Yapı Kredi Sigorta A.Ş.

Transkript

2010
ANNUAL REPORT
CHAIRMAN’S MESSAGE
Yapı Kredi Sigorta’s primary objectives in 2011
are to increase its contribution to the national
economy by accelerating the Company’s
profitability and market share growth, and to
maintain its leading and pioneering market
position while adhering to high standards of
insurance industry ethical conduct.
8
CONTENTS
GENERAL MANAGER’S MESSAGE
Yapı Kredi Sigorta met its challenging
performance targets in 2010, as it began to
reap the benefits of restructuring efforts that
included significant improvements in software
infrastructure and business processes.
INSURANCE SECTOR IN TURKEY
Although the Turkish insurance sector is well
below the European average in terms of the
penetration rate and per capita premium
production, its approximately 700% growth
between 2000-2010 is nothing sort of
remarkable.
9
12
Part I - Introduction
2
Yapı Kredi Sigorta A.Ş. Agenda of General Assembly of Shareholders
3
From the Board of Directors…
4
Unconsolidated Financial Highlights for the Accounting Period
6
Milestones
6
Amendments to Articles of Association in 2010
7
Shareholding Structure and Capital
8
Chairman’s Message
9
General Manager’s Message
10
Insurance Sector in the World
12
Insurance Sector in Turkey
14 Overview of Yapı Kredi Sigorta in 2010
15
Developments in the Company
16
Social Responsibility and Support for the Arts
17
Technical Results
PART II - Management and Corporate Governance Practices
24 Board of Directors
25
Auditors
25 Senior Management
27 Internal Audit
28 Organizational Chart
30 Headquarters and Regional Management
31 Terms of Office and Professional Experience of Auditors
31 Information about the General Assembly Meetings
32 Summary Board of Directors Report Submitted to the General Assembly
34 Overview of Activities of the Company in Its Respective Risk Group
35 Information on Human Resources Practices
36 Corporate Governance Principles Compliance Report
39
Statutory Auditors’ Report
40 Information about Internal Audit Activities
Part III - Overview of Financial Information and Risk Management
43 Compliance Statement for the Annual Report to be Submitted to the General Assembly
44 Independent Auditor’s Report
45 Compliance Opinion for the Annual Report to be Submitted to the General Assembly
46 Unconsolidated Financial Information
108 Convenience Translation of the Unconsolidated Balance Sheet and Income Statement
115 Profit Distribution
116 Overview of Financial Status, Profitability and Payment of Compensation
117 Information on Risk Management Policies Based on Risk Types
118 Summary Financial Results for the Five-Year Period Including the Report Period
Part IV – Consolidated Financial Information
123 Independent Auditor’s Report
124 Compliance Opinion for the Annual Report to be Submitted to the General Assembly
125 Consolidated Financial Information
204 Information Regarding Consolidated Partnerships
205 Information for Shareholders 206 YKSGR Share Performance in 2010
207 Directory
PART I
INTRODUCTION
2
Introduction
Yapı Kredi Sigorta A.Ş. Agenda of
General Assembly of Shareholders
1. Inauguration of the General Assembly and
election of the Presidency of the Council,
2. Reading out and deliberation of the reports
of the Board of Directors and Auditors on the
Company’s 2010 activities and accounts, and of
the summary of the Independent Auditor’s Report
prepared by Güney Bağımsız Denetim ve Serbest
Muhasebeci Mali Müşavirlik A.Ş.; amendment
and rejection of the Board of Directors’ proposal
on Balance Sheet and Income Statement for the
year 2010,
3. Release of the Board of Directors and Statutory
Auditors of their fiduciary responsibilities for the
Company’s activities in 2010,
4. Adoption, amendment or rejection of the Board
of Directors’ proposal on the distribution of
dividends for the year 2010,
5. Provision of information to the General Assembly
as regards the dividend distribution policy for the
year 2011 and after, pursuant to the principles of
Corporate Governance,
6. Provision of information to the General Assembly
on the Company’s public disclosure policy,
pursuant to the Capital Markets Law,
7. Determination of the number of members and
term of office of the Board of Directors, and the
election of its members,
8. Election of Company Auditors,
9. Determination of the gross monthly salaries of
the members of the Board of Directors and of
Auditors,
10.Provision of information to the General Assembly
as regards charitable donations and assistance
that the Company provided to foundations and
associations during the year 2010,
11.Provision of information to the General Assembly
on transactions with related parties,
12.Approval of the independent external auditors
selected by the Board of Directors in order to
audit the financial statements for the year 2010,
pursuant to the Communiqué on Independent
Audit Standards in Capital Markets issued by the
Capital Markets Board,
13.Decision to allow the Board Members to enter
into business transactions, directly or on behalf
of others, and to become shareholders and carry
out other transactions of other companies active
in the fields of activity of the Company, under
Articles 334 and 335 of Turkish Commercial
Code.
14.Authorization of the Presidency of the Council to
sign the minutes of the General Assembly and
contending with this action that no further action
is necessary,
15.Wishes.
Yapı Kredi Sigorta 2010 Annual Report
From the Board of Directors...
Dear Shareholders,
The Company generated a total of TRY 758 million in premium production in 2010, of which TRY 337 million
originated from health branches and TRY 421 million from other branches.
We hereby present for your examination and approval the Balance Sheet and Profit & Loss Statement reflecting
the 2010 financial position of the Company, which employs well-skilled personnel to deliver the highest-quality
services, to inspire trust, and to follow innovative and
customer-oriented business principles.
Board of Directors
3
4
Introduction
Unconsolidated Financial Highlights for the
Accounting Period
Key Indicators
Unless stated otherwise, the following data is expressed in TRY terms.
Financial Highlights
2009
2010
Total Premium Revenue
607,976,823
758,182,493
24.7
Total Underwriting Profit
(22,696,400)
46,547,641
305.1
Total Assets
752,854,306
902,063,337
19.8
80,000,000
80,000,000
0.0
289,989,583
330,212,608
13.9
Paid-in Capital
Shareholders’ Equity
Ratio (%)
Profit Before Tax
(10,151,462)
47,676,157
569.6
Net Profit
(11,930,295)
42,549,071
456.6
December 31, 2009
December 31, 2010
Ratio (%)
289,989,583
330,212,608
13.9
Cash and Financial Assets
344,961,937
448,162,030
29.9
Total Assets
752,854,306
902,063,337
19.8
Total Short-term Liabilities
454,916,791
561,535,803
23.4
Total Long-term Liabilities
7,947,932
10,314,926
29.8
466,304,280
622,684,691
33.5
28.3
Summary Financial Results
Written Premiums (Net)
Earned Premiums (Net)
441,451,956
566,487,506
(387,397,607)
(439,782,046)
13.5
Investment Income Transferred From Non-technical Section
38,745,037
55,661,252
43.7
Unexpired Risks Reserve
(6,915,853)
6,671,660
196.5
Change in Other Technical Reserves (Net)
(1,824,436)
(2,754,730)
51.0
72.0
Incurred Losses (Net)
Other Technical Income (Net)
Operating Expenses
Technical Division Balance
Investment Income
Investment Expenses
Other Income (Expenses)
Current Tax and Other Legal Liabilities
Current Profit After Tax
2,923,206
5,028,119
(116,594,556)
(138,092,460)
18.4
(22,696,400)
46,547,641
305.1
51,354,369
69,412,660
35.2
(43,464,449)
(61,739,948)
42.0
4,655,018
(6,544,196)
(240.6)
(1,778,833)
(5,127,086)
188.2
(11,930,295)
42,549,071
456.6
December 31, 2009
Premium Distribution
Fire and Catastrophe
Marine
Sea Vehicles
December 31, 2010
Premium
Ratio (%)
Premium
Ratio (%)
90,839,359
14.9
103,561,926
13.7
9,683,478
1.7
11,105,191
1.5
0.3
5,103,114
0.8
2,573,218
Land Vehicles Liability
48,954,371
8.1
61,902,739
8.2
Motor Own Damage
99,728,087
16.4
147,683,262
19.4
Air Vehicles Liability
Air Vehicles
404,845
0.1
407,565
0.1
1,319,269
0.2
964,520
0.1
General Damages
43,383,082
7.1
55,243,330
7.3
Casualty
13,165,201
2.2
16,346,018
2.2
32,844
0.0
0
0.0
Credit
General Liability
Health
Legal Protection
Total
9,982,051
1.6
19,279,183
2.5
284,571,739
46.8
337,430,078
44.5
809,383
0.1
1,685,463
0.2
607,976,823
100.0
758,182,493
100.0
December 31, 2009
December 31, 2010
Loss Distribution
Paid Loss
Ratio (%)
Paid Loss
Ratio (%)
34,441,475 7.8
7.8
21,436,432
4.7
4,100,795
0.9
3,041,355
0.7
485,704
0.1
1,767,760
0.4
Marine
Sea Vehicles
36,007,369
8.1
34,711,125
7.6
Motor Own Damage
90,080,588
20.2
113,111,203
24.8
0
0.0
0
0.0
Air Vehicles
357,964
0.1
34,066
0.0
General Damages
19,741,789
4.4
23,638,868
5.2
Casualty
1,380,508
0.3
2,591,616
0.6
0
0.0
0
0.0
1,390,647
0.3
2,040,477
0.4
257,147,801
57.8
253,927,888
55.6
575
0.0
3,192
0.0
445,135,215
100.0
456,303,982
100.0
Credit
General Liability
Health
Legal Protection
Total
Key Ratios (%)
Underwriting Profit/Premium Production
2009
2010
(3.7)
6.1
Profit Before Tax/Total Assets
(1.3)
5.3
Profit Before Tax/Shareholders’ Equity
(3.5)
14.4
Premium Production/Total Assets
80.8
84.0
Shareholders’ Equity /Total Assets
38.5
36.6
5
6
Introduction
Milestones
Yapı Kredi Sigorta currently holds a 6.3% share in the non-life insurance
sector, which comprises 57 companies, and is the sector leader in the
health insurance branch with a 19.8% market share.
Yapı Kredi Sigorta was originally founded in 1943
under the name Halk Sigorta. In 1972, Yapı Kredi
Bank, then a member of the Doğuş Group, purchased
a 75% stake in Halk Sigorta. In 1980, the Company
joined the Çukurova Group when its parent, Yapı Kredi
Bank, acquired it. Yapı Kredi Sigorta shares began
trading on the Istanbul Stock Exchange on
October 19, 1994; at present, 33.69% of the
Company’s stock is publicly traded.
In 1990, as required by changes in the legal
framework, all health and life insurance activities,
which were till then carried out by a separate
department of Halk Sigorta, were transferred to a
separate company, Halk Yaşam Sigorta A.Ş., wholly
owned by Halk Sigorta.
In 2000, the Company’s name was changed to
Yapı Kredi Sigorta A.Ş. (Yapı Kredi Insurance) and
the name of its subsidiary Halk Yaşam Sigorta was
changed to Yapı Kredi Yaşam A.Ş. (Yapı Kredi Life
Insurance).
One of the requirements of the draft Private Pension
System Law discussed in the subcommittees of the
Grand National Assembly of Turkey in late 2000 was
a rule stating that insurers who set up and managed
private pension funds could not be active in any
branch other than life insurance. Yapı Kredi Yaşam
Sigorta’s health insurance activities were accordingly
transferred to Yapı Kredi Sigorta on January 1,
2001 in order to make it possible for the former to
engage in the business of providing private pensions.
Concurrently, Yapı Kredi Sigorta’s life insurance
portfolio was transferred to Yapı Kredi Yaşam Sigorta,
whose name was changed to Yapı Kredi Emeklilik
(Yapı Kredi Pension) in 2002.
The Company, which created a small but robust
structure in the sector early on, gradually increased
its market share in the years that followed. Yapı Kredi
Sigorta holds a 6.3% share in the current non-life
insurance sector, which comprises 57 companies, and
is the sector leader in the health insurance branch
with a 19.8% market share.
On September 28, 2005, Yapı Kredi Bank and its
subsidiaries were acquired by Koç Finansal Hizmetler,
a partnership between Koç Holding and the Italy
based UniCredit. Effective the same date, Yapı Kredi
Sigorta began carrying out its operations as a member
of the same group.
Yapı Kredi Sigorta operates through its Istanbul
headquarters, Istanbul regional office, Kadıköy
and Bakırköy regional offices as well as offices
located in the Mediterranean, Aegean, Southern,
Central Anatolian and Bursa regions. In addition,
the Company provides a comprehensive range of
insurance services to customers throughout Turkey
through an extensive network of professional agencies
and branches of Yapı Kredi Bank.
Yapı Kredi Sigorta currently operates in the branches
of casualty, health, motor own damage, railway
vehicles, air vehicles, sea vehicles, marine, fire
and catastrophe, general damages, land vehicles
liability, air vehicles liability, sea vehicles liability,
general liability, credit, fidelity, financial loss and legal
protection.
Amendments to the Articles of
Association in 2010
There were no amendments to the Articles of Association in 2010.
Continually strengthening its position among
Turkey’s leading insurers, Yapı Kredi Sigorta is widely
considered to be the driving force of the country’s
insurance sector due to its market foresight, its
courage in taking necessary actions and its innovative
approach.
Shareholding Structure and Capital
Information about the Company’s shareholding structure, the changes made to its capital and shareholding structure
during the period, and the titles and shares of real persons and legal entities that own a qualified share is presented below.
The Company’s shareholding structure, as of December 31, 2010 is as follows:
Partners
Share (%)
Share Amount (TRY)
Yapı ve Kredi Bankası A.Ş.
53.10
42,480,000
Yapı Kredi Faktoring A.Ş.
7.95
6,358,787
Yapı Kredi Yatırım A.Ş.
5.26
4,209,333
Publicly Traded
Total
33.69
26,951,880
100.00
80,000,000
7
8
Introduction
Chairman’s Message
Yapı Kredi Sigorta’s primary objectives in 2011 are to increase its contribution to
the national economy by accelerating the Company’s profitability and market share
growth, and to maintain its leading and pioneering market position while adhering to
high standards of insurance industry ethical conduct.
In 2010, the sharp recession resulting from the
global financial crisis subsided and recovery
picked up in a number of countries. Compared to
developed economies, Turkey has ranked among
the countries to rebound most rapidly from the
crisis with appropriate fiscal and monetary policies:
Turkey’s 5.5% economic growth rate for the third
quarter of 2010 was the second highest in Europe.
In 2009, during the depths of the crisis, the Turkish
economy contracted by 4.7%. The following year,
the Turkish economy returned to pre-crisis levels
thanks to strong GDP growth, low inflation and
stable interest rates. Given that the real economy
has yet to reach pre-crisis levels in many developed
countries, they will have to continue the recovery
process in 2011. As the global economy is reshaped
by numerous dynamics and influences today, Turkey
strides confidently toward becoming one of the most
prominent players of the changing world economic
order. We expect the country to continue its growth
trend in 2011, although at a slower pace.
In this economic environment, Turkey benefits
from an insurance sector, which increases its
contribution to the country’s economy on a yearly
basis. The country’s steadily growing insurance
sector assumes risks under guarantee to ensure
that economic activities continue uninterrupted,
and provides funds for the national economy via
capital accumulation. In the first half of 2010, the
Turkish insurance sector’s share in the country’s
total financial assets stood at 2.7%. Although this
share was somewhat below expectations, Turkish
insurance companies provided collateral sources of
TRY 24.9 trillion in 2009, a clear indicator that the
sector is vital to the national economy.
An analysis of the sector’s growth performance
shows favorable results. Although these positive
results have yet to translate into profitability, we
are still prompted to make an upward revision of
our expectations of the insurance sector, which
outperformed the overall Turkish economy in 2010.
Turkish premium volume is still low considering
the country’s position as one of the world’s top
20 economies; however, this figure is predicted to
continue to rise in 2011.
As one of the leading companies in the Turkish nonlife insurance sector, Yapı Kredi Sigorta reported
total premium production of TRY 758 million with
6.3% market share in 2010. Yapı Kredi Sigorta
grew by 24.7% in nominal terms over the year, as
the non-life insurance sector grew by 12.6%; the
Company also maintained its leadership position in
the health branch with premium production of TRY
337 million and 19.8% market share. The year 2010
was a period of breakthroughs with infrastructure
related and organizational projects, as well as
innovations on the service side.
For the Turkish insurance sector, 2010 saw price
competition create significant pressure on operating
profits. Due to the considerable drop in inflation,
which had remained at a high level for years, and
the fall in interest rates to single digits, income
from financial investments no longer had a large
positive impact on the financial statements. As
the sector develops, it seems inevitable that
insurance companies which are unable to offset
their underwriting loss with fiscal revenue, price
competition will be replaced by service competition.
We expect the Turkish insurance sector, which now
has a more robust foundation thanks to new legal
regulations, to deliver profitable growth performance
in all branches in 2011 thanks to appropriate pricing
policies and the forecasted level of GDP growth.
Yapı Kredi Sigorta’s primary objectives in 2011 are
to increase its contribution to the national economy
by accelerating the Company’s profitability and
market share growth, and to maintain its leading
and pioneering market position while adhering
to high standards of insurance industry ethical
conduct.
On behalf of the Board of Directors, I would like
to take this opportunity to express my gratitude
and extend my regards to Koç Finansal Hizmetler
Group Companies, our business partners, for their
unlimited support, and our employees for their
diligent efforts.
Tayfun Bayazıt
Chairman of the Board of Directors
9
General Manager’s Message
Yapı Kredi Sigorta met its challenging performance targets in 2010, as it
began to reap the benefits of restructuring efforts that included significant
improvements in software infrastructure and business processes.
As global economic growth geared up in 2010,
Turkey achieved a stronger macroeconomic
balance, and a growth trend above that of the
pre-crisis period. In addition, buoyancy in the
financial markets impacted the Turkish insurance
sector by eliminating the contractionary effect of
the economic crisis and allowing growth in the
sector to resume. The insurance sector, which had
contracted in 2009, grew by 6.8% in real terms in
2010, taking into account the annual inflation rate
of 6.4%. The Company’s field of operation, non-life
branches, which constitute 84.6% of the insurance
sector, grew by 5.8% in real terms to TRY 11.9
billion in premium production.
Irrational price competition, which became even
more pronounced during the economic crisis, was
the main stumbling block for the Turkish insurance
sector in 2010. As sector companies opted to not
expand the overall current insurance market, but
instead to increase their share within it, they started
to adopt pricing policies based of those of their
rivals. As a result, many companies were unable to
post underwriting profits.
It is obvious that investment income, which is used
in periods of inflation to offset losses incurred by
insurance activities, can no longer play such a role
in financial results since interest rates remain in
single digits. In the future, as long as economic
stability is maintained, the key to profitable growth
in the insurance sector will be profit yielded by
underwriting results.
Despite the difficult competitive environment,
the Company’s operational performance in 2010
clearly indicates that the “Winds of Change”
initiative implemented last year continue to blow
in the direction of success. Yapı Kredi Sigorta
strengthened its position in the sector thanks to
the Direct Sales Team, an expansion of nearly 30%
in the agency network and the strong sales and
service structure composed of Yapı Kredi Bank
branches.
The objective of the recently adopted commission
practice is to achieve profitable growth via the
agency sales channel. The Company has upgraded
its products according to market demand and
competition, and implemented business process
improvement projects to boost productivity.
In 2010, the Company’s premium production grew
by 24.7% in nominal terms, well above the rate of
growth in the sector, to TRY 758 million. In face of
the uncertainty reigning in the sector, Yapı Kredi
Sigorta generated TRY 42.5 million in net profit,
thanks to its growth and price policies as well as
the Company’s productivity enhancing measures. In
non-life branches, Yapı Kredi Sigorta ranks among
the top five players, with 6.3% market share; and
in the health branch, the Company has maintained
its leadership position with TRY 337 million in
premium production and 19.8% market share. As
of end-2010, Yapı Kredi Sigorta continued to offer
the most extensive and first-rate health insurance
service with uncompromised quality, through its
network of contracted firms comprising about 2,200
pharmacies, hospitals and doctors’ offices.
In 2010, the Company also reaped the benefits
of restructuring efforts including significant
improvements in the software infrastructure and
business processes, and achieved its challenging
performance targets. The launch of the New
Elementary Insurance software enabled more rapid
delivery of higher quality services to customers, and
resulted in a strong system infrastructure that can
be easily modified.
Yapı Kredi Sigorta completed efforts to allow bank
branches to issue motor own damage policies
through the new infrastructure, which contributed
to productivity improvements in this sales channel.
The Company plans to expand the bank sales
channel product offering in 2011.
In 2010, new insurance sector regulations were
introduced to strengthen the financial structure of
companies. These new regulations aimed to provide
the sector with a strong foundation to ensure that
it completely meets its policyholder liabilities,
and avoids damages incurred in the event that
risks materialize. The objective of revisions to the
Regulation on Technical Reserves is to use capital
increases to strengthen those companies under the
risk of allocating insufficient reserves. Additionally,
the Association of the Insurance and Reinsurance
Companies of Turkey (TSRŞB) has initiated ad
campaigns across the nation to raise the awareness
about the importance of insurance.
As the Turkish insurance sector is forecast to grow
in 2011 even more than in the reporting year, we at
Yapı Kredi Sigorta have set our targets as delivering
the highest quality services to policyholders and
agencies while abiding by high standards of
insurance industry ethical conduct, extending our
service network, achieving profitable growth across
all channels with appropriate pricing policies, and
boosting employee satisfaction.
I would like to express my gratitude and extend my
regards to our esteemed customers and business
partners for their trust and support to the Company
during the insurance sector’s challenging year 2010,
and to our employees who are the real drivers of our
success.
Associate Professor S. Giray Velioğlu
General Manager
10 Introduction
Insurance Sector in the World
According to statistics published by Aon Benfield, out of a total of USD 252
billion of damage incurred in 2010 worldwide, some USD 38 billion were
insured assets.
The International Chamber of Commerce’s World
Economic Survey indicates that global economic
growth has picked up in the wake of the worldwide
financial crisis. The survey is composed of questions
on the general economic situation and economic
indicators of various countries, and responded by
1,103 experts from 116 nations. According to the
results of the survey, there is a slowdown in economic
growth in some regions including North America and
Asia, in contrast to a significant acceleration in others.
According to the real growth figures in a study
in Sigma, a periodical on the global insurance
sector published by Swiss Re, the insurance sector
closed the year 2009 with a 1.1% contraction from
the previous year. This figure suggests that the
repercussions of the global crisis started to subside
in 2009, given the 3.6% contraction experienced in
2008.
In 66% of the nations analyzed in the Sigma study,
the rate of increase in premium production is above
the GDP growth rate; however, the drop in premium
production in developed nations has translated into
an overall global contraction. Nevertheless, due to
the dynamism in emerging markets and the recovery
in lending and stock markets, the year 2009 brought
about an increase in investment income and overall
profitability. An analysis of premium production
across the world reveals that the US ranked first,
Japan second, the United Kingdom third, and that
Turkey dropped two positions to 38th place right after
Argentina.
According to the study featured in the report’s
2/2010 issue, the world economic situation is more
promising than the previous year and the slow growth
experienced in the major global economies in 2010
will pick up speed in the coming year. During the
financial crisis, the insurance sector continued to
assume risks and make claims payments. Unlike the
banking sector, it continued its operations without any
government support or guarantees, barring a handful
of exceptions. The study forecast that during 2010 and
2011, as Asian nations continue to grow rapidly, the
United States, China and many emerging economies
would show a strong growth trend. In Western Europe,
and Central and Eastern Europe, whose economies
depend on exports to Western Europe, however,
economic recovery is expected to take longer due to
the lingering recession.
From a climatic perspective, 2010 was the hottest year
ever on record, and the 33rd year in a row in which
average weather temperatures increased, according
to data dating back to 1880. Despite the rising
temperatures, however, the number of tropical storms
has stayed below average for the last five years, and
they have inflicted less damage than in previous
periods.
In terms of insured major risks, total loss incurred
in 2010 was much larger than in the previous three
years. The key events which marked this period were
the earthquake in Chile and the flooding that hit
Pakistan and China.
According to statistics published by Aon Benfield, out
of a total of USD 252 billion of damage incurred in
2010 worldwide, some USD 38 billion were insured
assets.
The number of events of a catastrophic scale
reached around 300. Nevertheless, an analysis on an
individual basis reveals that the only event in
2010 in which total loss to insured assets surpassed
USD 5 billion was the Chilean earthquake.
Total damage incurred by the largest two catastrophes
of 2010 stands at about USD 60 billion. However,
these events occurred in areas with low insurance
penetration, and claims payments totaled
approximately USD 9 billion. Statistically, it is possible
for similar catastrophes to happen in areas with high
insurance penetration. In such a case, the claims
payment for losses of a similar scale is estimated at
USD 20 billion.
There were changes in legal and regulatory
requirements and practices in Europe in 2010.
Solvency II, meant to increase the protection of
policyholders, has received the support of FERMA
(Federation of European Risk Management
Associations). However, federation members
expressed concerns to the European Commission
about the excessive level of capital requirements
in CEIOPS (Committee of European Insurance
and Occupational Pensions Supervisors)
recommendations under Solvency II, for middle and
large-scale collaterals. The chairman of FERMA stated
that to meet such capital requirements, premiums
would have to rise 20% in non-health branches, which
would have an adverse effect on the investment
capacity and competitiveness of FERMA members.
Other points made include that the insurance sector
should not be unfairly penalized due to the financial
failings of the banking sector, and that capital
increases would not provide a guarantee against
catastrophes, yet would have an adverse effect on
premium costs and product presence.
The European Commission has approved the new
Block Exemption Regulation. The Commission
had previously decided that the Block Exemption
Regulation needed to be upgraded in terms of
common calculations, tables, studies and insurance
pools. The new Block Exemption Regulation brings
more stringent rules in issues that include additional
requirements about the declaration of common
calculations and the calculation of insurance pools.
The Regulation also takes into account other matters
such as a wider definition of risk as demanded by the
European insurance and reinsurance federation CEA
and abolition of the ban on double membership in
insurance pools.
In 2010, in order to prevent irregularity and forgery
in insurance, EHFCN (European Healthcare Fraud &
Corruption Network) and the Centre for Counter Fraud
Studies of Portsmouth University in UK published a
study showing that 5.59% of global annual health
indemnity payments are caused by malpractices or
fraud. As a result of analyses in the UK, US, New
Zealand, France, Belgium, the Netherlands and other
developed countries, the experts discovered that fraud
in health services expenditures amounts to EUR 180
billion (USD 260 billion).
In 2010, acquisitions continued in the global market,
and Resolution Ltd. declared its purchase of Bupa’s
health portfolio for USD 164 million. Aviva reached
an agreement with PT Asuransi Wahana Tata and
acquired a 60% stake in PT Asuransi Winterthur
Life Indonesia (WLI). China’s third largest insurance
company, Ping An Insurance Group Company
(PAIGC), merged with Newbridge Asia. In addition,
ICBC declared that an agreement was reached on
the transfer of a significant stake of the Sino-French
joint venture AXA-Minmetals Assurance Company.
BNP Paribas established a joint venture named BNP
Paribas Assurance TCB Life Insurance Co. with Taiwan
Cooperative Bank in order to enter the Taiwanese
market. Great Eastern Holdings acquired Malaysia’s
Tahan Insurance Company for USD 4.7 million, while
ACE Group declared that the Malaysian Ministry of
Finance approved of its request to purchase Jerneh
Insurance Berhad. ACE also reached an agreement
to acquire New York Life’s life insurance business
in Hong Kong and Korea for USD 425 million.
Allianz purchased 14% of the shares of Brazil’s
Allianz Seguros from Ita’u Unibanco, obtaining the
majority of shares and the control of the company.
Zurich Insurance Co. Ltd. declared its acquisition of
Lebanon’s Compagnie Libanaise D’Assurances (CLA),
while the Canadian company Sun Life Financial Inc.
unveiled its plans to sell its reinsurance business to
Warren Buffett’s Berkshire Hathaway.
A report by Ernst & Young L.L.P. showed that the
takaful insurance market grew 30% during the year
to reach USD 8.9 billion in premium production.
According to Moody’s Investors Service, the increase
in products in line with the religion of Islam could
generate a fivefold rise in the assets of Islamic
financial corporations. Growth in the takaful market
is particularly expected in certain countries that
include Malaysia, Bahrain, Kuwait, Yemen, Qatar,
Saudi Arabia and United Arab Emirates. However,
a Standard & Poor’s report pointed to the intense
competition in the takaful market, which is affected
by the dynamics of the global investment markets.
Additionally, the absence of risk-related regulation
and supervision in Gulf countries is underscored as a
source of concern about the nascent market.
11
In emerging countries in 2009, insurance premium
volume grew by 3.5%, outpacing that in industrialized
nations and putting a brake on the fall in worldwide
premium production. Although the growth rate is
at the lowest level of the last 35 years, the share
of emerging market nations in global premium
production rose to 13%. In Asia, on the other hand,
the growth in Chinese premium production reached
13% in health branches and 19% in non-health
branches in 2009.
The World Economic Forum report “Global Risks
2010” underlined the interconnection between
different risks and the need for a radical overhaul
of the risk management approach. Economic risks,
insufficient infrastructure investment and chronic
diseases were mentioned as the risks with the greatest
negative impact.
12 Introduction
Insurance Sector in Turkey
Although the Turkish insurance sector is well below the European average in terms
of the penetration rate and per capita premium production, its approximately 700%
growth between 2000-2010 is nothing sort of remarkable.
In 2010, premium production in the Turkish insurance
sector grew by 13.6% over the previous year, to
TRY 14.1 billion. The sector shook off the effects of
the economic crisis and bounced back to its pre-crisis
volume, generating TRY 11.9 billion of premium
production in non-life and TRY 2.2 billion in the life
branch.
Compared with a year earlier, growth in 2010 reached
19.7% in life insurance, and 12.6% in non-life
branches. Taking into account inflation for the year
(CPI: 6.4%), the growth in real terms of the non-life
insurance sector stood at 5.8% in 2010.
Premium production in motor own damage, one of the
largest branches in the non-life sector rose by 16.7%
in 2010, to TRY 3.1 billion, while premium production
in the land vehicles liability branch increased by
13.1%, to TRY 2.5 billion. The health branch expanded
by 20.5%, to TRY 1.7 billion in premium production.
A breakdown of the sales channels of premium
production in the Turkish non-life insurance sector in
2010 reveals that the agencies channel accounted for
a 67.8% share, the bank channel 13.3%, the brokers
channel 10.8% and the direct sales channel 8.1%.
The largest increase in premium production was
observed in the bank channel. In addition, alternative
distribution channels, which facilitate access to
policyholders, also started to gain in importance.
Although the Turkish insurance sector is well below
the European average in terms of the penetration rate
and per capita premium production, its approximately
700% growth between 2000-2010 is nothing short of
remarkable. This figure is an indication of the high
potential for insurance operations in Turkey.
In recent years in the country, the insurance sector
made significant progress with government support;
however, price competition continued to have a very
adverse effect on the sector’s profitability level in
2010.
As a result, the Undersecretariat of Treasury
has taken a variety of measures to ensure the
healthy functioning of the sector, and to uphold
fair competition. The Communiqué on Adequate
Protection against Catastrophic Risks and Measures
against Factors that Disturb the Market and Adversely
Affect Companies’ Financial Structures, dated
January 7, 2010 and numbered 01350, clearly defined
the framework of activities toward branches which
pose a risk for the sector as a whole. These measures
by the Undersecretariat of Treasury try to encourage
the insurance sector to become more trustworthy in
the eyes of policyholders.
In 2010, the Turkish insurance sector experienced a
dynamic period and made progress on many fronts.
One of the most positive developments in the sector
was the Compulsory Financial Liability Insurance
against Medical Malpractice, which came into force on
July 30, 2010. This new mandatory scheme provides
insurance against risks that might occur during
medical practice, and as a result brings yet another
important risk under guarantee.
A group of insurance company representatives
including Yapı Kredi Sigorta officers continue their
efforts to align insurance legislation with the Solvency
II Directive numbered 2009/138/EC and relevant
guidelines. In addition, the Capital Adequacy project
that aims to combine 13 directives issued by the
European Union under a single framework also
continues.
13
Another key development for the sector in 2010 was
the work on Regulation on Insurance Agencies drafted
by Undersecretariat of Treasury in order to establish a
framework for the operations of agencies, which make
up the largest sales channel in the Turkish insurance
sector.
One of the most significant problems facing the
Turkish insurance sector is the low penetration rate.
To improve this situation, TSRŞB continued its ad and
promotion campaign in the visual and written media,
which started in 2009, to raise insurance awareness
in Turkey
As of year-end 2010, 57 insurance companies and
one reinsurance company are active in the Turkish
insurance sector. In 2010, Birlik Sigorta Hayat A.Ş.
changed its name to Halk Hayat ve Emeklilik A.Ş.
in December, Axa Hayat Sigorta A.Ş. to AXA Hayat
ve Emeklilik A.Ş. in June, and Ergo İsviçre Sigorta
to Ergo Sigorta in May. In addition, New Life Yaşam
Sigorta A.Ş. unveiled its decision to turn over its
insurance portfolio to another insurance company as
of November.
In 2011, forecasts indicate that the repercussions
of the economic crisis will subside further, product
and service diversification will replace the price
competition strategy, new products and product
revisions will provide insurance to a larger number
of risks, alternative distribution channels will allow
access to more diverse customer segments, and the
sector’s share in GDP will increase in parallel with
overall economic growth and the expansion of a
number of other related sectors.
According to 2009 data, the number of insurance
companies which are more than 50% foreign-held rose
to 35; the share of foreign capital in the sector’s total
paid-in capital reached about 55%. Turkey’s young
population and low insurance penetration rate make
the country’s sector an attractive market. Due to its
great potential, the sector continued to attract the
attention of foreign investors in 2010.
14 Introduction
Overview of Yapı Kredi Sigorta in 2010
Yapı Kredi Sigorta operates and provides services with a staff of 905 employees.
A comparison of the 2010 year-end figures with those of 2009 shows that the
number of Yapı Kredi Sigorta agencies increased to 993 from 761, contracted
health institutions rose to 2,198 from 2,095, and contracted service stations
increased to 764 from 693.
Yapı Kredi Sigorta operates and provides services with a staff of 905 employees. A comparison of the 2010 year-end figures with those of
2009 shows that the number of Yapı Kredi Sigorta agencies increased to 993 from 761, contracted health institutions rose to 2,198 from
2,095 and contracted service stations increased to 764 from 693. In 2010, 866 branches of Yapı Kredi Bank also provided services on behalf
of the Company. In non-life branches, Yapı Kredi Sigorta generated approximately TRY 758 million in premium production and secured a 6.3%
share of the Turkish insurance market, in which 57 companies are currently operating.
The table below details the regional distribution of employees, agents, and contracted firms.
Regional Offices
Number of
Employees
Number of Agencies
Number of Contracted
(Excluding Bank Institutions in the Health
Branches)
Branch *
Number of
Contracted
Service Stations
Southern Regional Office
32
96
143
57
Central Anatolian Regional Office
85
152
275
109
Marmara 1 Regional Office
51
49
165
79
Aegean Regional Office
74
145
315
130
Mediterranean Regional Office
Central Office
Total
32
59
121
58
631
492
1,179
331
905
993
2,198
764
* Hospitals, Medical Diagnosis Centers, Pharmacies, Contracted Physicians, and the like.
15
Developments in the Company
Yapı Kredi Sigorta achieved all of its main objectives, realized a
growth rate nearly double that of the non-life sector average, and
reached TRY 758 million in premium production in 2010.
As a partnership between Koç Group and UniCredit,
Yapı Kredi Sigorta operates under the umbrella of Koç
Finansal Hizmetler. An important player in the Turkish
insurance sector, in which 57 companies currently
operate, the Company has a 6.3% market share. In
2010, Yapı Kredi Sigorta provided high-quality and
widely accessible services to its policyholders with its
strong sales network composed of 993 professional
agencies, 866 Yapı Kredi Bank branches, 357 direct
sales employees, in addition to its 548 administrative
employees, 2,198 contracted institutions, and 764
contracted service stations.
Yapı Kredi Sigorta achieved all of its main objectives,
realized a growth rate nearly double that of the
non-life sector average, and reached TRY 758
million in premium production in 2010. In the health
branch, the Company maintained its well-established
leadership position and delivered the highest quality
services through its network of contracted firms
comprising 313 hospitals, 952 pharmacies and 367
doctor’s offices.
During the economic crisis, Yapı Kredi Sigorta focused
on its internal business processes and developed a
number of initiatives to boost profitability and sustain
growth over the long term. These initiatives were
successfully implemented in 2010; as a result, the
Company climbed up the sector rankings in terms of
premium production and posted TRY 46.5 million in
underwriting profit, one of the strongest performances
in the sector. The underwriting profit ratio rose to 6.1%
in 2010, up from (3.7)% in the prior year, while the
loss ratio fell to 71.6%, down from 75.2% in 2009.
The system infrastructure projects planned in 2009
in order to provide more rapid and higher quality
services, and to minimize operating costs in the nonhealth branches, were implemented in 2010. Closely
monitoring developments in the sector, the Company
started providing services to its policyholders with
its new software system in November 2010. The
new system will allow Yapı Kredi Sigorta to maintain
its competitive edge and extend its market leading
position in the health branch to non-health branches.
Another important agenda item for the Company
in 2010 was the bancassurance project carried
out jointly with Yapı Kredi Bank to enable the issue
of home and motor own damage policies at bank
branches. The infrastructure works were completed
in 2010 and the first phase of the project launch in
2011; YKB branches will soon start to issue motor
own damage policies.
In 2010, as a result of the growth in the real economy
and the expansion in credit market as well as efforts
to increase the effectiveness of the bank sales
channel, premium production through the bank
channel increased by 31.5% over the previous year.
In order to increase operational efficiency and
customer satisfaction in the agencies sales channel,
the Company restructured agency support teams and
launched a comprehensive, effective and extensive
award and commission program for agencies. The
“Come On and Choose Your Colors” campaign,
developed in 2010 and planned for launch in early
2011, will ensure the sustainability of this effort.
Business process improvement initiatives to
strengthen long term productivity, increase financial
returns and raise customer satisfaction continued in
2010; the Company also successfully implemented
projects geared toward the bank channel, agencies
channel, operational processes and the call center.
Yapı Kredi Sigorta started to reap the benefits of
these projects in 2010 as productivity and operational
efficiency surged. The Company aims to achieve
further improvements in long term productivity and
efficiency in the coming period with its ongoing
initiatives.
Yapı Kredi Sigorta has organized a number of
campaigns to expand its policyholder portfolio and to
make a difference for its existing policyholders. To this
end, the “Bundan İyisi Can Sağlığı” (Health for Life)
and “Nazar Boncuğu” (Evil Eye Charm) marketing
campaigns resulted in a larger customer base for
the Company’s individual health products. In the
non-health branches, promotional campaigns around
the products “Kasko” (Motor Own Damage) and
“Yuvam” (My Home) boosted the market penetration
of these products and generated strong results for the
Company.
In the face of price competition which had an adverse
effect on the profitability of the Turkish insurance
sector, Yapı Kredi Sigorta adhered to its actuarial
pricing policy and as a result met its profitability
targets to a large extent. The Company achieved its
production objective and reached its underwriting
profit goal thanks to marketing campaigns aimed
at production channels and customers, a strategic
focus on customer satisfaction and productivity
enhancement, and innovative improvements to its
systems infrastructure.
In 2010, Yapı Kredi Sigorta once again collaborated
with a panel comprising the world’s major reinsurers
including Everest Re, Mapfre Re and Scor, and led by
Munich Re, one of the largest reinsurers worldwide. In
addition, the Company also entered into an excess of
loss reinsurance agreement, covering natural disasters
and earthquakes, with some of the world’s most
prominent reinsurance companies, including Lloyd’s.
In 2011, Yapı Kredi Sigorta plans to take appropriate
actions as required by the dynamism of the sector,
to increase customer satisfaction and profit-centered
operations through its innovative approach, and
strengthen its position among the top five companies
in the sector while further improving its profitability.
16 Introduction
Social Responsibility and Support for the Arts
Since its beginnings in 1997, the Yapı Kredi Sigorta Afife Theatre Awards have evolved
from the recognition of individual artistic accomplishment to become an expression of
esteem for the arts and artists.
Yapı Kredi Sigorta Afife Theater Awards
As part of its efforts to support culture and the arts,
Yapı Kredi Sigorta launched the Yapı Kredi Sigorta
Afife Theatre Awards in 1996 under the artistic
guidance of renowned Turkish actor Haldun Dormen.
The awards program aims to foster interest in the
theatrical arts and to support theatrical artists. Named
after Afife Jale, the first Muslim Turkish woman
to appear on stage as a professional actress, the
program’s first awards were given in April 1997. Since
then, the program has grown and further developed,
making the Yapı Kredi Sigorta Afife Theatre Awards
a source of recognition that is held in high esteem
among the Turkish theatrical community. The awards
today are hallmark of respect for the arts as a whole
and are far more than simply recognition of personal
success.
The 14th annual Yapı Kredi Sigorta Awards ceremony
was held on April 26, 2010. Awards were given to
candidates in 14 categories and a number of other
awards were presented, including: the Muhsin Ertuğrul
Special Award went to Gencay Gürün; the Nisa Serezli
Aşkıner Special Award to Toron Karacaoğlu; the Cevat
Fehmi Başkut Special Award to Cüneyt Çalışkur;
“Next Generation in Theater” Special Award to Onur
Özaydın and Ahmet Varlı for their TiyatroperestHayvanat Bahçesi Masalı; and the Yapı Kredi Sigorta
Special Award to Yılmaz Öğüt. Because of the
spectacular annual awards ceremony, the meticulous
professionalism involved in the selection process, and
its support to theatrical arts in Turkey, the Yapı Kredi
Sigorta Afife Theatre Awards are widely considered
to be one of the most prestigious artistic awards in
Turkey.
Voluntary Work / Hand in Hand with
Darüşşafaka
In early 2009, Yapı Kredi Sigorta initiated efforts to
establish a group of employee volunteers within the
Company, with the help and collaboration of Yapı
Kredi Bank. The objective of the project “Yapı Kredi
Sigorta Volunteers Hand in Hand with Darüşşafaka”
was to help the orphans under the care of
Darüşşafaka Educational Institutions. These orphans,
around 80% of whom come from the remote corners
of Anatolia, are given opportunities to participate in
Istanbul’s social life which helps them to socialize
and enhances their personal development. To this
end, in 2010, Yapı Kredi Sigorta organized: a picnic in
Yapı Kredi Bağlarbaşı Grove; visits to the Rahmi Koç
Museum, Sadberk Hanım Museum, Miniatürk and
Turkuazoo; “ Seashore Cleaning Training” with the
cooperation of TURMEPA. In addition, the Company
provided support and advisory to the “Genç Başarı
Kulübü” (Youth Success Club) project in the school.
Yapı Kredi Sigorta Volunteers plan to hold many more
such events in 2011 with the children of Darüşşafaka,
with whom they had the chance to attend a play in a
local theater in 2010.
17
Technical Results
Yapı Kredi Sigorta posted underwriting profit of TRY 46,548
thousand in 2010 and an underwriting profit ratio of 6%.
In 2010, Yapı Kredi Sigorta ranked fifth in the nonlife insurance sector with premium production of
TRY 758,182 thousand, and retained its leadership
position in the health branch.
