 Producer Price Index (%) 8,9 Insurance Premium Income (TL billion) 14,13 Insurance Premium Income/GDP (%) 1,28 Source: Treasury and AIRCT 4

5 Anadolu Hayat Emeklilik Corporate Profile Established in 1990 as a subsidiary of Türkiye İş Bankası First life insurance company in Turkey The only Life & Pension company publicly traded since 2000 Has been operating in pension business since Market leader in life insurance and private pension 5

6 Anadolu Hayat Emeklilik Ownership Structure 6

7 INSURANCE SECTOR IN TURKEY Total Number of Companies Insurance Companies 60 - Non-Life 35 - Life 8 - Life & Pension 16 Reinsurance Companies 1 Source: Treasury 7

8 INSURANCE SECTOR IN TURKEY Premium Productions 2010 Total Premium Per Capita (USD) 124 Non-Life Premium Per Capita (USD) 101 Life Premium Per Capita (USD) 23 Total Premium Production (Billion USD) 9.1 Total Premium Production / GDP 1.3% Source: Treasury and AIRCT 8

9 PRIVATE PENSION SYSTEM IN TURKEY Contributions as of Total Pension Fund System Contributions Per Capita (USD) 84 Total Pension Fund System Contributions (Billion USD) 6,2 Total Pension Fund System Contributions / GDP 0,9% Source: Treasury 9

10 Anadolu Hayat Emeklilik Growth Strategy Distribution Channel Strategy Focus on Bancassurance Expanding Direct Sales Team Improve agency profile Improve Customer Service Quality Improve HR quality Focus on Corporate Pension Business 10

11 Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 11

12 Anadolu Hayat Emeklilik Lines of Business Private Pension Individual Corporate Life Insurance Endowment / Permanent Life Term Life Annuities Unemployment Critical illness 12

13 PRIVATE PENSION SYSTEM IN TURKEY Basic Features Started on Licensed pension companies Third pillar system Defined contribution Voluntary participation Tax incentives for both participant & employer Fully funded system Minimum 10 years of contribution payment Minimum retirement age is 56 Funds are managed by asset management companies Separate pension accounts for each participant Participants have the right to; Switch funds or pension plan Transfer accounts between pension companies once a year Merge their separate pension accounts Cease contribution payments Leave anytime 13

14 PRIVATE PENSION SYSTEM IN TURKEY Tax Incentives Contribution Stage Contributions are tax deductible up to %10 of income with a cap of annual minimum wage. Employer contributions are also tax deductible subject to the same limits Investment Stage Investment income of pension funds are tax exempt No stamp tax in setting up pension funds No tax on transactions in pension system Benefit payments %25 of retirement payments are exempt from income tax Residual is subject to a witholding tax of 5 % Early surrenders are subject to 15% or 10% (in case of completion of 10 yrs within the system) witholding tax with no exemption 14

15 15 Private Pension System In Turkey

16 Anadolu Hayat Emeklilik Distribution Network Bancassurance Direct Sales 1202 Branches 330 Branches 122 Branches 87 Branches 3 Branches 1 Branch 309 Licensed Salesperson Total of 6 Banks & 1745 Branches Agents & Brokers 241 Exclusive Agencies 53 Brokers Other Internet Call Centre 16

Anadolu Hayat Emeklilik Pension Production By Channel 2011 2009 2010 2011 Direct to Customer 5% 12% 10% Broker 1% 2% 2% Agency 7% 10% 13% BANCASSURANCE 87% 76% 75% Is

17 Anadolu Hayat Emeklilik Pension Production By Channel Direct to Customer 5% 12% 10% Broker 1% 2% 2% Agency 7% 10% 13% BANCASSURANCE 87% 76% 75% Is Bank 5% 4% 3% Is Bank + Direct Sales 45% 41% 42% Is Bank + Agency 16% 14% 13% HSBC 17% 16% 15% TEB + Agency 3% 2% - Anadolubank 1% - 1% Albaraka - - 1% Total 100% 100% 100% 17

18 Key Drivers For Growth In Pension Business Economic Improvements in Turkey Structural reforms Extended maturities Purchasing power Lack of confidence in the social security system Advantages of Pension System Tax incentives Transparent system Participating to the investment process Mobility of the pension accounts 18

19 Key Drivers For Our Market Leadership Distribution network Diversified products Fund performance Charging structure Service quality 19

20 Fund Size (TL mio) Number Of Participants Private Pension System In Turkey Overview as of Funds (TL mio) Number Of Participants 20