Technical Ratios by Year
2006
2007
2008
2009
2010
Premium (TRY Thousand)
585,459
628,143
631,536
607,977
758,182
Claims (TRY Thousand)
372,652
399,120
428,866
449,331
497,267
71
66
67
75
72
11,645
19,528
47,898
(22,696)
46,548
2
3
8
(4)
6
In an intensely competitive environment in 2010, Yapı
Kredi Sigorta’s claims increased to TRY 497,267
thousand, and its loss ratio decreased by 3
percentage points from the previous year, to 72%.
Loss Ratio (%)
Yapı Kredi Sigorta posted underwriting profit of
TRY 46,548 thousand in 2010 and an underwriting
profit ratio of 6%.
Total Premium Revenue (TRY Thousand)
Underwriting Profit (TRY Thousand)
Underwriting Profit Ratio (%)
2010
2009
Underwriting Profit (TRY Thousand)
758,182
2009
607,977
2008
631,536
2008
2007
628,143
2007
2006
585,459
2006
Loss Ratio (%)
2010
72
2009
75
2008
67
2007
66
2006
71
46,548
2010
(22,696)
47,898
19,528
11,645
18 Introduction
Technical Results
Developments in Premium Production and
Portfolio Shares Based on the New Branch
Structure
An examination of the increases in premium
production in 2010 clearly shows that in those
branches with a share in the portfolio above 1%, the
largest increases were recorded in general liability
(93%) and motor own damage (48%).
Under the new branch structure, the health branch
generated TRY 337,430 thousand in premiums and
its share in the portfolio reached 45%. Despite strong
competition in the health branch putting pressure on
the sector’s profitability, Yapı Kredi Sigorta maintained
its market leading position and posted the second
highest profit figure in this branch. An overview of the
portfolio distribution shows that the health branch is
followed by the motor own damage branch with a 19%
share, and by the fire and catastrophe branch with a
14% share.
The Company’s 2010 premium production, loss ratio
and underwriting profit data under the new branch
structure are shown below.
Premium Production and Portfolio Shares by Branches
Premium Production 2010
Branch
(TRY thousand)
Change (%)
Share in the
Portfolio (%)
16,346
24.2
2.2
Health
337,430
18.6
44.5
Motor Own Damage
147,683
48.1
19.5
965
(26.9)
0.1
Sea Vehicles
2,573
(49.6)
0.3
Marine
11,105
14.7
1.5
13.7
Casualty
Air Vehicles
103,562
14.0
General Damages
55,243
27.3
7.3
61,903
26.4
8.2
0.7
0.1
93.1
2.5
1,685
108.2
0.2
758,182
24.7
100.0
Legal Protection
Total
Loss Ratio by Branches (%)
Other*
17
34
Casualty
Distribution of Total Premium Production by
Branches (TRY thousand)
408
19,279
General Liability
87
General Liability
81
General Damages
106
16
87
Motor Own damage
81
Health
Health 45%
Motor Own Damage 19%
Fire and Catastrophe 14%
Land Vehicles Liability 8%
General Damages 7%
General Liability 3%
Casualty 2%
Other 2%
Underwriting Profit by Branches (TRY thousand)
6.751
Other*
10.192
Casualty
4.689
General Liability
5.667
General Damages
(16.753)
20.343
Motor Own damage
(5.212)
Health
* Air Vehicles, Air Vehicles Liability, Marine, Sea Vehicles, Legal Protection.
20.871
19
CASUALTY INSURANCE
HEALTH INSURANCE
MOTOR OWN DAMAGE INSURANCE
Premium production in the casualty branch rose by
24% over the previous year, to TRY 16,346 thousand.
Of this total amount, TRY 2,445 thousand was
transferred to reinsurers while TRY 13,901 thousand
was retained by the Company, resulting in a retention
ratio of 85%.
Yapı Kredi Sigorta’s health insurance premium
production in 2010 increased by 19% over the
previous year to TRY 337,430 thousand; of this
amount, TRY 202 million originated from individual
policies and with TRY 135 million from corporate
policies. The health branch’s share in the portfolio
for 2010 fell by two percentage points to 45%. In the
individual health branch, the number of policyholders
increased by 13%, to 167 thousand as of year-end
2010, up from 148 thousand in the prior year. The
corporate health branch, which counted 100 thousand
policyholders in 2009, experienced a 10% decrease in
2010, ending the year with 90 thousand policyholders.
Compared to the previous year, the Company realized
a 48% increase in premium production in 2010, to
TRY 147,683 thousand. Of this total, TRY 971
thousand was transferred to reinsurers and the
retention amount was TRY 146,712 thousand,
resulting in a retention ratio of 99%.
Total compensation amounted to TRY 6,389
thousand. Of this total, TRY 2,592 thousand was
made as payments with TRY 3,797 thousand in
outstanding loss claims. The loss ratio for the year
2010 stood at 34%.
The casualty branch ended the year with an
underwriting profit of TRY 10,192 thousand and an
underwriting profit ratio of 62%.
Casualty Branch Premium Revenue
(TRY thousand)
Health Branch Premium Revenue
(TRY thousand)
16,346
2010
2009
13,165
11,729
2008
2007
9,637
2009
10,449
2008
4,860
2008
15
2008
2009
2010
99,728
114,024
2007
133,187
2006
134,427
Motor Own Damage Branch Underwriting
Profit (TRY thousand)
20,871
2010
(17,646)
29,153
19,776
10,999
2010
(5,212)
2009
(28,298)
2008
(1,729)
2007
2006
3,168
(10,743)
Motor Own Damage Branch Loss Ratio (%)
81
2009
2008
7
229,211
Health Branch Loss Ratio (%)
34
2009
288,505
2006
Casualty Branch Loss Ratio (%)
2010
2008
2007
4,625
2006
2009
2008
9,595
2007
284,572
267,046
147,683
2010
2009
Health Branch Underwriting Profit
(TRY thousand)
10,192
2010
337,430
2006
Casualty Branch Underwriting Profit
(TRY thousand)
The motor own damage insurance branch ended 2010
with TRY 5,212 thousand of underwriting loss and an
underwriting loss ratio of 4%.
Motor Own Damage Branch Premium
Revenue (TRY thousand)
2010
2007
11,121
2006
In the health insurance branch, total compensation
amounted to TRY 257,519 thousand, of which TRY
253,928 thousand was made as payments with TRY
3,592 thousand in outstanding loss claims. The year
2010 ended with a loss ratio of 81%.
thousand, of which TRY 113,111 thousand was made
as payments, with TRY 30,102 thousand in outstanding
loss claims. The loss ratio for 2010 was 87%.
90
79
2010
87
2009
87
2008
2007
11
2007
76
2007
2006
11
2006
77
2006
73
75
95
20 Introduction
Technical Results
AIR VEHICLES INSURANCE
SEA VEHICLES INSURANCE
MARINE INSURANCE
In 2010, premium production decreased by 27% over
the previous year to TRY 965 thousand. This total
amount was transferred to reinsurers.
Compared to the previous year, premium production
decreased by 50%, to TRY 2,573 thousand, in 2010.
Of this total amount, TRY 2,292 thousand was
transferred to reinsurers and TRY 282 thousand was
retained by the Company, resulting in a retention ratio
of 11%.
Compared to the previous year, premium production
increased by 15%, to TRY 11,105 thousand, in 2010.
Of this total, TRY 4,647 thousand was transferred to
reinsurers and TRY 6,458 thousand was retained by
the Company, resulting in a retention ratio of 58%.
Total compensation amounted to TRY 44 thousand.
Of this, TRY 34 thousand was made in payments with
TRY 10 thousand in outstanding loss claims. The loss
ratio for the year 2010 stood at (48)%.
The branch closed the year with TRY 742 thousand
underwriting profit and an underwriting profit ratio of
77%.
Total compensation reached TRY 3,573 thousand. Of
this, TRY 1,768 thousand was made in payments with
TRY 1,805 thousand in outstanding loss claims. In
2010, the loss ratio stood at 22%.
The sea vehicles insurance branch ended 2010 with
TRY 187 thousand in underwriting profit, resulting in
an underwriting profit ratio of 7%.
Air Vehicles Branch Premium Revenue
(TRY thousand)
965
2010
896
2008
104
2007
860
2006
2006
Air Vehicles Branch Underwriting Profit
(TRY thousand)
2009
(742)
2008
2007
24
2007
(1)
2010
10
2007
2006
1,342
(1)
27
252
2007
166
2006
1,450
3,170
922
2,039
Marine Branch Loss Ratio (%)
22
2010
56
(29)
42
2009
78
18
2009
2008
(51)
41
4,170
2010
326
2008
2006
12,118
Marine Branch Underwriting Profit
(TRY thousand)
187
2007
10,968
2006
2009
99
2008
12,336
2007
Sea Vehicles Branch Loss Ratio (%)
(48)
2009
1,570
2006
Air Vehicles Branch Loss Ratio (%)
9,683
2009
2008
2009
21
2010
2,200
2010
2008
2006
5,103
Sea Vehicles Branch Underwriting Profit
(TRY thousand)
742
2010
11,105
2010
2009
2008
The marine insurance branch ended 2010 with TRY
4,170 thousand in underwriting profit, resulting in an
underwriting profit ratio of 38%.
Marine Branch Premium Revenue
(TRY thousand)
2,573
2010
1,319
2009
2007
Sea Vehicles Branch Premium Revenue
(TRY thousand)
thousand, of which TRY 3,041 thousand was made
in payments and TRY (584) thousand consisted of
outstanding loss claims. The loss ratio stood at (29)%.
2008
2007
2006
29
38
58
21
FIRE AND CATASTROPHE INSURANCE
GENERAL DAMAGES INSURANCE
LAND VEHICLES LIABILITY INSURANCE
In 2010, premium production increased by 14% over
the previous year to TRY 103,562 thousand. Of this
total amount, TRY 63,561 thousand was transferred to
reinsurers and about TRY 40 million was retained by
Premium production in 2010 experienced a 27%
increase over the previous year, to TRY 55,243
thousand. Of this total, TRY 42,335 thousand was
transferred to reinsurers and TRY 12,908 thousand
was retained by the Company, resulting in a retention
ratio of 23%.
In 2010, premium production increased by 26% over
the previous year, to TRY 61,903 thousand. Of that
total amount, TRY 4,089 thousand was transferred to
reinsurers and TRY 57,813 thousand was retained by
thousand, of which TRY 21,436 thousand was
made in payments, with TRY 17,385 thousand in
outstanding loss claims. The loss ratio for 2010 stood
at 16%.
Total compensation reached TRY 64,614 thousand, of
which TRY 23,639 thousand was made in payments,
with TRY 40,975 thousand in outstanding loss claims.
The loss ratio for 2010 was 81%.
The fire and catastrophe insurance branch ended
2010 with TRY 20,343 thousand in underwriting profit,
with an underwriting profit ratio of 20%.
The general damages insurance branch ended 2010
with TRY 5,667 thousand in underwriting profit,
resulting in an underwriting profit ratio of 10%.
Fire and Catastrophe Branch Premium
General Damages Branch Premium Revenue
(TRY thousand)
103,562
2010
90,839
2009
92,520
2008
2007
91,532
2007
89,309
20,343
10,635
2009
2007
(2,873)
2006
Fire and Catastrophe Branch Loss Ratio (%)
2010
16
2008
2007
2006
5,667
6,265
5,924
5,423
2,363
General Damages Branch Loss Ratio (%)
81
2010
36
2009
2006
General Damages Branch Underwriting
2007
3,189
2006
33,646
2008
58
2009
27
63
2008
39
41
2007
2006
35
2010
2007
2009
13,172
2008
Land Vehicles Liability Branch Premium
2008
40,640
2010
The land vehicles liability insurance branch ended
2010 with an underwriting loss of TRY 16,753
thousand and an underwriting loss ratio of 27%.
2009
45,572
2006
Fire and Catastrophe Branch Underwriting
2010
43,383
2009
2008
2006
55,243
2010
with TRY 57,243 in outstanding loss claims. The 2010
loss ratio was 106%.
61,903
48,954
53,890
61,678
65,630
Land Vehicles Liability Branch Underwriting
2010
(16,753)
2009
(6,991)
2008
(13,293)
2007
(12,983)
2006
(2,537)
Land Vehicles Liability Branch Loss Ratio (%)
106
2010
2009
72
81
2008
86
2007
56
2006
71
22 Introduction
Technical Results
GENERAL LIABILITY INSURANCE
LEGAL PROTECTION INSURANCE
Premium production increased by 93% over the
previous year, to TRY 19,279 thousand. Of this,
TRY 9,722 thousand was transferred to reinsurers and
TRY 9,558 thousand was retained by the Company,
resulting in a retention ratio of 50%.
In 2010, premium production increased 108% over
the previous year, to TRY 1,685 thousand. Legal
protection insurance had a retention ratio of 100%.
The loss ratio for the year 2010 was 87%.
The general liability insurance branch ended 2010
with TRY 4,689 thousand in underwriting profit, and
an underwriting profit ratio of 24%.
General Liability Branch Premium Revenue
(TRY thousand)
19,279
2010
The 2010 loss ratio was 0.54%.
The legal protection insurance branch ended the
year with TRY 1,654 thousand in underwriting profit,
resulting in an underwriting profit ratio of 98%.
Legal Protection Branch Premium Revenue
(TRY thousand)
1,685
2010
2009
9,982
2009
2008
9,154
2008
617
2007
9,576
2007
631
8,041
2006
4,689
2010
959
Legal Protection Branch Underwriting Profit
(TRY thousand)
1,654
2010
896
2009
2008
881
2008
2007
922
2007
2006
724
2006
General Liability Branch Underwriting Profit
(TRY thousand)
2009
809
696
2006
General Liability Branch Loss Ratio (%)
87
2010
65
2009
747
569
621
Legal Protection Branch Loss Ratio (%)
0.54
2010
2009
(0.35)
2008
76
2008
2007
75
2007
0.14
2006
0.44
2006
35
0.38
PART II
MANAGEMENT AND
CORPORATE GOVERNANCE
PRACTICES
24 Management and Corporate Governance Practices
Board of Directors
Tayfun BAYAZIT
Chairman of the Board
After having received a BS degree in Mechanical
Engineering (1980) and an MBA from Columbia
University, New York, (Finance and International
Business - 1983), Tayfun Bayazıt started his banking
career at Citibank in 1983. He subsequently worked
in senior executive positions within Çukurova Group
for 13 consecutive years, including Yapı Kredi (Senior
Executive Vice President and Executive Committee
Member), Interbank (CEO) and Banque de Commerce
et de Placements S.A. Switzerland (President and CEO).
In 1999, he was appointed as the Vice Chairman of
Doğan Holding and an Executive Director of Dışbank. He
assumed the CEO position at Dışbank in 2001 and was
appointed as the Chairman of the Board of Directors at
the 2003 Annual Shareholders’ Meeting. He became
the CEO and Board Member of Fortis Turkey after the
acquisition of the majority shares of Dışbank in July
2005. In the 2006 Annual Shareholders’ Meeting, he
was appointed as Chairman of the Board of Directors of
Fortis Bank A.Ş. He was appointed as the CEO of Yapı
Kredi and of the Bank’s holding company (Koç Financial
Services, KFS) in the beginning of 2007. Two years
later, he was elected as the Chairman of Yapı Kredi and
in 2010 he also started to serve as Chairman of Koç
Financial Services. Being the President of Banking and
Insurance Group at Koç Holding, Bayazıt also serves as
Chairman of Yapı Kredi Insurance, Yapı Kredi Pension,
Yapı Kredi Koray Real Estate Investment Trust, Yapı Kredi
Bank Nederland, Yapı Kredi Bank Azerbaijan and Yapı
Kredi Bank Moscow as well as Vice Chairman of Banque
et de Placements.
Alessandro Maria DECIO
Vice Chairman
A graduate from the Department of Economics,
Commerciale L. Bocconi University, Alessandro Maria
Decio holds an MA from INSEAD (the European
Institute for Business Administration) and worked as
a research assistant for six months at Commerciale L.
Bocconi University. Starting his finance career at IMI
International, Decio held the post of Vice President
until 1991. Subsequently, he was employed by Morgan
Stanley International as an associate and afterwards by
McKinsey until 1994 with the same position. Decio joined
the European Bank for Reconstruction and Development
(EBRD) at the end of 1994 and left in 2000 as a Director.
In June 2000, he joined UniCredit Group as the Head of
Foreign Banks Strategy, Mergers, Acquisitions, Planning
and Control Group and in October 2002 was appointed
Chief Operating Officer (COO) for Zagrebacka Banka
(within UniCredit Group). He served as COO at Bulbank,
another UniCredit Group company between 2003 and
2005 and later at UniCredit Group’s Integration Project
as Manager. Decio was appointed Manager of UniCredit
Group’s Germany Integration Project at the beginning
of 2006, before going on to serve as UniCredit Group
Deputy Head of Integration Office from July 2006 to
July 2007. Appointed as Executive Director of Yapı Kredi
on April 26, 2007, he also became the Chief Operating
Officer of the Bank on July 1, 2007. On January 30,
2009, Decio was appointed as the Deputy CEO of Yapı
Kredi. Decio also serves as Executive Director and Deputy
CEO of Koç Financial Services, Vice Chairman of Yapı
Kredi Asset Management, Yapı Kredi Invest, Yapı Kredi
Leasing, Yapı Kredi Factoring, Yapı Kredi Insurance, Yapı
Kredi Pension, Yapı Kredi Bank Nederland, Yapı Kredi
Bank Azerbaijan, Yapı Kredi Bank Moscow and Yapı
Kredi Cultural Activities, Arts and Publishing. Decio is a
member of Board of Directors of Yapı Kredi Koray Real
Estate Investment Trust.
Ahmet Fadıl ASHABOĞLU
Board Member
After graduating from the Alman Lisesi (German High
School) in Istanbul and Tufts University, Department of
Mechanical Engineering, in the USA, Ahmet F. Ashaboğlu
received an MS from Massachusetts Institute of
Technology (MIT), Department of Mechanical Engineering
and began his career as a research assistant at MIT in
Cambridge in 1994. He worked as Associate Director
of US Treasury Bond Trading at UBS Warburg, New
York and then as Head Trader of FX Options at UBS
Warburg, Philadelphia in 1998 and 1999. He served as
a consultant at McKinsey&Company between 1999 and
2003 in New York. Joining Koç Holding as the Finance
Group Coordinator after his return to Turkey in 2003,
Ashaboğlu has been the CFO (Chief Financial Officer) of
Koç Holding since January 2006. Ashaboğlu has been
a member of the Board of Directors of Yapı Kredi since
September 28, 2005. Ashaboğlu is also a member of
Board of Directors of Koç Financial Services, Yapı Kredi
Insurance and Yapı Kredi Pension.
Hüseyin Faik AÇIKALIN
Board Member
After earning a BS degree in Business Administration
from Middle East Technical University, Faik Açıkalın
began his banking career in 1987 as a Management
Trainee at Interbank. He subsequently worked in
various positions including internal auditor, relationship
manager, branch manager and marketing manager at
Interbank, Marmarabank, Kentbank, Finansbank and
Demirbank. In May 1998, he joined Dışbank as Executive
Vice President. Later that year, he was appointed Chief
Operating Officer (COO) responsible for the coordination
and communication between the Board of Directors
and business units. He also assumed the position as a
member of the Credit Committee. In June 1999, Açıkalın
was appointed as Deputy CEO and member of the Board
of Directors. In December 2000, he became CEO of
Dışbank. Following the acquisition of the majority shares
of Dışbank by Fortis in July 2005, he continued to serve
as CEO of the Bank when it was renamed Fortisbank and
was appointed member of the Fortis Global Management
Committee and Fortis Global Retail Management Team.
In October 2007, he resigned from his duties at Fortis and
became CEO at Turkey’s largest newsprint media holding
company, Doğan Gazetecilik. In April 2009, Açıkalın was
appointed Executive Director of Yapı Kredi and was also
appointed Chairman of the Executive Committee in April
2009. Having started to serve also as CEO of the Bank’s
holding company (KFS) in 2010, Açıkalın has been CEO
of Yapı Kredi since May 2009. Açıkalın also serves as
Chairman of Yapı Kredi Asset Management, Yapı Kredi
Invest, Yapı Kredi Leasing, Yapı Kredi Factoring and a
member of Board of Directors of Yapı Kredi Insurance,
Yapı Kredi Pension, Yapı Kredi Bank Nederland, Yapı
Kredi Bank Azerbaijan and Yapı Kredi Bank Moscow.
Marco CRAVARIO
Board MEMBER
Following his graduation from the Economics Department
at the University of Turin in 1991, Marco Cravario
attended top-level financial education programmes at the
London School of Economics and INSEAD. He started his
career as an auditor at Ernst & Young first in Turin (Italy)
and then in Prague (Czech Republic). In 1996, he moved
to Ernst & Young Corporate Finance in Milan (Italy),
serving as a Director. In 2001, Cravario joined UniCredit
Group to head the New Europe Division Mergers and
Acquisitions unit. Subsequently, he held a number of
managerial positions in the Group, including planning
and control, organisation, business development,
also gaining some commercial experience in the retail
network. In 2006, Cravario assumed the position of CFO
and Executive Board Member at UniCredit Tiriac Bank in
Romania. Cravario has been Executive Vice President and
CFO at Yapı Kredi since January 2008 and a member of
the Executive Committee since February 2009. Cravario
is also a member of Board of Directors of Yapı Kredi
Leasing, Yapı Kredi Factoring, Yapı Kredi Insurance, Yapı
Kredi Pension and Yapı Kredi Bank Azerbaijan.
Associate Professor S. Giray VELİOĞLU
Board Member/General Manager
Associate Professor S. Giray Velioğlu graduated from
Robert College, Department of Civil Engineering in 1971.
After obtaining a master’s degree in Civil Engineering
from Boğaziçi University in 1973, he went on to earn
a doctorate in Environmental Engineering from the
University of Illinois, Champaign-Urbana in 1976. Later
in 1976, Dr. Velioğlu started his career at Middle East
Technical University, Department of Environmental
Engineering as faculty member. From 1977 to 1982, he
held a position in the Department of Civil Engineering at
Boğaziçi University. Dr. Velioğlu was a faculty member at
Yarmouk University in Jordan between 1982 and 1986,
at the Jordan University of Science and Technology from
1986 to 1987, and in the Civil Engineering Department
at King Fahd University of Petroleum and Minerals, Saudi
Arabia. After a 13-year academic career, Dr. Velioğlu
joined Yapı Kredi Sigorta* as Risk Engineering Manager
in 1989. On March 1, 1997, he was appointed General
Manager of Yapı Kredi Emeklilik**. Since May 1, 2009,
Dr. Velioğlu has served as General Manager of Yapı Kredi
Sigorta and Executive Director of Yapı Kredi Emeklilik.
(*) The name of the Company, which was established in 1943, was changed from Halk Sigorta, to Yapı Kredi Sigorta A.Ş. in 2000.
(**) The name of the Company, which was established in 1991, was changed from Halk Yaşam Sigorta to Yapı Kredi Yaşam in October 2000 and to Yapı Kredi Emeklilik in December 2002.
Auditors
Adil G. ÖZTOPRAK
Adil G. Öztoprak graduated from Ankara University,
Faculty of Political Sciences, Department of Finance
and Economy in 1966. From 1966 to 1975, he
served on the Audit Board of the Turkish Ministry
of Finance and then as the Assistant General
Manager of Budgeting and Financial Control.
Since 1976, Mr. Öztoprak has served as Financial
Coordinator and General Manager in various
companies. From 1993 to 2000, he took office as
partner at Başaran Nas Yeminli Mali Müşavirlik A.Ş.
(PriceWaterhouseCoopers). In addition, Mr. Öztoprak
has been an independent sworn financial consultant
since 2000.
Abdullah GEÇER
Abdullah Geçer graduated from Middle East Technical
University, Department of Economics in 1996;
subsequently, in 2002, he received an MBA from
Nottingham University. From 1996 to 2000, Mr. Geçer
held the position of Assistant Certified Bank Auditor
at the Undersecretariat of Treasury. He then served
as Certified Bank Auditor in the Banking Regulation
and Supervision Agency (BRSA) from 2000 to 2007.
In 2007, Mr. Geçer became Chief Certified Bank
Auditor at BRSA, and the same year he was appointed
Coordinator of the Auditing Group at Koç Holding A.Ş.
25
Senior Management
Associate Professor S. Giray VELİOĞLU
General Manager
Associate Professor S. Giray Velioğlu graduated from
Robert College, Department of Civil Engineering
in 1971. After obtaining a master’s degree in Civil
Engineering from Boğaziçi University in 1973, he went
on to earn a doctorate in Environmental Engineering
from the University of Illinois, Champaign-Urbana in
1976. Later in 1976, Dr. Velioğlu started his career
at Middle East Technical University, Department of
Environmental Engineering as faculty member. From
1977 to 1982, he held a position in the Department
of Civil Engineering at Boğaziçi University. Dr. Velioğlu
was a faculty member at Yarmouk University in Jordan
between 1982 and 1986, at the Jordan University
of Science and Technology from 1986 to 1987, and
in the Civil Engineering Department at King Fahd
University of Petroleum and Minerals, Saudi Arabia.
After a 13-year academic career, Dr. Velioğlu joined
Yapı Kredi Sigorta* as Risk Engineering Manager in
1989. On March 1, 1997, he was appointed General
Manager of Yapı Kredi Emeklilik**. Since May 1,
2009, Dr. Velioğlu has served as General Manager of
Yapı Kredi Sigorta and Executive Director of Yapı Kredi
Emeklilik.
Manager, Technical Departments and subsequently
as Assistant General Manager, Technical Departments
and Sales between 2004 and 2009 at Yapı Kredi
Sigorta. Since 2009, Mr. Gölpınar has served as
Assistant General Manager, Sales.
Banu DARCAN
Assistant General Manager
Corporate Health Sales, Health Product
Management, Health Underwriting, Call Center,
Health Claims and Health Services
Yıldırım TÜRE
Istanbul Region, Kadıköy Region, Bakırköy Region,
Bursa Region, Aegean Region, Central Anatolian
Region, Southern Region, Mediterranean Region,
Agencies, Agency Support, Brokers and Corporate
Sales
Banu Darcan graduated from Istanbul Technical
University, Faculty of Business Administration,
Department of Industrial Engineering in 1989. She
began her career as Assistant Specialist at Halk
Yaşam A.Ş. in 1990, and joined Yapı Kredi Sigorta
as Group Head in 2001. Ms. Darcan has served as
Assistant General Manager, Health Insurance at Yapı
Kredi Sigorta since June 2004.
Coşkun GÖLPINAR
Bank Sales Management, Health Sales
Management, Marketing and Bancassurance,
Business Development
Coşkun Gölpınar graduated from Yıldız Technical
University, Department of Architecture. He began his
career in 1984 at Koçtaş as an architect, and in 1986,
he moved to Akbank, where he served in the same
capacity. Mr. Gölpınar joined Yapı Kredi Sigorta in
1987 in the company’s Risk Engineering Department,
and served as Group Head in Technical Departments.
From 1996 to 2004, he worked as Assistant General
İlkay ÖZEL
Agencies Finance, Treasury Management,
Financial Reporting and Accounting, Planning and
Control, Human Resources and Organization
İlkay Özel graduated from Marmara University,
Faculty of Economics and Administrative Sciences,
Department of Economics in 1994. She worked as
Senior Auditor for Deloitte and Touche from 1994 to
1997, as Financial Control Manager at Finansbank
and Finansbank Holland between 1997 and 2001.
Ms. Özel served as Planning and Control Group
Head at Yapı Kredi Bank from 2001 to 2006 as
well as Human Resources Practices and Planning
Group Head at the same bank. Since April 1, 2009,
Ms. Özel has held the position of Assistant General
Manager, Financial Group and Human Resources and
Organization.
Yıldırım Türe graduated from Çukurova University,
Business Administration Department in 1989. His
professional career started in the Southern Regional
Office of Yapı Kredi Sigorta and subsequently he
served as Manager at Internal Audit, Finance, Bursa
Region and Aegean Region. On June 1, 2001, Mr. Türe
was appointed Group Head in charge of Regions; on
July 9, 2009, he was promoted to Assistant General
Manager, Agencies and Regions.
Nasaş Alüminyum. Mr. Fenercioğlu started work in the
Fire Underwriting Department of Yapı Kredi Sigorta
on July 17, 1989 and transferred to the Reinsurance
Department on February 1, 1994. Mr. Fenercioğlu has
served as Consultant in the Reinsurance Department
since September 1, 2005; he was appointed Assistant
General Manager, Non-Health Underwriting (Acting)
on July 9, 2009.
Melike DEMİREL
Assistant General Manager (Acting)
Non-Auto Claims, Auto Claims, Subrogation,
Strategy and Systems Research and Development,
Sales Support, and Non-Health Actuary
Melike Demirel graduated from Boğaziçi University,
Industrial Engineering Department in 1990. Her
professional career began at Yapı Kredi Sigorta in the
Major Clients and Marketing Department in 1991.
Ms. Demirel transferred to the Non-Auto Claims
Department on June 1, 1992. She was appointed
Manager of Non-Auto Claims on January 1, 1998. Ms.
Demirel has served as Assistant General Manager,
Non-Health Claims and Strategy Development since
July 9, 2009.
Volkan TERZİOĞLU
Software Development, Special Projects, Unit
Relations, Systems and Network Management and
Customer Help Desk
Volkan Terzioğlu graduated from Yıldız Technical
University, Department of Computer Engineering in
1988. He started his professional career in 1991 as
Specialist Programmer at AGF Garanti Sigorta. On
April 1, 1992, Mr. Terzioğlu began work at Yapı Kredi
Emeklilik’s Information Technology Department, and,
served as Group Head of Information Technology at
Yapı Kredi Emeklilik from December 1, 2004. Mr.
Terzioğlu was appointed Acting Assistant General
Manager, Information Technologies on July 9, 2009.
Selim FENERCİOĞLU
Motor Underwriting, Fire Underwriting and
Risk Engineering, Marine Underwriting, Special
Risks and Liability Underwriting, Engineering
Underwriting and Reinsurance
Selim Fenercioğlu graduated from Istanbul Erkek
Lisesi, and then Boğaziçi University, Department
of Business Administration in 1986. He began his
professional career in 1986 as Internal Auditor at
(*) The name of the Company, which was established in 1943, was changed from Halk Sigorta, to Yapı Kredi Sigorta A.Ş. in 2000.
(**) The name of the Company, which was established in 1991, was changed from Halk Yaşam Sigorta to Yapı Kredi Yaşam in October 2000 and to Yapı Kredi Emeklilik in December 2002.
Internal Audit
Levent ÖZER
Internal Audit Manager
Levent Özer graduated from Istanbul University,
Department of Economics in 2000. Between 2004
and 2005, he completed a certification program
in accounting at the Baruch College of The City
University of New York. Mr. Özer worked at Ernst &
Young as a Senior Auditor from 2000 to 2003. He
joined Yapı Kredi Sigorta in September 2005 to work
in the Financial Affairs and Planning and Control
departments. Since May 2008, Mr. Özer has served
as the Internal Audit Manager of the Company.
Serdal GAZCILAR
Internal Control and Risk Management
Officer
Serdal Gazcılar graduated from Mimar Sinan
University, Department of Statistics in 1995. He
began his professional career by joining Yapı Kredi
Sigorta’s Fire Underwriting Department in 1996. Mr.
Gazcılar then worked for the Marketing Department
between 1998 and 2000, and as Expert Auditor for
the Internal Audit Department from 2000 to 2008. He
has worked in the Internal Control Department since
January 2009, where he also acts as the Company’s
MASAK (Financial Crimes Investigation Board)
Compliance Officer. Since July 2009, Mr. Gazcılar is
also responsible for Risk Management operations in
addition to Internal Control operations. No duration
has been specified for his term of office.
27
Organizational Chart
Board of Directors
Internal Audit
Levent Özer
General Manager
S. Giray Velioğlu
Internal Control and Risk
Management
Serdal Gazcılar
Management Office
Ülkü Adalı
Assistant General
Manager Sales
Coşkun Gölpınar
Health and Bank Sales
Group Head
Yılmaz Vatansever
Bank Sales Management
Alper Tunga Araman
Central-1 Region
Nihat Başıbüyük
Central-2 Region
Çetin Şılar
Marketing and Bancassurance
Group Management
Tolga Okan Tezbaşaran
Marketing and Bancassurance
Serap Esma Ağca
Agencies and Regions
Yıldırım Türe
Non-Health Underwriting
E. Selim Fenercioğlu (Acting)
Health Insurance
Banu Darcan
Istanbul Region
M. Murat Beköz
Non-Health Underwriting
Group Head
V. Aykut Alp Çelebi
Corporate Sales (Health) and
Product Management Group Head
Ayşe Türkölmez
Kadıköy Region
Petek Özsevim (Acting)
Motor Underwriting
Mehmet Tümer
Corporate Sales – Health
Business Development
Bakırköy Region
Gonca Akbudak Karacagil
(Acting)
Fire Underwriting and Risk
Engineering
Kadir Burnaz
Product Management– Health
Corporate Communications(5)
Agency Support
Marine Underwriting
Özlem Gülek Solmaz (Acting)
Kadıköy Region
Oğuz Sağızlı
Health Underwriting and Call
Center Group Head
Tevfik Ekmen
Ankara Region
Tolga Arslan
Bursa Region
Funda Baybalı (Acting)
Special Risks and Liability
Underwriting
Alper Tan
Health Underwriting
Uğur Yılmaz
Adana Region
Aegean Region
Ruhsan Gezgin
Engineering Underwriting
Barış Vardar
Call Center
Zümrüt Kulaksız
Antalya Region
Central Anatolian Region
A. Korkut Güner
Bursa Region
Southern Region
Adnan M. Sığın
İzmir Region
Health Sales
Ejder Akbaba
Mediterranean Region
Feza Gürel (Acting)
Renewal Desk
Gülçin Dülger
Central 1 Region
Güven Güngör
İstanbul Region
Central-2 Region
Şenol Dedeakayoğulları
Bursa Region
Kadıköy Region
Arzu Vatansever Yücegönül
Bursa Region
Özcan Baştor (Acting)
İzmir Region
Aegean Region
Barış Koçyiğit
Antalya Region
Birnar Nermin Gültekin
Barış Gündoğdu (Acting)
Adana Region
Agencies
M. Cengiz Cantekin
Brokers and Corporate Sales
Aslıhan Öğüt
Reinsurance
Nevra Demiral
Health Claims Group Head
F. Dilek İzbudak
Health Claims
Müge Sarıbayraktar
Health Services
Zafer Unar
Non-Health Claims and Strategy
Development
Melike Demirel (Acting)
Non-Health Claims
Group Head
Necmettin Yılmaz
Information Technologies
Volkan Terzioğlu (Acting)
Financial Group &
Human Resources and Organizations
İlkay Özel
Software Group Head
Hüseyin Akay
Human Resources and
Training Group Head
Non-Auto Claims
Musa Alphan Bahar (Acting)
Software Development
Human Resources and
Organizations(2)
Auto Claims
Sengül Yıldız (Acting)
Special Projects
Saliha Çevik Öksüzoğlu
Training(3)
Ayhan Güçlü
Subrogation
Gamze Bulur
Strategy Development and Sales
Support Group Head
Kenan Akter
Strategy and Systems Research
and Development
Atilla Karayiğit
Sales Support
Belkıs Tezbaşaran
Non-Health Actuary
Banu Aksoylu
Legal Affairs (1)
Gülay Akalay (Acting)
Actuary
S. Belkıs Erşen
Unit Relations
29
Finance and Treasury Group Head
Emel Bek
Systems and Network
Management
Özgür Uysal
Agencies Finance Group
L. Emre Keçecioğlu (Acting)
Help Desk
Faik Korhan Ürgüp
Treasury Management
İlkim Soysal
Planning, Control, Financial Reporting and
Accounting Department Group Head
Mehmet Yetgin
Financial Reporting and Accounting
M. Teoman Çelen
Planning and Control
Administrative Affairs and Cost
Management Group Management (4)
M. Uğur Kavuşturan
Administrative Affairs and Cost
Management (4)
M. Özgür Gökalp
(1) is a joint services department with YKE and reports to Umur Çullu as the Assistant General Manager.
(2) is a joint services department with YKE and reports to Seda Tunoğlu Kaymak as the Department Manager, Serkan Bayramoğlu as the Group Head, and to İlkay Özel
as the Assistant General Manager.
(3) is a joint services department with YKE and reports to Serkan Bayramoğlu as the Group Head and to S. Bülent Eriş as the Assistant General Manager.
(4) is a joint services department with YKE and reports to Umur Çullu as the Assistant General Manager.
(5) is a joint services department with YKE and reports to Füsun Dedehayır Ulukan as the Department Head and to S. Bülent Eriş as the Assistant General Manager
Headquarters and Regional Management
Group Heads
Ayşe Türkölmez
Head of Corporate Sales (Health) and Product
Management Group
Fatma Dilek İzbudak
Head of Health Claims Group
Vehbi Aykut Alp Çelebi
Head of Non-Health Underwriting Group
Necmettin Yılmaz
Head of Non-Health Claims Group
Mehmet Uğur Kavuşturan
Head of Administrative Affairs and Cost Management
Group
Emel Bek
Head of Finance and Treasury Group
Tevfik Ekmen
Head of Health Underwriting and Call Center Group
Yusuf Kenan Akter
Head of Strategy Development and Sales Support
Group
Tolga Okan Tezbaşaran
Head of Marketing, Bancassurance and Business
Development Group
Hüseyin Akay
Head of Software Group
Mehmet Yetgin
Head of Planning, Control, Financial Reporting and
Accounting Group
Yılmaz Vatansever
Head of Health and Bank Sales Group
Department Managers
Alper Tan
Special Risks and Liability Underwriting Manager
Alper Tunga Araman
Bank Sales Manager
Aslıhan Öğüt
Brokers and Corporate Sales Manager
Atilla Karayiğit
Strategy and Systems Research Development
Manager
Ayhan Güçlü
Training Manager
Banu Aksoylu
Non-Health Actuary Assistant Manager
Barış Vardar
Engineering Underwriting Manager
Belkıs Tezbaşaran
Sales Support Assistant Manager
Faik Korhan Ürgüp
Help Desk Assistant Manager
Gamze Bulur
Subrogation Assistant Manager
Gülay Akalay
Legal Affairs Assistant Manager (Acting)
İlkim Soysal
Treasury Assistant Manager
Kadir Burnaz
Fire Underwriting and Risk Engineering Manager
Levent Özer
Internal Audit Assistant Manager
Lutfi Emre Keçecioğlu
Agencies Finance Assistant Manager (Acting Manager)
Mehmet Cengiz Cantekin
Agencies Manager
Mehmet Tümer
Motor Underwriting Manager
Müge Dürdane Sarıbayraktar
Health Claims Manager
Musa Alphan Bahar
Non-Auto Claims Assistant Manager (Acting Manager)
Mustafa Özgür Gökalp
Administrative Affairs and Cost Management Manager
Mustafa Teoman Çelen
Financial Reporting and Accounting Manager
Nevra Demiral
Reinsurance Manager
Özgür Uysal
Systems and Network Manager
Özlem Gülek Solmaz
Marine Underwriting Manager (Acting Manager)
Saliha Çevik Öksüzoğlu
Special Projects Manager
Sengül Yıldız
Auto Claims Assistant Manager (Acting Manager)
Serap Esma Ağca
Marketing and Bancassurance Manager
Uğur Yılmaz
Health Underwriting Manager
Zafer Unar
Health Services Assistant Manager
Zümrüt Kulaksız
Call Center Assistant Manager
Regional Managers
Adnan Mehmet Sığın
Southern Region Manager
Ahmet Korkut Güner
Central Anatolian Region Manager
Ejder Akbaba
Marmara Region Health Sales Manager
Feza Gürel
Mediterranean Region Manager (Acting)
Funda Baybalı
Bursa Region Manager (Acting Region Manager)
Gonca Akbudak Karacagil
Bakırköy Region Assistant Manager (Acting Region
Manager)
Mehmet Murat Beköz
Istanbul Region Manager
Petek Özsevim
Kadıköy Region Assistant Manager (Acting Region
Manager)
Ruhsan Gezgin
Aegean Region Manager
Terms of Office and Professional Experience of Auditors
Adil G. ÖZTOPRAK
Auditor
Adil G. Öztoprak graduated from Ankara University,
Faculty of Political Sciences, Department of Finance
and Economy in 1966. From 1966 to 1975, he
served on the Audit Board of the Turkish Ministry
of Finance and then as the Assistant General
Manager of Budgeting and Financial Control.
Since 1976, Mr. Öztoprak has served as Financial
Coordinator and General Manager in various
companies. From 1993 to 2000, he took office as
partner at Başaran Nas Yeminli Mali Müşavirlik A.Ş.
(PriceWaterhouseCoopers). In addition, Mr. Öztoprak
has been an independent sworn financial consultant
since 2000.
Abdullah GEÇER
Auditor
Abdullah Geçer graduated from Middle East Technical
University, Department of Economics in 1996;
subsequently, in 2002, he received an MBA from
Nottingham University. From 1996 to 2000, Mr. Geçer
held the position of Assistant Certified Bank Auditor
at the Undersecretariat of Treasury. He then served
as Certified Bank Auditor in the Banking Regulation
and Supervision Agency (BRSA) from 2000 to 2007.
In 2007, Mr. Geçer became Chief Certified Bank
Auditor at BRSA, and the same year he was appointed
Coordinator of the Auditing Group at Koç Holding A.Ş.
The auditors will remain in office until the General
Assembly Meeting to be held for the evaluation of the
Company’s accounts and activities in 2010.
Information about the General Assembly Meetings
Information regarding the attendance of
Board Members at related meetings held
during the period.
The Board of Directors met 28 times in 2010.
Twenty-one meetings were held after the election of
Board Members at the General Assembly Meeting on
March 23, 2010. The Board Members fully attended
all the meetings.
31
Summary Board of Directors Report Submitted
to the General Assembly
Dear Shareholders,
We hereby submit for your assessment, the 2010 balance sheet and profit/loss accounts of the Company, which
has completed its 67th year in the sector.
Based on the figures for 2010, Yapı Kredi Sigorta recorded total premium production of TRY 758 million, of
which, TRY 337 million originated from the health branch, with TRY 421 million from non-health branches.
These results placed Yapı Kredi Sigorta in a leadership position in the health branch of the non-life insurance
sector, with a 20% market share; in addition, the Company has a 4% market share and ranks ninth in the nonhealth branches.
The progress of the Company’s market share in non-life branches over the last five years is presented below:
Yapı Kredi Sigorta Market Share (%)
2006
2007
2008
2009
2010
7.1
6.5
6.2
5.7
6.3
Yapı Kredi Sigorta has 905 employees. In 2010, the number of the Company’s agents increased to 993,
contracted institutions rose to 2,198 and contracted service stations increased to 764.
The Company’s financial investments in 2010 were directed toward risk-free and high-yield investment
instruments including government bonds, treasury bills, foreign exchange accounts and Turkish Lira deposit
accounts.
In non-health branches, in order to offer customers more rapid and higher quality services, minimize operating
costs, maintain a competitive edge and extend the leadership position in the health branch to non-health
branches, the Company implemented a new software system as of November 1, 2010.
In 2010, Yapı Kredi Sigorta continued business process improvement initiatives to determine ways to increase
productivity, improve financial returns, and raise customer service quality. The Company also successfully
implemented improvement projects via the bank channel and agencies channel, and those geared toward
operational and call center processes. These projects yielded positive results during the year. In 2011, the
Company targets achieving more extensive and long term improvements in productivity and operational
efficiency.
Yapı Kredi Sigorta has implemented a variety of marketing campaigns in order to expand its customer base and
strengthen its market leading position. The “Bundan İyisi Can Sağlığı” (Health for Life) and “Nazar Boncuğu”
(Evil Eye Charm) promotional campaigns helped the Company reach a wider customer base for its individual
health products. In non-health branches, the Company organized campaigns around the products “KOBİ İşimin”
(My SME Business), “Kasko” (Motor Own Damage) and “Yuvam” (My Home) with the objectives of increasing
market penetration and generating competitive advantages.
In the face of irrational competitive pricing policies which had an adverse impact on the profitability of the
insurance sector, the Yapı Kredi Sigorta did not abandon its actuary based price policies and closed the year
2010 with underwriting profit.
Branch
Casualty
Premium Production 2010
(TRY thousand)
33
Share in the
Portfolio (%)
16,346
2.2
Health
337,430
44.5
Motor Own Insurance
147,683
19.4
Air Vehicles
Sea Vehicles
Marine
965
0.1
2,573
0.3
11,105
1.5
103,562
13.7
General Damages
55,243
7.3
61,903
8.2
408
0.1
General Liability
19,279
2.5
Legal Protection
1,685
0.2
758,182
100.0
Total
The highlights of the Balance Sheet and Profit and Loss Statement, presented for your examination, are as
follows:
The Company reported underwriting profit of TRY 46,547,641 with TRY 55,661,252 and TRY 79,087,453 carried
forward from investment income and general expenses, respectively.
The profit/loss account balance consists of net investment income of TRY 13,751,407 and net investment
expense of TRY 6,078,696.
Expenses from other activities, including reserves, earnings from deferred taxes, and other income and
expenses, amount to TRY 6,544,196.
Net investment income added to underwriting profit, as well as other operational costs, amount to a gross profit
of TRY 47,676,157.
When TRY 5,127,086 in taxes is deducted from gross profit, the Company posted an after-tax profit of TRY
42,549,071.
Respectfully yours,
The Board of Directors
Overview of Activities of the Company in
Its Respective Risk Group
Yapı Kredi Group Companies, their ultimate shareholders and the companies controlled by those ultimate
shareholders, are defined as related companies in the financial statements.
The details and explanations relating to the Company’s activities in its respective risk group in 2010 can be
found in disclosure number 45 of the financial statement in the Annual Report.
35
Information on Human Resources Practices
Application and Recruitment Management
Yapı Kredi Sigorta seeks to fill job vacancies that arise
owing to the creation of approved new or additional
positions, or the death, resignation, transfer or
promotion of an employee, based on its strategy and
targets, by recruiting candidates who possess skills
and abilities compatible with the Company’s mission,
vision, values, policies, targets and corporate culture.
Applications reaching the Company via a variety
of sources (postal mail, email, corporate website,
personal application, Company employees or
consulting companies) are collected in the
applications pool, and those applicants who hold the
necessary abilities and capabilities required for the
respective position are short-listed into the related pool
of candidates.
Yapı Kredi Sigorta pays meticulous attention to
recruiting the right people for the right positions, and
to this end, it conducts one-on-one, as well as group
interviews with the candidates and administers testing
as necessary.
At the final stage, the suitable candidates are offered
a job, and, if they accept, they are welcomed to
the Yapı Kredi Sigorta family. Candidates who are
not found suitable for the related position are also
informed of the decision.
Newly recruited employees are supported via
orientation and on-the-job training so that they can
better acclimate themselves to their jobs and the
Company.
Performance Management
The Company places great emphasis on performance
management in pursuit of continuously improving
the operational performance of the organizational
structure, systems and employees.
Training Management
Having adopted continuous development and work
values as key principles, Yapı Kredi Sigorta dedicates
great effort to improving its employees’ suitability for
their jobs and enhancing their abilities.
In order to obtain information about the development
of its human resources, enable employees to integrate
within the Company, and reach corporate targets,
Yapı Kredi Sigorta conducts various assessments
and systematically produces the required information
within the framework of the Performance Management
System.
The investment starts with the orientation programs
and on-the-job training given to employees upon their
recruitment. It is further fine-tuned based on the
Company’s strategies and targets, as well as customer
complaints, and the results from the Training
Requirement Analysis Survey and the Performance
Management System; this investment is continued via
the implementation of the annual training plans.
Career Management
Yapı Kredi Sigorta believes that expanding employees’
abilities and responsibilities within the framework
of their current positions is equally important as
promotions for sustainable personal development.
On-the-job assessment of the employees’ ability
levels enables the identification of areas that need
improvement, and the channeling of the employees
into positions where they can succeed.
When doing this, the Company considers and
evaluates the performance and/or abilities of the
employees not only based on their current positions,
but also for higher positions.
The effectiveness of the training activities is evaluated
based on a systematic approach, and the Company
takes carefully calculated steps in order to ensure
continuous development of its human capital.
Salary Management
Yapı Kredi Sigorta’s salary operations are carried out
based on the Salary Management System, which is
defined in line with other systems used within the
Company.
The salary of newly recruited employees is determined
in the framework of the Company’s general policies,
and according to the job definition, as well as the
employee’s skills, experience and education. In case
of a position change, the salary operation is carried
out based on the predefined principles.
Corporate Governance Principles
Compliance Report
1. Statement of Compliance with Corporate
Governance Principles
It was decided by the Board of Directors of Yapı
Kredi Sigorta to accept in principle the “Corporate
Governance Principles” published by the Capital
Markets Board (CMB) with the BOD decision number
60, dated December 23, 2003.
During the fiscal year between January 1, 2010 and
December 31, 2010, the Company has not performed
any application which is contrary to the principles
included in the “Corporate Governance Principles”
published by the Capital Markets Board.
PART I - SHAREHOLDERS
2. Shareholders Relations Unit
A Shareholder Relations Unit has been set up
pursuant to the Board of Directors decision number
60, dated December 23, 2003. Head of Planning,
Control and Treasury Group, Emel Bek (emel.bek@
yksigorta.com.tr - +90 212 336 08 42) and Financial
Affairs Manager, M. Teoman Çelen (tcelen@yksigorta.
com.tr - +90 212 336 08 41) are responsible for this
unit. Shareholders had no information requests from
the Company during the reporting period.
In brief, the duties and responsibilities of the Investor
Relations Unit consist of the following, and similar,
activities:
• Ensure that shareholders are able to exercise
their rights as shareholders and to manage
communications between shareholders and the
Board of Directors;
• Ensure that records pertaining to shareholders
are maintained in ways that are valid, reliable,
and timely;
• Respond to shareholders’ written requests for
information on all matters about the Company
that are subject to public disclosure and are not
in the nature of commercial secrets;
• Ensure that general assembly meetings are held
in accordance with current laws and regulations
and within the provisions of the Articles of
Incorporation;
• Prepare the minutes of general assembly
meetings and have them registered and
announced; send documents to appropriate
public authorities;
• Supervise and monitor all issues related to public
disclosures in accordance with the requirements
of law and the Company’s public disclosure
policy.
3. Shareholders’ Exercise of Their Right to
Obtain Information
The Company’s corporate website, www.yksigorta.
com.tr, is used to announce periodic financial
statements, annual reports, special circumstance
announcements disclosures and general assembly
meeting minutes to all shareholders. Additionally,
regarding the Capital Markets Board communiqué
numbered VIII/54, shareholders are informed via
public announcements that are provided to the media
through the Istanbul Stock Exchange.
The Company’s corporate website, www.yksigorta.
com.tr, is used to announce developments which
may affect the use of rights of stock ownership.
Shareholders had no information requests from the
Company during the reporting period. As there is not
any arrangement regarding the request for the private
auditor appointment in the Articles of Association,
there has not been any private auditor appointment
requests during the year.
4. Information about General Assembly
Meetings
The Company’s Annual General Assembly Meeting
was held on March 23, 2010, and was attended by
the legally prescribed quorum. Invitations to attend
the meetings were sent to shareholders by registered
mail, and invitations were published in two separate
newspapers. There is no specified period of time
during which registered shareholders’ shares must
make an entry in the shareholders’ register in order to
take part in the general assembly meeting.
The Company’s Articles of Association contain no
provisions requiring decisions of a highly important
nature, such as buying, selling or leasing substantial
amounts of assets and property, to be taken at a
general assembly meeting.
Minutes of the general assembly meeting are
published for shareholders to examine on the
corporate website.
To facilitate shareholders’ participation in General
Assembly Meetings, the meetings are announced
via the Istanbul Stock Exchange and the media. The
annual report, balance sheet, profit/loss statement,
and Statutory Auditors’ report, as well as the date
and agenda of the General Assembly Meeting are
published for shareholders to examine.
5. Voting Rights and Minority Rights
None of the Company’s shares are subject to special
voting rights. Minority shareholding interests are not
represented in management. There are no companies
in which there are reciprocal shareholding interests.
provisions governing the accumulated voting method.
6. Dividend Payment Policy and Timing
The profit distribution policy for the year 2011 and
beyond is published on the Company website, www.
yksigorta.com.tr, for the information of shareholders.
7. Transferring Shares
provisions restricting the transfer of shareholding
interests.
PART II - PUBLIC DISCLOSURE AND
TRANSPARENCY
8. Company Disclosure Policy
Information regarding the disclosure policy approved
by the Board of Directors can be found on the
Company website, www.yksigorta.com.tr.
9. Special Circumstance Announcements
The Company made 22 special circumstance
announcements in 2010, pursuant to CMB
regulations. No special circumstance announcements
were made on foreign stock exchanges since the
Company’s shares are not quoted on such exchanges.
10. Company Website and its Content
For many years, the Company’s website, www.
yksigorta.com.tr, has been used for making public
announcements. The website contains information
regarding shareholder and management structures,
annual reports, financial statements and reports, and
special circumstance announcements and forms to
submit inquiries to the Company.
11. Disclosure of Non-Corporate Ultimate
Shareholder(s) Who Have a Controlling Interest
There are no non-corporate ultimate shareholders
with which the Company has an indirect or reciprocal
shareholding interest.
12. Public Disclosure of Those who May Have
Access to Insider Information
The management members list includes members
of the management and audit units of Yapı Kredi
Sigorta A.Ş., as well as individuals who directly or
indirectly access insider information regarding the
Company in a regular fashion; in addition, those who
have the authority to make administrative decisions
that influence the Company’s future development and
commercial objectives are on this list. The Company’s
management members list is presented below.
İlkay Özel
The list of individuals with access to insider
information is prepared and maintained according to
the applicable laws and regulations.
Volkan Terzioğlu
Yıldırım Türe
Emin Selim Fenercioğlu
Melike Demirel
37
and requests are regularly queried and suggestions
are entertained at the workplace. In addition, the
corporate intranet is open to all employees and serves
as a continuous channel of communication between
employees and the Human Resources Department.
The Company maintains a working environment in
which rules and practices are clearly shared with all
personnel. Any complaint from personnel is resolved
by the Human Resources Department, keeping the
best interests of both the Company and its employees
in mind at all times. In dealing with any complaint,
the management of the appropriate unit is involved
as well, and every effort is made to understand the
source of the problem and to prevent its recurrence.
PART III - STAKEHOLDERS
YAPI KREDİ SİGORTA A.Ş. MANAGEMENT
MEMBERS LIST
Members of the Board of Directors
Tayfun Bayazıt
Chairman of the Board of Directors
Alessandro Maria Decio
Vice Chairman of the Board of Directors
Marco Cravario
Member
Ahmet Fadıl Ashaboğlu
Member
Hüseyin Faik Açıkalın
Member
Member and General Manager
Senior Management (General Managers and
Assistant General Managers)
General Manager
Banu Darcan
Coşkun Gölpınar
13. Keeping Stakeholders Informed
Company employees are kept informed about
Company activities by the General Manager and
relevant Assistant General Managers as circumstances
dictate. Publicly disclosed information is also made
available to employees and other stakeholders via the
corporate website.
14. Stakeholder Participation in Management
The Company is a joint-stock company and is
managed by its legally-prescribed organs. Issues
that require these organs to make decisions are
first examined and assessed by the appropriate
management levels, and then submitted to the
appropriate decision-making organ for its approval.
Suggestions and ideas submitted by stakeholders are
also assessed and taken into consideration in this
decision-making process as well.
15. Human Resources Policy
The declared objective of the Human Resources
Department is to conduct modern human resources
practices based on success so as to recruit qualified
personnel and employ them in the most productive
way in line with the Company’s goals and strategies.
Employees who are members of the Human
Resources team play an active role in conducting
relations with other Company personnel. Visits are
made to operational units, and employees’ needs
16. Relations with Customers and Suppliers
Detailed information about all Company products is
available on the Company website, as is complete
information about all special and general offers. The
website also contains a mechanism whereby users
may direct questions, suggestions, and complaints to
the Company. The email address, yksigorta@yksigorta.
com.tr, is also available for the same purpose. Thanks
to the Customer Relations Center, it is possible to gain
access to information by means of a single phone call
and obtain full details about products and policies
and resolve any problems. Complaints directed to
the Company are handled through the Customer
Complaint Tracking System. Activities at the center are
reported to senior management on a monthly basis
and the situation at the center is monitored at the
highest levels. A customer who enters into a health
insurance policy agreement has the unconditional
right to cancel it within one month’s time from the
policy’s issue date.
17. Social Responsibility
Since the commissioning of the statue “Akdeniz” (The
Mediterranean), widely regarded as an important work
in the history of Turkish sculpture, as well as the de
facto symbol of the Company, Yapı Kredi Sigorta’s
other efforts to foster the arts and artists include
the Afife Theatre Awards, where winners in 14 main
categories and five special categories were announced
at the 14th annual awards program in 2010.
Corporate Governance Principles Compliance Report
PART IV -THE BOARD OF DIRECTORS
18. Structure and Formation of the Board of
Directors and Independent Members
The Board of Directors consists of Tayfun Bayazıt
(Chairman), Alessandro Maria Decio (Vice Chairman),
Ahmet Fadıl Ashaboğlu (Member), Hüseyin Faik
Açıkalın (Member), Marco Cravario (Member) and
Associate Professor Sezai Giray Velioğlu (MemberGeneral Manager). There are no independent
members on the Board. There are no specific rules
or restrictions pertaining to Members of the Board
of Directors undertaking other duties outside the
Company.
19. Qualifications of Board Members
The Company’s Board of Directors consists of
members who satisfy the levels of knowledge and
skills stipulated in the CMB’s corporate governance
principles, and who possess specific experience,
background and qualifications that are not specifically
mentioned in the Company’s Articles of Association.
20. Mission, Vision, and Strategic Goals of
the Company
Yapı Kredi Sigorta’s Vision
To be an enduring and pioneering insurance
trademark that is preferred by everyone in the Turkish
insurance sector; to possess the experience and
financial strength that makes it a reference point in
the international insurance business.
Yapı Kredi Sigorta’s Mission
To possess the advanced technical and sales
infrastructure capable of immediately responding to
all the insurance needs of Turkish society, and in this
way, to number among the companies providing the
best service in the sector by ensuring unconditional
customer satisfaction.
Yapı Kredi Sigorta’s corporate mission and vision have
been publicly disclosed by both the Board of Directors
and the Company’s senior management through
interviews, discussions, and publications appearing in
the written and audiovisual media.
The Company’s senior management periodically
identifies, reviews, and revises Yapı Kredi Sigorta’s
long, medium, and short-term strategic objectives.
After these have been approved by the Board of
Directors, the action plans needed to accomplish
them are developed by management. During its
regular monthly meetings, the members of the Board
of Directors review the Company’s activities and
performance as well as the degree to which short-term
objectives have been met. Every six months, the
degree to which medium and long-term objectives
have been met is also reviewed, any instances of
under-performance are scrutinized, and the measures
that need to be taken are identified. In situations
where targets are exceeded, they are reviewed and
adjusted as necessary.
21. Risk Management and Internal Control
Mechanisms
The Company’s Internal Audit Department and
Internal Control and Risk Management Department
report directly to the Board of Directors; they are
responsible for all activities in the areas of risk
management and internal control, and issue reports
on their activities within the framework of the annual
business plan.
22. Authorities and Responsibilities of Board
Members and Executives
The authorities and responsibilities of the Board of
Directors are spelled out in detail in article 16 of the
Company’s Articles of Association.
23. Operating Principles of the Board of
Directors
During the reporting period, the Board convened
28 times. There is a secretariat, whose duty is
to keep Board Members informed, and maintain
communication with and among them. This office
also notifies members of meeting agendas prior to the
meeting. Board members must be physically present
at meetings. Decisions taken at board meetings are
recorded in the Company’s decision register.
24. Prohibition on Doing Business or
Competing with the Company
During the reporting period, members of the Board
of Directors engaged in no transactions with the
Company, and they complied with the prohibition on
competing with the Company.
25. Rules of Ethics
Yapı Kredi Sigorta adheres to the principle of
providing maximum satisfaction to its shareholders
by managing its insured risks in the best possible way
and to its policyholders by fulfilling, at the highest
possible level, the levels of compensation and service
they expect from its commitments toward them. The
Company has earned an outstanding reputation for
itself in the sector as an honest and principled insurer
that does not compromise its business principles.
It strives continually to build on that reputation.
Numerous interactive communications channels are
available to permit shareholders and policyholders
to make their opinions clear to the Company and
to provide them with information. Ensuring access
to information is considered a high priority for every
employee of the Company.
Yapı Kredi Sigorta is mindful of the rules and laws
to which it is subject, and respects the rights and
liberties of individuals. It pursues its activities honestly
and openly, stressing the immense importance of
confidentiality, the concept upon which our sector was
founded.
The Company’s employees are bound to protect the
reputation of Yapı Kredi Sigorta in all situations. They
are also bound by the principles of the Company in all
their actions. Employees are prohibited from adopting
an inappropriate stance or engaging in any activity
that is contrary to law or social order.
26. Numbers, Structures, and Independence
of Committees within the Board of Directors
Members Marco Cravario and Ahmet Fadıl Ashaboğlu
were elected by the Board of Directors to be
responsible for the audit committee.
27. Financial Rights Provided to the Board of
Directors
During the Ordinary General Assembly Meeting held
on March 23, 2010, it was decided that Members of
the Company’s Board of Directors are not to be paid
an honorarium.
During the reporting period, the Company made no
loans or extended any credit to any board member
or manager; did not extend the terms or improve
the conditions of any existing loans or credit already
provided to them; did not extend credit under the
rubric of personal loan or surety to them through any
third party.
39
Statutory Auditors’ Report
STATUTORY AUDITORS’ REPORT
To the attention of
Yapı Kredi Sigorta General Assembly,
We hereby submit the audit results of the Company for the fiscal year 2010 for your attention:
1. We found out that, based on the Turkish Commercial Code and other relevant regulations,
a. The mandatory books and accounts were kept in line with the applicable laws,
b. The documents, which certify the accounts, were kept properly, and
c. The decisions regarding the Company management were duly kept in the minutes book.
2. In our opinion, given the condition and status of the Company, the enclosed financial statements, issued as of December 31, 2010, based on insurance laws and
regulations as well as other accounting principles and standards, accurately and truly reflect the results of business activities during the same period.
In conclusion, we hereby recommend that the business activities summarized in the Board of Director’s report, the financial statements prepared in accordance with
insurance laws and other regulations, and the recommendations of the Board of Directors about the results of the period be approved, and that the members of the Board
of Directors be released of their fiduciary responsibilities.
Istanbul, February 25, 2011
With regards,
Auditor
Abdullah GEÇER
Auditor
Adil G. ÖZTOPRAK
Information about Internal Audit Activities
Internal audit activities at Yapı Kredi Sigorta are carried out by the Internal Audit Unit. As of end-2010, the Unit
includes one director and two experts, reporting directly to the Board of Directors. Audits are conducted based
on an annual audit plan, which is created in line with a risk-based approach and is subject to the approval of
the Board of Directors. The Internal Audit Unit makes general audits, process audits and follow-up audits and
in addition to these, it also conducts investigations. It reports quarterly on important events that occurred and
audit activities that were performed during the reporting period. The reports are submitted to the attention of the
Board of Directors through the Audit Committee, which includes Board Members as well.
The Internal Audit Unit’s activities are directed toward two main goals: controlling whether the administrative and
financial aspects of the insurance operations carried out by Yapı Kredi Sigorta A.Ş. headquarters and regional
offices comply with the related laws and regulations as well as the Company’s procedures; and identifying
the areas that are subject to risks, and making recommendations as to how to avoid those risks, based on its
observations of the capacity and efficiency of the internal control system and business processes.
PART III
OVERVIEW OF FINANCIAL
INFORMATION AND RISK
MANAGEMENT
Annual Report Compliance Statement to be presented to the General Assembly
2010 Annual Report Compliance Statement
The Company’s 2010 Annual Report has been prepared in conformity with the principles and procedures outlined in the Regulation on the Financial Structure of
Insurance, Reinsurance and Pension Companies, published in the Official Gazette dated August 7, 2007 and numbered 26606.
Tayfun BAYAZIT
Chairman
İlkay ÖZEL
Assistant General Manager Doç. Dr. S. Giray VELİOĞLU
General Manager
Mehmet YETGİN
Group Head
M. Teoman ÇELEN
Manager
43
Yapı Kredi Sigorta Anonim Şirketi
Independent auditors’ report as of December 31, 2010
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”) and its subsidiary as of 31 December 2010
and the related unconsolidated statement of income, statement of changes in equity, 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.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Yapı Kredi Sigorta Anonim Şirketi
and its subsidiaries as of December 31, 2010 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.
Other matter
7. The unconsolidated financial statements of the Company prepared in accordance with the accounting principles and standards as set out in the insurance law were
audited by another independent audit firm, who expressed an unqualified opinion in their report dated March 1, 2010.
Additional paragraph for convenience translation to English
8. As of December 31, 2010, 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 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 25, 2011
Istanbul, Turkey
45
CONVENIENCE TRANSLATION OF THE COMPANY’S REPRESENTATION
ON THE UNCONSOLIDATED FINANCIAL STATEMENT PREPARED
AS OF 31 DECEMBER 2010
We confirm that the accompanying unconsolidated financial statements and notes to these unconsolidated financial statements as of 31 December 2010 are prepared
in accordance with the accounting principles and standards as set out in the insurance legislation and in conformity with the related regulations and the company’s
accounting records.
Istanbul, 25 February 2011
Doç. Dr. S. Giray VELİOĞLU
General Manager
İlkay ÖZEL
Abdullah GEÇER
A. Giray ÖZTOPRAK
Auditor
Auditor
Mehmet YETGİN
Company Manager
M. Teoman ÇELEN
Manager
B. Sema ERŞEN
Actuary
Registry No: 20
46 Unconsolidated Financial Information and Risk Management Assessment
Convenience Translation of the Unconsolidated
Balance Sheet at 31 December 2010
(Amounts expressed in Turkish Lira [“TRY”] unless otherwise indicated.)
IA12345B12345678C12345678910D123456789E1234567F1234G12345678I-
ASSETS
Current Assets
Cash and Cash Equivalents
Cash
Cheques Received
Banks
Cheques Given and Payment Orders (-)
Other Cash and Cash Equivalents
Financial Assets and Financial Investments at Insurees’ Risk
Available for Sale Investments
Held to Maturity Investments
Trading Investments
Loans
Provision for Loans (-)
Financial Assets at Insuree’s Risk
Company’s Shares
Provision for impairment of financial assets (-)
Receivables from 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 (-)
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 (-) Provision for Doubtful Receivables from
Related Parties (-)
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 (-)
Deferred Expenses and Income Accruals
Deferred Expenses
Accrued Interest and Rent Income
Deferred Income
Other Deferred Expenses and Income Accrualsf
Other Current Assets
Prepaid Office Supplies
Prepaid Taxes and Funds
Deferred Tax Assets
Job Advances
Advances to Personnel
Count Shortages
Provision for Other Current Assets (-)
Total Current Assets
Note
2.12
2.12
2.12 and 47.1
11.1
2.8 and 11.1
2.8 and 11.1
2.8, 11.1 and 12.1
12.1
12.1
12.1
12.1
12.1
12.1
45
47.1
2.18
Audited
31 December 2010
Audited
31 December 2009
290,659,637
1,300
237,878,001
52,780,336
157,502,393
153,484,496
4,017,897
216,340,442
278,543,027
(66,332,861)
3,120,360
3,569,305
(2,559,389)
433,661
2,289
423,079
8,293
-
156,379,779
3,702
127,477,212
28,898,865
188,582,158
184,906,397
3,675,761
181,455,858
232,732,365
(55,878,972)
3,094,123
75,511
3,747,568
(2,314,737)
59,435
2,167
57,268
-
6,243,867
9,447
6,192,087
86,825
(44,492)
49,842,753
49,842,753
3,224,294
314,274
2,836,775
801
72,444
724,247,047
2,858,807
25,280
2,791,194
86,825
(44,492)
40,620,092
40,620,092
3,311,007
248,713
3,055,673
6,621
573,267,136
The accompanying notes form an integral part of these unconsolidated financial statements.
47
31 December 2010
Audited
31 December 2009
148,249,982
148,249,982
10,311,452
5,373,700
6,286,450
16,333,035
101,661
7,261,834
(25,045,228)
9,161,285
12,733,628
(3,661,798)
89,455
26,562
26,562
10,067,009
10,067,009
177,816,290
902,063,337
148,249,982
148,249,982
18,024,569
5,141,566
16,628,517
16,142,938
143,695
7,033,348
(27,065,495)
5,040,384
5,303,112
(3,098,772)
2,836,044
1,500,972
1,500,972
6,771,263
6,771,263
179,587,170
752,854,306
Audited
IIA12345678910B123456789C1234567D12345678910E12345678910F1234567G123H12345678II-
ASSETS
Non-Current Assets
Receivables from Main Operations
Premium Reserves
Loans to Insurees
Due from Personnel
Provision for Doubtful Receivables from Related Parties (-)
Other Receivables
Leasing Receivables
Other Receivables
Financial Assets
Investment Securities
Subsidiaries
Subsidiaries Capital Commitments (-)
Equity Investments
Equity Investments Capital Commitments (-)
Joint-Ventures
Joint-Ventures Capital Commitments (-)
Other Financial Assets
Tangible Assets
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 (-)
Advances Given for Tangible Assets(including construction in progress)
Intangible Assets
Rights
Goodwill
Start-up Costs
Research and Development Expenses
Other Intangible Assets
Accumulated Amortization (-)
Advances Given for Intangible Assets
Deferred Expenses
Income Accruals
Other Deferred Expenses and Income Accruals
Other Non-Current Assets
Effective Foreign Currency Accounts
Foreign Currency Accounts
Deferred Tax Assets
Other Non-Current Assets Depreciation (-)
Provision for Diminution in Value of Other Non-Current Assets (-)
Total Non-Current Assets
TOTAL ASSETS (I+II)
Note
11.4 and 45.2
2.5 and 2.6
7
6
6
6
6
2.7, 8
8
8
8
2.18, 21 and 35
Audited
LIABILITIES
IIIA12345678B123456C123456D123E1234567F1234567G123H123I123III-
Note
Current Liabilities
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)
Payables from Main 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 (-)
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
Other Payables
Deposits and Guarantees Received
Other Payables
Rediscount on Other Payables (-)
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
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
Prepaid Corporate Tax and Other Fiscal Liabilities (-)
Other Taxes and Fiscal Liabilities Provision
Provisions for Other Risks
Provision for Employment Termination Benefits
Provision for Social Aid Fund Asset Shortage
Provision for Expense Accruals
Deferred Income and Expense Accruals
Deferred Income
Expenses Accruals
Other Deferred Income and Expense Accruals
Other Current Liabilities
Deferred Tax Liabilities
Count Overages
Total Current Liabilities
2,22
2,22
19
4
19 and 47.1
47.1
19 and 47.1
2.24, 4 and 17
2.24, 4 and 17
2.24, 4 and 17
47.1
2.18 and 35
2.18
47.1
2.19 and 22
23
47.1
31 December 2010
89,565,935
24,617,774
23,671,757
41,276,404
1,353,397
484
20,261
1,332,652
9,374,161
59
9,374,102
426,826,735
315,976,310
324,756
110,525,669
14,062,691
5,329,896
991,906
5,420,249
(687,617)
3,008,257
561,971
561,971
17,770,127
11,090,510
6,679,617
2,020,786
2,020,786
561,535,803
Audited
31 December 2009
289
(289)
70,888,034
19,729,964
14,096,193
72,505
36,989,372
760,695
484
760,211
10,718,522
59
10,718,463
347,017,134
253,107,465
6,996,416
76,661,572
10,251,681
8,275,047
4,821,478
886,188
1,778,833
(1,188,363)
1,976,911
15,702,819
12,286,882
3,415,937
1,554,540
1,554,540
454,916,791
49
31 December 2010
Audited
31 December 2009
6,481,612
6,481,612
3,833,314
3,833,314
10,314,926
3,726,882
3,726,882
4,221,050
4,221,050
7,947,932
Audited
LIABILITIES
IVA1234567B123456C123456D123E1234567F123G12H123I12IV-
Note
Non-Current Liabilities
Leasing Payables
Payables from Operations
Premium Deposits
Due to Shareholders
Due to Subsidiaries
Due to Equity Investments
Due to Personnel
Other Payables
Other Payables
Rediscount on Other Payables
Other Liabilities and Related Provisions
Other Payables
Overdue, Deferred or Restructured
Deferred Income
Expenses Accruals
Other Non-Current Liabilities
Total Non-Current Liabilities
2.24, 4, 17 and 47.1
2.19 and 22
The accompanying notes form an integral part of these unconsolidated financial statements
SHAREHOLDERS’ EQUITY
Note
VA1234B12345C123456D1E1F123V-
Share Capital
Nominal Capital
Unpaid Capital (-)
Adjustments to Share Capital
Adjustments to Share Capital (-)
Capital Reserves
Share Premium
Profit from Stock Abrogation
Sales Profits to be Added to the Capital
Foreign Currency Translation Differences
Other Capital Reserves
Profit Reserves
Legal Reserves
Statutory Reserves
Extraordinary Reserves
Special Funds (Reserves)
Valuation of Financial Assets
Other Profit Reserves
Retained Earnings
Retained Earnings
Accumulated Deficit (-)
Previous Years’ Losses
Net Profit for the Period
Net Loss for the Period (-)
Profit for he period-not subject to distribution
Total Shareholders’ Equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (III+IV+V)
2.13 and 15
15
15
15
15
15
Audited
31 December 2010
Audited
31 December 2009
198,495,352
80,000,000
118,495,352
9,350,548
9,350,548
83,070,096
5,600,553
49,304,509
6,173,768
21,991,266
8,677,836
8,677,836
(11,930,295)
(11,930,295)
42,549,071
38,650,317
3,898,754
330,212,608
198,495,352
80,000,000
118,495,352
9,350,548
9,350,548
85,396,142
5,600,553
49,304,509
8,499,814
21,991,266
8,677,836
8,677,836
(11,930,295)
(11,930,295)
289,989,583
902,063,337
752,854,306
51
Convenience Translation of the Unconsolidated Statement
Of Income for the Period 1 January-31 December 2010
I-TECHNICAL PART
Note
A11.1-
1.2-
1.3-
233.13.2B11.1-
1.2-
22.12.234CD11.1-
1.2-
1.3-
234E11.1-
1.2-
22.12.233.13.244.14.256789FG1234567H1234I-
Non-Life Technical Income
Earned Premiums-(Net of Reinsurer’s Share)
Written Premiums-(Net of Reinsurer’s Share)
1.1.1-Gross Written Premium (+)
1.1.2-Reinsurer’s Share of Gross Written Premium (-)
Change in Unearned Premiums Reserve (Net of Reinsurer’s Share and Reserves Carried Forward)(+/-)
1.2.1-Unearned Premiums Reserve (-)
1.2.2-Reinsurer’s Share of Unearned Premiums Reserve (+)
Change in Unexpired Risks Reserve (Net of Reinsurer’s Share and Reserves Carried Forward)(+/-)
1.3.1-Unexpired Risks Reserve (-)
1.3.2-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 (-)
Non-Life Technical Expense
Incurred Losses-(Net of Reinsurer’s Share)
Paid Claims-(Net of Reinsurer’s Share)
1.1.1-Gross Paid Claims (-)
1.1.2-Reinsurer’s Share of Gross Paid Claims (+)
Change in Outstanding Claims (Net of Reinsurer’s Share and Returned Reserve) (+/-)
1.2.1-Outstanding Claims Provision (-)
1.2.2-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) (+/-)
Operating Expenses (-)
Net Technical Income-Non-Life (A-B)
Life Technical Income
1.1.1-Gross Written Premiums (+)
1.1.2-Reinsurer’s Share of Gross Written Premiums (-)
Change in Unearned Premiums Reserve (Net of Reinsurer’s Share and Reserves Carried Forward) (+/-)
Change in Unexpired Risks Reserve (Net of Reinsurer’s Share and Reserves Carried Forward) (+/-)
1.3.1.-Unexpired Risks Reserve (-)
1.3.2.-Reinsurer’s Share of Unexpired Risks Reserve (+)
Life Investment Income
Unrealised Investment Income
Life Technical Expense
Paid Claims (Net of Reinsurer’s Share)
Change in Outstanding Claims (Net of Reinsurer’s Share and Reserves Carried Forward) (+/-)
1.2.1-Outstanding Claim Provisions (-)
1.2.2-Reinsurer’s Share of Outstanding Claim Provisions (+)
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 (+)
Investment Expenses (-)
Unrealised Investment Expense (-)
Investment Income Transferred to Non-Life Technical Part (-)
Net Technical Income-Non-Life (D-E)
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
Pension Funds Technical Expense
Fund Management Expense (-)
Capital Allowance Value Decrease Expense (-)
Other Technical Expenses (-)
Net Technical Income-Pension Funds (G-H)
2.21 and 24
24
10 and 24
47.5
10
47.5
10
47.5
10
47.5
31 and 32
Audited
Audited
01.01.2010-31.12.2010
627,176,877
566,487,506
622,684,691
758,182,493
(135,497,802)
(62,868,845)
(63,670,269)
801,424
6,671,660
6,671,660
55,661,252
5,028,119
5,028,119
(580,629,236)
(439,782,046)
(413,609,701)
(456,303,982)
42,694,281
(26,172,345)
(40,962,806)
14,790,461
(2,754,730)
(138,092,460)
46,547,641
-
01.01.2009-31.12.2009
483,120,199
441,451,956
466,304,280
607,976,823
(141,672,543)
(17,936,471)
(6,153,800)
(11,782,671)
(6,915,853)
(6,915,853)
38,745,037
2,923,206
2,923,206
(505,816,599)
(387,397,607)
(379,375,696)
(445,135,215)
65,759,519
(8,021,911)
(4,195,854)
(3,826,057)
(1,824,436)
(116,594,556)
(22,696,400)
-
II-NON-TECHNICAL PART
Note
CFIJK-
L-
M-
N-
Net Technical Income-Life (D-E)
Total Net Technical Income (C+F+I)
Investment Income
1-Income from Financial Investments
2-Income from Sales of Financial Investments
3-Valuation of Financial Investments
4-Foreign Exchange Gains
5-Income from Associates
6-Income from Equity Subsidiaries and Joint-Ventures
7-Income from Land and Buildings
8-Income from Derivatives
9-Other Investments
10-Investment Income Transferred from Life Technical Part
Investment Expense (-)
1-Investment Management Expenses (Interest incl.) (-)
2-Diminution in Value of Investments (-)
3-Loss from Realization of Financial Investments (-)
4-Investment Income Transferred to Non-Life Technical Part (-)
5-Loss from Derivatives (-)
6-Foreign Exchange Losses (-)
7-Depreciation Expenses (-)
8-Other Investment Expenses (-)
Income and Expenses from Other Operations and Extraordinary Operations (+/-)
1-Provisions (+/-)
2-Rediscounts (+/-)
3-Special Insurance Account (+/-)
4-Inflation Adjustment (+/-)
5-Deferred Tax Assets (+/-)
6-Deferred Tax Liabilities Expenses (-)
7-Other Income
8-Other Expenses (-)
9-Prior Year’s Income
10-Prior Year’s Expenses (-)
Net Profit/(Loss) for the Period
1-Profit/(Loss) for the Period
2-Corporate Tax Provision and Other Fiscal Liabilities (-)
3-Net Profit/(Loss) for the Period
26
26 and 45
6.1
47.5
47.5
47.1
35 and 47.5
Audited
01.01.2010-31.12.2010
46,547,641
46,547,641
69,412,660
27,606,419
262,691
7,362,964
3,585,045
26,492,624
4,102,917
(61,739,948)
(2,272)
(55,661,252)
(4,133,592)
(1,942,832)
(6,544,196)
(9,732,277)
41,698
2,767,431
710,125
(331,173)
42,549,071
47,676,157
(5,127,086)
42,549,071
Audited
01.01.2009-31.12.2009
(22,696,400)
(22,696,400)
51,354,369
27,149,886
1,910,963
10,828,278
2,866,588
7,007,884
1,590,770
(43,464,449)
(3,079)
(81,320)
(38,745,037)
(2,873,474)
(1,761,539)
4,655,018
(699,578)
1,803,024
4,565,365
270,983
(1,284,776)
(11,930,295)
(10,151,462)
(1,778,833)
(11,930,295)
53
Convenience Translation of the Unconsolidated Statements
Of Cash Flows for the Period 1 January-31 December 2010
Note
A123456789101112B123456789C1234567DEFG-
CASH GENERATED FROM MAIN OPERATIONS
Cash flows from insurance operations
Cash flows from reinsurance operations
Cash flows from private pension funds operations
Cash outflows from insurance operations (-)
Cash outflows from reinsurance operations (-)
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 (-)
Net cash provided by main operations
CASH FLOWS FROM INVESTING OPERATIONS
Sale of tangible assets
Tangible assets purchases (-)
Financial assets purchases (-)
Sales of financial assets
Interest received
Dividends received
Other cash inflows
Net Cash from investing activities
CASH FLOWS FROM FINANCING OPERATIONS
Issue of shares
Cash inflows due to the borrowings
Leasing payments (-)
Dividends paid (-)
Other cash inflows
Net cash used in financing activities
EFFECT OF EXCHANGE DIFFERENCES ON CASH
AND CASH EQUIVALENTS
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period (E+F)
6.3
45
Audited
01.01.2010-31.12.2010
Audited
01.01.2009-31.12.2009
668,056,998
67,295,532
(531,578,508)
(125,994,743)
77,779,279
20,261
(73,151,312)
4,648,228
617,749,483
93,944,943
(513,934,561)
(146,566,225)
51,193,640
(87,748,772)
(36,555,132)
11,265,038
(6,215,581)
(167,044,863)
203,503,681
27,026,277
26,492,624
519,027
95,546,203
45,213
(2,361,644)
(69,210,372)
91,884,613
30,116,434
6,994,867
676,986
58,146,097
-
(10,739,894)
(10,739,894)
(437,173)
99,757,258
156,024,114
255,781,372
(6,886)
10,844,185
145,179,929
156,024,114
38
2.12
BCDEFGHIJII-
A-
BCDEFGHIJIII-
IA-
80,000,000
-
(2,326,046)
6,173,768 118,495,352
-
5,600,553
Legal
Reserves
2,207,340
3,393,213
5,600,553
5,600,553
49,304,509
Statutory
Reserves
18,421,558
(17,869)
30,900,820
49,304,509
49,304,509
Capital Increase (A1 + A2))
1- Cash
2- From Internal Resources
Own Shares of the Company
Gain and Losses Not Included in the Income Statement (Note 15)
Value Increase in the Assets
Other Income and Losses
Inflation Adjustments
Net Profit for the Period (Note 37)
Dividends Paid (Note 38 and 45)
Transfer
Balances at the period end (31/12/2010) (I+A+B+C+D+E+F+G+H+I+J)
Balances at the prior period end (31/12/2008)
1- Cash
Gain and Losses Not Included in the Income Statement (Note 15)
Dividends Paid (Note 38 and 45)
Transfer
Balances at the period end (31/12/2009) (I+A+B+C+D+E+F+G+H+I+J)
Statements of changes in Shareholders’ Equity-Audited (*)
Financial
Inflation
Foreign
Own Shares
Assets Fair Adjustment
Currency
of the
Value to the Share
Translation
Capital Company (-)
Reserve
Capital Differences
80,000,000
3,093,553 118,495,352
5,406,261
80,000,000
8,499,814 118,495,352
80,000,000
8,499,814 118,495,352
31,341,814
Other
Reserves and
Retained
Profit
21,991,266
9,350,548
31,341,814
31,341,814
(2,326,046)
42,549,071
330,212,608
Retained
Earnings
Total
8,677,836 307,271,380
5,406,261
(17,869)
- (11,930,295)
- (10,739,894)
8,677,836 289,989,583
8,677,836 289,989,583
42,549,071
(11,930,295) (11,930,295)
42,549,071 (3,252,459)
Net
Profit/
(Loss) for
the Period
54,384,475
(11,930,295)
(10,739,894)
(43,644,581)
(11,930,295)
(11,930,295)
Of Changes In Shareholders’ Equity for the Period 1 January-31 December 2010
55
Convenience Translation of the Notes to the Unconsolidated
Financial Statements as of 31 December 2010
1. General information
1.1 Name of the parent company: As of 31 December 2009 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 1943. 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. 34330 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, life insurance and pension
branches.
1.4 Explanation of the activities and characteristics of main operations of the corporation: Disclosed in Notes 1.2 and 1.3.
1.5 Average number of employees during the period by category:
Top and middle management
Other personnel
Total
1 January31 December 2010
42
861
903
44
825
869
1.6 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:
2,262,116
554,590
153,793
3,105,855
632,942
119,626
2,970,499
3,858,423
Long Term Benefits Provided to Top and Middle Management
Provision for employment termination benefits
-
108,612
Total
-
108,612
2,970,499
3,967,035
170,636
164,984
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 in Balance Sheet
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.
1.10 Events occurred after the balance sheet date: Unconsolidated financial statements for the period 1 January-31 December 2010 have been approved by the
Board of Directors on 25 February 2011. The events occurred after the balance sheet date are explained in Note 46.
2. 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 26851 dated 18 April 2008.
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 31 December 2008 and
published in official gazette numbered 27097 effective from 31 March 2009.
Unconsolidated financial statements were prepared on a TRY and historical cost basis, being adjusted for inflation until 31 December 2004, other than the financial assets
and liabilities 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 31
December 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:25290 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 2005. Based on the above mentioned notification of the Treasury, the Company has
restated its financial statements as of 31 December 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 5684.
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.
Changes in Turkish Financial Reporting Standards:
The accounting policies adopted in the preparation of unconsolidated financial statements are outlined below, except the new standards and interpretations were
consistent with the previous year. Company, period of beginning on 1 January 2010, implemented the following new and revised interpretations of TFRS.
•
•
•
•
•
TFRS 17, “Distribution of non-cash assets to owners”
TMS 39, “Financial Instruments: Recognition and Measurement” (Revised)-Appropriate protected instruments.