21 Pension System Outlook % Change % Change % Change Net Asset Value (mio TL) AHE % % % Sector % % % Market Share 20,7% 21,5% 21,8% 21,1% Number of Participants (thousand ) AHE % % % 574 Sector % % % Market Share 21,5% 22,0% 22,1% 21,7% 21

22 Private Pension System Sectoral Expectations - 1 Consolidated Expectations of Pension Companies for 2011 Number of New Participants Within the Year Total Number of Participants at the Year-end Net Cumulative Amount of Contributions at the Year-end (TL) Net Cumulative Amount of Accumulations at the Year-end (TL) Source: Pension Monitoring Center - Most Probable Scenario 22

23 Private Pension System Sectoral Expectations - 2 Consolidated Expectations of Pension Companies for 2011 (Year-end) Number of Contracts to be Transferred Amount of Transfers (TL) Expected Number of Contracts to Withdraw Expected Amount of Accumulations to be Withdrawn (TL) Expected Number of Participants to Retire Expected Amount of Accumulations Related to Retired Participants (TL) Source: Pension Monitoring Center - Most Probable Scenario 23

24 Private Pension System In Turkey Overview as of XXX XXX XXX XXX XXX XXX XXX XXX 24 XXX XXX XXX XXX

25 Private Pension System In Turkey Lapse Ratio: Sector Average vs. Anadolu Hayat Emeklilik 25

Fund Bond Fund International Mixed Fund Eurobond $/ Fund

26 Pension Products Fund Menu As of Conservative Balanced Aggressive Cash Fund Conservative Fund Bond Fund International Mixed Fund Eurobond $/ Fund Alternative Balanced F. Balanced Fund Equity Fund Agressive Fund BRIC Fund 55 % 27 % 18 % 26

27 Pension Funds & Mutual Funds Fund Average Net Asset Value T-Bills & Bonds Reverse Money Market Inst. Foreign Currency T.Deposits / Type Maturity (mio TL) Equity (%) (%) Repo (%) (%) Sec.(%) Other (%) PRIVATE PENSION FUNDS ,12 58,08 13,03 0,05 0,14 16, ,10 60,77 11,36 0,47 0,85 14,46 MUTUAL FUNDS BANKS & Others ,80 28,74 53,59 7,99 0,37 5, ,57 23,24 46,61 9,15 0,38 17,06 27

28 Pension Funds Net Asset Values as of

29 Anadolu Hayat Emeklilik Pension Funds Weighted Average Return Performance Weighted Average Returns (%) % 29

30 ASSET ALLOCATION & PERFORMANCE OF PENSION FUNDS OECD COMPARISON (Source: Pension Markets in Focus, OECD 2011, i8) 30

31 Pension Products Charging Structure Entrance Fee At the phase of entrance to the System for each pension account Can be deferred till the leaving date or can be collected by installments ½ of Monthly Minimum Wage Management Fee To cover administrative expenses On contributions Legal upper limit: 8% Fund Management Fee To cover fund management expenses On NAV of each fund Legal upper limit: 1/10,000 (daily) 3,65% (annual) 31

32 Life Insurance In Turkey Market Shares (Top 7 in Premium Production) 35% 30% 27% 28% 30% 25% 20% 16% 15% 13% 10% 5% 11% 10% 9% 4% 6% 7% 6% 5% 5% 4% 5% 5% 4% 4% 3% 0% 0% AHE ZİRAAT XXX GARANTI XXX HALK XXX YKE XXX VAKIF XXX FİNANS XXX

33 Life Insurance In Turkey Market Shares (Mathematical Reserves) % (Mio TL) % (Mio TL) AHE 41% % XXX 10% 451 NA NA XXX 9% 396 NA NA XXX 8% 368 NA NA XXX 6% 290 NA NA XXX 5% 241 NA NA Others 21% 939 NA NA TOTAL 100% * *Temporary 33

34 34 Anadolu Hayat Emeklilik Profit Sharing Rates TL Based Life Products

35 35 Anadolu Hayat Emeklilik - Life Portfolio Total Number of Policies 2010 vs 2011

36 36 Anadolu Hayat Emeklilik - Life Portfolio Total Premium Production (TL) 2010 vs 2011

37 37 Anadolu Hayat Emeklilik - Life Portfolio Premium Production New Business (TL)

Anadolu Hayat Emeklilik Life Production By Channel 2011 2009 2010 2011 Agency & Broker 34% 35% 29% Direct to Customer 36% 32%