TFRS 2 (revised) “Company cash-settled share-based payment transactions”
Re-issued TFRS 3 Business Combinations and IAS 27 Unconsolidated and Separate Financial Statements (Revised)
TFRS Improvements, May 2008-all changes are published in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations standard after
sales business continues to hold non-controlling shares in the subsidiary and the partnership where all the assets and liabilities held for sale except for clarifying
changes to provisions concerning the classification as held on December 31, 2009 is valid for the period ended.
• TFRS Improvements, April 2009
The Company management point of view that applying the standards and interpretations above will not materially affect the unconsolidated financial statements in the
future periods.
57
Scope of TFRS improvements, published in April 2009 whether made changes to the Company’s accounting policies, financial condition and performance
standards are as follows:
•
•
•
•
•
•
•
•
•
•
•
•
TFRS 2 “Share based payment”
TFRS 5 “Measurement of non-current assets (or disposal companys) classified as held-for-sale”
FRS 8 “Operating segments”
TMS 1 “Presentation of financial statements”
TFRS 7 “Financial Instruments-Disclosures”
TMS 17 “Leases”
TMS 18 “Revenue”
TMS 36 “Impairment of Assets”
TMS 38 “Intangible assets” “
TMS 39 “Financial Instruments: Recognition and Measurement”-Accounts accepted as protected from financial risk.
TFRS 9 “Reassessment of Embedded Derivatives”
TFRS 16 Hedges of the net investment in foreign operation
The Company does not expect to have an impact on the financial position or performance changes
Changes and interpretations in the standards that are not yet effective and have not been adopted early by the Company:
TFRS 19 Extinguishing Financial Liabilities with Equity Instruments
Effective for annual periods beginning on or after 1 July 2010. TFRS 19 clarifies that equity instruments issued to a creditor to extinguish a financial liability consideration
pain in accordance with paragraph 41 of TMS 39 Financial Instruments; Recognition and Measurement. The equity instruments issued at measured at their fair value,
unless this cannot be reliably measured, in which case they are measured at the fair value of the liability extinguished. Any gain or loss is recognized immediately in profit
or loss.
TFRS 14 Prepayments of a Minimum Funding Requirement (Amendment)
Effective for annual periods beginning on or after 1 January 2011. TFRS 14 provides guidance on assessing the recoverable amount of net pension asset. The amendment
permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is applied retrospectively to the beginning of the earliest period
presented in the first financial statements in which the entity applied the original interpretation.
TFRS 9 Financial Instruments
Effective for annual periods beginning on or after 1 January 2013. The first phase of TFRS 9 Financial Instruments addresses the classification and measurement of
financial assets. Early application is permitted. This standard has not been ratified yet by the European Union. The Company evaluates the regulation of financial status or
whether there is an impact on the performance.
TFRS 32 Financial Instruments: Presentation-Classification of Rights Issues (Amendment)
Effective for annual periods beginning on or after 1 February 2010. The amendment will provide relief to entities that issue rights(fixed in a currency other than their
functional currency), from treating the rights as derivatives with fair value changes recorded in profit or loss. Rights issued in foreign currencies that were previously
accounted for as derivatives will now be classified as equity instruments. Application of the change will result in the reversal of profits or losses previously recognized, as
application of the change will be retrospective. In addition, the impact on previously reported results would be a reclassification in equity.
TMS 24 Related Party Disclosures (Re-Edit)
Effective for annual periods beginning on or after 1 January 2011. The definition of a related party has been clarified to simplify the identification of related party
relationship, particularly in relation to significant influence and joint control. A partial exemption from the disclosures has been included for government-related entities.
Early application is permitted, and early application should be made retrospectively. Entities will need to consider the revised definition of related parties to ensure all the
relevant information is still being captured. The Company does not expect to have an impact on the correction of financial status or performance.
In May 2010, resolve inconsistencies and to clarify statements, TMSK published the third frame arrangement. Changes have been determined for the various effective
dates of July 1, 2010 and after the effective date of early periods beginning. Early implementation is permitted.
TFRS 1 International Financial Reporting Standards are valid for annual accounting periods from January 1, 2011 onwards.
The amendment clarifies the evaluation of accounting policy changes following the publication of financial statements in accordance with the TMS 34 Interim Financial
Reporting Standard for the year in which the TFRS comes into effect. For the first time, the amendment gives practitioners the right to utilize the realistic value as an
approximate value determined according to events prior to the publication of the TFRS financial statements. The amendment also expands the scope of the approximate
cost used for tangible fixed assets or intangible fixed assets, so as to include activities whose ratio is subject to regulation.
TFRS 3 Business Combinations (revised)
Effective for annual periods beginning on or after 1 July 2010. The amendments to TFRS 7 Financial Instruments: Disclosures, TMS 32 Financial Instruments:
Presentation and TMS 39 Financial Instruments: Recognition and Measurement, that eliminate the exemptions 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 2008).
The amendment limits the scope of the measurement choices that only 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, in the event of liquidation, shall be measured either at fair value or at the present ownership instruments
proportionate share of the acquiree’s identifiable net assets net assets.
TFRS 7 Financial Instruments:
Effective for annual periods beginning on or after1 July 2010. The amendment emphasis the interaction between quantitative and qualitative disclosures and the nature
and the extent of risks associated with financial instruments.
TMS 1 Presentation of Financial Statements
Effective for annual periods beginning on or after 1 January 2010. The 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.
TMS 27 Consolidated and Separate Financial Statements
The amendment clarifies that the consequential amendments from IAS 27 made to TMS 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.
TMS 34 Interim Reporting
Effective for annual periods beginning on or after 1 January 2011. The amendment provides guidance to illustrate how to apply disclosure principles in TMS34
TFRS 13 Customer Loyalty Programmes
Effective for annual periods beginning on or after 1 January 2011. The amendment clarifies that when the fair value of award credits is measured based on the value of
the awards for which they could be reemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be
taken into account..
TFRS 7 Financial Instruments: Explanations of comprehensive analysis of off-balance sheet transactions(Amendment)
Effective for annual periods beginning on or after 1 January 2011.The purpose of change, provide better understanding for readers of financial statements about assets
transfer operations (such as securitization)-including possible risk stay on transferring party-. Amendment also provides requirements of additional explanation about
situation in which disproportionate transfer of financial assets at the end of the fiscal year. These changes all largely compatible with the requirements of disclosure of IFRS
and U.S GAAP (U.S. Generally Accepted Accounting Principles).
The Company does not expect to have an impact on changes in financial position or performance.
2.1 Comparative Information
In the financial statements dated December 31, 2010 and 2009 amount of provision for unused vacations are classified under Other Short Term Liabilities account.
In accordance with “J-Subrogation and Salvage Revenue Accounting Records Article “ of the circular dated October 18, 2010 and numbered 2010/16 published by
Undersecretary of the Treasury, because the potential subrogation and salvage deduction from outstanding claims reserve is not included in existing legislation, amount
calculated as of December 31, 2010 transferred to current year by reclassification and followed in “Provisions No Longer Required”.
Company classified the salvage and subrogation receivables and administrative and legal subrogation follow up receivables, in accordance with the draft circulars regarding
subrogation and salvage revenue as of 31 December 2009, accounted to relevant account in order to be consistent with the representation of current period.
2.2 Consolidation
Yapı Kredi Emeklilik A.Ş., the subsidiary of the Company, which is in the scope of “TMS 27-Consolidated and Separate” is not fully consolidated and measured at the
historical cost in the financial statements as of 31 December 2009 (Notes 2, 11.4 and 45.2).
Company will prepare consolidated financial statements of Yapı Kredi Emeklilik A.Ş., a subsidiary of the Company’s. The consolidated financial statements of the Company
as of the date of 31 December 2009, was published on 1 March 2010.
59
2.3 Segment reporting
Operating segments are settled compatible with the segments on information reported to the chief operating decision-maker. Chief operating decision-maker of the
Company is responsible for the uses of resources and evaluation of the performance of the segments. General Manager, who makes the strategic decisions, is determined
as the chief operating decision-maker. Details related to the segment reporting are disclosed in the Note 5.
2.4 Foreign currency translation
The functional currency of the Company is TRY. Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the period end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the income statement.
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from
changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are
recognised in profit or loss, and other changes in carrying amount are recognised in equity.
Foreign exchange differences arising from the translation of non monetary financial assets and liabilities are considered as part of the fair value changes and those
differences are accounted for in the accounts in which the fair value changes are accounted for.
2.5 Property and equipment
Property and equipment are carried at cost less accumulated depreciation. Land is not subject to depreciation due to its infinite years of useful life. Depreciation is
calculated using the straight-line method based on the useful lives of properties. The depreciation periods estimated considering useful lives of tangible assets are as
follows:
Property for Operational Usage (Buildings)
Furniture and fixtures
Machinery and equipment
Motor vehicles
Other tangible assets
50 years
3-15 years
10-20 years
5 years
5 years
If there are indicators of impairment on tangible assets, a review is made in order to determine possible impairment and as a result of the review, if an asset’s carrying
amount is greater than its estimated recoverable amount, the asset’s carrying amount is written down immediately to its recoverable amount by accounting for a provision
for impairment. Gains and losses on disposals of property and equipment are included in other operational income and expenses accounts (Note 6).
2.6 Investment properties
The buildings of the Company held for the purpose of receiving rent or an increase in value or both instead of being used in the operations of the Company or being
sold within the normal business course are classified as investment properties. The investment properties are carried at acquisition cost by deducting the accumulated
depreciation. Investment properties are amortised by the straight-line method over their estimated useful lives. If there are indicators of impairment on investment
properties, a review is made in order to determine possible impairment and as a result of this review, if the property’s carrying amount is greater than its estimated
recoverable amount, the property’s carrying amount is written down immediately to its recoverable amount by accounting for an impairment provision. The recoverable
amount is the higher of the future cash inflows from the existing use of the investment property and the fair value of the property after cost of sale.
The Company have an impairment booking for its investment properties as of 31 December 2010 amount of TRY 11,925 (31 December 2009: TRY 11,925) (Note 7).
The depreciation period of investment properties is 50 years.
2.7 Intangible assets
Intangible assets consist of the acquired information systems, franchise rights and software. Intangible assets are carried at acquisition cost and amortised by the straightline method over their estimated useful lives after their acquisition date. If impairment exists, carrying amount is written down immediately to its recoverable amount
(Note 8).
The amortisation periods of intangible assets are:
Software
License
3 years
15 years
2.8 Financial assets
The Company classifies and accounts for its financial assets as “Financial assets at fair value through profit or loss” (Held-for-trading financial assets), “Available-for-sale
financial assets” and “Loans and receivables (Receivables from main operations)”.
Receivables from main operating activities that receivables arising from insurance contracts and in spite of all receivables arising TMS 39 out of scope to hold the
insurance contracts, since did not applied to TFRS 4, as a facultative company of receivables arising from the insurance contract are classified as financial assets in the
financial statements and company applies TMS 39 principles of the measurement.
Purchases and sales of the financial assets are recognised and derecognised based on “Settlement date”. The classification of the financial assets is determined by the
Company management at inception by considering the purpose for which the financial assets are acquired.
Financial assets at fair value through profit or loss (Held-for-trading financial assets):
Financial assets at fair value through profit or loss consist of financial instruments that are acquired principally for the purpose of generating a profit from short-term
fluctuations in prices or other parameters or formed as a part of a portfolio of financial assets that are managed together for the purpose of short-term profit taking, and
classified as financial assets designated at fair value through profit or loss at inception since they are managed and their performance is evaluated on fair value basis,
regardless of purpose for acquisition.
Financial assets at fair value through profit or loss are accounted for at fair value at inception and are measured at fair value after initial recognition. It is concluded that
the fair value cannot be reliably measured if the price that provides a basis for fair value is not set in active market conditions and “amortised cost value” that is calculated
using the effective interest method is assumed as fair value. Gains or losses generated as a result of the valuation are recognised in the income statement. The valuation
gains and losses on financial assets at fair value through profit or loss are classified in investment income and investment losses, respectively.
Loans and Receivables together with Policy Loans (Receivables from Main Operations):
Loans and receivables are financial assets which are generated by providing money or service to the debtor. Loans and receivables are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest method. Fees and other charges paid related to assets obtained as guarantee for the above
mentioned receivables are not deemed as transaction costs and they are recognised as expense in the income statement.
The Company accounts for an impairment provision for its receivables based on Management’s evaluation and estimations 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. This provision is classified as
“provision for due from insurance operations” on the balance sheet. Management sets its estimations within the risk policies and the prudency principle by considering the
overall position of is receivable portfolio, financial and non-financial data regarding its insurees and its intermediaries and the general economic developments.
In addition to provision for receivables from insurance operations, the Company, the above-mentioned “Receivables from insurance operations” is not in the provision for
doubtful debts taking into account value and quality of receivable and make provision as administrative and legal proceeding provision.
In the financial statements as of December 31, 2010 the Company, according to principles of Treasury circulars dated January 14, 2011 and September 20, 2010
numbered 2010/16 and 2011/1 underlying claim of subrogation receivable over the 6 months from the date of payment (Due from insurance company) and 4 months
(the actual claims and other legal entities), booked receivable provision in addition to this amounts. In addition to the amounts for the first time that the circular
No. 2010/16 dated 20 September 2010 the parties agreed to assets connected with the method mentioned in reserve to claims of recourse for amounts of optional
unallocated reserved for additional provision.
Provision for doubtful receivables is deducted from the related year’s income. Recoveries of amounts previously provided for are treated as a reduction from provisions for
overdue receivables for the period and recorded in the “Provision Expense” account. Such receivables are written off only after all necessary legal proceedings have been
completed (Note 12).
61
Available-for-sale financial assets:
Available-for-sale financial assets are composed of the financial assets except for the “Loans and receivables together with Policy Loans” and “Financial assets at fair value
through profit or loss”.
Available-for-sale financial assets are subsequently measured at fair value after their recognition. It is considered that the fair value can not be reliably measured if the price
that provides a basis for fair value is not set in active market conditions and “amortised cost value” that is calculated using the effective interest method is used as fair
value. Equity securities classified as available-for-sale are carried at fair values if they have quoted market prices in active markets and/or if their fair value can be reliably
measured. The equity securities that do not have a quoted market price in an active market, and if their fair value cannot be reliably measured are carried at cost less the
provision for impairment.
“Unrealised gains and losses” arising from the change in the fair value of available-for-sale financial assets is accounted for under “Valuation of Financial Assets” account
in the shareholders’ equity and not reflected in the income statement until the financial asset is sold, disposed or derecognised. The unrealised gains and losses arising
from the change in the fair value is removed from shareholders’ equity and recognised in the income statement when the financial assets mature or are derecognised.
The Company assesses at each balance sheet date whether there is objective evidence that an available-for-sale financial asset is impaired. In the case of equity
investments classified as available-for-sale financial assets, such as, a significant or prolonged decline in the fair value of the security below its cost is considered as
impairment. If any objective evidence for impairment exists for available-for-sale financial assets, the difference between the acquisition cost and current fair value is
deducted from shareholders’ equity and recognised in the income statement. The impairment losses on available-for-sale equity instruments previously recognised in the
profit or loss cannot be reversed through profit or loss.
In such condition that there’s not a risk of collection in the financial assets classified under available-for-sale financial assets, the Company does not account for a
provision for impairment considering the short-term market fluctuations (Note 11).
2.9 Impairment of Assets
The details about the impairment of assets are explained in the notes in which the accounting policies of the relevant assets are explained.
Mortgages or guarantees on assets are explained in Note 43, provisions for overdue receivables and provisions for receivables which are not overdue are explained in Note
12.1, and provision and rediscount expense for the period are explained in Note 47.5.
2.10 Derivative Financial Instruments
None (31 December 2009: None).
2.11 Offsetting Financial Instruments
Financial assets and liabilities are offset only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or
when the acquisition of the asset and the settlement of the liability take place simultaneously.
2.12 Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits held at banks, other short-term highly liquid investments with original maturities of three months or
less, and bank overdrafts.
Cash and cash equivalents included in the statement of cash flows are as follows:
31 December 2010
237,878,001
52,780,336
1,300
(856,361)
31 December 2009
127,477,212
28,898,865
3,702
(355,665)
Total cash and cash equivalents
289,803,276
156,024,114
Time deposit excess of 3 months
(34,021,904)
-
Cash and cash equivalents basis on cash flow
255,781,372
156,024,114
31 December 2010
31 December 2009
1,974,832
1,830,136
8,130,660
455,726
3,804,968
8,586,386
232,307,366
909,306
117,969,660
565,501
233,216,672
118,535,161
856,361
355,665
237,878,001
127,477,212
Banks
Other cash and cash equivalents (Credit card collections)
Cash
Less-Interest accrual
The details of deposits held at banks are as follows:
Foreign deposits
-time deposits
-demand deposits
TRY deposits
-time deposits
-demand deposits
Interest accrual
Total
As of 31 December 2010, the Company has no restricted time and demand deposits in favor of the Treasury (31 December 2009: None).
Weighted average interest rates time deposits
TRY
USD
EUR
31 December 2010
(%)
8.59
0.60
0.50
31 December 2009
(%)
9.46
0.65
0.65
63
Details of foreign currency denominated demand and time deposits are as follows:
EUR
USD
CHF
GBP
DKK
31 December 2010
Foreign Currency
Time
Demand
Time
373,000
313,908
764,323
783,000
448,567
1,210,509
179,480
80,525
22,013
-
Total
1,974,832
EUR
USD
CHF
GBP
DKK
31 December 2009
Foreign Currency
Time
Demand
Time
2,300,000
59,304
4,968,690
2,100,000
146,619
3,161,970
53,616
9,791
19,825
-
Total
8,130,660
TRY
Demand
643,229
693,485
295,029
192,342
6,051
1,830,136
TRY
Demand
128,114
220,765
77,701
23,392
5,754
455,726
2.13 Share capital
The composition of the Company’s share capital at 31 December 2009 and 31 December 2010 is as follows:
Name of shareholders
Public offering
Other
Total
31 December 2010
Share
Amount
53.10%
42,480,000
33.69%
26,951,880
13.21%
10,568,120
100.00%
80,000,000
31 December 2009
Share
Amount
53.10%
42,480,000
33.69%
26,951,880
13.21%
10,568,120
100.00%
80,000,000
As of 31 December 2009, no privileges are granted to the preference shares representing the share capital. (31 December 2009: None).
Authorized capital of the Company is TRY 250,000,000 as of 31 December 2010 and 2009.
Other information about the Company’s share capital is explained in Note 15.
2.14 Insurance and investment contracts-classifications
The insurance contracts are those contracts that transfer insurance risk. The insurance contracts protect the insured against the adverse economic consequences of loss
event under the terms and conditions stipulated in the insurance policy.
The main contracts produced by the Company are within non-life branches mainly in fire, marine, accident, engineering and health. The highest written premium is within
the health branch.
The insurance agreements written in health branch consist of guarantees for the claims regarding the insuree’s identification, diagnosis, and treatment. Fire insurance
policies cover mainly fire and theft guarantees for household and business premises, as well as additional guarantees such as indemnity, rent deficiency, glass, and loss of
profit. Marine insurance (hull, motor or air transport vehicles) covers goods in transit. The Company also writes engineering policies with engineering, assembly, machinery
breakdown, electronic equipment, loss of profit coverage, and policies in accident branch including comprehensive insurance for motor vehicles, traffic, third party liability,
and breach of trust guarantees. Furthermore, there are agriculture insurance contracts produced by Tarım Sigortaları Havuz İşletmesi A.Ş. (“TARSİM”) and compulsory
earthquake insurance contracts produced by Doğal Afet Sigortaları Kurumu (“DASK”). The basis of calculation of insurance technical income and insurance liabilities
arising from insurance contracts is explained Notes 2.21 and 2.24.
Reinsurance agreements
Reinsurance agreements are those agreements between the Company and reinsurance companies providing insurance coverage to the Company regarding losses which
may occur in one or more underlying insurance contracts signed by the Company.
The Company has excess of loss, proportional surplus treaty and proportional quota share reinsurance agreements in the branches that the Company operates. Ceded
premiums arising from excess of loss agreements are accounted for on an accrual basis during the related period. Premiums, claims and technical reserves which are
ceded in accordance with other reinsurance agreements are accounted for on the same basis with the income and liabilities arising from related insurance contracts.
The Company has facultative reinsurance agreements. The Company has not proportional quota share agreements as of 31 December, 2010. However, The Company
has proportional quota share agreements in casco and traffic branches at 31 December 2009. These quota share agreements are the agreements that the liability of the
reinsurer ceases when the reinsurance agreements are expired even though the liability of the Company arising from the insurance contracts continues to exist and these
quota share reinsurance agreements are made on the basis of ceding of written premiums and paid claims during the period of reinsurance agreements for the Company
on 31 January 2010 be renewed after considering the financial statements dated December 31, 2009 an additional provision amounting to TRY 10,251,681 allocated
pursuant to the reinsurance agreement. Treasury circular No. 2010/22 dated 26 November 2010 stated that application of the Company has become mandatory for all
sectors at the end of December 31, 2010.
2.15 Insurance contracts and investment contracts with discretionary participation features
2.16 Investment contracts without discretionary participation features
2.17 Borrowings
2.18 Taxes on Income
Corporate Tax
Corporation tax for 2009 is payable at a rate of 20%. (2009: 20%). Tax rate is applied on the tax base by adjusting for certain disallowable expenses, exempt income and
investment and other allowances. No further tax is payable unless the profit is distributed.
Dividends paid to non-resident corporations, which have a place of business in Turkey, or resident corporations are not subject to withholding tax. Otherwise, dividends
paid are subject to withholding tax at the rate of 15%. An increase in capital via issuing bonus shares is not considered as a profit distribution thus does not incur
withholding tax and no stoppage is applied.
Corporations are required to pay advance corporation tax quarterly at the rate of 20% on their corporate income. Advance Tax is declared by 14th of the second month
following and payable by the 17th of the second month following each calendar quarter end. Advance Tax paid by corporations is credited against the annual Corporation
Tax liability. The balance of the advance tax paid may be refunded or used to set off against other liabilities to the government.
The affiliate shares stocked for minimum 2 years and the 75% of the profit obtained from the property sales are considered as tax exemptions in such condition that the
amount is added onto capital as prestated in Corporate Tax Law or the amount is kept in equity for 5 years.
According to Turkish tax legislation, financial losses on the returns can be offset against period income for up to 5 years. However, financial losses cannot be offset against
previous years’ profits.
There is no such application for the reconciliation of payable taxes with the tax authority. Corporate tax returns are submitted to the related tax office by the 25th day of the
4th month following the month when the accounting period ends. In tax reviews authorized bodies can review the accounting records for the past five years and if errors
are detected, tax amounts may change due to tax assessment.
65
Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. Deferred income tax assets and liabilities are determined using tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised
(Note 21).
2.19 Employee benefits
The Company accounts for its liability related to employment termination and vacation benefits according to “Turkish Accounting Standards Regarding Employee Benefits”
(“TMS 19”) and classifies in balance sheet under the account, respectively, “Provision of Employment Termination Benefits” and “Long Term Other Payables and Expense
Accruals”.
According to the Turkish Labour Law, the Company is required to pay termination benefits to each employee whose jobs are terminated except for the reasons such as
resignation, retirement and attitudes determined in Labour Law. The provision for employment termination benefits is calculated over present value of the possible liability
in scope with the Labour Law by considering determined actuarial estimates (Note 22).
The Company also makes payments to monthly pension contribution as contributions paid by staff within the company retirement plan and recognize as expense in
personnel expenses amount of which corresponds to their share.
2.20 Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be
required to settle the obligation; and the amount can be reliably estimated. Provisions are measured over expenditures expected to be required to settle the obligation by
considering the risks and uncertainties related to the obligation at the balance sheet date. When the provision is measured by using the estimated cash outflows that are
required to settle the obligation, the carrying value of the provision is equal to present value of the related cash outflows.
Where some or all of the expenditure required settling a provision is expected to be reimbursed by another party, the reimbursement shall be recognised as an asset if and
only it is virtually certain that reimbursement will be received and the reimbursement can be reliably estimated.
Liabilities that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly
within the control of the entity are classified as contingent liabilities and not included in the financial statements (Note 23).
2.21 Accounting for revenues
Written premiums
Written premiums represent premiums on policies written during the year, net of cancellations. As disclosed in Note 2.24, premium income is recognised in the financial
statements on accrual basis by allocating the unearned premium reserve over written risk premiums.
Reinsurance Commissions
Commission income related to the ceded premiums to reinsurance companies are accrued within the period and classified in technical part under operating expenses in
the income statement. As disclosed in Note 2.24, reinsurance commission income is recognised in the financial statements on accrual basis by allocating the deferred
commission income over commissions received.
Salvage and subrogation income
As of 31 December 2009, in line with the declaration dated 18 January 2005 and numbered B.02.1.HM.O.SGM.0.3.1.1 of the Treasury, the Company recognises salvage
and subrogation receivables only from insurance companies, and from individuals with whom the Company has agreed on payment terms. In addition, the Company
books a doubtful receivables provision for salvage and subrogation receivables under legal follow-up. In the financial statements as of December 31, 2010 the Company,
according to principles of Treasury circulars dated January 14, 2011 and September 20, 2010 numbered 2010/16 and 2011/1 underlying claim of subrogation receivable
over the 6 months from the date of payment ( Due from insurance company) and 4 months (the actual claims and other legal entities). In the financial statements
as of December 31, 2010, according to dated January 14, 2011 September 20, 2010 and 2010/16 and 2011/1 numbered circulars of Treasury the Company books
provision to the subrogation receivables according to the claim over the 6 months from the date of payment (insurance due from related parties) and 4 months (the actual
claims and other legal entities); in addition to that, the Circular No. 2010/16 dated 20 September 2010 for the first time for the receivables that are not reconciled with
the confirmation, the additional provision is booked. As of December 31, 2010 net amount of the subrogation receivables is TRY 6,515,800 (31 December 2009: TRY
3,843,184) (Note: 12).
Interest income
Interest income is recognised by using the effective interest rate method on an accrual basis.
Dividend income
Dividend income is recognised as an income in the unconsolidated financial statement when the right to receive the payment is established.
2.22 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lesser are classified as financial leases while other leases are classified as
operational leases.
Finance leases are capitalised at the commencement of the lease at the lower of the fair value of the leased property and the present value of the minimum lease
payments. The liability to lessor is classified as the leasing payables in the balance sheet. Each lease payment is allocated between the liability and finance charges so as
to achieve a constant rate on the finance balance outstanding. The interest element of the finance cost except for capitalised portion is charged to the income statement.
The payment of the operational lease is charged to the income statement on a straight-line basis over the lease period (The incentives received or to be received from the
lessor and payments made to intermediaries to acquire the lease contract are also charged to the income statement on a straight-line basis over the lease period). The
Company currently undue operating leases liability is TRY 1,005,901 as of December 31, 2010.
2.23 Dividend Distribution
Listed companies perform dividend distributions as envisaged by Turkish Capital Market Board as explained below:
In accordance with the CMB Communiqué IV No:27 Clause:5 and other several decisions of CMB, in case of dividend distribution the rate of first dividend could not be
less than 20% of remaining distributable profit after deducting the prior year losses if any. Depending on the decisions taken by General Assemblies, publicly traded joint
stock companies are free to distribute dividends in cash, in share certificates, in partial distribution within cash or share certificates while retaining a portion within the
company or retain as a whole with distributing neither cash nor stocks.
As required by CMB decision numbered 7/242 dated February 25, 2005; amount of distributable profit, calculated from net distributable profit in accordance with CMB
regulations related to minimum dividend distribution requirements shall be fully distributed, wherein the amount could be compensated by net distributable profit per
statutory books, otherwise full amount of net distributable profit per statutory books will be distributed. No profit distribution shall be made in the case of net loss in either
statutory books or the financial statements prepared in accordance with CMB regulations.
In accordance with the Capital Market Board decision dated January 27, 2010, concerning with distribution of dividends for publicly traded joint stock companies, it was
decided that no minimum dividend distribution requirement will be applied for publicly traded joint stock companies.
Inflation adjustments to issued capital and historical amount of extraordinary reserves can be used as an internal source of capital increase, dividend distribution in cash
or the net off from prior period losses. In case of usage of inflation adjustment to issued capital in dividend distribution in cash, it is subject to corporation tax.
67
2.24 Technical reserves
Unearned premium reserve
An unearned premium reserve is calculated on a daily basis for all policies in force as of 31 December 2009 for unearned portions of premiums written, except for marine
and earthquake premiums issued before 14 June 2007. During the calculation of unearned portion of premiums written on a daily basis, it is supposed that the policies
start at 12.00 noon and finish at 12.00 noon again. Within the framework of the “Regulation Regarding the Technical Reserves of Insurance, Reinsurance and Pension
Companies and the Assets to which These Reserves Are Invested” (“Regulation on Technical Reserves”) issued in Official Gazette No: 26606 dated 27 August 2007,
unearned premium reserve and the reinsurers’ share of the unearned premium reserve of the policies issued after 1 January 2008, are calculated as the unearned portion
of the premiums and ceded premiums to reinsurers without deducting commissions or any other deductions, on an accrual and gross basis. As for the policies written
before 1 January 2008 with to premium accrued during 2008, the unearned premium reserve is calculated by deducting commissions from premiums. For transportation
policies with an uncertain end date, unearned premium reserve is calculated as 50% of the premiums written in the last three months (Note 17).
Deferred commission expense and income
Within the framework of the Circular numbered 2007/25 and dated 28 December 2007 published by Treasury, the unearned portion of commissions paid to agencies for
the written premiums and commissions received from reinsurers for the ceded premium after 1 January 2008, are recorded as in deferred expenses and deferred income,
respectively on the balance sheet, and as operating expenses on a net basis in the income statement (Note 17).
Unexpired risks reserve
Within the framework of Regulation on Technical Reserves, effective from 1 January 2008, insurance companies are required to account for an unexpired risk reserve
against the probability that future losses incurred from in force policies may exceed the unearned premium reserve accounted for the related policies considering expected
loss ratios. Expected loss ratio is calculated by dividing the current year incurred losses to current year earned premiums. If the loss ratio for a branch is higher than 95%,
the unexpired risk reserve for that branch is calculated by multiplying the ratio in excess of 95% with the unearned premium reserve for the related branch.
The Company has calculated and accounted for net unexpired risk reserve amounting of TRY 324,756 at 31 December 2010 (31 December 2009: TRY 6,996,416) (Note
17).
Outstanding claims reserve
The Company recognizes outstanding claims reserve for the claims which are accrued but not paid yet in the current period or previous periods and for claims incurred
but not reported. Outstanding claim reserves are determined based on reports of experts or assessments of policyholders and experts. (December 31, 2009-Outstanding
claims reserve of expert reports or expert evaluations of the insured is determined in accordance with the reserve for outstanding claims in the calculations, if any,
recourse and other revenue items are considered to have been deducted.)
In accordance with Technical Provisions Regulation, starting from September 30, 2010, a compensation fee; which is realized by using actuarial chain ladder methods
but not reported and of which the application bases are specified by the Undersecretaries of Treasury is calculated by the end of the fiscal period. These are Standard
Chain, Damage/Premium, Cape Cod, Frequency/Force and Munich Chain methods. The difference between the accrued and detected suspended claims reserve and the
selected actuarial chain ladder method is the claim fee, which is realized but not reported.
In order to test the incurred but not reported amounts, different calculation is performed. In this calculation, the amounts covers the last twelve months as gross are taken.
The claims occur before these dates and are reported after these dates are accepted as incurred but not reported. In the calculation of the incurred but not reported
amounts, the claims incurred before these dates and reported after these dates in the last five or more years and the subrogation are calculated that the amount deducted
the salvage and other income collections related to these incurred but not reported amounts is divided by the premium production in the related years is calculated by
multiplying the weighted average and premium production in the twelve month before the current period. According to these calculation, the Company books the net
outstanding claims reserve amounting to TRY 110,525,669 (December 31, 2009-TRY 76,661,572) (December 31, 2009-Outstanding claims reserve adequacy amounting
to TRY 3,343,988, actuarial ladder chain method TRY 4,677,585, estimated subrogation and salvage income accruals TRY 7,691,751).
Actuarial chain ladder method calculations made on the gross amounts, the Company reaches the net amount considering the reinsurance agreements in force or related
insurance agreement.
After the test, the amount of the selected actuarial reserves in the chain ladder method, as compared with the sum of the branches, and which amount the industry in
each related this method is larger than the amounts incurred but not reported reserves are reflected in the financial statements. As at 31 December 2010 amounting to
TRY 26,023,587 for life and non-life branches calculated for claim incurred but not reported.
Furthermore, in the branches that the huge claims are picked by the actuary, adequacy difference is calculated in the following year for the huge claims picked.
A huge claims to elimination is calculated in accordance with Treasury Circular No. 2010/16 dated 18 October 2010 issued by the “F-Huge Claims Agent”. Great claim
elimination is committed for Motor Vehicles, Traffic, Fire and Natural Disasters, General Liability branches.
In accordance with “J-Subrogation and Salvage Revenue Accounting Records Article “ of the circular dated October 18, 2010 and numbered 2010/16 published by
The Company uses standard actuarial chain ladder method for all branches.
The Company includes the incurred but not reported claim fees as of balance sheet date, the revenue accrues such as recourse, salvage and etc., which will be deducted
from accrued suspense claim fee, the suspense damage provision adequacy difference, and the difference between the amount calculated by the actuarial chain ladder
method and the suspense damage provision in its calculation of outstanding claims reserve as of December 31, 2009.
Equalization reserve
In accordance with the Regulation on Technical Reserves, effective from 1 January 2008, insurance companies are required to record an equalization reserve for the
insurance contracts including earthquake and credit coverage, in order to cover the catastrophic risks and in order to equalize the fluctuations within the claim ratios that
may occur during the following accounting periods.
Such reserve is calculated over 12% of net earthquake and credit premiums corresponding to each year. In the calculation of the net premium, the amounts paid for the
non-proportional reinsurance agreements are regarded as ceded premiums. The Company has accounted for an equalization reserve for non-health branches amounting to
TRY 6,481,612 (31 December 2009: TRY 3,726,882) (Notes 17 and 47.1).
3. Critical accounting estimates and judgments
Preparation of financial statements requires the use of estimations and assumptions which may affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities as of the balance sheet date and reported amounts of income and expenses during the financial period. Estimations and assumptions are
evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under current circumstances.
Although the estimations and assumptions are based on the best knowledge of the management for existing events and operations, they may differ from the actual results.
The estimation of the ultimate liability for technical expenses that can be incurred for the existing insurance contracts is the one of the most critical accounting estimates
of the Company. Estimation of the insurance liabilities, by nature, includes the evaluation of several uncertainties. Estimates used in mainly, insurance and indemnity
reserves for outstanding claims, life mathematical equivalents, other financial assets at fair value calculation of technical reserves, provision for severance payments,
provisions for impairment of assets associated with the calculation of deferred tax assets are described in detail, and apart from the footnotes of financial significant impact
on the amounts as reflected in comments that may be realized and the balance between the predictions based on existing or future sources of important assumptions and
assessments made by considering the following:
Provision for employment termination benefits:
Company, calculated the value of employment termination benefits using the actuarial assumptions and reflected in enclosed financial statements and records. As of 31
December 2010, employment termination liabilities is TRY 4,395,285 (31 December 2009: TRY 4,221,050).
Provision for doubtful receivables:
The Company sets doubtful provision for receivables in legal follow-up from agencies and insurers amounting to TRY 2,559,389 (December 31, 2009-TRY 2,314,737) in
the financial statements as of December 31, 2010. Furthermore, the Company sets provision amounting to TRY 1,751,387 (December 31, 2009-TRY 1,224,763) for the
receivables that are no in legal follow-up but the Company thinks that these receivables can not be collected.
Subrogation Receivables:
Company, recorded net subrogation receivables for on an accrual basis as of 31 December 2010 subrogation claims in lawsuits and execution phase and not agreed
person subrogation receivables after doubtful receivables provision TRY 6,515,800 (31 December 2009: TRY 3,843,184).
69
Outstanding Claims Reserve:
During the calculation of the reserve of outstanding claims, not only use estimates reserves but also referred to many experts and the consultant opinion as conclusive
evidence. Outstanding benefit for certain amounts of reserve take a long time to reach the final shape. Therefore, the actuarial calculation of outstanding benefit reserve
by claims chain ladder method also amounts are based on experience of past years claim development amount. In this calculation, the development of claims paid in the
past, the average amount of compensation per claim claims to in the past and the expected number of loss/premium ratio is taken into account. Technical Reserves in
accordance with the Regulation, as of September 30, 2010, by the end of the accounting period determined by the undersecretariat actuarial basis of the implementation
chain ladder methods, benefit cost is calculated using the incurred but not reported. Outstanding claims reserve determined and accrued on account reserve the
difference between with selected actuarial chain ladder method, benefit cost for incurred but not reported. After the test, the amount of the selected actuarial chain ladder
method compared with the sum of the branches, and which of them is larger, the amounts incurred but not reported reserves of each branch are reflected in the financial
statements. Furthermore, in the branches that the huge claims are picked by the actuary, adequacy difference is calculated in the following year for the huge claims
picked.
A huge claim to elimination is calculated in accordance with Treasury Circular No. 2010/16 dated 18 October 2010 issued by the “F-Huge Claim Agent”(Box Plot). Big
claim elimination is committed for Motor Vehicles, Traffic, Fire and Natural Disasters, General Liability branches
The Company’s outstanding claim reserve as of 31 December 2010 is a net amount of TRY 110,525,669 (31 December 2009: TRY 76,661,572).
Deferred Tax:
Deferred tax, taking into consideration the balance sheet liability method, assets and liabilities for financial reporting assets and liabilities and the tax effects of temporary
differences between tax bases are recognized by taking into consideration. Various estimates and judgments used in the calculation of deferred tax assets. Company, as of
31 December 2010 amount of 10,067,009 TRY (31 December 2009: TRY 6,771,263) net deferred tax assets calculated and reflected to the records.
4. Management of insurance and financial risk
Insurance risk
The risk under any one insurance contact is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of the
insurance contracts, this risk is random and therefore unpredictable.
For a portfolio of insurance contracts where the theory of probability is applied to pricing and reserving, the principal risk that the Company faces under its insurance
contracts is that the actual claims and benefit payments exceed the carrying amount of insurance liabilities. The Company determines its insurance underwriting strategy
based on the type of insurance risk accepted and the claims incurred.
The Company manages the aforementioned risks by its overall underwriting strategy and via reinsurance agreements, which the Company is a party to.
The concentration of insurance risk (maximum insured loss) under each branch is summarised below (excluding health branch):
Land vehicles liability
Fire
General losses
General liability
Land vehicles
Transportation
Accident
Air vehicles liability
Water vehicle
Air vehicles
Legal protection
Loans
Total
31 December 2010
526,082,542,589
55,298,915,197
28,670,806,466
10,943,462,784
6,209,512,929
5,444,042,064
7,919,801,458
2,500,075,250
388,140,861
441,023,793
439,953,500
644,338,276,891
31 December 2009
364,605,767,045
46,191,597,047
22,540,161,551
4,888,416,149
4,540,845,359
3,525,472,332
3,193,100,136
2,254,281,200
764,843,559
616,194,574
221,599,000
656,877
453,342,934,829
Sensitivity Analysis
Financial risk
The Company is exposed to financial risk through its financial assets, reinsurance assets and insurance liabilities. In particular the key financial risk is that the proceeds
from its financial assets are not sufficient to fund the obligations arising from its insurance contracts. The most important components of the financial risk are market risk
(including foreign exchange risk, fair value interest rate risk, cash flow interest rate risk and price risk), liquidity risk and credit risk. The Company’s overall risk management
programme focuses on the unpredictability of financial markets and seeks to minimize potential negative effects on the Company’s financial performance. The Company
does not use derivative financial instruments to hedge certain risk exposures. Risk management is carried out by management under policies approved by the Board of
Directors.
(a) Market Risk
i. Cash flow and market interest rate risk
The Company is exposed to interest rate risk through its variable rate financial assets and liabilities.
The Company’s variable rate financial assets expose the Company to interest rate risk If market interest rates of variable rate financial assets had been changed by 1% on
31 December 2009, holding all other variables constant, net assets would have been higher/lower by TRY 331,801 (31 December 2009: TRY 902,194).
ii. Foreign currency risk
The Company is exposed to foreign exchange risk through the impact of rate changes at the translation of Turkish Lira pertaining to foreign currency denominated assets
and liabilities. These risks are monitored and limited by the analysis of the foreign currency position.
As of December 31, 2010, had EUR strengthened/weakened by 10% against TRY with all other variables held constant, net assets would have been higher/lower by TRY
1,486,299 (31 December 2009: TRY 257,473), as a result of foreign exchange gains/losses on the translation of Euro denominated assets and liabilities.
As of December 31, 2010, had USD strengthened/weakened by 10% against TRY with all other variables held constant, net assets would have been higher/lower by TRY
605,923 (31 December 2009: TRY 253,870).
Since the Company has no available-for-sale equities denominated in foreign currency as at 31 December 2009 and 2008, foreign currency changes will not have an effect
on the “Valuation of financial assets” account under shareholders’ equity.
Foreign currency denominated assets and liabilities of the Company is disclosed in related notes.
iii. Price risk
The Company’s financial assets expose the Company to price risk. The Company is not exposed to commodity price risk.
The Company’s common stock investments assets have been stated at market value as of 31 December 2010. If market price of common stocks had been changed by 5%
holding all other variables constant, net assets would have been higher/lower by TRY 12,021 (31 December 2009: TRY 7.185).
The Company’s available-for-sale financial assets with fixed interest rate have been stated at market value as of 31 December 2010. If market price had been changed by
1% holding all other variables constant, impact on the “Valuation of financial assets” account under shareholders’ equity would have been equal to TRY 2,377,951 (31
December 2009: TRY 4,391,541).
Sensitivity analysis related to market risk explained above reflects the effects before tax.
71
(b) Credit Risk
Ownership of financial assets involves the risk that counterparties may be unable to meet the terms of their agreements. The Company’s exposure to credit risk arises
mainly from cash and cash equivalents and deposits in banks, financial assets, reinsurer’s share of insurance liabilities, amounts due from reinsurers, premium
receivables from policyholders and intermediaries. The Company management deems these risks as total credit risk to the counterparty.
The Company monitors the credit risk of financial assets and receivables from insurance operations (including reinsurance receivables) by limiting the aggregate risk to any
individual counterpart and covered by collaterals. Other explanations in relation to these receivables are included in Note 12.
The Company’s financial assets except for loans and receivables which are subject to credit risk are generally composed of domestic government bonds and time and
demand deposits kept in banks and other financial institutions in Turkey and such receivables are not deemed to have high credit risk.
(c) Liquidity risk
The Company uses its available cash resources to pay claims arising from insurance contracts. Liquidity risk is the risk that cash may not be available to pay obligations
when due at a reasonable cost. Management sets limits on the minimum portion of funds available to meet such claims.
The table below analyses the Company’s financial liabilities and insurance liabilities into relevant maturity companys based on the expected remaining period at the
balance sheet or contractual maturity date. The amounts disclosed in table are the undiscounted cash flows except for payables to insurance and reinsurance companies:
Contractual cash flows
Up to
3 months
1 to 5
31 December 2010
3 months
to 1 year
years
Total
Payables from insurance and reinsurance companies
3,852,188
5,868,289
9,720,477
3,852,188
5,868,289
-
9,720,477
Over
5 years
24,897
6,481,612
6,506,509
Total
110,525,669
324,756
6,481,612
117,332,037
3 months
1 to 5
to 1 year
years
7,824,362
72,505
-
Total
9,828,620
72,505
Expected cash flows
31 December 2010
Outstanding claim reserves-net (*)
Unexpired risks reserve-net
Equalization reserve-net
Up to
3 months
49,187,897
2,318
49,190,215
3 months
to 1 year
34,183,216
14,571
34,197,787
Up to
3 months
2,004,258
31 December 2009
Premium reserves
2,004,258
1 to 5 years
27,154,556
282,970
27,437,526
7,896,867
-
9,901,125
Over
5 years
1,322
3,726,882
3,728,204
Total
253,107,465
76,661,572
6,996,416
3,726,882
340,492,335
Expected cash flows
31 December 2009
Unearned premium reserves-net (*)
Outstanding claim reserves-net (*)
Unexpired risks reserve-net
Equalization reserve-net
Up to
3 months
13,130,393
33,720,153
362,951
47,213,497
3 months
to 1 year
238,430,972
20,811,128
6,590,727
265,832,827
1 to 5 years
1,544,778
22,130,291
42,738
23,717,807
(*) The Company expects to make payment of outstanding claims under legal follow-up in a period more than one year. Unearned premium reserves calculated on the
long-term policies are shown as long-term in the table above. All of the outstanding claim reserves and unearned premium reserves are classified as short-term in the
balance sheet.
Company foresees to meet the liabilities of the Company mentioned above with the asset in the financial assets and cash and cash equivalents.
Fair value of the financial assets
Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and
is best evidenced by a quoted market price, if one exists.
The estimated fair values of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies As
of December 31, 2010 and 2009, all financial assets are 1st level of financial assets designated at fair value.
The following methods and assumptions were used to estimate the fair value of the financial instruments for which it is practicable to estimate fair value:
Financial assets
The fair values of balances denominated in foreign currencies, which are translated at period end exchange rates, are considered to approximate carrying values. The fair values of certain financial assets carried at amortised cost, including cash and cash equivalents are considered to approximate their respective carrying values
carried at amortised cost due to their short-term nature. The fair value of premiums receivable along with related provision for overdue receivables is considered to
approximate respective carrying values carried at amortised cost. The cost of the financial assets that are not quoted in an active market, less impairment if any, are
considered to approximate carrying value.
Financial liabilities
The fair values of liabilities on main operations and other financial liabilities are considered to approximate to their respective carrying values.
Capital management
The Company’s objectives when managing the capital are:
-
-
-
to comply with the capital requirements required by Treasury,
to safeguard the Company’s ability to continue as a going concern so that it can continue to provide returns for shareholders,
to price the insurance agreements in proportion to the risks and to yield return to shareholders
As of the preparation date of the financial statements, the minimum required shareholders’ equity of the Company at 31 December 2010 is calculated as TRY
230,682,666 within the framework of the related regulations on capital adequacy (31 December 2009: TRY 168,435,398).
(*) According to regulation article 10, measurement and assessment of capital adequacy of Insurance and Reinsurance and Pension Companies companys prepares
twice a year in June and December.
5. Segment information
Information related to the operational reporting made by the Company to the chief operating decision-maker in the accordance with the “TFRS 8-Operating Segments” is
disclosed in this part.
Numerical limits in “TFRS 8-Operating Segments” is also considered as the reporting to the chief operating decision-maker in the determination of segments and segments
those constitute more than 10% of premium production and net technical income are determined as a separate operating segment. The Company’s production channels
are composed of agency sales and direct sales and there are no policyholders that constitutes 10% of total premium production. The Company operates in Turkey. The
Company mainly generates income from premiums on policies.
Operating segments determined by the Company management as of 31 December 2010 and 2009 is as below:
Non-Health Insurance
Non-Health or elementary insurance mainly consists on Land Vehicles (Casco), Land vehicles liability (Traffic), Fire, transportation, engineering and other industries’
production. Premium production of non-health branches mainly carried out through brokers and banks as insurance risks are usually held within the borders of Turkey.
Especially fire, casco and traffic branch insurance policies is arranged annually. For products with a concentration of high-risk domestic and foreign reinsurance companies
held concurrently with the discretionary policy is necessary transfers are made with reinsurance contracts.
73
Health Insurance
Health insurance provides guarantees for sickness or expenses incurred due to injuries and indemnities if applicable and on the ground of general and special conditions if
any during the policy period. Geographical area that the guarantee is given is disclosed on the policy.
The Company considers the reporting to the chief operating decision-maker according to the “Regulation on Financial Reporting of Insurance and Reinsurance Companies
and Pension Companies”, and in accordance with TMS and TFRS as issued by TMSK and other regulations, communiqués and explanations issued by the Treasury
regarding accounting and financial reporting issues.
The Company does not distribute the assets to the branches, considers them together.
Segment results for the year ended at 31 December 2010
TECHNICAL INCOME
1-Earned Premiums-(Net of Reinsurance Share)
1.1-Written Premiums-(Net of Reinsurance Share)
1.2-Change in Unearned Premiums Reserve
1.3-Unexpired Risks Reserve
2-Other Technical Income-(Net of Reinsurance Share)
TECHNICAL EXPENSE
1-Incurred Losses-(Net of Reinsurance Share)
1.1-Paid Claims-(Net of Reinsurance Share)
1.2-Change in Outstanding Claims (Net of Reinsurance Share and
Returned Reserve) (+/-)
2-Other Technical Expense
Investment income
Personnel expenses
General expenses
Depreciation expense
Provision expense, net
Tax
Investment expense
Other
Net Profit/(Loss)
Health
312,097,808
309,120,866
333,368,763
(24,247,897)
2,976,942
Non-Health
285,215,440
257,366,640
289,315,928
(38,620,948)
6,671,660
27,848,800
Undistributed
-
Total
597,313,248
566,487,506
622,684,691
(62,868,845)
6,671,660
30,825,742
(271,118,139)
(247,410,573)
(248,001,509)
(256,221,263)
(192,371,473)
(165,608,192)
-
(527,339,402)
(439,782,046)
(413,609,701)
590,936
(23,707,566)
(26,763,281)
(63,849,790)
-
(26,172,345)
(87,557,356)
40,979,669
28,994,177
-
69,973,846
-
-
69,412,660
(61,831,820)
(17,255,329)
(1,942,832)
(9,732,277)
(5,127,086)
(4,135,864)
3,187,773
69,412,660
(61,831,820)
(17,255,329)
(1,942,832)
(9,732,277)
(5,127,086)
(4,135,864)
3,187,773
40,979,669
28,994,177
(27,424,775)
42,549,071
TECHNICAL INCOME
1-Earned Premiums-(Net of Reinsurance Share)
1.1-Written Premiums-(Net of Reinsurance Share)
1.2-Change in Unearned Premiums Reserve
1.3-Unexpired Risks Reserve
2-Other Technical Income-(Net of Reinsurance Share)
TECHNICAL EXPENSE
1-Incurred Losses-(Net of Reinsurance Share)
1.1-Paid Claims-(Net of Reinsurance Share)
1.2-Change in Outstanding Claims (Net of Reinsurance Share and
Returned Reserve) (+/-)
2-Other Technical Expense
Health
283,430,686
281,178,223
280,516,861
661,362
2,252,463
Non-Health
191,898,683
160,273,733
185,787,419
(18,597,833)
(6,915,853)
31,624,950
Undistributed
-
Total
475,329,369
441,451,956
466,304,280
(17,936,471)
(6,915,853)
33,877,413
(275,053,922)
(251,511,033)
(251,807,643)
(189,410,895)
(135,886,574)
(127,568,053)
-
464,464,817
(387,397,607)
(379,375,696)
296,610
(23,542,889)
(8,318,521)
(53,524,321)
-
(8,021,911)
(77,067,210)
8,376,764
2,487,788
-
10,864,552
-
-
51,354,369
(56,709,238)
(15,596,751)
(1,761,539)
(699,578)
(1,778,833)
(2,957,873)
5,354,596
51,354,369
(56,709,238)
(15,596,751)
(1,761,539)
(699,578)
(1,778,833)
(2,957,873)
5,354,596
8,376,764
2,487,788
(22,794,847)
(11,930,295)
Investment income
Personnel expenses
General expenses
Tax
Investment expense
Other
Net Profit/(Loss)
6. Property and equipment
6.1 Depreciation and amortisation expenses for the period: TRY 1,942,832 (1 January-31 December 2009: TRY 1,761,539).
6.1.1 Depreciation expenses: TRY 1,379,806 (1 January-31 December 2009: TRY 1,386,455).
6.1.2 Amortisation expenses: TRY 563,026 (1 January-31 December 2009: TRY 375,084).
6.2 Changes in depreciation calculation methods and effect of such changes on depreciation expenses for the year: None (1 January-31 December
2009: None).
75
6.3 Movements of property and equipment in the current period:
6.3.1 Cost of property and equipment purchased: TRY 1,531,654 (1 January-31 December 2009: TRY 1,167,968).
6.3.2 Cost of property and equipment sold or used as scrap: TRY 11,265,038 (1 January-31 December 2009: TRY 9,716,577).
6.3.3 Revaluation increases in the current period:
6.3.3.1 Cost of fixed assets (+): None (1 January-31 December 2009: TRY 857,407).
6.3.3.2 Accumulated depreciation (-): None (1January-31 December 2009: None).
6.3.4 Nature, amount, beginning and ending dates of construction-in-progress: (*): TRY 89,455 (31 December 2009: TRY 395,573).
(*) Data processing automation project starting in December 2010 and planned to be completed in 2011 is followed under other financial assets.
Movement table of tangible assets is as follows:
1 January 2010
Additions
Transfers
Disposals
31 December 2010
16,628,517
16,142,938
143,695
7,033,348
5,965
976,787
316,768
33,713
(33,713)
(10,348,032)
(786,690)
(75,747)
(54,569)
6,286,450
16,333,035
101,661
7,261,834
Total cost
39,948,498
1,299,520
-
(11,265,038)
29,982,980
Accumulated depreciation:
Properties for operational usage
Motor vehicles
(4,758,044)
(14,121,204)
(90,469)
(6,225,488)
(127,402)
(730,303)
(20,332)
(391,026)
(10,114)
10,114
2,509,173
765,158
75,747
49,995
(2,376,273)
(14,086,349)
(45,168)
(6,556,405)
(25,195,205)
(1,269,063)
-
3,400,073
(23,064,195)
Cost:
Motor vehicles
Total accumulated depreciation
Net book value
14,753,293
-
6,918,785
1 January 2009
Additions
Disposals
Impairment
31 December 2009
Cost:
Property for operational usage
Motor vehicles
15,771,110
24,629,064
251,792
6,987,734
958,876
209,092
(9,445,002)
(108,097)
(163,478)
857,407
-
16,628,517
16,142,938
143,695
7,033,348
Total cost
47,639,700
1,167,968
(9,716,577)
857,407
39,948,498
(4,442,408)
(22,966,075)
(165,643)
(5,904,608)
(315,636)
(493,356)
(16,690)
(451,544)
9,338,227
91,864
130,664
-
(4,758,044)
(14,121,204)
(90,469)
(6,225,488)
(33,478,734)
(1,277,226)
9,560,755
-
(25,195,205)
Property for operational usage
Motor vehicles
Total accumulated depreciation
Net book value
14,160,966
14,753,293
In circumstances where the fair value of the tangible assets is lower than the inflation adjusted costs, impairment is accounted for these differences. The Company has
accounted for impairment amounting to TRY 227,336 for the property for operational usage as of 31 December 2010 (31 December 2009: TRY 227,336).
The mortgage on the properties for operational usage in favour of Treasury amounts to TRY 3,328,729 (31 December 2009: TRY 4,669,626) (Note 43).
The details of the tangibles assets obtained from financial leasing agreements as a lessee is follows:
Cost-capitalised leasing agreements
Accumulated depreciation
Net book value
31 December 2010
4,203,591
(4,171,662)
31 December 2009
4,203,591
(3,852,536)
31,929
351,055
7. Investment properties
Cost:
Buildings
Buildings
Net book value
1 January 2010
Additions
Disposals
31 December 2010
5,141,566
232,134
-
5,373,700
5,141,566
232,134
-
5,373,700
(1,870,290)
(110,743)
-
(1,981,033)
(1,870,290)
(110,743)
-
(1,981,033)
3,271,276
(121,391)
3,392,667
77
1 January 2009
Addition
Impairment
31 December 2009
5,153,491
-
(11,925)
5,141,566
5,153,491
-
(11,925)
5,141,566
(1,761,061)
(109,229)
-
(1,870,290)
(1,761,061)
(109,229)
-
(1,870,290)
-
3,271,276
Cost:
Buildings
Buildings
Net book value
3,392,430
The fair value of investment properties of the Company is determined by the independent, professionally qualified valuation companies. In the circumstances where the fair
value of the investment properties is lower than the costs adjusted for inflation, the differences are accounted for in provision for impairment. As of 31 December 20
10 impairment provision amounting to TRY 11,925 is accounted for investment properties. (31 December2009: TRY 11,925). The fair value of investment properties of the
Company are determined by valuation companies as at the year 2009 as TRY 11,096,524 (31 December 2009: TRY 10,670,000).
The Company has a total monthly rent income from these investment properties amounting to TRY 48,540 (1 January-31 December 2009: TRY 55,331)
Investment properties amounting to TRY 1,703,850 (31 December 2009: TRY 3,921,598) mortgaged over their costs in favour of the Treasury (Note 43).
8. Intangible assets
1 January 2010
Disposals
Transfer
31 December 2010
5,303,112
2,836,044
4,594,472
89,455
2,836,044
(2,836,044)
12,733,628
89,455
8,139,156
4,683,927
-
12,823,083
Accumulated amortisation:
Other
(3,098,772)
(563,026)
-
(3,661,798)
Net book value
5,040,384
4,120,901
1 January 2009
Addition
Disposals
31 December 2009
4,848,912
2,440,471
739,476
395,573
(285,276)
-
5,303,112
2,836,044
7,289,383
1,135,049
(285,276)
8,139,156
Other
(2,723,688)
(375,084)
-
(3,098,772)
Net book value
4,565,695
Cost:
Other
Advances given for intangible assets
Cost:
Other
(*) Other intangible assets consist of computer software and licenses.
9,161,285
5,040,384
9. Investments in associates
The Company has no investments in associates accounted for by the equity accounting method. (31 December 2009: None).
10. Reinsurance assets
Reinsurance share of outstanding claim reserve (Note 17)
Reinsurance share of unearned premium reserve (Note 17)
Reinsurance companies’ current account-net
Reinsurance income/(expenses)
Reinsurers share in paid claims
Commissions received from reinsurance companies (gross)
Postponement of the commissions that
received from reinsurers
Ceded premiums (Note 24)
Reinsurance share of change in unearned premiums reserve(Note 17)
Reinsurance share of change in outstanding claim reserve
Effect of reinsurance agreement change (*)(Note 47.1)
31 December 2010
75,715,728
55,804,385
(20,551,397)
31 December 2009
59,031,894
55,002,961
(11,002,070)
42,694,281
26,986,609
65,759,519
28,083,155
1,188,987
(135,497,802)
801,424
14,790,461
-
2,871,053
(141,672,543)
(11,782,671)
(3,826,057)
(10,251,681)
Information about reinsurance agreements are disclosed in Note 2.14.
(*) The total effect of the increase in the net technical insurance reserves due to decrease in the related reinsurance share is calculated as as of 31 December 2009 and
the reserve accounted for regarding decline has been presented in the other technical reserves on the balance sheet.
11. Financial Assets
11.1 Financial assets are summarised below by measurement category in the table below:
Blocked
Available-for-sale financial assets
Government bonds (*)
Common stocks (**)
Held-for-trading financial assets
Investment funds
Total
Total
Total
76,324,131
-
76,759,317
401,048
153,083,448
401,048
-
4,017,897
4,017,897
76,324,131
81,178,262
157,502,393
Blocked
Government bonds (*)
Common stocks (**)
Investment funds
31 December 2010
Free
31 December 2009
Free
Total
103,110,617
-
81,491,450
304,330
184,602,067
304,330
-
3,675,761
3,675,761
103,110,617
85,471,541
188,582,158
(*) The interest rates of the government bonds in the available-for-sale portfolio vary between 7.19% and 16.04% (31 December 2009: 7.23%-27.50%).
(**)TRY 240,414 of the shares is listed on the stock market (31 December 2009: TRY 143,696), TRY 160,634 of the shares is not listed on the stock market
(31 December 2009: TRY 160,634).
79
Loans and receivables (Note 12)
31 December 2010
216,340,442
31 December 2009
181,455,858
216,340,442
181,455,858
Total
The Company does not have any available for sale financial asset denominated in foreign currency as of 31 December 2010 (31 December 2009: None).
11.2 Marketable securities issued during the year other than share certificates: None (31 December 2009: None).
11.3 Debt securities issued during the year None (31 December 2009: None).
11.4 Market value of marketable securities and financial assets carried at cost and carrying value of marketable securities and financial assets
shown at market value:
Marketable securities
Government bonds
Investment funds
Common stocks
31 December 2010
Cost
Fair Value
139,524,674
153,083,448
3,661,481
4,017,897
187,425
401,048
143,373,580
157,502,393
160,186,204
188,582,158
Inflation
Adjusted Cost
148,249,982
31 December 2010
Carrying
Value
148,249,982
Fair
Value
-
148,249,982
148,249,982
Inflation
Adjusted Cost
148,249,982
31 December 2009
Carrying
Value
148,249,982
148,249,982
148,249,982
Non-current financial assets
Yapı Kredi Emeklilik A.Ş.
31 December 2009
Cost
Fair Value
156,336,433
184,602,067
3,670,454
3,675,761
179,317
304,330
-
Fair
Value
-
11.5 Marketable securities under “Marketable Securities and Investment Securities” account company and issued by the company’s
shareholders, investments or subsidiaries and the issuers: None (31 December 2009: None).
11.6 Revaluation of property and equipment in the last three years: None (31 December 2009: None). The difference between amortized cost and fair value
of available for sale financial assets is presented net of applicable taxes under shareholders’ equity.
-
11.7-11.9 Other information about financial assets
The realised fair value changes and interest income from available-for-sale financial assets amounting to TRY 20.553.396 (31 December 2009: TRY 25.336.083) are
accounted for under investment income in the income statement. At the end of the period, the unrealised fair value changes amounting to TRY 6.173.768 (31 December
2009: TRY 8.499.814) are classified in the shareholders’ equity (Note 15).
The maturity analysis of financial assets is as follows:
31 December 2010
6 month1 year
43,497,960
-
Government bonds
Investment funds
Common stocks
No stated
maturity
4,017,897
401,048
0-3
month
24,105,180
-
3-6
month
2,734,732
-
Total
4,418,945
24,105,180
2,734,732
Government bonds
Investment funds
Common stocks
No stated
maturity
3,675,761
304,330
0-3
month
17,305,295
-
31 December 2009
3-6
6 monthmonth
1 year
84,766,100
25,994,620
-
3,980,091
17,305,295
Total
84,766,100
43,497,960
25,994,620
1-3
year
81,719,667
-
More than
3 years
1,025,909
-
Total
153,083,448
4,017,897
401,048
81,719,667
1,025,909
157,502,393
1-3
year
55,486,160
-
More than
3 years
1,049,892
-
Total
184,602,067
3,675,761
304,330
55,486,160
1,049,892
188,582,158
12. Loans and Receivables
12.1 Classification of the receivables as receivables from main customers, receivables from interested parties, receivables for the advance
payment (short-term and long-term prepayment) and the others:
31 December 2010
104,453,098
102,943,348
6,565,107
213,961,553
31 December 2009
88,015,276
85,331,197
4,731,683
178,078,156
68,150,779
3,120,360
-
58,401,777
3,094,123
75,511
285,232,692
239,649,567
(64,581,474)
(2,559,389)
(1,751,387)
(54,654,208)
(2,314,738)
(1,224,763)
Provision for overdue and non overdue receivables
(68,892,250)
(58,193,709)
Receivables from main operations-net
216,340,442
181,455,858
Receivables from intermediaries
Receivables from policyholders
Receivables for salvage and claim recovery-gross
Due from insurance operations
Doubtful receivables from main operations
Receivables from insurance and reinsurance companies
Premium reserves
Due from main operations-gross
Provision for claim recovery receivables under legal follow-up (***)
Provision for doubtful receivables from main operations
Provision for receivables from policyholders and intermediaries (*)
81
The details of claim recovery and salvage receivables are as follows:
31 December 2010
71,146,581
(19,661,820)
31 December 2009
59,385,891
(21,609,488)
Receivables for salvage and claim recovery-net
51,484,761
37,776,403
Provision for salvage and claim recovery under follow-up
Provision for salvage and claim recovery under follow-up-reinsurance share (**)
(64,581,474)
19,612,513
(54,654,208)
20,720,989
(44,968,961)
(33,933,219)
6,515,800
3,843,184
Receivables for salvage and claim recovery-gross (including doubtful receivables)
Receivables for salvage and claim recovery reinsurance share (**)
Provision for salvage and claim recovery-net
Total
(*)
(**)
(***) Disclosed under provision for doubtful receivables from main operations in the balance sheet.
Disclosed under provision for due from insurance operations in the balance sheet.
In accordance with the draft circulars regarding subrogation and salvage receivables as of December 31, 2009 together with subrogation receivables in administrative and legal follow up amounts are made re-classification by the company to the related accounts.
12.2 Due from/due to shareholders, investments and subsidiaries:
Balances and transactions with the related parties are disclosed in Note 45.
12.3 Total mortgages and collateral obtained for receivables:
The details of mortgages and collaterals received are as follows:
USD
31 December 2010
EUR
TRY
Total
Mortgages and collateral obtained
Pledges
Letter of guarantees
Public borrowing notes
Guarantees and collaterals obtained from companies
108,320
-
2,108
-
44,593,450
12,241,911
787,990
155,622
44,593,450
12,352,339
787,990
155,622
Total
108,320
2,108
57,778,973
57,889,401
31 December 2010
EUR
TRY
Total
USD
Pledges
109,261
-
2,222
-
42,260,055
8,626,016
859,873
177,587
42,260,055
8,737,499
859,873
177,587
Total
109,261
2,222
51,923,531
52,035,014
12.4 Receivables and payables denominated in foreign currencies having no foreign exchange rate guarantees, assets in foreign currencies and
conversion rates:
Foreign currency type
31 December 2010
Foreign currency amount
Exchange rate
Amount TRY
Loans and Receivables
Foreign currency denominated premium receivables
EUR
USD
CHF
GBP
SEK
JPY
AUD
DKK
9,070,789
10,631,270
138,689
19,846
16,656
492,167
23
(11,647)
2.0491
1.5460
1.6438
2.3886
0.2261
0.0189
1.5685
0.2748
18,586,954
16,435,943
227,977
47,404
3,766
9,302
36
(3,201)
35,308,181
Foreign currency denominated commission payables
EUR
USD
CHF
GBP
DKK
JPY
SEK
AUD
885,964
1,079,949
12,763
2,649
14,085
9,300
83
5
2.0491
1.5460
1.6438
2.3886
0.2748
0.0189
0.2261
1.5685
1,815,429
1,669,601
20,980
6,327
3,871
176
19
8
3,516,411
31 December 2009
Exchange rate
Amount TRY
EUR
USD
CHF
GBP
SEK
JPY
CAD
DKK
5,181,435
6,199,830
141,611
34,760
31,650
185,310
32
(12,484)
2.1603
1.5057
1.4492
2.3892
0.2082
0.0163
1.4368
0.2902
11,193,454
9,335,084
205,223
83,049
6,590
3,021
46
(3,623)
20,822,844
EUR
USD
CHF
GBP
DKK
JPY
SEK
CAD
617,714
887,808
30,611
6,138
14,778
16,292
521
5
2.1603
1.5057
1.4492
2.3892
0.2902
0.0163
0.2082
1.4368
1,334,448
1,336,773
44,361
14,665
4,289
266
108
7
2,734,917
83
12.5-12.7 Other information about loans and receivables:
The aging of due from insurance operations is as follows:
31 December 2010
65,959,838
97,871,084
36,593,405
5,797,618
3,092,703
31 December 2009
47,477,466
90,476,896
31,612,117
5,828,777
-
209,314,648
175,395,256
71,146,581
(1,918,202)
59,385,892
(2,048,783)
278,543,027
232,732,365
Opening balance-1 January
Additions during the period
Release of provision during the period
2010
1,224,763
697,078
(170,454)
2009
1,299,878
1,422
(161,546)
Closing balance-31 December
1,751,387
1,224,763
Additions during the period (*)
2010
33,933,219
12,576,570
(1,540,828)
2009
24,853,146
11,259,046
(2,178,973)
44,968,961
33,933,219
Overdue
Up to 3 months
3 to 6 months
6 months to 1 year
Over 1 year
Claim recovery and salvage receivables (gross)
Rediscount on receivables
Total
The movement of provision for receivables from policyholders and intermediaries is as follows:
The movement of provision for doubtful net claim recovery and salvage receivables is as follows:
(*) According to dated January 14, 2011 September 20, 2010 and 2010/16 and 2011/1 numbered circulars of Treasury the Company books provision to the subrogation
receivables according to the claim over the 6 months from the date of payment (insurance due from related parties) and 4 months (the actual claims and other legal
entities) amounting to TRY 2,920,383 TRY in the additions in the current period and the additional provision is booked amounting to TRY 1,662,055 for the remaining
amount of individual subrogation receivables that are not yet settled.
The movement of provision for doubtful receivables from main operations is as follows:
2010
2,314,737
244,652
2009
48,600,009
8,368,937
2,559,389
56,968,946
The aging of the overdue but not impaired receivables from policyholders and agencies are as follows:
Up to 3 months
3 to 6 months
6 months to 1 year
Over 1 year
Total
31 December 2010
55,424,042
7,745,365
1,832,325
958,106
31 December 2009
43,721,980
2,173,332
829,813
752,341
65,959,838
47,477,466
31 December 2010
20,964,223
7,491,231
553,803
31 December 2009
21,159,146
6,025,401
572,268
29,009,257
27,756,815
The details of the guarantees received for the receivables stated above are follows:
Mortgages
Total
13. Derivative financial instruments
14. Cash and cash equivalents
Cash and cash equivalents that are included the statement of cash flows for the year ended 31 December 2010 and 2009 are shown in Note 2.12.
15. Share capital
Other Capital Reserves:
In accordance with the Corporate Tax Law article 5.1.e, 75% of the profit obtained from the sales of the properties of the company is considered as tax exempt in such
condition that the amount is kept in capital reserves under liabilities for 5 years. The profit assumed as tax exemption cannot be transferred to any account except for the
capital account or retrieved from the company. In accordance with the notification of the Treasury numbered 2008/41, dated
27 October 2008, the Company accounted TRY 3,711,141 total investment sales income calculated according to the TMS regulations, generated from the sales of the
building realised in 2008 is recognised in the statement of income calculated according to TMS regulations. The Company classified TRY 3,898,754 which consists of 75%
of investment sales income, amounting to TRY 5,198,339, generated from the sales of the building realised in 2010 and calculated using the book values as determined
by Tax Procedural Law, in “Profit not Subject to Distribution” included in “Net Profit for the Period” account company under shareholders’ equity and this amount is
transferred to account “Other Capital Reserves” in 2011.
Profit reserves as of December 31, 2010 and 2009 in the shareholders’ equity accounts express earthquake claims reserves come up in the balance sheet as of December
31, 2006 and revenue obtained from this account and revenue fallowed until the date of 14 June 2007.
Legal Reserves:
Retained earnings as per the statutory financial statements, other than legal reserve requirements, are available for distribution subject to the legal reserve requirement
referred to below. The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code. The Turkish Commercial Code
stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the company’s paid-in share
capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash distributions in excess of 5% of the paid-in share capital. Under the Turkish
Commercial Code, the legal reserves can only be used to offset losses and are not available for any other usage unless they exceed 50% of paid-in share capital.
85
The movement of legal reserves in the period is as follows:
Reserves accounted in dividend payment
2010
5,600,553
-
2009
2,207,340
3,393,213
5,600,553
5,600,553
Valuation of Financial Assets:
The unrealised gains and losses that result from the changes in the fair values of available-for-sale financial assets are directly recognized in the shareholders’ equity as
“Valuation of Financial Assets”.
The movement of valuation of financial assets in the period is as follows:
2010
8,499,814
(4,210,803)
842,161
1,303,245
(260,649)
6,173,768
Opening balance-1 January (net of tax effect)
Outflows due to matured or sold financial assets
Tax effect of redempted asset
Fair value change
Tax effect of fair value change (Note 35)
2009
3,093,553
(62,276)
12,455
6,820,102
(1,364,020)
8,499,814
The Company has 8,000,000,000 units of shares all fully paid (31 December 2009: 8,000,000,000 units).
Movement of common stocks at opening balance and closing balance is as follows:
Paid in capital
Total
Paid in capital
Total
1 January2010
Unit
Nominal TRY
8,000,000,000
80,000,000
8,000,000,000
80,000,000
1 January2009
Unit
Nominal TRY
8,000,000,000
80,000,000
8,000,000,000
80,000,000
Issued capital
Unit
Nominal TRY
-
-
Issued capital
Unit
Nominal TRY
-
Amortised
Nominal Unit
Amortised
Nominal Unit
-
-
16. Other reserves and equity component of discretionary participation feature
Information about other reserves classified in share capital is explained in Note 15.
-
TRY
-
TRY
-
31 December 2010
Nominal Unit
TRY
8,000,000,000
80,000,000
8,000,000,000
80,000,000
31 December 2010
Nominal Unit (*)
TRY
8,000,000,000
80,000,000
8,000,000,000
80,000,000
17. Insurance liabilities and reinsurance assets
17.1 Guarantees to be provided and guarantees provided for life and non-life branches:
Required guarantee amount to be provided for non-life branches
Guarantees provided for non-life branches (*)
31 December 2010
72,288,237
76,894,222
31 December 2009
56,145,133
102,855,054
(*) In accordance with the article 4 of Communiqué regarding “The Financial Structure of Insurance, and Reinsurance and Pension Companies”, published in the Official
Gazette (No: 26606) dated 7 August 2007 in accordance with the adaptation to the Insurance Law, the insurance and pension fund companies operating in personal
accident and life branches should be provided guarantees that equals to one third of required capital amount in each capital adequacy calculation period.
17.2 Number of life policies, the number and mathematical reserve amount of the life policies that enter and exit during the year and current
status: None
(31 December 2009: None).
17.3 Guarantee amount to be provided for non-life branch:
Disclosed in Note 4.
Unit prices of pension funds and savings founded by the Company: None (31 December 2009: None).
17.4 Units and amounts of share certificates in portfolio and in circulation: None (31 December 2009: None).
17.5 Units and amounts of share certificates in portfolio and in circulation: None (31 December 2009: None).
17.6 Numbers and portfolio amounts of the individual and group pension funds’ participants (entered, left, cancelled during the period and the
current participants: None (1 January-31 December 2009: None).
17.7 Valuation methods of profit share calculation for life insurance: None (1 January-31 December 2009: None).
17.8 Number of units and individual/company allocation of gross/net contribution amounts of the private pension fund participants during the
period: None (1 January-31 December 2009: None).
17.9 Number of units and individual/company allocation of gross/net contribution amounts of the private pension fund participants transferred
from another company during the period: None (1 January-31 December 2009: None).
17.10 Number of units and individual/company allocation of gross/net contribution amounts of the private pension fund participants
transferred from the life insurance portfolio to the private pension fund portfolio during the period: None (31 December 2009: None).
17.11 Number of units and individual/company allocation of gross/net contribution amounts of the private pension fund participants that left
the Company and transferred to another company or that left the Company but did not transfer to another company: None (1 January-31 December
2009: None).
17.12 Number of units, gross/net premiums and individual/company allocation for life policyholders that joined the portfolio during the period:
None (1 January-31 December 2009: None).
17.13 Number of units, gross/net premiums and individual/company allocation of mathematical reserves for life policyholders that left the
portfolio during the period: None (1 January-31 December 2009: None).
17.14 Profit share allocation rate to the life policyholders: None (1 January-31 December 2009: None).
87
17.15-17.19-Other required information about liabilities from insurance agreements:
Outstanding claims reserve:
Paid claims
Increase
-Outstanding claims of current period
-Prior years’ outstanding claims
Gross
114,472,327
(39,859,073)
78,557,616
79,047,523
(489,907)
31 December 2010
Reinsurance share
(53,431,747)
15,289,198
(28,388,928)
(34,674,360)
6,285,432
Net
61,040,580
(24,569,875)
50,168,688
44,373,163
5,795,525
Closing balance
153,170,870
(66,531,477)
86,639,393
Claims incurred but not reported (*)
Total
33,070,527
186,241,397
(9,184,251)
(75,715,728)
23,886,276
110,525,669
Paid claims
Increase
-Outstanding claims of current period
-Prior years’ outstanding claims
Gross
108,190,172
(37,424,394)
43,706,549
55,492,095
(11,785,546)
31 December 2009
Reinsurance share
(52,894,074)
11,100,285
(11,637,958)
(25,369,515)
13,731,557
Net
55,296,098
(26,324,109)
32,068,591
30,122,580
1,946,011
Closing balance
114,472,327
(53,431,747)
61,040,580
22,702,802
3,425,876
4,677,585
(9,585,124)
(7,411,632)
(81,888)
1,893,373
15,291,170
3,343,988
4,677,585
(7,691,751)
135,693,466
(59,031,894)
76,661,572
Gross
308,110,425
63,670,270
31 December 2010
Reinsurance share
(55,002,961)
(801,424)
Net
253,107,465
62,868,845
371,780,695
(55,804,385)
315,976,310
Net change
Gross
301,956,626
6,153,800
31 December 2009
Reinsurance share
(66,785,632)
11,782,671
Net
235,170,994
17,936,471
Closing balance
308,110,426
(55,002,961)
253,107,465
Outstanding claims adequacy reserve (*)
Chain ladder reserve (*)
Expected salvage and claim recovery income accrual (*)
Total
(*) The related reserves are calculated on a gross and net basis and recorded in the financial statements.
Unearned premium reserve:
Net change
Closing balance
As of 31 December 2010, deferred commission income and deferred commission expenses are TRY 10,929,569TRY (31 December 2009: TRY 12,118,556) and TRY
45,716,218 (31 December 2009: TRY 37,971,078), respectively, and recorded in deferred income and expense accruals account on balance sheet.
Unexpired risk reserve (*):
Gross
6,996,416
(6,671,660)
31 December 2010
Reinsurance Share
-
Net
6,996,416
(6,671,660)
324,756
-
324,756
Net change
Gross
80,563
6,915,853
31 December2009
Reinsurance share
-
Net
80,563
6,915,853
Closing change-31 December
6,996,416
-
6,996,416
Net change
Gross
3,726,882
2,754,730
31 December 2010
Reinsurance share
-
Net
3,726,882
2,754,730
6,481,612
-
6,481,612
Net change
Gross
1,902,446
1,824,436
2009
Reinsurance share
-
Net
1,902,446
1,824,436
3,726,882
-
3,726,882
3,538,770
2,662,534
5,447
11,423
555
3,256
5,764
31 December 2010
currency rate (*)
2.0590
1.5535
2.4011
0.31389
1.6544
1.05275
0.2762
Amount TRY
7,286,328
4,136,246
13,078
3,585
918
3,428
1,592
Net change
Equalization reserve (*):
(*) The reserves calculated in terms of net value as described in note 2.24.
Foreign currency denominated items in claims reserve are as follows:
Type
EUR
USD
GBP
FRF
CHF
DEM
DKK
11,445,175
Type
EUR
USD
GBP
FRF
CHF
2,433,395
654,789
2,071
11,423
713
31 December 2009
currency rate (*)
2.1707
1.5130
2.4017
0.3309
1.4585
Amount TRY
5,282,171
990,696
4,974
3,780
1,040
6,282,661
The Company prepares the claim development table by considering net paid claims in accordance with the Regulation on Technical Reserves.
Elimination of huge claim
Outstanding claims before
2004
Indirect outstanding
claims
Gross IBNR
Reinsurance share
(reserves included)
Net outstanding claim
amount
P/L
Outstanding claim
amounts
Claims paid
Accident year
Payment made in the
year of the accident
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
3,194,908
(250,144,217)
234,384,474
12,943,131
1,675,377
2,067,748
809,024
939,037
520,334
6,128,862
(334,046,398)
309,334,451
25,305,248
4,057,418
3,721,297
(3,698,268)
1,455,113
-
8,017,948
(363,229,911)
344,347,774
19,452,657
3,493,325
2,213,107
1,733,994
-
6,420,045
(377,318,432)
366,662,780
14,542,725
1,290,516
1,242,456
-
1 January 2004
1 January 20051 January 20061 January 200731 December 2004 31 December 2005 31 December 2006 31 December 2007
Claim development table as of 31 December 2010:
9,050,090
(403,611,433)
401,900,488
9,770,667
990,368
-
1 January 200831 December 2008
9,872,262
(421,237,306)
427,363,813
3,745,755
-
2,551,651,726
85,760,184
11,507,004
9,244,609
(1,155,250)
2,394,150
520,334
Total Net
Paid
58,954,192
110,525,669
110,525,669
(75,715,728)
4,668,253
33,070,527
12,104,169
34,760,142
101,638,307
(408,703,754) (2,558,584,451)
467,657,946
-
1 January 20091 January 201031 December 2009 31 December 2010
89
5,384,752
(207,375,655)
191,900,370
15,447,493
1,597,258
230,314
1,051,856
1,313,264
1,219,852
3,812,567
(248,999,432)
234,143,379
13,009,372
1,739,948
2,131,459
849,248
938,593
-
1 January 2004
1 January 200531 December 2004 31 December 2005
6,501,863
(332,479,459)
309,340,299
25,376,045
4,076,662
3,874,031
(3,685,715)
-
11,030,764
(361,381,163)
345,373,576
20,372,220
3,652,457
3,013,674
-
6,949,189
(375,879,406)
366,787,446
14,677,263
1,363,885
-
11,597,490
(400,332,459)
402,132,345
9,797,604
-
50,087,314
(377,228,496)
427,315,811
-
1 January 20091 January 201031 December 2009 31 December 2010
76,661,573
76,661,572
(59,031,893)
4,217,115
22,702,802
3,425,876
(9,585,125)
4,677,585
6,078,086
8,813,188
95,363,938
(2,303,676,071)
2,276,993,226
98,679,997
12,430,211
9,249,478
(1,784,611)
2,251,857
1,219,852
Total Net
Paid Paid
In accordance with the Regulation on Technical Reserves, since the outstanding claim reserve per branch in the current period is less than the amount calculated by chain ladder method issued by
Treasury, the Company has accounted for net additional outstanding claim reserve in total amounting to TRY 23.886.276.
Elimination of huge claim
Outstanding claims
before 2003
Indirect outstanding
claims
Gross IBNR
Adequacy
Estimated subrogation
Actuarial method of chain
Reinsurance share
(reserves included)
Net outstanding claim
amount
P/L
Outstanding claim
amounts
Claims paid
Accident year
Payment made in the
year of the accident
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
91
18. Investment contract liabilities
19. Trade and other payables and deferred income
Other main operations payables (Note 47.1)
Reinsurance payables
Payables from insurance operations
Deferred commission income (Note 17)
Other liabilities (Note 47.1)
Other deferred income
Total
31 December 2010
41,276,404
23,671,757
24,617,774
10,929,569
9,374,102
160,941
110,030,547
31 December 2009
36,989,372
14,096,193
19,729,964
12,118,556
10,718,463
168,326
93,820,874
31 December 2010
Exchange rate (*)
1.5535
0.3138
2.4011
Amount TRY
215,671
11,270
7,429
Related party transactions are disclosed in Note 45.
Payables denominated in foreign currencies are as follows:
USD
FRF
GBP
138,829
35,915
3,094
234,370
USD
FRF
GBP
138,829
35,915
3,094
31 December 2009
Exchange rate (*)
1.5130
0.3309
2.4017
Amount TRY
210,048
11,885
7,431
229,364
20. Borrowings
21. Deferred income tax
Deferred income tax was calculated for the temporary differences in the balance sheet items arising due to measurement in financial statements and measurement in
accordance with Tax Law.
The enacted tax rate used for the calculation of deferred income taxes on temporary differences that are expected to be realised in the following periods under the liability
method is 20%.
As of 31 December 2010 and 2009 the temporary differences giving rise to deferred income tax assets and deferred income tax liabilities with using appropriate tax rates
are as follows:
Cumulative temporary differences
31 December 2010 31 December 2009
Deferred income tax assets
Provision for premium and commission for employee
Provision for lawsuits
Provision for receivables from
intermediaries and policyholders
Provision for unused vacations
Fixed asset depreciation difference
Provisions for not received invoices
Provisions of effect of renewal of reinsurance agreements (Note 47.1)
Chain ladder reserve
Deferral of asistance premiums
Subrogation provisions
Other
Deferred income tax assets/(liabilities)
7,914,665
4,395,285
3,008,257
3,618,578
4,221,050
1,976,911
1,582,933
879,057
601,651
723,716
844,210
395,382
1,751,387
2,020,786
324,755
715,688
552,114
19,927,576
2,887,052
4,746,503
4,582,439
47,710
1,224,763
1,554,540
6,996,416
24,451
10,251,681
4,677,585
2,145,094
498,852
350,277
404,157
64,951
143,138
110,423
3,985,515
577,410
949,301
916,488
9,542
244,953
310,908
1,399,283
4,890
2,050,336
935,517
429,019
99,770
52,874,217
37,189,921
10,574,843
7,437,984
Fixed asset depreciation differences
Provision for other income
(2,536,442)
(1,630,078)
(1,305,870)
(1,754,934)
(262,153)
(1,094,593)
(507,288)
(326,016)
(261,174)
(350,987)
(52,431)
(218,919)
Total deferred income tax liabilities
(2,539,173)
(3,333,603)
(507,834)
(666,721)
10,067,009
6,771,263
Total deferred income tax assets
Deferred income tax liabilities
Net deferred income tax assets (Note 35)
The movement of deferred income tax is as follows:
Deferred tax income
Closing balance-31 December (Note 35)
2010
6,771,263
3,295,746
2009
3,538,699
3,232,564
10,067,009
6,771,263
93
22. Retirement Benefit Obligations
Provision for employment termination benefits-Short term
Provision for employment termination benefits-Long term
31 December 2010
561,971
3,833,314
31 December 2009
4,221,050
4,395,285
4,221,050
Under Turkish Labour Law, the Company is required to pay termination benefits to each employee who has completed one year of service and whose employment is
terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement
age (58 for women and 60 for men). After the changes made on 23 May 2002 in the legislation, some process of transition clauses related to the length of service before
retirement have been omitted.
The amount payable consists of one month’s salary limited to a maximum of TRY 2,517.01 (31 December 2009: TRY 2,365.16) for each year of service at 31 December
2010.
The liability is not funded, as there is no funding requirement.
The provision has been calculated by estimating the present value of the future probable obligations arising from the retirement of the employees.
Before the date of December 31, 2010, the provision for employment termination benefits is TRY 400,945 and termination provision is TRY 161,026 for the personnel who
are definitely noticed that are dismissed.