38 Anadolu Hayat Emeklilik Life Production By Channel Agency & Broker 34% 35% 29% Direct to Customer 36% 32% 27% BANCASSURANCE 30% 33% 44% Is Bank 15% 24% 36% Is Bank & Direct Sales & Agency 14% 8% 7% HSBC 1% 1% 1% Total 100% 100% 100% 38

39 Life Products Charging Structure Agency Commission Management Fee Fund Charge Paid out to our distribution channels Charged on premiums No limits since To cover administrative expenses Charged on premiums No limits To cover fund management expenses Charged on current year s returns Max. 15% of the returns 39

40 Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 40

41 Anadolu Hayat Emeklilik Financial Highlights Mio TL Written Premium General Technical Profit Total Assets Paid-In Capital Shareholders Equity Math.& Profit Sharing Provisions Total Fund Size (Private Pension) Net Profit

42 Anadolu Hayat Emeklilik Dividend Payout Net Profit (TL) Net Distributable Profit (TL) Dividend to Shareholders (TL) Cash Bonus Share Cash / Net Profit (%) 79,39 69,37 54,99 63,57 Cash / Net Distributable Profit (%) 83,65 72,69 57,82 67,02 Bonus Share / Net Profit (%) Bonus Share / Net Distributable Profit (%) Dividend to Shareholders / Net Profit (%) 79,39 69,37 54,99 63,57 Dividend to Shareholders / Net Distributable Profit (%) 83,65 72,69 57,82 67,02 42

43 Anadolu Hayat Emeklilik Capital Adequacy (TL) (TL) (TL) Capital required for Non-Life Branch Capital required for Life Branch Capital Required for Pension Branch TOTAL CAPITAL REQUIRED TOTAL CAPITAL EXCESS CAPITAL

44 Anadolu Hayat Emeklilik Income Statement TECHNICAL PART (mio TL) NON-LIFE TECHNICAL INCOME 0,17 0,32 NON-LIFE TECHNICAL EXPENSES -0,40-0,33 I - NON-LIFE TECHNICAL PROFIT / LOSS -0,23-0,01 LIFE TECHNICAL INCOME 551,20 563,17 LIFE TECHNICAL EXPENSES -537,25-528,72 II- LIFE TECHNICAL PROFIT / LOSS 13,95 34,45 PENSION FUND TECHNICAL INCOME 95,16 113,85 PENSION FUND TECHNICAL EXPENSES -82,04-113,85 III- PENSION FUND TECHNICAL PROFIT / LOSS 13,12 - IV- GENERAL TECHNICAL PROFIT / LOSS 26,84 34,44 INVESTMENT INCOME 70,03 57,22 INVESTMENT EXPENSES -7,90-7,60 PROFIT FROM OTHER & EXTRAORDINARY ACTIVITIES -2,14-5,98 44 V- COMPANY ASSETS PROFIT / LOSS 59,99 43,64 VI- PERIOD PROFIT / LOSS (IV+V) 86,83 78,08 VII- PROVISION FOR TAX & OTHER LEGAL LIABILITIES -15,44-13,41 IX- PERIOD NET PROFIT / LOSS (VII - VIII) 71,39 64,67

45 Anadolu Hayat Emeklilik Balance Sheet ASSETS (mio TL) I- LIQUID ASSETS II- MARKETABLE SECURITIES IIII- RECEIVABLES IV- INVESTMENTS 6 9 V- FIXED ASSETS VI- OTHER ASSETS (NET) 5 13 TOTAL ASSETS LIABILITIES AND SHAREHOLDERS EQUITY I- PAYABLES II- TECHNICAL PROVISIONS IIII- OTHER PROVISIONS 8 9 IV- TAX PROVISIONS 5 10 V- SHAREHOLDERS' EQUITY TOTAL LIAB. AND SHAREHOLDERS EQUITY

46 Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 46

Anadolu Hayat Emeklilik Stock Data Year MCAP (Million $) 2005 414

47 Anadolu Hayat Emeklilik Stock Data Year MCAP (Million $) /

48 THANK YOU For further information: Website:

ANADOLU HAYAT EMEKLİLİK A.Ş. COMPANY PRESENTATION. October 2012

ANADOLU HAYAT EMEKLİLİK A.Ş. COMPANY PRESENTATION October 2012 Contents Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 2 Turkish Economy 2011 Population (End of 2011 ) 74.724.269