TMS 19 requires actuarial valuation methods to be developed to estimate the enterprise’s obligation. Accordingly, the following actuarial assumptions were used in the
calculation of the total liability:
Discount rate per annum (%)
Turnover rate for estimating the probability of retirement (%)
31 December 2010
4.66
94.71
31 December 2009
5.92
94.94
The principal assumption is that the maximum liability will increase in line with inflation. Thus, the discount rate applied represents the expected real rate after adjusting
for the anticipated effects of future inflation. As the maximum liability is revised semi-annually, the maximum amount of TRY 2,623.23 (1 January 2010: TRY 2,427.04)
which is effective from 1 January 2011, has been taken into consideration in calculating the provision for employment termination benefits.
Movement in the provision for employment termination benefits in the current period is as follows:
Paid during the period (Note 33)
Charge for the period
2010
4,221,050
(1,248,943)
1,423,178
2009
3,893,175
(1,158,641)
1,486,516
4,395,285
4,221,050
23. Provisions for Other Liabilities and Charges
Commitments and contingent liabilities not recognised as liabilities are disclosed in Note 43.
Guarantees and pledges received are disclosed in Note 12.3.
The details of provisions that are classified under provisions for expense accruals in balance sheet are as follows:
Personnel bonus provision
Provision for marketing and general administrative expenses
31 December 2010
6,127,503
552,114
31 December 2009
2,904,078
511,859
6,679,617
3,415,937
24. Net Insurance Premium Revenue
The distribution of premium income is as follows:
Sickness\Health
Land vehicles
Accident
Fire and natural disasters
General losses
Transportation
General liability
Other
Gross
337,430,078
147,683,262
61,902,739
16,346,018
103,561,926
55,243,330
11,105,191
19,279,183
5,630,766
Total premium income
758,182,493
Sickness\Health
Land vehicles
Accident
General losses
Transportation
General liability
Other
Gross
284,571,739
99,728,087
48,954,371
13,165,201
90,839,359
43,383,082
9,683,478
9,982,051
7,669,455
607,976,823
1 January-31 December 2010
Reinsurance share
(4,061,315)
(971,219)
(4,089,379)
(2,445,414)
(63,561,038)
(42,335,305)
(4,647,297)
(9,721,564)
(3,665,271)
(135,497,802)
1 January-31 December 2009
Reinsurance share
(4,054,878)
(13,300,455)
(7,529,318)
(2,362,560)
(60,851,664)
(34,620,153)
(5,313,845)
(7,225,061)
(6,414,609)
(141,672,543)
Net
333,368,763
146,712,043
57,813,360
13,900,604
40,000,888
12,908,025
6,457,894
9,557,619
1,965,495
622,684,691
Net
280,516,861
86,427,632
41,425,053
10,802,641
29,987,695
8,762,929
4,369,633
2,756,990
1,254,846
466,304,280
95
25. Fee Income
Income related with pension operations are disclosed in Notes 2.21 and 2.25.
26. Investment Income
Interest income
Dividend income
Net sales income
Cash and cash equivalents
Interest income
Total
20,290,705
26,492,624
262,691
23,425,120
7,007,884
1,910,963
14,678,678
14,553,044
61,724,698
46,897,011
138,092,460
-
116,594,556
-
138,092,460
116,594,556
27. Net Realised Gains on Financial Assets
Information about realised gain/loss on available-for-sale financial assets is disclosed in Notes 11 and 15.
28. Net Fair Value Gains on Assets at Fair Value Through Income
Income gain from investment fund TRY 352,803 as of 31 December 2010 (31 December 2009: TRY 458,734).
29. Insurance Benefits and Claims
30.Investment Contract Benefits
31. Other Expenses by Destination
Operating expenses classified under technical part ( Note 32)
Operating expenses classified under non-technical part-life
Total (Note 32)
32. Expenses by nature
Details of the operating expenses in the income statement are as below:
Commission expenses
Personnel expenses (Note 33)
Office expenses
Outsource expenses
Advertising and marketing expenses
Rent expenses
Transportation expenses
Communication expenses
Maintenance and repair expenses
Other operating expenses
Reinsurance commission income
Other technical expense
Total
83,390,647
61,831,820
3,979,653
4,641,646
3,369,312
2,363,718
1,008,258
704,201
77,048
1,111,797
(25,797,622)
1,411,982
65,828,154
56,709,238
4,153,888
3,510,664
3,425,696
2,342,644
685,017
667,592
113,507
697,743
(30,954,208)
9,414,621
138,092,460
116,594,556
29,863,686
9,347,885
6,032,148
6,109,377
1,248,943
107,686
128,264
8,993,831
27,916,806
8,931,995
5,503,513
4,819,434
1,158,641
420,993
150,995
7,806,861
61,831,820
56,709,238
33. Employee Benefit Expense
Salary payments
Bonus payment
Social security deductions
Sales personnel expense
Employment termination benefits (Note 22)
Unused vacation benefit
Notification benefit
Other
Total (Note 32)
Total salaries and benefits paid to the members of the Board of Directors, General Manager, General Coordinator, Assistant General Manager and other executive
management are explained in Note 1.6.
The Company does not have any shared-based payments. (1 January-31 December 2009: None).
34. Financial Costs
34.1 Total financial expenses for the period: None (1 January-31 December 2009: None).
34.1.1
34.1.2
34.1.3
Expenses related to production cost: None (1 January-31 December 2009: None).
Expenses related to tangibles: None (1 January-31 December 2009: None).
Directly recorded as expense: None (1 January-31 December 2009: None)
34.2 Financial expenses related to shareholders, subsidiaries and investments (any amount exceeding 20% of total will be illustrated
separately): None (31 December 2009: None).
34.3 Sales to/purchases from shareholders, subsidiaries and investments (any amount exceeding 20% of total will be illustrated separately):
Related party transactions and balances are disclosed in Note 45.
97
34.4 Interest, rent or other charges received from or paid to shareholders, subsidiaries and investments (any amount exceeding 20% of total
will be illustrated separately):
35. Income taxes
Tax income and expense recognised in the income statement for the year ended 31 December 2010 and 2009 are summarised below:
293,163
(5,420,249)
(1,778,833)
(528,314)
3,295,746
1,332,801
3,232,564
(2,359,654)
2,786,532
31 December 2010
5,420,249
(2,836,775)
31 December 2009
1,778,833
(3,055,673)
Total
2,583,474
(1,276,840)
Deferred income tax asset
Deferred income tax liability
10,574,843
(507,834)
7,437,984
(666,721)
Deferred income tax asset, net (Note 21)
10,067,009
6,771,263
31 December 2010
47,676,156
2,767,431
44,908,725
20%
(8,981,745)
(494,723)
745,376
6,078,274
293,163
31 December 2009
(10,151,462)
4,565,365
(14,716,827)
20%
2,943,365
(1,561,141)
1,404,308
-
(2,359,655)
2,786,532
Prior year’s excess of corporate tax provision
Corporate tax for the current period
Tax expense classified in equity
on available-for-sale financial assets (Note 15) (*)
Deferred tax income
Total tax (expense)/income
(*) Classified under deferred income tax asset account in the income statement.
Tax
Prepaid taxes (-)
Profit before income tax
Minus: Deferred tax income
Profit before current and deferred income tax
Enacted tax rate
Tax calculated by enacted tax rate
Expenses not allowable for tax purposes
The effect of temporary differences of not calculated tax asset on deferred tax
Income not subject to tax
Provision of excess of previous period corporate tax
Tax charge for the period
36. Net Foreign Exchange Gains
Investment income, net
Technical income, net
General administrative expenses
Total
9,896,412
(17,760,374)
7,315,415
23,656,238
(32,720,009)
9,056,885
(548,547)
(6,886)
42,549,071
8,000,000,000
0.53
1 January31 December2009
(11,930,295)
8,000,000,000
(0.15)
37. Earnings per share
Earnings per share is calculated by dividing net profit for the period into weighted average unit share of the Company.
Net profit for the period
Weighted average number of shares with face value of Kr 1 per share
Earning per share (Kr)
38. Dividends per sharew
Distribution of profit for the year ended 31 December 2010 with a decision of the Board of Directors or the General Assembly are not taken yet. The Company Management
Board meeting held on 2 March 2010, distribution of profit for the year 2009 closed with a loss so is not to be presented to the approval of the General Assembly. The
General Assembly approved this decision on March 23, 2010.
39. Cash generated from operations
Disclosed in the statement of cash flows.
40.Convertible bond
41. Redeemable preference shares
42. Risks
Outstanding claims litigations against the Company (*)
Lawsuits against the Company for refund of premiums
Labour litigations against the Company
Other lawsuits against the Company
Total
31 December 2010
47,468,456
1,032,120
495,481
1,090,858
31 December 2009
42,146,629
896,630
452,209
628,072
50,086,915
44,123,540
(*) Related item is accounted for in outstanding claim reserve and the movement table of outstanding claim reserve is disclosed in Note 17. Related reserve’s net amount
is TRY 27,374,406 (31 December 2009: TRY 18,432,125)
99
43. Commitments
The amount of guarantees and pledges and foreign currency details are as follows:
31 December 2010
Letter of guarantee
USD
15,460
Euro
-
TRY
4,616,931
Total
4,632,391
Total
15,460
-
4,616,931
4,632,391
Letter of guarantee
USD
15,057
Total
15,057
31 December 2009
TRY
5,829,827
Total
5,844,884
5,829,827
5,844,884
31 December 2010
76,413,241
3,328,729
1,703,850
31 December 2009
102,987,219
4,669,626
3,921,598
81,445,820
111,578,443
Mortgages or restrictions on assets:
Marketable securities portfolio (*)
Property for Operational Usage (Note 6)
Investment properties (Note 7)
Total
(*) Marketable securities amounting to TRY 76,264,249 (31 December 2009: TRY 102,855,054) are blocked in favour of the Treasury and TRY 148,992 TRY
(31 December 2009: TRY 132,165) in favour of TARSİM.
44. Business combinations
45. Related-party transactions
Yapı Kredi Company Companies, Yapı Kredi Company Companies’ shareholders and the companies under control of the shareholders are considered as related parties in
these financial statements.
31 December 2010
31 December 2009
277,300,121
154,112,695
277,300,121
154,112,695
29,281,609
1,323,989
263,372
262,875
94,246
122,130
23,526
97,601
74,236
22,273
16,144
5,635
378
31,599,007
24,464,131
1,125,749
259,070
227,284
117,961
96,471
81,588
77,844
62,871
16,699
13,612
6,188
5,278
-
a) Deposits and financial assets
Total
b) Trade receivables
Yapı Kredi Yatırım Menkul Değerler A.Ş.
Yapı Kredi Leasing
Yapı Kredi Kültür Sanat Tic. A.Ş.
Agrosan Kimya San.veTic.A.Ş.
Setur Servis Turistik A.Ş.
Yapı Kredi Portföy Yönetimi A.Ş.
Unicredit (San) Menkul Değerler A.Ş.
Kredi Kayıt Bürosu A.Ş.
Türkiye Eğitim Gönüllüleri Vakfı
Yapı Kredi Yatırım Ortaklığı A.Ş.
Koç Finansal Hizmetler A.Ş.
Ford Otomotiv
YKS Tesis Yönetim Hizmetleri A.Ş. 10.993
Total
26,554,746
Yapı Kredi Sigorta 2010 Annual Report 101
31 December 2010
31 December 2009
c) Trade Payables
2,256,105
3,494,448
Total
2,256,105
3,494,448
484,321
632,563
342,486
86,696
28,829
26,626
19,976
26,626
8,260
11,648
35,329
33,192
32,612
14,590
33,192
7,869
-
1,291,689
618,504
e) Other receivables
Yapı Kredi Factoring A.Ş.
YKS Tesis Yönetim Hizmetleri A.Ş.
423,079
8,293
57,268
-
Total
431,372
57,268
f) Rent income
153,653
112,163
11,261
119,610
106,593
26,100
Total
277,077
252,303
g) Rent expense
1,088,023
687,201
1,233,110
528,741
Total
1,775,224
1,761,851
h) Interest income
23,058,888
22,109,369
Total
23,058,888
22,109,369
i) Interest expense
Yapı Kredi Leasing A.Ş.
289
1,796
Total
289
1,796
d) Other payables
Zer Merkezi Hizmetler A.Ş.
Koç Sistem A.Ş.
Koçnet Haberleşme Teknolojileri ve
Otokoç A.Ş.
Opet Petrolcülük A.Ş.
Otokoç A.Ş.
Koç Holding A.Ş.
Yapı Kredi Bankası A.Ş.
Total
61,070,426
3,036,970
47,711,925
2,223,921
890,205
508,227
296,026
239,997
197,377
3,817
128,218
144,998
122,527
41,156
43,148
24,012
805,444
320,172
24,208
10,178
307,749
15,799
362,729
7,886
5,411
531,903
457,274
248,839
208,488
166,521
133,460
116,479
87,669
21,335
12,376
10,556
972,664
231,857
598,998
10,218
41,731
13,047
665,333
18,599
6,363
68,606,680
54,489,556
k) Commission expense and insurance premiums
14,305,765
1,832,793
-
11,456,818
1,873,440
79,054
Total
16,138,558
13,409,312
l) Commissions income
8,767
5,160
Total
8,767
5,160
m) Other income
237,515
91,674
Total
237,515
91,674
n) Other expense
40,406
38,600
Total
40,406
38,600
j) Written premiums
Yapı Kredi Yatırım Menkul
Değerler A.Ş.
Yapı Kredi Moscow
T.Eğitim Gönüllüleri Vakfı
Unicretid (San) Menkul Değerler A.Ş.
Kredi Kayıt Bürosu
Yapı Kredi Koray GYO A.Ş.
Yapı Kredi Yatırım Ort. A.Ş.
Setair Hava Taşımacılığı ve Hizm. A.Ş.
RMK Marine Gemi Yapım San. A.Ş.
Agrosan Kimya Sanayi ve Tic. A.Ş
Aygaz A.Ş.
Bankalararası Kart Merkezi
Koç Holding
Otokoç A.Ş.
Tümteks Tekstil ve Gıda San. Tic.
Total
o) Dividends received
Other
26,480,569
12,055
6,994,867
13,017
Total
26,492,624
7,007,884
p) Dividends paid
Other
-
5,702,885
853,659
565,098
3,618,252
Total
-
10,739,894
The Company has written premiums amounting to TRY 111,408,768 (1 January-31 December 2009: TRY 84,717,684) by the intermediary of Yapı ve Kredi Bankası A.Ş.
during the period.
45.1 Doubtful receivables from shareholders, investments, subsidiaries: None (31 December 2009: None).
45.2 Breakdown of investments and subsidiaries having an indirect shareholding and management relationship with the Company, participation
rates and amounts of these investments and subsidiaries; profit/loss, net profit/loss in the latest financials, the period of these financials and
the opinion type of the independent audit report if the company is independently audited:
Financial Assets
31 December 2010
Yapı Kredi
Emeklilik A.Ş.
(%)
Independent
Restated
Cost
Financial
Book
Value
Audit
opinion
Statement
period
99.99
148,249,982
148,249,982
Unqualified
31.12.2010
(%)
Independent
Restated
Cost
Financial
Book
Value
Audit
opinion
Statement
period
99.99
148,249,982
148,249,982
Unqualified
31.12.2009
Total
Asset
Total
liabilities
Net
sales
Net profit/
(loss)
2,603,432,660 2,472,114,037
101,564,056
22,589,031
31 December 2009
Yapı Kredi
Emeklilik A.Ş.
Total
Asset
Total
liabilities
Net
sales
Net profit/
(loss)
2,105,869,098 1,970,653,055
86,975,157
20,163,300
45.3 Bonus shares obtained through internally funded capital increases of equity investments and subsidiaries: None (31 December 2009: None).
45.4 Rights on immovable and their value: None (31 December 2009: None).
45.5 Guarantees, commitments and securities given for shareholders, investments and subsidiaries: None (31 December 2009: None).
45.6 Liabilities from distribution of dividends to shareholders: TRY 484 (December 31, 2009: TRY 484).
46. Events after the balance sheet date: None (31 December 2009: None).
47. Other
47.1 Details of “Other” items in the balance sheet which exceed 20% of its respective account company or 5% of total assets:
a) Other receivables from related parties
Receivables from related parties
b) Other cash and cash equivalents:
Credit card collections
c) Other receivables:
Receivables from compulsory earthquake insurance policies
Other
d) Other payables from main operations:
Payables to contracted institutions
Other
e) Other payables to related parties:
Zer A.Ş.
Koç Sistem A.Ş.
Other
f) Other payables:
Payables to intermediaries
Payables to suppliers
Personnel health insurance
Other
g) Other technical reserves-Short term:
Effect of ratio change in reinsurance agreements (Note 10)
31 December 2010
31 December 2009
8,293
-
8,293
-
52,780,336
28,898,865
52,780,336
28,898,865
2,318,583
3,873,504
1,895,781
895,413
6,192,087
2,791,194
39,082,328
2,194,076
36,059,896
929,476
41,276,404
36,989,372
484,321
632,563
11,648
204,120
342,486
86,696
24,392
306,637
1,332,652
760,211
4,068,581
2,786,773
1,664,201
854,547
6,258,800
2,260,639
1,437,466
761,558
9,374,102
10,718,463
-
10,251,681
10,251,681
h) Other taxes and fiscal liabilities:
Provision for court cases
i) Other non-current technical reserves-Long term:
j) Other non-current deferred income and expense accruals Short term:
Unused vacation provision
31 December 2010
31 December 2009
3,008,257
1,976,911
3,008,257
1,976,911
6,481,612
3,726,882
6,481,612
3,726,882
2,020,786
1,554,540
2,020,786
1,554,540
In the consolidated financial statements dated December 31, 2010 and 2009 amount of provision for unused vacations are classified under Other Short Term Liabilities
account.
k) Other receivables and profits:
Personnel bonus not distributed in the previous year
Other
481,279
228,846
106,737
164,246
710,125
270,983
47.2 Due from and due to personnel classified in “Other receivables” and “Other short-term or long-term payables” that exceed 1% of total
assets: None (31 December 2009: None).
47.3 Receivables from salvage and subrogation followed under off-balance sheet item: None (31 December 2009: TRY 2,500,673).
47.4 Income and expenses related to prior periods and the amounts and sources of expenses and losses: None (31 December 2009: None).
47.5 Information that the Treasury requires to be presented:
Provision and rediscount expense/(income) for the period:
62,868,845
26,172,345
(6,671,660)
2,754,730
(7,745,140)
1,188,987
17,936,471
8,021,911
6,915,853
1,824,436
314,078
(7,320,357)
(2,871,052)
5,127,086
(2,767,431)
1,778,833
(4,565,365)
Rediscount on receivables income/(expense)
Reserve for net claim recovery receivables under legal follow-up
Potential subrogation
(The opposite balance as 2009)
Provision for receivables from policyholders and intermediaries
Other expense accruals (unused vacation)
Provision for employment termination benefit
Other provisions
(41,698)
(9,927,266)
(1,803,024)
(2,489,042)
7,691,751
526,624
466,246
174,235
244,652
628,769
(75,115)
91,708
327,875
(61,336)
416,446
Provision Account
9,732,277
699,578
Technical provisions:
Unearned premium reserves, net
Outstanding claim reserve, net
Other technical reserves (Equalization reserve)
Effect of non-renewal of reinsurance agreements
Deferred commission expenses
Deferred commission income
Tax provisions:
Tax provision
Deferred tax provision
Provision expenses:
Note
I.
1.1.
1.2
A
1.3.
1.4
1.5.
B
1.6.
1.7.
1.8.
1.9.
1.10.
1.11.
1.12.
1.13.
1.14.
1.15.
II.
2.1.
2.2.
2.3.
2.4.
2.5.
III
3.1.
3.2.
3.3.
3.4.
IV.
4.1.
4.2.
4.3
4.4.
DISTRIBUTION OF PROFIT FOR THE PERIOD
PROFIT FOR THE PERIOD
TAXES PAYABLE AND LEGAL LIABILITIES
1.2.1. Corporation tax (Income tax)
1.2.2. Income tax deduction
1.2.3. Other taxes and legal liabilities
NET PROFIT FOR THE PERIOD (1.1-1.2)
PREVIOUS YEARS’ LOSSES (-)
FIRST LEGAL RESERVE
LEGAL RESERVES KEPT IN THE COMPANY (-)
NET DISTRIBUTABLE PROFIT FOR THE PERIOD [ (A-(1.3 + 1.4 + 1.5) ]
FIRST DIVIDEND TO SHAREHOLDERS (-)
1.6.1. To common shareholders
1.6.2. To preferred shareholders
1.6.3 To owners of participating redeemed shares
1.6.4 To owners of profit-sharing securities
1.6.5 To owners of profit and loss sharing securities
DIVIDENDS TO PERSONNEL (-)
DIVIDENDS TO FOUNDERS (-)
DIVIDENDS TO BOARD OF DIRECTORS (-)
SECOND DIVIDENDS TO SHAREHOLDERS (-)
To common shareholders
1.10.3. To owners of participating redeemed shares
1.10.4. To owners of profit-sharing securities
1.10.5. To owners of profit and loss sharing securities
SECOND LEGAL RESERVE (-)
STATUTORY RESERVES (-)
EXTRAORDINARY RESERVES
OTHER RESERVES
SPECIAL FUNDS
DISTRIBUTION FROM RESERVES
DISTRIBUTED RESERVES
DIVIDENDS TO SHAREHOLDERS (-)
2.3.2 To preferred shareholders
2.3.4 To owners of profit-sharing securities
2.3.5 To owners of profit and loss sharing securities
DIVIDENDS TO EMPLOYEES (-)
PROFIT PER SHARE
TO COMMON SHAREHOLDERS
TO COMMON SHAREHOLDERS (%)
TO PREFERRED SHAREHOLDERS
TO PREFERRED SHAREHOLDERS (%)
DIVIDENDS PER SHARE
-
-
31 December 2010
Current Period
31 December 2009
Previous Period
47,676,157
(5,127,086)
(5,127,086)
42,549,071
-
(10,151,462)
(1,778,833)
(1,778,833)
(11,930,295)
-
General Assembly is the responsible body for profit distribution and General Assembly was not held as of the preparation date of the financial statements. Since the
statement of profit distribution for the year 2010 is not prepared by the Board of Directors yet, only net profit for the period is disclosed in the statement of profit
distribution.
-
-
ANNUAL ACTIVITY REPORT
COMPLIANCE OPINION
We have been engaged to audit the annual report of Yapı Kredi Sigorta Anonim Şirketi (“the Company”) as of 31 December 2010, which will be submitted to the General
Assembly. This annual report is the responsibility of the Company’s management. Our responsibility, as independent auditors, is to express an opinion on the annual
report regarding whether the financial information presented therein is consistent with the independently audited financial statements and explanatory notes.
We conducted our audit in accordance with the principles and procedures regarding the preparation and issue of annual reports set out by the regulations in conformity
with the Insurance Law No. 5684. Those regulations require that we plan and perform the audit to obtain reasonable assurance as to whether the financial information
presented in the annual report is consistent with the independently audited financial statements and explanatory notes. We believe that our audit provides a reasonable
and sufficient basis for our compliance opinion.
In our opinion, in accordance with procedures and principles identified by regulations in force as per the Insurance Law No. 5684, the financial information included in the
accompanying annual report, is consistent, in all material respects, with the financial situation of Yapı Kredi Sigorta Anonim Şirketi as of 31 December 2010, includes the
Summary Board of Directors’ Report and our independent audit opinion, and is in conformity with the information presented in independently audited financial statements
and explanatory notes.
A member firm of Ernst & Young Global Limited
Şeyda Oltulu. SMMM
Partner
4 March 2011
Istanbul, Turkey
IA12345B12345678C12345678910D123456789E1234567F1234G12345678I-
ASSETS
Current Assets
Cash
Cheques Received
Banks
Trading Investments
Loans
Company’s Shares
Premium Reserves
Loans to Insurees
Due from Personnel
Other Receivables
Leasing Receivables
Other Receivables
Deferred Expenses
Deferred Income
Other Deferred Expenses and Income Accrualsf
Deferred Tax Assets
Job Advances
Count Shortages
Note
2.12
2.12
2.12 and 47.1
11.1
2.8 and 11.1
2.8 and 11.1
2.8, 11.1 and 12.1
12.1
12.1
12.1
12.1
12.1
12.1
45
47.1
2.18
Audited
31 December 2010
Audited
31 December 2009
290,659,637
1,300
237,878,001
52,780,336
157,502,393
153,484,496
4,017,897
216,340,442
278,543,027
(66,332,861)
3,120,360
3,569,305
(2,559,389)
433,661
2,289
423,079
8,293
6,243,867
9,447
6,192,087
86,825
(44,492)
49,842,753
49,842,753
3,224,294
314,274
2,836,775
801
72,444
724,247,047
156,379,779
3,702
127,477,212
28,898,865
188,582,158
184,906,397
3,675,761
181,455,858
232,732,365
(55,878,972)
3,094,123
75,511
3,747,568
(2,314,737)
59,435
2,167
57,268
2,858,807
25,280
2,791,194
86,825
(44,492)
40,620,092
40,620,092
3,311,007
248,713
3,055,673
6,621
573,267,136
31 December 2010
Audited
31 December 2009
148,249,982
148,249,982
10,311,452
5,373,700
6,286,450
16,333,035
101,661
7,261,834
(25,045,228)
9,161,285
12,733,628
(3,661,798)
89,455
26,562
26,562
10,067,009
10,067,009
177,816,290
902,063,337
148,249,982
148,249,982
18,024,569
5,141,566
16,628,517
16,142,938
143,695
7,033,348
(27,065,495)
5,040,384
5,303,112
(3,098,772)
2,836,044
1,500,972
1,500,972
6,771,263
6,771,263
179,587,170
752,854,306
Audited
IIA12345678910B123456789C1234567D12345678910E12345678910F1234567G123H12345678II-
ASSETS
Non-Current Assets
Premium Reserves
Loans to Insurees
Due from Personnel
Other Receivables
Leasing Receivables
Other Receivables
Financial Assets
Subsidiaries
Equity Investments
Joint-Ventures
Tangible Assets
Motor Vehicles
Leased Assets
Intangible Assets
Rights
Goodwill
Start-up Costs
Deferred Expenses
Income Accruals
Deferred Tax Assets
TOTAL ASSETS (I+II)
Note
11.4 and 45.2
2.5 and 2.6
7
6
6
6
6
2.7 and 8
8
8
8
2.18, 21 and 35
Audited
LIABILITIES
Note
Current Liabilities
Leasing Payables
Premium Deposits
Due to Shareholders
Due to Associates
Due to Subsidiaries
Due to Personnel
Other Payables
Other Payables
Deferred Income
Expenses Accruals
Count Overages
2.22
2.22
19
4
19 and 47.1
47.1
19 and 47.1
2.24, 4 and 17
2.24, 4 and 17
02.24, 4 and 17
47.1
2.18 and 35
2.18
47.1
2.19 and 22
23
47.1
31 December 2010
89,565,935
24,617,774
23,671,757
41,276,404
1,353,397
484
20,261
1,332,652
9,374,161
59
9,374,102
426,826,735
315,976,310
324,756
110,525,669
14,062,691
5,329,896
991,906
5,420,249
(687,617)
3,008,257
561,971
561,971
17,770,127
11,090,510
6,679,617
2,020,786
2,020,786
561,535,803
Audited
31 December 2009
289
(289)
70,888,034
19,729,964
14,096,193
72,505
36,989,372
760,695
484
760,211
10,718,522
59
10,718,463
347,017,134
253,107,465
6,996,416
76,661,572
10,251,681
8,275,047
4,821,478
886,188
1,778,833
(1,188,363)
1,976,911
15,702,819
12,286,882
3,415,937
1,554,540
1,554,540
454,916,791
31 December 2010
Audited
31 December 2009
6,481,612
6,481,612
3,833,314
3,833,314
10,314,926
3,726,882
3,726,882
4,221,050
4,221,050
7,947,932
Audited
LIABILITIES
IVA1234567B123456C123456D123E1234567F123G12H123I12IV-
Note
Leasing Payables
Premium Deposits
Due to Shareholders
Due to Subsidiaries
Due to Personnel
Other Payables
Other Payables
Other Payables
Overdue, Deferred or Restructured
Deferred Income
Expenses Accruals
2.24, 4, 17 and 47.1
2.19 and 22
The accompanying notes form an integral part of these unconsolidated financial statements
Note
VA1234B12345C123456D1E1F123V-
Share Capital
Nominal Capital
Unpaid Capital (-)
Capital Reserves
Share Premium
Profit Reserves
Legal Reserves
Statutory Reserves
Retained Earnings
Retained Earnings
2.13 and 15
15
15
15
15
15
Audited
31 December 2010
Audited
31 December 2009
198,495,352
80,000,000
118,495,352
9,350,548
9,350,548
83,070,096
5,600,553
49,304,509
6,173,768
21,991,266
8,677,836
8,677,836
(11,930,295)
(11,930,295)
42,549,071
38,650,317
3,898,754
330,212,608
198,495,352
80,000,000
118,495,352
9,350,548
9,350,548
85,396,142
5,600,553
49,304,509
8,499,814
21,991,266
8,677,836
8,677,836
(11,930,295)
(11,930,295)
289,989,583
902,063,337
752,854,306
I-TECHNICAL PART
Note
A11.1-
1.2-
1.3-
233.13.2B11.1-
1.2-
22.12.234CD11.1-
1.2-
1.3-
234E11.1-
1.2-
22.12.233.13.244.14.256789FG1234567H1234I-
1.1.1-Gross Written Premium (+)
1.1.2-Reinsurer’s Share of Gross Written Premium (-)
1.3.1-Unexpired Risks Reserve (-)
1.3.2-Reinsurer’s Share of Unexpired Risks Reserve (+)
Paid Claims-(Net of Reinsurer’s Share)
1.2.1-Outstanding Claims Provision (-)
1.2.2-Reinsurer’s Share of Outstanding Claims Provision (+)
1.1.1-Gross Written Premiums (+)
1.1.2-Reinsurer’s Share of Gross Written Premiums (-)
1.3.1.-Unexpired Risks Reserve (-)
1.3.2.-Reinsurer’s Share of Unexpired Risks Reserve (+)
1.2.1-Outstanding Claim Provisions (-)
1.2.2-Reinsurer’s Share of Outstanding Claim Provisions (+)
Net Technical Income-Non-Life (D-E)
Entrance Fee Income
2.21 and 24
24
10 and 24
47.5
10
47.5
10
47.5
10
47,5
31 and 32
Audited
Audited
01.01.2010-31.12.2010
627,176,877
566,487,506
622,684,691
758,182,493
(135,497,802)
(62,868,845)
(63,670,269)
801,424
6,671,660
6,671,660
55,661,252
5,028,119
5,028,119
(580,629,236)
(439,782,046)
(413,609,701)
(456,303,982)
42,694,281
(26,172,345)
(40,962,806)
14,790,461
(2,754,730)
(138,092,460)
46,547,641
-
01.01.2009-31.12.2009
483,120,199
441,451,956
466,304,280
607,976,823
(141,672,543)
(17,936,471)
(6,153,800)
(11,782,671)
(6,915,853)
(6,915,853)
38,745,037
2,923,206
2,923,206
(505,816,599)
(387,397,607)
(379,375,696)
(445,135,215)
65,759,519
(8,021,911)
(4,195,854)
(3,826,057)
(1,824,436)
(116,594,556)
(22,696,400)
-
II-NON-TECHNICAL PART
Note
CFIJK-
L-
M-
N-
Investment Income
1-Income from Financial Investments
2-Income from Sales of Financial Investments
3-Valuation of Financial Investments
4-Foreign Exchange Gains
5-Income from Associates
6-Income from Equity Subsidiaries and Joint-Ventures
7-Income from Land and Buildings
8-Income from Derivatives
9-Other Investments
10-Investment Income Transferred from Life Technical Part
1-Investment Management Expenses (Interest incl.) (-)
2-Diminution in Value of Investments (-)
3-Loss from Realization of Financial Investments (-)
4-Investment Income Transferred to Non-Life Technical Part (-)
5-Loss from Derivatives (-)
6-Foreign Exchange Losses (-)
7-Depreciation Expenses (-)
8-Other Investment Expenses (-)
1-Provisions (+/-)
2-Rediscounts (+/-)
3-Special Insurance Account (+/-)
4-Inflation Adjustment (+/-)
5-Deferred Tax Assets (+/-)
6-Deferred Tax Liabilities Expenses (-)
7-Other Income
8-Other Expenses (-)
9-Prior Year’s Income
10-Prior Year’s Expenses (-)
1-Profit/(Loss) for the Period
2-Corporate Tax Provision and Other Fiscal Liabilities (-)
3-Net Profit/(Loss) for the Period
26
26 and 45
6.1
47.5
47.5
47.1
35 and 47.5
Audited
01,01,2010-31,12,2010
46,547,641
46,547,641
69,412,660
27,606,419
262,691
7,362,964
3,585,045
26,492,624
4,102,917
(61,739,948)
(2,272)
(55,661,252)
(4,133,592)
(1,942,832)
(6,544,196)
(9,732,277)
41,698
2,767,431
710,125
(331,173)
42,549,071
47,676,157
(5,127,086)
42,549,071
Audited
01,01,2009-31,12,2009
(22,696,400)
(22,696,400)
51,354,369
27,149,886
1,910,963
10,828,278
2,866,588
7,007,884
1,590,770
(43,464,449)
(3,079)
(81,320)
(38,745,037)
(2,873,474)
(1,761,539)
4,655,018
(699,578)
1,803,024
4,565,365
270,983
(1,284,776)
(11,930,295)
(10,151,462)
(1,778,833)
(11,930,295)
PROFIT DISTRIBUTION
Dear Shareholders,
We propose the allocation of profit for the year 2010 to be made in conformity with the provisions of Article 37 of the Articles of Association as follows:
Yapı Kredi Sigorta A.Ş. Profit Distribution Statement 2010 (TRY)
1. Paid-in/ Issued Capital
2. Total Legal Reserves (Based on Legal Books)
Privileges in profit distribution as per Articles of Association:
3.
4.
5.
6.
7.
8
9.
10.
11.
Consolidated, based on the
Insurance Legislation
49,060,821.67
10,419,852.14
38,640,969.53
0.00
1,530,938.79
37,110,030.74
177,228.50
37,287,259.24
7,457,451.85
7,457,451.85
0.00
7,457,451.85
0.00
0.00
0.00
14,942,548.15
1,840,000.00
0.00
3,898,754.41
8,971,276.33
80,000,000.00
5,600,553.07
None
Unconsolidated, based on
legal books
47,676,156.65
5,127,086.11
42,549,070.54
11,930,294.79
1,530,938.79
29,087,836.96
0.00
29,087,836.96
Profit for the Period
Taxes Payable (-)
Net Profit for the Period (=)
Prior Years’ Losses (-)
1st Legal Reserves (-)
NET DISTRIBUTABLE PROFIT (=)
Donations (+)
Net Distributable Profit Including Donations Used in the Calculation of 1st Dividend
1st Dividend to Shareholders
-Cash
-Bonus Shares
-Total
12.
Dividend to Shareholders with Preferred Shares
13.
Dividend to Members of Board of Directors, Employees, etc.
14.
Dividend to Shareholders who Possess Redeemed Shares
15.
2nd Dividend to Shareholders
16.
2nd Legal Reserves
17.
Statutory Reserves
18.
Special Reserves *
3,898,754.41
19.
949,082.55
20.
Other Resources Accepted as Distributable
-Retained Earnings
0.00
0.00
-Extraordinary Reserves
0.00
0.00
-Other Distributable Reserves in Accordance with Related Laws and Articles of Association
0.00
0.00
* It equals 75% of the profit from real estate sales, as per Corporate Tax Law No. 5520, Article 5.e.
According to the Company’s consolidated results as of end-2010, the net profit that corresponds to the parent company is TRY 38,640,969.53 TRY; however according to
unconsolidated results based on legal books, the net period for the profit is 42,549,070.54. We hereby propose a total of TRY 22,400,000.00 to be distributed on March
28, 2011 as 1st and 2nd Dividend to Shareholders, pursuant to Capital Markets Board’s Communiqué Serial: IV, No: 27, dated November 13, 2001.
Board of Directors
Overview of Financial Status, Profitability and
Payment of Compensation
2009
2010
Fire And Catastrophe
Marine
Sea Vehicles
Motor Own Damage
Air Vehicles
General Damages
Casualty
Credit
General Liability
Health
Legal Protection
Premiums
90,839,359
9,683,478
5,103,114
48,954,371
99,728,087
404,845
1,319,269
43,383,082
13,165,201
32,844
9,982,051
284,571,739
809,383
Retention Ratio
33.0%
45.1%
8.5%
84.6%
86.7%
(0.1%)
0.7%
20.2%
82.1%
0.0%
27.6%
98.6%
100.0%
Premiums
103,561,926
11,105,191
2,573,218
61,902,739
147,683,262
407,565
964,520
55,243,330
16,346,018
0
19,279,183
337,430,078
1,685,463
Retention Ratio
38.6%
58.2%
10.9%
93.4%
99.3%
(0.2%)
(0.1%)
23.4%
85.0%
0.0%
49.6%
98.8%
100.0%
Total
607,976,823
76.7%
758,182,493
82.1%
Paid Loss
34,441,475
4,100,795
485,704
36,007,369
90,080,588
0
357,964
19,741,789
1,380,508
0
1,390,647
257,147,801
575
Retention Ratio
36.6%
35.2%
26.0%
88.2%
83.2%
0.0%
1.7%
26.2%
65.2%
0.0%
43.3%
97.9%
100.0%
Paid Loss
21,436,432
3,041,355
1,767,760
34,711,125
113,111,203
0
34,066
23,638,868
2,591,616
0
2,040,477
253,927,888
3,192
Retention Ratio
45.3%
56.2%
9.5%
98.4%
99.3%
0.0%
1.4%
24.4%
30.8%
0.0%
45.3%
97.7%
100.0%
445,135,215
85.2%
456,303,982
90.6%
2009
10,634,781
1,450,072
326,336
(6,990,633)
(28,297,922)
1,455
(742,173)
6,264,942
10,448,556
(807)
959,257
(17,646,047)
895,783
2010
20,342,570
4,170,318
187,351
(16,753,179)
(5,211,599)
(3,294)
742,440
5,666,886
10,192,462
(877)
4,689,057
20,871,406
1,654,102
(22,696,400)
46,547,641
2009
Loss Distribution
Marine
Sea Vehicles
Motor Own Damage
Air Vehicles
General Damages
Casualty
Credit
General Liability
Health
Legal Protection
Total
Underwriting Profit
Marine
Sea Vehicles
Motor Own Damage
Air Vehicles
General Damages
Casualty
Credit
General Liability
Health
Legal Protection
Total
2010
Information on Risk Management
Based on Risk Types
In order to achieve sustainable profitability in its
field of activity, the Company has devised a risk
management strategy, based on internal systems
which evaluate and manage activities and related
risks in a systematic fashion, and comprising all
regional directorates and units. The Company has also
espoused the Risk Management policies of its parent
company, Koç Finansal Hizmetler.
In the framework of these policies, the Internal
Control and Risk Management Department defines,
measures, monitors, controls and reports on risks
that the Company is subject to. In addition, Internal
Control and Risk Management Department acts as
the compliance department in the implementation of
Law No. 5549 on Prevention of Laundering Proceeds
of Crime and other related regulations.
Risk types that might affect the Company are as
follows.
1. Insurance Risk
The risk in insurance agreements is in the fact that
the probability of the occurrence of the event, which
constitutes the subject matter of the insurance, and
the amount of damage it will cause are unknown. Due
to the nature of insurance contracts, this risk is
accidental and therefore cannot be predicted
precisely. The Company’s basic risk in a policy
portfolio, where the probability theory is applied
to pricing and reserve allocation methods, is the
possibility that the amount of claims and damages
paid are above the registered value of the insurance
reserves. The Company determines its underwriting
strategy based on the type of presumed insurance
risks and the claims incurred.
These risks are managed in accordance with the
Company’s underwriting strategy as well as the
reinsurance agreements the Company entered into in
all insurance branches.
2. Financial Risks
a. Market Risk
Market risk is the possibility of making a loss in onand off-balance sheet positions due to such risks as
interest rate risk, share position risk and exchange rate
risk, which occur as a result of the changes in interest
rates, exchange rates and share prices in a fluctuating
financial market. In other words, it is the negative
impacts, which arise due to changing interest rates
(including borrowing interval), exchange rates, share
prices and commodity prices or price levels in general,
on the Company’s performance in achieving its targets
and protecting its capital and earnings. Market risk
elements such as interest rate risk and exchange rate
risk are periodically measured and reported at Yapı
Kredi Sigorta. The portfolio, which is arranged in line
with the limits approved by the Board of Directors, is
controlled daily, weekly and monthly, including the
maximum loss scenarios estimated to occur within
a given confidence interval and a timeframe defined
under normal market conditions.
b. Liquidity Risk
Liquidity risk corresponds to cash flow problems
in fulfilling contractual liabilities due to maturity
mismatch or market constriction. In meeting risks
resulting from such financial and insurance liabilities,
the Company relies on its financial assets as well as
its cash and securities available in its current asset
account. To this end, the liquidity risk is observed and
controlled daily, weekly and monthly based on the
currencies used.
3. Credit Risk
Credit risk is the possibility that parties, which enter
into agreements with the Company, fully or partially
fail to fulfill their obligations under those agreements.
In that context, the Company’s total credit risks
mainly include insurance operations such as its
activities in financial markets, acquisitions made
for its operations as well as the receivables from
reinsurance companies, policyholders and agencies.
Yapı Kredi Sigorta follows up and limits the credit
risk on its financial assets and receivables from
insurance activities (including reinsurance receivables)
by requiring collaterals and implementing certain
procedures in selection of its counter parties. In
the choice of companies with which a reassurance
relationship is to be established, evaluations by such
rating agencies as Standard&Poor’s and AM Best are
taken into consideration and agency collaterals are
monitored monthly.
4. Operational Risk
Operational risk is defined as risk of loss inflicted by
errors, transgressions, deficiencies or damages owing
to internal processes, personnel or systems, as well as
external events.
The Company acts in accordance with principles
and policies outlined in the directive prepared by Koç
Finansal Hizmetler Operational Risk Management.
Each month, data which has inflicted operational loss
is collected and analyzed department by department.
This information is gathered to serve as raw data to be
used in measurement and scenario analysis models
in “Risk Based Capital Adequacy” calculations which
will be required by Solvency II that shall come into
effect in the future.
In addition, in order to comply with the Solvency
II practice which will be launched in the European
Union in 2012, the Undersecratariat of Treasury
has established a Solvency II Expertise Committee
in 2010. The Company voluntarily joined the
subcommittees under the Solvency II Expertise
Committee and participated in the Quantitative
Impact Study 4.
On the other hand, in order to calculate capital
adequacy according to methods outlined in Basel
II standards, Yapı Kredi Bank and its subsidiaries
continued to collect information from their database
of the last four years, that has caused or could cause
operational loss, so as to be consolidated to the Yapı
Kredi Bank.
Summary Financial Results for the Five-Year Period
Including the Report Period
Financial Highlights
Total Premium Production
Total Underwriting Profit
Total Assets
Paid-in Capital
Profit Before Tax
Net Profit
2006
585,458,771
11,645,048
569,155,490
80,000,000
223,705,983
19,896,558
19,463,854
Summary Financial Results Shareholders’ Equity
Cash and Financial Assets
Total Assets
Total Short Term Liabilities
Total Long-Term Liabilities
31 December 2010
330,212,608
448,162,030
902,063,337
561,535,803
10,314,926
Written Premiums (Net)
Earned Premiums (Net)
Incurred Losses (Net)
Investment Income Transferred from Non-Technical Section
Unexpired Risks Reserve
Change in Other Technical Reserves (Net)
Other Technical Income (Net)
Operating Expenses
Technical Division Balance
622,684,691
566,487,506
(439,782,046)
55,661,252
6,671,660
(2,754,730)
5,028,119
(138,092,460)
46,547,641
Investment Income
Investment Expenses
Other Income (Expenses)
Current Tax and Other Legal Liabilities
Current Profit after Tax
Key Ratios (%)
Underwriting Profit /Premium Production
Profit before Tax /Total Assets
Profit before Tax /Shareholders’ Equity
Premium Production /Total Assets
Shareholders’ Equity /Total Assets
2007
628,142,639
19,527,767
650,521,783
80,000,000
253,598,079
35,948,192
25,356,896
69,412,660
(61,739,948)
(6,544,196)
(5,127,086)
42,549,071
2009
(3.7)
(1.3)
(3.5)
80.8
38.5
2010
6.1
5.3
14.4
84.0
36.6
2008
631,535,814
47,897,719
736,856,699
80,000,000
307,271,380
66,862,022
54,384,475
2009
607,976,823
(22,696,400)
752,854,306
80,000,000
289,989,583
(10,151,462)
(11,930,295)
2010
758,182,493
46,547,641
902,063,337
80,000,000
330,212,608
47,676,157
42,549,071
Marine
Sea Vehicles
Motor Own Damage
Air Vehicles
General Damages
Casualty
Credit
General Liability
Health
Legal Protection
31 December 09
Premium
Ratio %
90,839,359
14.9
9,683,478
1.7
5,103,114
0.8
48,954,371
8.1
99,728,087
16.4
404,845
0.1
1,319,269
0.2
43,383,082
7.1
13,165,201
2.2
32,844
0.0
9,982,051
1.6
284,571,739
46.8
809,383
0.1
Total
607,976,823
Loss Distribution
Marine
Sea Vehicles
Motor Own Damage
Air Vehicles
General Damages
Casualty
Credit
General Liability
Health
Legal Protection
Total
100.0
31 December 09
Paid Loss
Ratio %
34,441,475
7.8
4,100,795
0.9
485,704
0.1
36,007,369
8.1
90,080,588
20.2
0
0.0
357,964
0.1
19,741,789
4.4
1,380,508
0.3
0
0.0
1,390,647
0.3
257,147,801
57.8
575
0.0
445,135,215
100.0
31 December 10
Premium
Ratio %
103,561,926
13.7
11,105,191
1.5
2,573,218
0.3
61,902,739
8.2
147,683,262
19.4
407,565
0.1
964,520
0.1
55,243,330
7.3
16,346,018
2.2
0
0.0
19,279,183
2.5
337,430,078
44.5
1,685,463
0.2
758,182,493
100.0
31 December 10
Paid Loss
Ratio %
21,436,432
4.7
3,041,355
0.7
1,767,760
0.4
34,711,125
7.6
113,111,203
24.8
0
0.0
34,066
0.0
23,638,868
5.2
2,591,616
0.6
0
0.0
2,040,477
0.4
253,927,888
55.6
3,192
0.0
456,303,982
100.0
PART IV
CONSOLIDATED
FINANCIAL INFORMATION
(Convenience translation of independent auditors’ report originally issued in Turkish)
Yapı Kredi Sigorta Anonim Şirketi
Independent auditors’ report as of December 31, 2010
To the Board of Directors of Yapı Kredi Sigorta Anonim Şirketi.
1. We have audited the accompanying consolidated balance sheet of Yapı Kredi Sigorta Anonim Şirketi (“the Company”) and its subsidiary as of 31 December 2010 and the
related consolidated statement of income, statement of changes in equity, 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 Group 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.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Yapı Kredi Sigorta Anonim Şirketi and its
subsidiaries as of December 31, 2010 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.
Other matter
7. The consolidated financial statements of the Group prepared in accordance with the accounting principles and standards as set out in the insurance law were audited by
another independent audit firm, who expressed an unqualified opinion in their report dated March 1, 2010.
Additional paragraph for convenience translation to English:
8. As of December 31, 2010, the accounting principles described in Note 2 to the accompanying consolidated 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 consolidated financial statements. Accordingly, the accompanying financial statements are not intended to present the financial
position and results of operations of the Company in accordance with IFRS.
A member firm of Ernst &, Young Global Limited
Şeyda Oltulu, SMMM
Engagement Partner
2 March 2011
Istanbul, Turkey
CONVENIENCE TRANSLATION OF THE COMPANY’S REPRESENTATION
ON THE CONSOLIDATED FINANCIAL STATEMENT PREPARED
AS OF 31 DECEMBER 2010
We confirm that the accompanying consolidated financial statements and notes to these consolidated financial statements as of 31 December 2010 are prepared
in accordance with the accounting principles and standards as set out in the insurance legislation and in conformity with the related regulations and the company’s
accounting records.
Istanbul, 2 March 2011
Doç. Dr. S. Giray VELİOĞLU
General Manager
Abdullah GEÇER
Auditor
İlkay ÖZEL
Mehmet YETGİN
Group Manager
A. Giray ÖZTOPRAK
Auditor
M. Teoman ÇELEN
Manager
B. Sema ERŞEN
Actuary
Registry No: 20
Convenience Translation of the Consolidated
Balance Sheet as of 31 December 2010
ASSETS
Note
IA12345B12345678C12345678910D123456789E1234567F1234G12345678I-
Current Assets
Cash
Cheques Received
Banks
Trading Investments
Loans
Company’s Shares
Premium Reserves
Loans to Insurees
Due from Personnel
Other Receivables
Leasing Receivables
Other Receivables
Deferred Expenses
Deferred Income
Deferred Tax Assets
Job Advances
Count Shortages
2.12
2.12
2.12 and 47.1
2.8 and 11.1
2.8 and 11.1
2.8 and 11.1
2.8 and 12.1
12.1
12.1
12.1
12.1
12.1
12.1 and 47.1
12.1
12.1
47.1
47.1
2.25 and 47.1
2.18
47.1
The accompanying notes form an integral part of these consolidated financial statements.
Audited
31 December 2010
Audited
31 December 2009
389,133,254
1,300
305,424,902
83,707,052
750,422,564
237,634,390
29,503,423
483,284,751
2,096,047,797
278,555,998
(66,332,861)
3,120,360
7,750,457
1,871,943,927
3,569,305
(2,559,389)
42,349
2,289
31,767
8,293
6,263,641
29,221
6,192,087
86,825
(44,492)
54,812,543
52,717,541
2,095,002
3,415,761
314,274
2,836,775
802
72,444
191,466
3,300,137,909
238,213,399
4,219
182,595,827
55,613,353
793,341,289
273,767,810
24,032,341
495,541,138
1,570,097,392
233,260,476
(55,878,972)
3,094,123
75,511
11,236,161
1,376,877,262
3,747,568
(2,314,737)
2,168
2,168
2,878,580
45,054
2,791,193
86,825
(44,492)
44,096,884
41,659,432
2,437,452
3,329,272
248,713
3,055,673
6,621
18,265
2,651,958,984
IIA-
B-
C-
D-
E-
F-
G-
H-
II-
1234567891012345678912345671234567891012345678910123456712312345678-
ASSETS
Non-Current Assets
Premium Reserves
Loans to Insurees
Due from Personnel
Other Receivables
Leasing Receivables
Other Receivables
Financial Assets
Subsidiaries
Equity Investments
Joint-Ventures
Tangible Assets
Motor Vehicles
Leased Assets
Intangible Assets
Rights
Goodwill
Start-up Costs
Deferred Expenses
Income Accruals
Deferred Tax Assets
Note
2.8 and 45.2
45,2
45,2
2.5 and 2.6
7
6
6
6
6
6
6
2.7, 8
8
8
8
8
2.25 and 47.1
21 and 35
TOTAL ASSETS (I+II)
Audited
Audited
31 December 2010
31 December 2009
631,834
6,939,956
(6,308,122)
26,991,920
5,783,494
22,225,745
8,240,293
19,624,441
177,013
17,113,025
(46,172,091)
10,705,614
4,011,077
12,733,628
(6,128,546)
89,455
3,878,263
1,442,513
2,435,750
11,112,823
11,112,823
53,320,454
631,834
6,939,956
(6,308,122)
34,485,326
5,550,539
32,398,107
6,598,287
19,338,397
219,047
16,718,901
504,512
(46,842,464)
6,938,194
3,484,396
5,303,112
(4,685,358)
2,836,044
5,040,261
2,613,695
2,426,566
8,528,726
8,528,726
55,624,341
3,353,458,363
2,707,583,325
LIABILITIES
Current Liabilities
Leasing Payables
Premium Deposits
Due to Shareholders
Due to Associates
Due to Subsidiaries
Due to Personnel
Other Payables
Other Payables
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
Deferred Income
Expenses Accruals
Count Overages
Note
2.22
2.22
19
19
4
19 and 47.1
19 and 47.1
47.1
19 and 47.1
2.24 and 17
2.24, 4 and 17
2.24, 4 and 17
47.1
2.18 and 35
2,18
47.1
22
2.24
2.20 and 23
47.1
Audited
31 December 2010
Audited
31 December 2009
1,983,777,767
24,617,774
24,601,085
1,893,282,504
41,276,404
1,353,397
484
20,261
1,332,652
12,906,715
59
12,906,656
445,258,297
324,510,965
324,756
120,272,576
150,000
19,954,525
8,582,194
1,820,502
11,211,935
(4,834,774)
3,174,668
561,971
561,971
22,727,604
11,090,510
11,637,094
2,647,147
2,647,147
2,489,187,423
289
(289)
1,465,193,398
19,729,964
14,339,481
72,504
1,394,062,077
36,989,372
779,437
484
18,742
760,211
12,961,003
59
12,960,944
360,093,955
257,377,868
7,129,778
85,174,628
10,411,681
12,478,470
7,868,662
1,654,493
8,667,701
(7,689,297)
1,976,911
20,574,800
12,286,882
8,287,918
199,002
199,002
1,872,280,065
IVA1234567B123456C123456D123E1234567F123G12H123I12IV-
LIABILITIES
Leasing Payables
Premium Deposits
Due to Shareholders
Due to Subsidiaries
Due to Personnel
Other Payables
Other Payables
Unearned Premium Reserve - Net
Unexpired Risks Reserve - Net
Life Mathematical Reserve - Net
Outstanding Claim Reserve - Net
Bonus and Rebate Provision - Net
Provision for Life Policies at Insuree’s Risk - Net
Other Technical Reserves - Net
Other Payables
Other Payables and Expense Accruals
Deferred Income
Expenses Accruals
Note
Audited
31 December 2010
Audited
31 December 2009
537,083,005
496,382,238
751,671
39,949,096
7,874,640
7,874,640
6,032,045
6,032,045
550,989,690
1,065
(1,065)
540,891,533
512,507,045
1,031,544
2.22
2.22
2.24
2.24, 4 and 17
4 and 17
2.24 and 47.1
2.19 and 47.1
2.19 and 22
2.25 and 47.1
27,352,944
2,052,651
2,052,651
7,193,835
7,193,835
8,209,597
8,209,597
558,347,616
VA1234B12345C123456D1E1F123GV-
Share Capital
Nominal Capital
Unpaid Capital (-)
Capital Reserves
Share Premium
Profit Reserves
Legal Reserves
Statutory Reserves
Retained Earnings
Retained Earnings
Minority Interest
Note
Audited
31 December 2010
Audited
31 December 2009
198,495,352
80,000,000
118,495,352
28,162,329
18,811,781
9,350,548
91,403,899
10,293,377
49,633,371
9,485,885
21,991,266
(24,592,427)
(24,592,427)
(18,925,162)
(18,925,162)
38,640,970
34,742,216
3,898,754
96,289
313,281,250
198,495,352
80,000,000
118,495,352
28,162,329
18,811,781
9,350,548
100,048,459
6,927,682
59,331,119
11,798,392
21,991,266
(51,072,996)
(51,072,996)
1,223,353
1,223,353
99,147
276,955,644
3,353,458,363
2,707,583,325
2.13 and 15
15
15
15
15
15
15
Convenience Translation of the Consolidated Statement
Of Income for the Period 1 January - 31 December 2010
I- TECHNICAL PART
Note
A11.11.21.3233.13.2B11.11.222.12.234CD11.11.21.3234E11.11.222.12.233.13.244.14.256789FG1234567H1234I-
Earned Premiums - (Net of Reinsurer’s Share)
Written Premiums - (Net of Reinsurer’s Share)
1.1.1- Gross Written Premium (+)
1.1.2- Reinsurer’s Share of Gross Written Premium (-)
1.2.1- Unearned Premiums Reserve (-)
1.2.2- Reinsurer’s Share of Unearned Premiums Reserve (+)
1.3.1- Unexpired Risks Reserve (-)
1.3.2- Reinsurer’s Share of Unexpired Risks Reserve (+)
Other Technical Income - (Net of Reinsurer’s Share)
Incurred Losses - (Net of Reinsurer’s Share)
Paid Claims – (Net of Reinsurer’s Share)
1.1.1- Gross Paid Claims (-)
1.1.2- Reinsurer’s Share of Gross Paid Claims (+)
1.2.1- Outstanding Claims Provision (-)
1.2.2- Reinsurer’s Share of Outstanding Claims Provision (+)
Net Technical Income- Non-Life (A - B)
Earned Premiums – (Net of Reinsurer’s Share)
Written Premiums – (Net of Reinsurer’s Share)
1.1.1- Gross Written Premiums (+)
1.1.2- Reinsurer’s Share of Gross Written Premiums (-)
1.2.1- Unearned Premiums Reserve (-)
1.2.2- Reinsurer’s Share of Unearned Premiums Reserve (+)
1.3.1.- Unexpired Risks Reserve (-)
1.3.2.- Reinsurer’s Share of Unexpired Risks Reserve (+)
Other Technical Income - (Net of Reinsurer’s Share)
Incurred Losses - (Net of Reinsurer’s Share)
1.1.1- Gross Paid Claims (-)
1.1.2- Reinsurer’s Share of Gross Paid Claims (+)
1.2.1- Outstanding Claim Reserve (-)
1.2.2- Reinsurer’s Share of Outstanding Claim Reserve (+)
Net Technical Income- Non-Life (D -E)
Entrance Fee Income
Net Technical Income - Pension Funds (G - H)
2.21
47.5
10
47,5
31 and 32
2.21
47.5
47.1 and 47.5
31
31
47.1
Audited
Audited
01.01.2010 - 31.12.2010
603,468,055
564,465,934
620,210,934
755,741,837
(135,530,903)
(62,550,022)
(63,351,446)
801,424
6,805,022
6,805,022
33,974,002
5,028,119
5,028,119
(580,111,765)
(439,639,075)
(413,632,565)
(456,330,161)
42,697,596
(26,006,510)
(40,796,605)
14,790,095
(2,842,926)
(137,629,764)
23,356,290
135,477,206
96,711,028
101,294,103
109,653,515
(8,359,412)
(4,583,075)
(5,038,501)
455,426
38,642,340
123,838
(128,394,896)
(105,886,725)
(104,487,039)
(105,814,565)
1,327,526
(1,399,686)
(1,748,013)
348,327
279,871
279,871
16,212,855
16,212,855
(3,878,260)
(35,122,637)
7,082,310
63,300,352
31,450,395
20,477,341
9,183,635
8,280
2,180,701
(54,049,254)
(7,862,599)
(41,653,337)
(4,533,318)
9,251,098
01.01.2009 - 31.12.2009
480,836,805
439,102,858
463,953,063
605,659,035
(141,705,972)
(17,800,990)
(6,024,021)
(11,776,969)
(7,049,215)
(7,049,215)
38,745,037
2,988,910
2,988,910
(505,393,039)
(387,581,848)
(379,400,671)
(445,160,190)
65,759,519
(8,181,177)
(4,353,322)
(3,827,855)
(1,824,436)
(115,986,755)
(24,556,234)
135,441,834
86,418,696
86,834,286
92,209,467
(5,375,181)
(415,590)
(152,691)
(262,899)
48,848,521
174,617
(129,350,452)
(133,204,153)
(132,036,878)
(134,733,380)
2,696,502
(1,167,275)
(1,070,554)
(96,721)
177,023
177,023
37,001,723
37,001,723
(3,697,912)
(29,627,133)
6,091,382
53,534,916
22,691,819
18,924,078
11,914,901
4,118
(54,193,127)
(5,672,955)
(44,193,157)
(4,327,015)
(658,211)
Of Income for the Period 1 January - 31 December 2010
II- NON-TECHNICAL PART
Note
CFIJK12345678910L12345678M12345678910N123-
4-
Investment Income
Income from Financial Investments
Income from Sales of Financial Investments
Valuation of Financial Investments
Foreign Exchange Gains
Income from Associates
Income from Equity Subsidiaries and Joint-Ventures
Income from Land and Buildings
Income from Derivatives
Other Investments
Investment Income Transferred from Life Technical Part
Investment Management Expenses (Interest incl.) (-)
Diminution in Value of Investments (-)
Loss from Realization of Financial Investments (-)
Loss from Derivatives (-)
Foreign Exchange Losses (-)
Depreciation Expenses (-)
Other Investment Expenses (-)
Provisions (+/-)
Rediscounts (+/-)
Special Insurance Account (+/-)
Inflation Adjustment (+/-)
Deferred Tax Assets (+/-)
Deferred Tax Liabilities Expenses (-)
Other Income
Other Expenses (-)
Prior Year’s Income
Prior Year’s Expenses (-)
Profit/(Loss) for the Period
Corporate Tax Provision and Other Fiscal Liabilities (-)
- Parent’s Share
- Minority Interest
Inflation Adjustment
6.1
47.5
47.5
35, 47.5
47.1
35 and 47.5
37
Audited 01.01.2010 31.12.2010
23,356,290
7,082,310
9,251,098
39,689,698
60,824,202
39,553,735
1,408,362
11,778,777
3,845,701
12,055
4,225,572
(43,347,466)
(227,548)
(839,435)
(33,974,002)
(4,133,592)
(4,172,889)
(8,085,146)
(10,855,026)
41,698
2,059,169
1,000,186
(331,173)
38,657,533
49,081,288
(10,423,755)
38,657,533
38,640,970
16,563
-
Audited 01.01.2009 31.12.2009
(24,556,234)
6,091,382
(658,211)
(19,123,063)
68,747,988
40,495,179
4,990,851
18,370,796
3,405,640
13,017
1,472,505
(46,095,840)
(221,595)
(81,320)
(425,136)
(38,745,037)
(2,873,474)
(3,749,278)
6,376,754
(1,390,504)
1,803,024
6,308,414
940,596
(1,284,776)
1,238,138
9,905,839
(8,667,701)
1,238,138
1,223,353
14,785
-
Convenience Translation of the Consolidated Statements
Of Cash Flows for the Period 1 January - 31 December 2010
Note
A123456789101112B123456789C1234567DEFG-
CASH GENERATED FROM MAIN OPERATIONS
Cash flows from insurance operations
Cash flows from reinsurance operations
Cash flows from private pension funds operations
Cash outflows from insurance operations (-)
Cash outflows from reinsurance operations (-)
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
Net cash provided by main operations
CASH FLOWS FROM INVESTING OPERATIONS
Sale of tangible assets
Tangible assets purchases (-)
Financial assets purchases (-)
Sales of financial assets
Interest received
Dividends received
Other cash inflows
Net Cash from investing activities
CASH FLOWS FROM FINANCING OPERATIONS
Issue of shares
Cash inflows due to the borrowings
Leasing payments (-)
Dividends paid (-)
Other cash inflows
Net cash used in financing activities
EFFECT OF EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period (E+F)
Audited
01.01.2010 -31.12.2010
Audited
01.01.2009 - 31.12.2009
791,115,882
67,295,532
560,343,226
(685,404,441)
(125,994,743)
(550,424,863)
56,930,593
(4,036,687)
1,303,698
(76,585,023)
(22,387,419)
686,941,242
93,944,943
476,047,563
(628,715,584)
(146,566,225)
(474,608,275)
7,043,664
(6,412,572)
513,251
(89,387,676)
(88,243,333)
11,265,038
(8,270,415)
(330,558,094)
402,295,581
53,342,474
12,055
890,289
3,586,144
132,563,072
317,074
(4,913,473)
(144,219,119)
204,670,383
53,328,785
1,854,935
(643,652)
110,394,933
(19,431)
(19,431)
(176,516)
109,979,704
215,261,612
325,241,316
(10,745,027)
(10,745,027)
532,166
11,938,739
203,322,873
215,261,612
2.12
Dividends Paid (Note 38)
Transfer
Balances at the period end (31/12/2010)
(I+A+B+C+D+E+F+G+H+I+J)
H-
I-
J-
II-
G-
1- Cash
A-
F-
I-
Balances at the period end (31/12/2009)
(I+A+B+C+D+E+F+G+H+I+J)
II-
E-
Transfer
J-
Dividends Paid (Note 38)
I-
D-
H-
Gain and Losses Not Included in the Income
Statement (Note 15)
G-
C-
-
F-
-
E-
B-
-
D-
80,000,000
-
-
-
-
-
-
-
-
-
80,000,000
80,000,000
-
-
-
-
-
-
-
-
Gain and Losses Not Included in the Income
Statement (Note 15)
C-
-
-
-
1- Cash
B-
-
A-
80,000,000
I-
Capital
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Own Shares
of the
Company (-)
9,485,885
-
-
-
-
-
-
-
(2,312,507)
-
-
-
-
11,798,392
11,798,392
-
-
-
-
-
-
-
8,141,734
-
-
-
-
3,656,658
Financial
Assets Fair
Value
Reserve
118,495,352
-
-
-
-
-
-
-
-
-
-
-
-
118,495,352
118,495,352
-
-
-
-
-
-
-
-
-
-
-
-
118,495,352
Inflation
Adjustment
to the Share
Capital
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Foreign
Currency
Translation
Differences
10,293,377
3,365,695
-
-
-
-
-
-
-
-
-
-
-
6,927,682
6,927,682
4,720,342
-
-
-
-
-
-
-
-
-
-
-
2,207,340
Legal
Reserves
49,633,371
(9,697,748)
-
-
-
-
-
-
-
-
-
-
-
59,331,119
59,331,119
40,927,430
-
-
-
(17,869)
-
-
-
-
-
-
-
18,421,558
50,153,595
-
-
-
-
-
-
-
-
-
-
-
-
50,153,595
50,153,595
9,350,548
-
-
-
-
-
-
-
-
-
-
-
40,803,047
Other
Reserves and
Profit/
Statutory
Retained
Reserves
Profit
38,640,970
(1,223,353)
-
38,640,970
-
-
-
-
-
-
-
-
-
1,223,353
1,223,353
(63,544,802)
(10,739,894)
1,223,353
-
-
-
-
-
-
-
-
-
74,284,696
Net
(Loss) for
the Period
Statements of changes in Shareholders’ Equity - Audited (*)
(43,517,589)
7,555,407
-
-
-
-
-
-
-
-
-
-
-
(51,072,996)
(51,072,996)
8,546,482
-
-
-
-
-
-
-
-
-
-
-
(59,619,478)
Retained
Earnings
313,184,961
1
-
38,640,970
-
-
-
-
(2,312,507)
-
-
-
-
276,856,497
276,856,497
-
(10,739,894)
1,223,353
-
(17,869)
-
-
8,141,734
-
-
-
-
278,249,173
Equity
holders
of the parent
96,289
-
(19,431)
16,563
-
-
-
-
10
-
-
-
-
99,147
99,147
-
(5,133)
14,785
-
-
-
-
2,007
-
-
-
-
87,488
Minority
Interest
Total
313,281,250
1
(19,431)
38,657,533
-
-
-
-
(2,312,497)
-
-
-
-
276,955,644
276,955,644
-
(10,745,027)
1,238,138
-
(17,869)
-
-
8,143,741
-
-
-
-
278,336,661
Of Changes In Shareholders’ Equity for the Period 1 January - 31 December 2010
Convenience Translation of the Notes to the Consolidated
1. General information
1.1 Name of the parent company: As of 31 December 2009 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.. The consolidated financial statements as of 31 December 2009 and 2010 include the accounts of
Yapı Kredi Sigorta A.Ş., the parent company and its subsidiary Yapı Kredi Emeklilik A.Ş. (“The Subsidiary”) (collectively referred as “the Group”).
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 1943. 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. 34330 Levent-İstanbul”. The Company has “Istanbul”, “Middle Anatolia”, “Marmara”, “South”, “Agean”, “Mediterranean,” Bakırköy” and “Kadıköy”
regional offices.
1.3 Nature of operations: The Group mainly operates in fire, transportation, accident, personal accident, machine assembly, agriculture, health, life insurance and
pension branches.
1.4 Explanation of the activities and characteristics of main operations of the corporation: Disclosed in Notes 1.2 and 1.3.
1.5 Average number of employees during the period by category:
Top and middle management
Other personnel
Total
68
1,658
1,726
72
1,647
1,719
1.6 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:
Short Term Benefits Provided to Top and Middle Management
Salary and other short term payments
Bonus
Group pension plan
3,305,751
614,652
177,790
4,764,516
652,314
305,264
Total
4,098,193
5,722,094
Long Term Benefits Provided to Top and Middle Management
-
164,984
Total
-
164,984
4,098,193
5,887,078
Total Benefits Provided to Top and Middle Management
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 Group investment of assets backing non-life and life technical reserves, is transferred from non-technical to technical part. Other investment income is classified
under non-technical part. The Group 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 for non-life branches. For life and pension funds branches the Group distributed operating expenses
transferred to technical part initially to pension and insurance parts by considering the weighted average of number of private pension agreements, and number of policies
issued in the last three years period. The expenses allocated to insurance part are distributed to life and non-life parts by considering the weighted average of number of
policies issued, gross written premium amount and number of notified claims in the last three years.
.
1.8 Whether financial statements include only one firm or group of firms: The financial statements include the accounts of the Company and its subsidiary,
Yapı Kredi Emeklilik A.Ş..
Detailed information of the Subsidiary is explained below:
• Legal residence of the Company, its legal structure, the country of incorporation and the address of its registered office: The Subsidiary is registered in
Istanbul and the registered address of the Company’s headquarters is Büyükdere Cad. Yapı Kredi Plaza A Blok 34330 Levent / Istanbul.
• Nature of operations: The main operation of the Subsidiary is to act in private pension fund system and, as a result of this activity, to prepare private pension
contracts, to fulfil all transactions defined in the laws and regulations related with pension funds, and also to issue all kinds of group and individual life and personal
accident policies in Turkey and foreign countries and to perform all related reinsurance transactions. The title of the Subsidiary, which was Yapı Kredi Yaşam Sigorta
A.Ş. has changed as Yapı Kredi Emeklilik A.Ş. on 30 December 2002. The articles of association of the Subsidiary have been changed by the written approval No:
81316 dated 20 December 2002 of the Undersecreteriat of Treasury and the initial authorization No: 10919 dated 20 December 2002 of the Ministry of Trade and
Industry. With this change, the Subsidiary has been entitled to act in private pension fund system, to issue private pension fund contracts and to fulfill all transactions
defined in the laws and regulations related with pension funds.
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.
1.10 Events occurred after the balance sheet date: Consolidated financial statements for the period 1 January - 31 December 2010 have been approved by the
Board of Directors on 2 March 2011. The events occurred after the balance sheet date are explained in Note 46.
2. Summary of significant accounting policies
2.1 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 Group prepares its consolidated 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 consolidated 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 consolidated 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 26851 dated 18 April 2008.
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- Consolidated 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 31 December 2008
and published in official gazette numbered 27097 effective from 31 March 2009.
Consolidated financial statements were prepared on a TRY and historical cost basis, being adjusted for inflation until 31 December 2004, other than the financial assets
and liabilities 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 31
December 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:25290 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 2005. Based on the above mentioned notification of the Treasury, the Group has restated
its financial statements as of 31 December 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 Group calculated insurance technical reserves and accounted for in the consolidated 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 5684.
Accounting policies and measurement principles that are used in the preparation of the consolidated financial statements are explained in the notes from 2.3 to 2.25
below.
Changes in Turkish Financial Reporting Standards:
The accounting policies adopted in the preparation of consolidated financial statements are outlined below, except the new standards and interpretations were consistent
with the previous year. Group, period of beginning on 1 January 2010, implemented the following new and revised interpretations of TFRS.
•
•
•
•
•
TFRYK 17, “Distribution of non-cash assets to owners”
TMS 39, “Financial Instruments: Recognition and Measurement” (Revised) - Appropriate protected instruments.
TFRS 2 (revised) “Group cash-settled share-based payment transactions”
Re-issued TFRS 3 Business Combinations and IAS 27 Consolidated and Separate Financial Statements (Revised)
TFRS Improvements, May 2008 - all changes are published in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations standard after
sales business continues to hold non-controlling shares in the subsidiary and the partnership where all the assets and liabilities held for sale except for clarifying
changes to provisions concerning the classification as held on December 31, 2009 is valid for the period ended.
• TFRS Improvements, April 2009
There is no impact of these standards and interpretations on the consolidated financial statements or operations.
Scope of TFRS improvements, published in April 2009 whether made changes to the Group’s accounting policies, financial condition and performance
standards are as follows:
•
•
•
•
•
•
•
•
•
•
•
•
TFRS 2 “Share based payment”
TFRS 5 “Measurement of non-current assets (or disposal groups) classified as held-for-sale”
FRS 8 “Operating segments”
TMS 1 “Presentation of financial statements”
TFRS 7 “Financial Instruments - Disclosures”
TMS 17 “Leases”
TMS 18 “Revenue”
TMS 36 “Impairment of Assets”
TMS 38 “Intangible assets”
TMS 39 “Financial Instruments: Recognition and Measurement” – Accounts accepted as protected from financial risk.
TFRS 9 “Reassessment of Embedded Derivatives”
TFRS 16 “Hedges of the net investment in foreign operation”
The Group does not expect to have an impact on the financial position or performance changes.
Changes and interpretations in the standards that are not yet effective and have not been adopted early by the Group:
TFRS 19 Extinguishing Financial Liabilities with Equity Instruments
Effective for annual periods beginning on or after 1 July 2010. TFRS 19 clarifies that equity instruments issued to a creditor to extinguish a financial liability consideration
pain in accordance with paragraph 41 of TMS 39 Financial Instruments; Recognition and Measurement. The equity instruments issued at measured at their fair value,
unless this cannot be reliably measured, in which case they are measured at the fair value of the liability extinguished. Any gain or loss is recognized immediately in profit
or loss.
TFRS 14 Prepayments of a Minimum Funding Requirement (Amendment)
Effective for annual periods beginning on or after 1 January 2011. TFRS 14 provides guidance on assessing the recoverable amount of net pension asset. The amendment
permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is applied retrospectively to the beginning of the earliest period
presented in the first financial statements in which the entity applied the original interpretation.
TFRS 9 Financial Instruments
Effective for annual periods beginning on or after 1 January 2013. The first phase of TFRS 9 Financial Instruments addresses the classification and measurement of
financial assets. Early application is permitted. This standard has not been ratified yet by the European Union. Group evaluates the regulation of financial status or whether
there is an impact on the performance.
TFRS 32 Financial Instruments: Presentation- Classification of Rights Issues (Amendment)
Effective for annual periods beginning on or after 1 February 2010. The amendment will provide relief to entities that issue rights(fixed in a currency other than their
functional currency), from treating the rights as derivatives with fair value changes recorded in profit or loss. Rights issued in foreign currencies that were previously
accounted for as derivatives will now be classified as equity instruments. Application of the change will result in the reversal of profits or losses previously recognized, as
application of the change will be retrospective. In addition, the impact on previously reported results would be a reclassification in equity.
TMS 24 Related Party Disclosures (Re-Edit)
Effective for annual periods beginning on or after 1 January 2011. The definition of a related party has been clarified to simplify the identification of related party
relationship, particularly in relation to significant influence and joint control. A partial exemption from the disclosures has been included for government –related entities.
Early application is permitted, and early application should be made retrospectively. Entities will need to consider the revised definition of related parties to ensure all the
relevant information is still being captured. The Group does not expect to have an impact on the correction of financial status or performance.
In May 2010, resolve inconsistencies and to clarify statements, TMSK published the third frame arrangement. Changes have been determined for the various
effective dates of July 1, 2010 and after the effective date of early periods beginning. Early implementation is permitted.
TFRS 3 Business Combinations (revised)
Effective for annual periods beginning on or after 1 July 2010. The amendments to TFRS 7 Financial Instruments: Disclosures, TMS 32 Financial Instruments:
Presentation and TMS 39Financial Instruments: Recognition and Measurement, that eliminate the exemptions 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 2008).The amendment limits the scope of
the measurement choices that only 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, in the event of liquidation, shall be measured either at fair value or at the present ownership instruments proportionate share of the acquiree’s
identifiable net assets net assets.
TFRS 7 Financial Instruments: Effective for annual periods beginning on or after 1 July 2010.
The amendment emphasis the interaction between quantitative and qualitative disclosures and the nature and the extent of risks associated with financial instruments.
TMS 1 Presentation of Financial Statements, Effective for annual periods beginning on or after 1 January 2010. The 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.
TMS 27 Consolidated and Separate Financial Statements, The amendment clarifies that the consequential amendments from IAS 27 made to TMS 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.
TMS 34 Interim Reporting, Effective for annual periods beginning on or after 1 January 2011. The amendment provides guidance to illustrate how to apply disclosure
principles in TMS34 .
TFRS 13 Customer Loyalty Programmes, Effective for annual periods beginning on or after 1 January 2011. The amendment clarifies that when the fair value of
award credits is measured based on the value of the awards for which they could be reemed, the amount of discounts or incentives otherwise granted to customers not
participating in the award credit scheme, is to be taken into account.
TFRS 7 Financial Instruments: Explanations of comprehensive analysis of off-balance sheet transactions (Amendment) Effective for annual periods beginning on or
after 1 January 2011.
The purpose of change, provide better understanding for readers of financial statements about assets transfer operations (such as securitization)- including possible risk
stay on transferring party-. Amendment also provides requirements of additional explanation about situation in which disproportionate transfer of financial assets at the
end of the fiscal year .These changes all largely compatible with the requirements of disclosure of IFRS and U.S GAAP(U.S. Generally Accepted Accounting Principles).
The Group does not expect to have an impact on changes in financial position or performance.
2.1 Comparative Information
In the consolidated financial statements dated December 31, 2010 and 2009 amount of provision for unused vacations are classified under Other Short Term Liabilities
account.
In accordance with “J- Subrogation and Salvage Revenue Accounting Records Article “ of the circular dated October 18, 2010 and numbered 2010/16 published by
Group classified the salvage and subrogation receivables and administrative and legal subrogation follow up receivables, in accordance with the draft circulars regarding
subrogation and salvage revenue as of 31 December, 2009, accounted to relevant account in order to be consistent with the presentation of current period.
2.2 Consolidation
The consolidated financial statements are prepared in accordance with the “Communiqué on the Preparation of the Consolidated Financial Statement of Insurance
and Reinsurance Companies and Pension Companies” dated 31 December 2008 and published in official gazette numbered 27097 and in accordance with “TMS 27Consolidated and Separate Financial Statements”.
Principles of consolidation of subsidiaries:
Control is defined as the power to assign or discharge a majority of the members of the Board of Directors, either through the power to exercise more than 51% of voting
rights relating to shares in the companies as a result of ownership interest owned directly and indirectly by itself, or through the preferred shares held although not having
the power to exercise more than 50% of the ownership interest, or as a result of agreements by other shareholders whereby the Group exercises control over the ownership
interest of the shares held by them or otherwise has the power to exercise control. Subsidiaries are consolidated on a line-by-line basis on the grounds of materiality on the
basis of operating results, total asset and shareholders’ equity of the subsidiaries in accordance with “TMS 27” and the carrying value of the investment held by Yapı Kredi
Sigorta and its subsidiary is eliminated against the related shareholders’ equity. Subsidiaries are consolidated from the date on which control is transferred to the Group
and are no longer consolidated from the date that control ceases. Where necessary, accounting policies of the subsidiaries have been changed for the purpose of the
application of uniform accounting policies across the Group.
In accordance with consolidation on a line-by-line basis, 100% of the assets, liabilities, income, expense and off-balance sheet accounts of the subsidiaries are combined
with the assets, liabilities, income, expense and off-balance sheet accounts of the parent. The carrying value of the investment in subsidiaries held by Group is eliminated
against the Subsidiaries’ related equity. Intercompany transactions and balances between the subsidiaries included in the scope of consolidation are eliminated during
the consolidation. The minority shareholders’ share in the net income for the period of the subsidiary is deducted from income for the period of the subsidiary, in order
to calculate the net income of the Group. Minority interest is disclosed separately classified in the consolidated balance sheets from the liabilities and share of the
shareholders included in the Group. Minority interest is disclosed separately in the income of the Group.
Name and legal residence of the Subsidiary, nature of its operations and proportion of ownership, effective interest, total assets, total equity, net sales and net income are
as follows:
31 December 2010
Proportion
of ownership
interest (%)
Indexed Cost
Book Value
Independent
audit report
99.93
148,249,982
148,249,982
Unqualified
Yapı Kredi
Emeklilik A.Ş.
Proportion
of ownership
interest (%)
Indexed Cost
Book Value
99.93
148,249,982
148,249,982
Yapı Kredi
Emeklilik A.Ş.
Financial
Statement
Period
Total Asset
Net Liability
Net Sales
Net Profit
31,12,2010 2,603,432,660
2,472,114,037
101,564,056
22,589,031
Total Asset
Net Liability
Net Sales
Net Profit
31,12,2009 2,105,869,098
1,970,653,055
86,975,157
20,163,300
31 December 2009
Financial
Independent
Statement
audit report
Period
Unqualified
2.3 Segment reporting
Operating segments are settled compatible with the segments on information reported to the chief operating decision-maker. Chief operating decision-maker of the Group is
responsible for the uses of resources and evaluation of the performance of the segments. General manager who makes the strategic decisions, is determined as the chief
operating decision-maker. Details of to the segment reporting are disclosed in the Note 5.
2.4 Foreign currency translation
The functional currency of the Group is TRY. Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the period end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the income statement.
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from
changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are
recognised in profit or loss, and other changes in carrying amount are recognised in equity.
Foreign exchange differences arising from the translation of non monetary financial assets and liabilities are considered as part of the fair value changes and those
differences are accounted for in the accounts in which the fair value changes are accounted for.
2.5 Property and equipment
Property and equipment are carried at cost less accumulated depreciation. Land is not subject to depreciation due to its infinite years of useful life. Depreciation is
calculated using the straight-line method based on the useful lives of properties. The depreciation periods estimated considering useful lives of tangible assets are as
follows:
Property for Operational Usage (Buildings)
Motor vehicles
Special costs
Leasehold improvements
50 year
3-15 year
10-20 year
5 year
5 year
5 year
5 year
If there are indicators of impairment on tangible assets, a review is made in order to determine possible impairment and as a result of the review, if an asset’s carrying
amount is greater than its estimated recoverable amount, the asset’s carrying amount is written down immediately to its recoverable amount by accounting for a provision
for impairment. Gains and losses on disposals of property and equipment are included in other operational income and expenses accounts (Note 6).
As of 31 December 2010 the group recognized provision for asset impairment amount to TRY 474,214 (31 December 2009: TRY 11,925) (Note 6).
2.6 Investment properties
The buildings of the Group held for the purpose of receiving rent or an increase in value or both instead of being used in the operations of the Group or being sold within
the normal business course are classified as investment properties. The investment properties are carried at acquisition cost by deducting the accumulated depreciation.
Investment properties are amortised by the straight-line method over their estimated useful lives. If there are indicators of impairment on investment properties, a review
is made in order to determine possible impairment and as a result of this review, if the property’s carrying amount is greater than its estimated recoverable amount, the
property’s carrying amount is written down immediately to its recoverable amount by accounting for an impairment provision. The recoverable amount is the higher of
the future cash inflows from the existing use of the investment property and the fair value of the property after cost of sale. The Group have an impairment booking for its
investment properties as of 31 December 2010 amount of TRY 11,925 (31 December 2009: TRY 11,925) (Note 7).
The depreciation period of investment properties is 50 years.
2.7 Intangible assets
Intangible assets consist of the acquired information systems, franchise rights and software. Intangible assets are carried at acquisition cost and amortised by the straightline method over their estimated useful lives after their acquisition date. If impairment exists, carrying amount is written down immediately to its recoverable amount
(Note 8).
The amortisation periods of intangible assets as of balance sheet dates are as follows:
Software
License
3 - 5 years
15 years
2.8 Financial Assets
The Group classifies and accounts for its financial assets as “Financial assets at fair value through profit or loss” (Held-for-trading financial assets), “Available-for-sale
financial assets” and “Loans and receivables (Receivables from main operations)”. Receivables from main operations are the receivables (except for policy loans) arising
from insurance agreements and they are classified as financial assets in financial statements. The measurement principles of TMS 39 are used for these receivables.
Receivables from main operating activities that receivables arising from insurance contracts and in spite of all receivables arising TMS 39 out of scope to hold the
insurance contracts, since did not applied to TFRS 4, as a facultative group of receivables arising from the insurance contract are classified as financial assets in the
financial statements and group applies TMS 39 principles of the measurement.
Purchases and sales of the financial assets are recognised and derecognised based on “Settlement date”. The classification of the financial assets is determined by the
Group management at inception by considering the purpose for which the financial assets are acquired.
Financial assets at fair value through profit or loss (Held-for-trading financial assets):
Financial assets at fair value through profit or loss consist of financial instruments that are acquired principally for the purpose of generating a profit from short-term
fluctuations in price or dealer’s margin, formed as a part of a portfolio of financial assets that are managed together for which there is evidence of short-term profit taking,
and classified as financial assets designated at fair value through profit or loss at inception since they are managed and their performance is evaluated on fair value basis.
Financial assets at fair value through profit or loss are accounted for at their fair value at inception and after initial recognition, financial assets are measured at their fair
values. It is concluded that the fair value cannot be reliably measured if the price that provides a basis for fair value is not set in active market conditions and amortised
value that is calculated using the effective interest method is used as fair value. Gains or losses generated as a result of valuation are recognised in the income statement.
The valuation gains and losses on financial assets at fair value through profit or loss are classified in Investment Income and Investment Losses, respectively. (Note11)
In addition, changes in fair value of the marketable securities within the portfolio of life policyholders are classified in investment income and expense under the Life
Branch Technical Income and Expenses. Furthermore changes in fair value of the financial assets at fair value through profit or loss within the portfolio of life policyholders
are also included in the mathematical reserve and profit share calculations and as a result the increases/ decreases in the technical reserves are accounted for in the
change in mathematical reserves account under the Life Branch Technical Income and Expenses (Note 11).
Loans and Receivables together with Policy Loans (Receivables from Main Operations):
Loans and receivables are financial assets which are generated by providing money or service to the debtor. Loans and receivables are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest method. Fees and other charges paid related to assets obtained as guarantee for the above
mentioned receivables are not deemed as transaction costs and they are recognised as expense in the income statement.
The Group accounts for an impairment provision for its receivables based on Management’s evaluation and estimations 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. This provision is classified as
“provision for due from insurance operations” on the balance sheet. Management sets its estimations within the risk policies and the prudency principle by considering the
overall position of is receivable portfolio, financial and non-financial data regarding its insurees and its intermediaries and the general economic developments.
In addition to provision for receivables from insurance operations, the Group, the above-mentioned “Receivables from insurance operations” is not in the provision for
doubtful debts taking into account value and quality of receivable and book provision as administrative and legal proceeding provision. The group stage of the lawsuits and
execution of records doubtful receivables provision for subrogation claims.
These provisions, respectively, classified in the balance sheet under “Provision for Doubtful Receivables from operating activities” and” receivables for insurance
operations” accounts.
In the consolidated financial statements as of December 31, 2010 the Group, according to principles of Treasury circulars dated January 14, 2011 and September 20,
2010 numbered 2010/16 and 2011 / 1 underlying claim of subrogation receivable over the 6 months from the date of payment ( Due from insurance company) and 4
months (the actual claims and other legal entities), booked receivable provision in addition to this amounts. In addition to the amounts for the first time that the circular
No. 2010/16 dated 20 September 2010 the parties agreed to assets connected with the method mentioned in reserve to claims of recourse for amounts of discretionary
leave is reserved for additional provision.
Increase in the provision for doubtful receivables is deducted from the related year’s income. Recoveries of amounts previously provided for are treated as a reduction
from provisions for overdue receivables for the period and recorded in the “Provision Expense” account. Such receivables are written off only after all necessary legal
proceedings have been completed (Note 12).
Policy loans are the loan provided to the insurees for the time interval (the time interval for policy loan is minimum three years related to the General Conditions of Life
Insurance) determined by the technical principal cause related to the tariffs of life insurance. Policy loans are accounted from their fair value in the balance sheet and
followed from their values determined by applying interest on, by considering impairment provision if any. Since 100% cash guarantees are received for policy loans,
Group does not account any impairment for its policy loans. Interest income from policy loans and the foreign currency gains and losses are also taken into account in
the mathematical reserve and profit share calculations and are classified in the investment income and expenses account under the Life Branch Technical Income and
Expense in the income statement.
Loans derived from interest income and foreign exchange gains / losses and dividend corresponds to the tariff decisions of the mathematical calculations, and this
provision is taken into account the increase or decrease in the income statement Revenues and Expenses of Life Branch Technical is monitored under the main account
group change in mathematics of technical reserve.
Available-for-sale financial assets:
Available-for-sale financial assets are composed of the financial assets except for the “Loans and receivables together with Policy Loans” and “Financial assets at fair value
through profit or loss”.
Available-for-sale financial assets are subsequently carried at fair value after their recognition. It is considered that the fair value can not be reliably measured if the price
that provides a basis for fair value is not set in active market conditions and amortised value that is calculated using the effective interest method is used as fair value.
Equity securities classified as available-for-sale are carried at fair values if they have quoted market prices in active markets and/or if their fair value can be reliably
measured. The equity securities that do not have a quoted market price in an active market, and if their fair value cannot be reliably measured are carried at cost less the
provision for impairment.
“Unrealised gains and losses” arising from the change in the fair value of available-for-sale financial assets is accounted for under “Valuation of Financial Assets” account
in the shareholders’ equity and not reflected in the income statement until the financial asset is sold, disposed or derecognised. The unrealised gains and losses arising
from the change in the fair value is removed from shareholders’ equity and recognised in the income statement when the financial assets mature or are derecognised.
The Group assesses at each balance sheet date whether there is objective evidence that an available-for-sale financial asset is impaired. In the case of equity investments
classified as available-for-sale financial assets, such as, a significant or prolonged decline in the fair value of the security below its cost is considered as impairment. If
any objective evidence for impairment exists for available-for-sale financial assets, the difference between the acquisition cost and current fair value is deducted from
shareholders’ equity and recognised in the income statement. The impairment losses on available-for-sale equity instruments previously recognised in the profit or loss
cannot be reversed through profit or loss.
In such condition that there’s not a risk of collection in the financial assets classified under available-for-sale financial assets, the Group does not account for a provision
for impairment considering the short-term market fluctuations (Note 11).
The share of the portfolio of the policyholders in unrealised losses, arising from the change in the fair value of available-for-sale financial assets in an amount of TRY
32,526,080 TRY (31 December 2009: 23,325,661 TRY), composing 95% of total unrealised losses is classified under the long term “other technical reserves” on the
balance sheet. The interest income and foreign exchange gains and losses of available-for-sale financial assets which are in the portfolio at policyholders’ risk is calculated
with the effective interest rate method and are traced under “Life Branch Investment Income” account. The portion of these gains that is included in the calculation of
mathematical reserves is traced in “Changes in mathematical technical provisions” account in the life technical income or expenses (Notes 17 and 47.1).
2.9 Impairment of Assets
The details about the impairment of assets are explained in the notes in which the accounting policies of the relevant assets are explained.
Mortgages or guarantees on assets are explained in Note 43, provisions for overdue receivables and provisions for receivables which are not overdue are explained in Note
12.1, and provision and rediscount expense for the period are explained in Note 47.5.
2.10 Derivative Financial Instruments
2.11 Offsetting Financial Instruments
Financial assets and liabilities are offset only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or
when the acquisition of the asset and the settlement of the liability take place simultaneously.
2.12 Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits held at banks, other short-term highly liquid investments with original maturities of three months or
less, and bank overdrafts.
Cash and cash equivalents included in the statement of cash flows are as follows:
Banks
Other cash and cash equivalents (Credit card collections)
Cash
Less - Restricted cash Group’s portfolio
Less - Interest accrual
Time deposit excess of 3 months
Total cash and cash equivalents
31 December 2010
305,424,902
83,707,052
1,300
(*) (28,874,250)
(995,784)
(34,021,904)
31 December 2009
182,595,827
55,613,353
4,219
(22,482,360)
(469,427)
-
325,241,316
215,261,612
(*) Time deposits which are blocked in favour of the Treasury are included in other cash outflows from main operations in the statement of cash flows.
Details of the bank deposits of the Group are as follows:
Foreign currency denominated bank deposits
- time deposits
- demand deposits
TRY denominated bank deposits
- time deposits
- demand deposits
Interest accrual
Total
31 December 2010
31 December 2009
3,058,455
2,229,613
10,788,220
815,240
5,288,068
11,603,460
292,372,727
6,769,746
165,212,411
5,310,529
299,142,473
170,522,940
995,784
469,427
305,424,902
182,595,827
As of 31 December 2010, the Group’s time deposits amounting to TRY 2,874,250 (31 December 2009: TRY 22,482,360) is blocked in favour of the Treasury (Note 43).
Weighted average interest rates time deposits
TRY
USD
EUR
31 December 2010
(%)
8.48
1.74
0.50
31 December 2009
(%)
9.55
1.52
0.65
Details of foreign currency denominated demand and time deposits are as follows:
EUR
USD
CHF
GBP
DKK
31 December 2010
Foreign Currency
Time
Demand
Time
373,000
327,964
764,314
1,483,921
677,748
2,294,132
189,433
80,525
22,013
-
Total
3,058,455
USD
EUR
CHF
GBP
DKK
31 December 2009
Foreign Currency
Time
Demand
Time
3,865,794
321,507
5,820,726
2,300,000
97,136
4,968,690
63,592
9,791
19,825
-
Total
10,789,416
TRY
Demand
672,031
1,047,800
311,389
192,342
6,051
2,229,613
TRY
Demand
484,094
209,842
92,158
23,392
5,754
815,240
2.13 Share capital
The composition of the Company’s share capital at 31 December 2009 and 31 December 2010 is as follows:
Name of shareholders
Public offering
Other
Total
31 December 2010
Share
Amount
%53.10
42,480,000
%33.69
26,951,880
%13.21
10,568,120
%100.00
80,000,000
31 December 2009
Share
Amount
%53.10
42,480,000
%33.69
26,951,880
%13.21
10,568,120
%100.00
80,000,000
As of 31 December 2009, no privileges are granted to the preference shares representing the share capital. (31 December 2009: None).
Authorized capital of the Company is TRY 250,000,000 as of 31 December 2010 and 2009.
Other information about the Company’s share capital is explained in Note 15.
2.14 Insurance and investment contracts - classifications
The insurance contracts are those contracts that transfer insurance risk. The insurance contracts protect the insured against the adverse economic consequences of
loss event under the terms and conditions stipulated in the insurance policy. Private pension contracts are not considered as insurance contracts in this context and are
accounted for in accordance with the relevant regulation (Notes 2.21 and 2.25). The accounting principles for the calculation of technical reserves due to insurance and
reinsurance agreements are disclosed in Note 2.24.
The insurance contracts produced by the Group are mainly in fire, marine, accident, engineering and health in non-life branches and group and personal life, and personal
accident agreements which are classified under the groups of risk and saving policies in life branches. The highest written premium of the Group is within the health
branch.
Non-life insurance contracts
The insurance agreements written in health branch consist of guarantees for the claims regarding the insuree’s identification, diagnosis, and treatment. Fire insurance
policies cover mainly fire and theft guarantees for household and business premises, as well as additional guarantees such as indemnity, rent deficiency, glass, and loss
of profit. Marine insurance (hull, motor or air transport vehicles) covers goods in transit. The Group also writes engineering policies with engineering, assembly, machinery
breakdown, electronic equipment, loss of profit coverage, and policies in accident branch including comprehensive insurance for motor vehicles, traffic, third party liability,
and breach of trust guarantees. Furthermore, there are agriculture insurance contracts produced by Tarım Sigortaları Havuz İşletmesi A.Ş. (“TARSİM”) and compulsory
earthquake insurance contracts produced by Doğal Afet Sigortaları Kurumu (“DASK”). The basis of calculation of insurance technical income and insurance liabilities
arising from insurance contracts is explained Notes 2.21 and 2.24.
Life insurance contracts
i) Risk Policies:
Annual Life
Annual Life Insurance provides guarantee against the risks that the policyholder may encounter for a year. This insurance covers all risks that the policyholder can
be exposed to by providing natural death coverage along with the additional coverage such as accidental death, disability, critical disease, accidental death in public
transportation during the policy term. Annual life contracts do no provide surrender and policy loan rights, have not any paid up value, and can be issued for Groups and
Individuals. The age limit is between 18 and 65, premium amount changes according to the risk assessment based on age, sex and health risk assessment.
Credit Life
Credit Life Insurance, provides guarantee against the risks that the policyholder may encounter (death) throughout the period the credit is used. In the event of such
a negative situation the credit debt is paid by the credit life insurance and therefore the debtor and the family of the credit holder are financially protected. Credit Life
Insurance products are risk products that do not have any paid up value. The age limit is between 18 and 70 (the period and age cannot exceed 70) premium amount
changes according to the risk assessment based on age, sex and health risk assessment. Insurance guarantees can be arranged as fixed or diminishing and premium
payments are made at the beginning of the insurance. This product is sold only through the branches of Yapı ve Kredi Bankası A.Ş.
Personal Accident Insurance
Personal Accident Insurance provides assurance against the risks insured may face within the specified period of time. This insurance, accidental death, accidental
permanent disability, death, car accident, work accident and died as a result of an accident such as mass specific vehicles by providing additional guarantees, the risks
of accidents that can happen to the insured during the policy term is guaranteed. Accident products can be sold individually. Age limit is between 18-65 years of age in
general, premiums do not change according to age, gender and health-related risk assessment. Premium payment terms vary depending on the products.
ii) Saving Policies:
Saving Life Insurance
Saving Life insurance products are investment policies of minimum 10 years. The savings at the end of a minimum period of 10 years are paid to the policyholder.
These insurances cover death risks as well as additional risk such as disability, critical disease, accidental death, and accidental death in public transportation.
Guaranteed amounts are determined as multiple amounts of the monthly insurance premium. The age limit is usually between 18 and 65, and the premium amounts
changes according to the risk assessment based on age, sex and health risk assessment. If the return on saving policies exceeds the technical interest guaranteed, the
policyholders benefit from the profit share. In accordance with the insurance regulation in force, the Group classifies and accounts for all saving policies as insurance
contracts.
iii) Annuity Products:
The Group offers lifelong annuity products and annuity products with guaranteed periods for beneficiary clients willing to receive payments periodically instead of a bulk
compensatory payment. The annual income calculation for lifelong products are made by considering the real age and for annuity products with guaranteed periods, the
insurance period is taken into account during the calculation as there is no probability of life or death.
Reinsurance agreements
Reinsurance agreements are those agreements between the Group and reinsurance companies providing insurance coverage to the Group regarding losses which may
occur in one or more underlying insurance contracts signed by the Group.
The Group has excess of loss, proportional surplus treaty and proportional quota share reinsurance agreements in the branches that the Group operates. Ceded premiums
arising from excess of loss agreements are accounted for on an accrual basis during the related period. Premiums, claims and technical reserves which are ceded in
accordance with other reinsurance agreements are accounted for on the same basis with the income and liabilities arising from related insurance contracts.
The Group’s reinsurance agreements for certain risks for the insurance contract are facultative basis. As of December 31, 2010 there are no proportional quota-share
agreements. As of December 31, 2009 in the branches of traffic and automobile insurance contracts of the Group arising from agreements proportional annual quotashare - despite continued responsibility of liability in terms of reinsurance agreements with reinsurers at the end of the end of the reinsurance agreement and the transfer
of the premium during the post on the basis of paid claims and the reinsurance agreements related agreements, agreements for the Group on 31 January 2010 be
renewed after considering the financial statements dated December 31, 2009 an additional reserve amounting to TRY 10,251,681 allocated pursuant to the reinsurance
agreement. Treasury circular No. 2010/22 dated 26 November 2010 stated that application of the Group has become mandatory for all sectors at the end of December
31, 2010.
The Group transfers partly the risks taken such as death, disability, accidental death/ disability, critical illness, accidental death in public transportation to reinsurance
companies. The Group has reinsurance agreements for the life policies differentiated on product basis which are generally surplus, quota share/surplus and excess of loss
structured. As for the catastrophic claims, the Group adopted a structure with USD 40,000,000 capacity formed of three layers.
The Group eliminates the risks in personal accident branch by the excess of loss reinsurance agreements.
2.15 Insurance contracts and investment contracts with discretionary participation features
2.16 Investment contracts without discretionary participation features
2.17 Borrowings
2.18 Taxes on Income
Corporate Tax
The Corporate tax law does not allow preparing a tax declaration on the consolidated financial statements of the parent company. Therefore, tax provisions in the
consolidated financial statements, are calculated separately for the companies subject to the consolidation.
Corporation tax for 2009 is payable at a rate of 20%. (2009: 20%). Tax rate is applied on the tax base by adjusting for certain disallowable expenses, exempt income and
investment and other allowances. No further tax is payable unless the profit is distributed.
Dividends paid to non-resident corporations, which have a place of business in Turkey, or resident corporations are not subject to withholding tax. Otherwise, dividends
paid are subject to withholding tax at the rate of 15%. An increase in capital via issuing bonus shares is not considered as a profit distribution thus does not incur
withholding tax and no stoppage is applied.
Corporations are required to pay advance corporation tax quarterly at the rate of 20% on their corporate income. Advance Tax is declared by 14th of the second month
following and payable by the 17th of the second month following each calendar quarter end. Advance Tax paid by corporations is credited against the annual Corporation
Tax liability. The balance of the advance tax paid may be refunded or used to set off against other liabilities to the government.
The affiliate shares stocked for minimum 2 years and the 75% of the profit obtained from the property sales are considered as tax exemptions in such condition that the
amount is added onto capital as prestated in Corporate Tax Law or the amount is kept in equity for 5 years. According to Turkish tax legislation, financial losses on the
returns can be offset against period income for up to 5 years. However, financial losses cannot be offset against previous years’ profits.
There is no such application for the reconciliation of payable taxes with the tax authority. Corporate tax returns are submitted to the related tax office by the 25th day of the
4th month following the month when the accounting period ends. In tax reviews authorized bodies can review the accounting records for the past five years and if errors
are detected, tax amounts may change due to tax assessment.
Deferred income tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable profit, and are accounted for using the liability method. Deferred tax liabilities are generally recognized for all taxable temporary
differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences
can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised
(Note 21).
2.19 Employee benefits
The Group accounts for its liability related to employment termination and vacation benefits according to “Turkish Accounting Standards Regarding Employee Benefits”
(“TMS 19”) and classifies in balance sheet under the account “Provision of Employment Termination Benefits” and “Long Term Other Payables and Expense Accruals”.
According to the Turkish Labour Law, the Group is required to pay termination benefits to each employee whose jobs are terminated except for the reasons such as
resignation, retirement and attitudes determined in Labour Law. The provision for employment termination benefits is calculated over present value of the possible liability
in scope with the Labour Law by considering determined actuarial estimates (Note 22).
The Group also makes payments to monthly pension contribution as contributions paid by staff within the group retirement plan and recognize as expense in personnel
expenses amount of which corresponds to their share.
Group, must pay contributions behalf of employees to the Social Security Authority in amounts that determined by law. Except group’s contributions have been paying out,
they have not make another payment to the employee or authority. These contributions are expensed when they are accrued.
2.20 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be
required to settle the obligation; and the amount can be reliably estimated. Provisions are measured over expenditures expected to be required to settle the obligation by
considering the risks and uncertainties related to the obligation at the balance sheet date. When the provision is measured by using the estimated cash outflows that are
required to settle the obligation, the carrying value of the provision is equal to present value of the related cash outflows.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised as an asset if and
only it is virtually certain that reimbursement will be received and the reimbursement can be reliably estimated.
Liabilities that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly
within the control of the entity are classified as contingent liabilities and not included in the financial statements (Note 23).
2.21 Accounting for revenues
Written premiums
Written premiums represent premiums on policies written during the year, net of cancellations. As disclosed in Note 2.24, premium income is recognised in the financial
statements on accrual basis by allocating the unearned premium provision over written risk premiums.
The premium written for life insurance policies with maturities over one year consists of income accrued for payments with maturities within the current year. The premium
written for policies with maturities less than one year covers the total premium of the relevant period. As a Group policy, in circumstances where the premiums related
with the life branch are not collected, if no response is received after the termination of the notification period, the policy is cancelled within the period prescribed and the
cancellation is accounted for in the records of the Group.
Reinsurance Commissions
Commission income related to the ceded premiums to reinsurance companies are accrued within the period and classified in technical part under operating expenses in
the income statement. As disclosed in Note 2.24, reinsurance commission income is recognised in the financial statements on accrual basis by allocating the deferred
commission income over commissions received.
Salvage and subrogation income
As of 31 December 2009, in line with the declaration dated 18 January 2005 and numbered B.02.1.HM.O.SGM.0.3.1.1 of the Treasury, the Group recognises salvage and
subrogation receivables only from insurance companies, and from individuals with whom the Group has agreed on payment terms. In addition, the Group books a doubtful
receivables provision for salvage and subrogation receivables under legal follow-up.
In the consolidated financial statements as of December 31, 2010 the Group, according to principles of Treasury circulars dated January 14, 2011 and September 20,
2010 numbered 2010/16 and 2011 / 1 underlying claim of subrogation receivable over the 6 months from the date of payment ( Due from insurance company) and 4
months (the actual claims and other legal entities).
In the consolidated financial statements as of December 31, 2010, according to dated January 14, 2011, September 20, 2010 and 2010/16 and 2011 / 1 numbered
circulars of Treasury the Group books provision to the subrogation receivables according to the claim over the 6 months from the date of payment (insurance due from
related parties) and 4 months (the actual claims and other legal entities); in addition to that, the Circular No. 2010/16 dated 20 September 2010 for the first time for the
receivables that are not confirmed for collection, the additional provision is booked. As of December 31, 2010 net amount of the subrogation receivables is TRY 6,515,800
(31 December 2009: TRY 3,843,184) (Note: 12).
Interest income
Interest income is recognised by using the effective interest rate method on an accrual basis.The information about the accounting of the income from life policyholder’s
portfolio is disclosed in Note 2.8.
Dividend income
Dividend income is recognised as an income in the financial statement when the right to receive the payment is established.
Income from Pension Operations
The entrance fee income account includes the accrued balance when the participants enter the private pension system for the first time or when they open a new private
pension account, not exceeding the monthly minimum wage (half of monthly amount for contracts issued after 9 August 2008,) at the date the private pension agreement
is signed. In the Group’s private pension plans, half of the entrance fee is collected within the first year of the contract and is recorded as income. The collection of
the other half is deferred till the date the participants leave the private pension system or make a demand for transfer to another company within 10 years (5 years for
contracts issued after 9 August 2008).For contracts issued in TRY before 9 August 2008, if the participant leaves the system before 10 years, the other deferred half of the
entrance fee is collected by increasing the amount with the inflation rate and recorded as income. For new contracts issued after 9 August 2008, if the participant leaves
the system before 5 years the deferred other half of the entrance fee is collected from the participant without being increased with the inflation rate and is recorded as
income.
On the other hand, for contracts issued before 9 August 2008, based on the entrance fee amount collected at the beginning, the Group contributes a continuity (loyalty)
award, amounting to the deferred portion of the entrance fee which is fixed for foreign currency denominated contracts and the deferred portion of the entrance fee
increased with the inflation for TRY contracts, to the private pension account of the participants on the condition that the participants hold their private pension account
in the Group for 10 years without interruption. For contracts issued after 9 August 2008; the entrance fee received is transferred to the account of the participants, by
increasing the amount with the inflation rate for contracts in TRY, on the condition that the participants hold their private pension account in the Group until retirement.
2.22 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lesser are classified as financial leases while other leases are classified as
operational leases.
Finance leases are capitalised at the commencement of the lease at the lower of the fair value of the leased property and the present value of the minimum lease
payments. The liability to lessor is classified as the leasing payables in the balance sheet. Each lease payment is allocated between the liability and finance charges so as
to achieve a constant rate on the finance balance outstanding. The interest element of the finance cost except for capitalised portion is charged to the income statement.
The payment of the operational lease is charged to the income statement on a straight-line basis over the lease period (The incentives received or to be received from the
lessor and payments made to intermediaries to acquire the lease contract are also charged to the income statement on a straight-line basis over the lease period). The
Group currently undue operating leases liability is TRY 1,005,901 as of December 31, 2010.
2.23 Dividend Distribution
Listed companies perform dividend distributions as envisaged by Turkish Capital Market Board as explained below:
In accordance with the CMB Communiqué IV No:27 Clause:5 and other several decisions of CMB, in case of dividend distribution the rate of first dividend could not be
less than 20% of remaining distributable profit after deducting the prior year losses if any. Depending on the decisions taken by General Assemblies, publicly traded joint
stock companies are free to distribute dividends in cash, in share certificates, in partial distribution within cash or share certificates while retaining a portion within the
company or retain as a whole with distributing neither cash nor stocks.
As required by CMB decision numbered 7/242 dated February 25, 2005; amount of distributable profit, calculated from net distributable profit in accordance with CMB
regulations related to minimum dividend distribution requirements shall be fully distributed, wherein the amount could be compensated by net distributable profit per
statutory books, otherwise full amount of net distributable profit per statutory books will be distributed. No profit distribution shall be made in the case of net loss in either
statutory books or the financial statements prepared in accordance with CMB regulations.
In accordance with the Capital Market Board decision dated January 27, 2010, concerning with distribution of dividends for publicly traded joint stock companies, it was
decided that no minimum dividend distribution requirement will be applied for publicly traded joint stock companies.
Inflation adjustments to issued capital and historical amount of extraordinary reserves can be used as an internal source of capital increase, dividend distribution in cash
or the net off from prior period losses. In case of usage of inflation adjustment to issued capital in dividend distribution in cash, it is subject to corporation tax.
2.24 Technical reserves
Unearned premium reserve
An unearned premium reserve is calculated on a daily basis for all policies in force as of 31 December 2009 for unearned portions of premiums written, except for
transportation and earthquake premiums issued before 14 June 2007. During the calculation of unearned portion of premiums written on a daily basis, it is supposed that
the policies start at 12.00 noon and finish at 12.00 noon again. Within the framework of the “Regulation Regarding the Technical Reserves of Insurance, Reinsurance and
Pension Companies and the Assets to which These Reserves Are Invested” (“Regulation on Technical Reserves”) issued in Official Gazette No: 26606 dated 27 August
2007, unearned premium reserve and the reinsurers’ share of the unearned premium reserve of the policies issued after 1 January 2008, are calculated as the unearned
portion of the premiums and ceded premiums to reinsurers without deducting commissions or any other deductions, on an accrual and gross basis. As for the policies
written before 1 January 2008 with to premium accrued during 2008, the unearned premium reserve is calculated by deducting commissions from premiums. For marine
policies with an uncertain end date, unearned premium reserve is calculated as 50% of the premiums written in the last three months (Note 17).
The Group accounted for unearned premium reserve calculated on a daily basis for all policies in force except the policies for which mathematical reserve for the unearned
portions of premiums written without deducting commissions or any other expenses. In this context, unearned premium reserve has been calculated for the premiums
corresponding to annual insurance guarantee amounts of policies renewed annually and with maturities over one year. The Group calculated unearned premium reserve
via adding annual premiums of valid life insurance policies and accumulation of life insurance over a period of one year, and deducting the expenses in the framework of
“Industry-Specific Declaration about the Changes on the Regulation of Technical Reserves Assets Invested by Insurance and Reinsurance Companies and Pension Funds”
numbered 2010/29 and dated September 20, 2010. During the calculation of unearned portion of premiums written on a daily basis, it is supposed that the policies start
at 12.00 noon and finish at 12.00 noon again (Note 17).
Deferred commission expense and income
Within the framework of the Circular numbered 2007/25 and dated 28 December 2007 published by Treasury, the unearned portion of commissions paid to agencies for
the written premiums and commissions received from reinsurers for the ceded premium after 1 January 2008, are recorded as in deferred expenses and deferred income,
respectively on the balance sheet, and as operating expenses on a net basis in the income statement. Income and expenses from private pension agreements (including
commissions) are disclosed in Notes 2.21 and 2.25 (Note 17). Furthermore, as of December 31,2010 the Group is not subject the guarantee premiums costs of the
policies that have mathematical reserves as deferred income account within the framework of the “Industry-Specific Declaration about the Changes on the Regulation of
Technical Reserves Assets Invested by Insurance and Reinsurance Companies and Pension Funds” numbered 2010/29 and dated September 20, 2010 . As of December
31, 2010 the Group calculated insurance expenditure amounting to TRY 624,981 (31 December 2009: None).
Within the framework of Regulation on Technical Reserves, effective from 1 January 2008, insurance companies are required to account for an unexpired risk reserve
against the probability that future losses incurred from in force policies may exceed the unearned premium reserve accounted for the related policies considering expected
loss ratios. Expected loss ratio is calculated by dividing the current year incurred losses to current year earned premiums. If the loss ratio for a branch is higher than 95%,
the unexpired risk reserve for that branch is calculated by multiplying the ratio in excess of 95% with the unearned premium reserve for the related branch.
The Group has calculated and accounted for net unexpired risk reserve amounting of TRY 324,756 as of 31 December 2010 (Note 17) (31 December 2009: TRY
7,129,778).
Outstanding claims reserve
The Group recognizes outstanding claims reserve for the claims which are accrued but not paid yet in the current period or previous periods and for claims incurred but
not reported. Outstanding claim reserves are determined based on reports of experts or assessments of policyholders and experts. (December 31, 2009 - Outstanding
claims reserve of expert reports or expert evaluations of the insured is determined in accordance with the reserve for outstanding claims in the calculations, if any,
recourse and other revenue items are considered to have been deducted.)
In accordance with Technical Provisions Regulation, starting from September 30, 2010, a compensation fee; which is realized by using actuarial chain ladder methods
but not reported and of which the application bases are specified by the Undersecretaries of Treasury is calculated by the end of the fiscal period. These are Standard
Chain, Damage/Premium, Cape Cod, Frequency/Force and Munich Chain methods. The difference between the accrued and detected suspended claims reserve and the
selected actuarial chain ladder method is the claim fee, which is realized but not reported.
In order to test the incurred but not reported amounts, different calculation is performed. In this calculation, the amounts covers the last twelve months as gross are
taken. The claims occur before these dates and are reported after these dates are accepted as incurred but not reported. In the calculation of the incurred but not
reported amounts, the claims incurred before these dates and reported after these dates in the last five or more years and the subrogation are calculated that the amount
deducted the salvage and other income collections related to these incurred but not reported amounts is divided by the premium production in the related years is
calculated by multiplying the weighted average and premium production in the twelve month before the current period. According to these calculation, the Group books
the net outstanding claims reserve amounting to TRY 120,272,576 (December 31, 2009 – TRY 76,662,486) (December 31, 2009- Outstanding claims reserve adequacy
amounting to TRY 3,616,310, actuarial ladder chain method TRY 4,829,486, estimated subrogation and salvage income accruals TRY 7,691,751).
Actuarial chain ladder method calculations made on the gross amounts, the Group reaches the net amount considering the reinsurance agreements in force or related
insurance agreement.
After the test, the amount of the selected actuarial reserves in the chain ladder method, as compared with the sum of the branches, and which amount the industry in
each related this method is larger than the amounts incurred but not reported reserves are reflected in the financial statements. As at 31 December 2010 amounting to
TRY 26,023,587 for life and non-life branches calculated for claim incurred but not reported.
Furthermore, in the branches that the huge claims are picked by the actuary, adequacy difference is calculated in the following year for the huge claims picked.
A huge claims to elimination is calculated in accordance with Treasury Circular No. 2010/16 dated 18 October 2010 issued by the “F- Huge Claims Agent”. Great claim
elimination is committed for Motor Vehicles, Traffic, Fire and Natural Disasters, General Liability branches.
In accordance with “J- Subrogation and Salvage Revenue Accounting Records Article “ of the circular dated October 18, 2010 and numbered 2010/16 published by
The Group uses standard actuarial chain ladder method for all branches.
The Group includes the incurred but not reported claim fees as of balance sheet date, the revenue accrues such as recourse, salvage and etc., which will be deducted
from accrued suspense claim fee, the suspense damage provision adequacy difference, and the difference between the amount calculated by the actuarial chain ladder
method and the suspense damage provision in its calculation of outstanding claims reserve as of December 31, 2009.
In life branch, outstanding claim reserve amount for incurred but not reported is calculated on the basis of guarantee amounts within the framework of Circular numbered
2010/14 “Calculation of outstanding IBNR reserves at Life Branch” and Article No.7 of Circular “Technical Reserves and Assets for Investing Reserves of Insurance,
Reinsurance and Pension Funds Companies” published by Treasury numbered 2010/14. In this direction, the Group takes into account the IBNR amount for the last 5
years, compensations and total guarantees. The annual average of the guarantees that calculated for each policy, weighted according to their risks, and the outstanding
IBNR reserves of life branch is calculated by dividing the total of guarantees into amount of guarantees of last 5 years as stated above and multiplying this ratio and the
average of 12 months of current period’s guarantee amounts. As of December 31, 2010 the Group made reserve on the financial statements about life branch IBNR
amounting to TRY 2,137,311 (31 December 2009: TRY 790,392) as net outstanding claims reserves (Note 17).
In Personal Accident Branch, the Group calculated outstanding claim reserve for IBNR via the technique that stated at Article No:6 of “Technical Reserves and Assets for
Investing Reserves of Insurance, Reinsurance and Pension Funds Companies” due to the low number of claim (19 claims in 7 years). In this calculation, the figures of
end of accounting periods that covers last 12 months were taken into as gross. Claims that occurred before but reported after these dates are considered as IBNR claims
amount. While the calculation of the IBNR claims reserves, the Group takes into considerations weighted averages of the amounts outstanding IBNR reserves of past 5
years and more; deducted the withdrawal, salvage and similar gains, and dividing the related each year’s written premiums. The current years IBNR amount is calculated
by multiplying the weighted average that found as stated above and total of 12 months before the current period. In this framework The Group made reserve amounting to
4,113 TRY (31 December 2009: TRY 914) for personal accident branch.(31 December 2009: The Group made reserve for outstanding claims adequacy amounting to TRY
272,322, and actuarial chain ladder method was TRY 151,901)
In accordance with the Regulation on Technical Reserves, effective from 1 January 2008, insurance companies are required to record an equalization reserve for the
insurance contracts including earthquake and credit coverage, in order to cover the catastrophic risks and in order to equalize the fluctuations within the claim ratios
that may occur during the following accounting periods. Such reserve is calculated over 12% of net earthquake and credit premiums corresponding to each year. In the
calculation of the net premium, the amounts paid for the non-proportional reinsurance agreements are regarded as ceded premiums. The Group has accounted for an
equalization reserve for non-health branches amounting to 6,481,612 TRY (31 December 2009: 3,726,882 TRY) (Notes 17 and 47.1).
Based on the explanation numbered 2009/9 regarding “Application of Regulation on the Technical Reserves”, starting from 1 January 2009, the life and pension
companies are required to record an equalization reserve for the insurance contracts including earthquake and credit coverage in life and accident branches. In addition,
the calculation technique of the equalization reserves determined by the Undersecretariat of Treasury by Regulation numbered “Regulation for the Amendment on
Regulations about Technical Reserves and Assets for Investing Reserves of Insurance, Reinsurance and Pension Funds Companies” 27655 and dated July 28, 2010.
According to the related Regulation’s Article No.9 and fifth paragraph entitled as “Equalization Reserves”, Insurance companies can use their own statistical data for
calculation of the equalization reserves amount for the life policies that have guaranty of death, but if the entity that has not own statistical data, has to made reserves as
equalization reserve via considering 11% of the amount of life indemnity (also include costs share) as earthquake premium and 12% of the same amount as equalization
reserve. As of December 31, 2010 the Group made reserve for life branch amounting to TRY 941.255 (31 December 2009: TRY 300,401) and for personal accident branch
amounting to TRY 149 (31 December 2009: None) (Note 17).
Bonus Provisions
If The Group’s apply practice of bonuses and discounts case according to Insurance Law, according to 16th Article Group must be allocated according to the technical
results of the current year bonuses and discounts reserve the insured persons or beneficiaries consist of the amounts allocated for bonuses and discounts as of 31
December 2010 TRY 751,671 (31 December 2009: TRY 1,031,544) made of the total allocated reserve bonuses and discounts.
Life Mathematical and Profit Share Reserves
Mathematical reserves for a contract in force in each tariff is calculated separately according to the technical principles and the following: (i) and (ii) of this paragraph has
been committed with the reserves described in the actuarial mathematics reserve obtained by directing investment income allocated to the dividend equivalents is the sum
insured.
i) The actuarial mathematical reserves, with the insurance premiums received from registrants for the risks assumed by companies with cash values is the difference
between the obligations of beneficiaries. Actuarial mathematical reserves, for a long-term life insurance is divided on the basis of tariffs and technical basics of the
formula specified. Actuarial mathematical reserves, will perform in the future liabilities of the insurer in advance by the Insured to the value of the difference between
the present value of future premiums payable in the form of presence (prospective method) is calculated. However, the policyholder pays premiums result of reserves
in actuarial mathematical undertaken by the insurer with the value of the difference between the value of the calculation results in the form of Hazard (retrospective
method) or by the Undersecretariat adopted by the generally accepted actuarial methods in calculating the total sum not be less than the sum of reserves in the
actuarial mathematics. Actuarial mathematics reserve is calculated as a negative value if this is considered to be zero. Accumulation premiums for life insurance
actuarial mathematics taken in reserve, the accumulation of contributions is the sum of the parts. Actuarial mathematics accrue or be charged according to the
reserves of the tariff be calculated based on the specifications.
ii) Reserves for dividend companies committed to providing beneficiaries with their obligations pursuant to contracts with the insurance reserves registrants deposited
income assets, dividend approved the technical basics of technical interest income calculated in accordance with the dividend distribution system shall be limited to
the guaranteed portion, including With that amount consists of the past years accumulated dividend equivalents. (Note 17).
2.25 Private Pension Operations
The total amount of pension investment funds established by the Group within the private pension system including the participants’ investments are accounted for as
gross amounts within the financial statements under due from private pension fund operations and payables from private pension operations.
As of 31 December 2010, the Group has twelve pension funds. (31 December 2009: Eleven)
Private pension system receivables consist of capital advances made to pension investment funds, receivables from funds for fund operating deductions and receivables
from Takasbank, the custodian. Fund operating deductions account comprises of daily deductions made by the Group for the expenses arising from fund management
services that have not been collected on the same day. Advances allocated to pension investment funds established by the Group are recorded as capital advances made
to pension investment funds.
In addition to payables to participants’ account mentioned in the paragraph above, private pension system payables also include payables to private pension intermediaries
and temporary participants’ accounts. Temporary participants account includes the contributions from pension investment fund participants that have not been invested
yet by the Group. This account also includes the proceeds from the sale of participation shares less entrance fee deduction and similar charges, if any, in case the
participant leaves the system or transfers his/her saving to other private pension companies.
Fund management charge, which is charged in return for the fund management services, representation and other services provided to pension funds, is recorded as
income in the Group’s accounts and is shared between the Group and the funds’ portfolio manager according to the ratios specified in the agreement signed between the
parties. The total charge is recorded to the Group’s technical income as fund management revenue and the part of charge which belongs to the funds’ portfolio manager
thereof, is recorded in the Group’s technical expense accounts.
Commission expenses incurred for pension fund operations are accounted for under operating expenses for pension funds account balance. The Group, defers the
commissions paid for issuing the private pension contracts in the context of TMS 18 “Revenue” and TMS 39 “Financial Instruments: Recognition and Measurement” with
the condition of not exceeding the total guaranteed income from these contracts and by considering the expected period of time to secure this income. As of 31 December
2010 the Group has calculated deferred commission expense amounting to TRY 4,530,752 (31 December 2009: 4,864,018 TRY) and accounted for TRY 2,095,002 TRY
(31 December 2009: 2,437,452 TRY) of this amount under other current deferred income and expense accruals, and the remaining amount of TRY 2,435,750 TRY
(31 December 2009: 2,426,566 TRY) under other non-current deferred income and expense accruals (Note 47.1). The change in deferred commission expense based on
private pension agreements is accounted for in the income statement under the operating expenses
Management expense deduction, which is deducted as 8% at most, from contributions made to participants’ private pension accounts, is accounted for under the
management expense deductions account.
The entrance fee income account includes the accrued balance when the participants enter the private pension system for the first time or when they open a new private
pension account, not exceeding the monthly minimum wage at the date the private pension agreement is signed. In the Group’s private pension plans, half of the entrance
fee is collected within the first year of the contract and is recorded as income. The collection of the other half is deferred till the date the participants leave the private
pension system or make a demand for transfer to another company within 10 years.
Nonetheless, based on the entrance fee amount collected at the beginning, the Group contributes a continuity (loyalty) award (for TRY contracts, the deferred portion
of the entrance fee is increased with the inflation rate), amounting to the deferred portion of the entrance fee, to the private pension account of the participants on the
condition that the participants hold their private pension account in the Group for 10 years without interruption. The Group has calculated a provision amounting to TRY
8,209,597 for its liability regarding the loyalty bonus on contractual basis and accounted for this provision in the financial statements under other non-current liabilities
as of 31 December 2009. In order to calculate this provision, the Group has developed a model to measure the probability of participants to keep their private pension
account in the Group for 10 years and accounts for the probable amount in the financial statements by discounting it to present value. The change in this financial liability
is recorded in other technical expenses under the expenses from private pension operations account in the income statement. For contracts issued after 9 August 2008,
loyalty bonus is given when the participants are entitled to pension therefore the calculation of this provision for contracts issued after this date is made over the probability
of the participants to keep their pension accounts in the Group until the date of their eligibility to pension.
The return on capital advances injected to newly established pension funds, representing the positive fair value change in the newly established pension funds, are
recorded to income as interest on capital advances given to pension funds.
3. Critical accounting estimates and judgments
Preparation of financial statements requires the use of estimations and assumptions which may affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities as of the balance sheet date and reported amounts of income and expenses during the financial period. Estimations and assumptions are
evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under current circumstances.
Although the estimations and assumptions are based on the best knowledge of the management for existing events and operations, they may differ from the actual results.
The estimation of the ultimate liability for technical expenses that can be incurred for the existing insurance contracts is the one of the most critical accounting estimates
of the Group. Estimation of the insurance liabilities, by nature, includes the evaluation of several uncertainties. Estimates used in mainly, insurance and indemnity reserves
for outstanding claims, life mathematical equivalents, other financial assets at fair value calculation of technical reserves, reserve for severance payments, provisions
for impairment of assets associated with the calculation of deferred tax assets are described in detail, and apart from the footnotes of financial significant impact on
the amounts as reflected in comments that may be realized and the balance between the predictions based on existing or future sources of important assumptions and
assessments made by considering the following:
Group, calculated the value of employment termination benefits using the actuarial assumptions and reflected in enclosed financial statements and records. As of 31
December 2010, employment termination liability is TRY 8,436,611(31 December 2009: TRY 7,193,835).
Provision for doubtful receivables
The Group sets doubtful provision for receivables in legal follow-up from agencies and insurers amounting to TRY 2,559,389 (December 31, 2009 – TRY 2,314,737) in
the financial statements as of December 31, 2010. Furthermore, the Group sets provision amounting to TRY 1,751,387 (December 31, 2009 – TRY 1.224,763) for the
receivables that are no in legal follow-up but the Group thinks that these receivables can not be collected.
Subrogation Receivables
Group records net subrogation receivables amounting to TRY 6,515,800 (December 31, 2009 – TRY 3,843,184) for subrogation receivables under litigation process on
accrual basis and individual subrogation receivables, that are not confirmed, after doubtful receivables (deducted reinsurance share) as of December 31, 2010.
Outstanding Claims Reserve:
During the calculation of the outstanding claims reserve, not only use estimates reserves but also referred to many experts and the consultant opinion as conclusive
evidence. Outstanding for certain amounts of reserve take a long time to reach the final shape. Therefore, the actuarial calculation of outstanding claim reserve by claims
chain ladder method also amounts are based on experience of past years claim development amount.
In this calculation, the development of claims paid in the past, the average amount of compensation per claim claims to in the past and the expected number of loss /
premium ratio is taken into account. Technical Reserves in accordance with the Regulation, as of September 30, 2010, by the end of the accounting period determined by
the Undersecretariat actuarial basis of the implementation chain ladder methods, benefit cost is calculated using the incurred but not reported. Outstanding claims reserve
determined and accrued on account reserve the difference between with selected actuarial chain ladder method, benefit cost for incurred but not reported. After the test,
the amount of the selected actuarial chain ladder method compared with the sum of the branches, and which of them is larger, the amounts incurred but not reported
reserves of each branch are reflected in the financial statements. Furthermore, in the branches that the huge claims are picked by the actuary, adequacy difference is
calculated in the following year for the huge claims picked.
Moreover, in the branches that is occurred big separation of the claim by actuary, for the separated huge claims adequacy calculation done in the next year.
A huge claim to elimination is calculated in accordance with Treasury Circular No. 2010/16 dated 18 October 2010 issued by the “F-Huge Claim Agent”(Box Plot). Big
claim elimination is committed for Motor Vehicles, Traffic, Fire and Natural Disasters, General Liability branches.
As the years, the total margin is calculated on the basis of calculation for each policy the risks of collateral related to all the guarantees within the framework of the annual
weighted average values. Reserve for Outstanding Claims Incurred but not reported on the life branch the last 5 years before the accounting period, the sum of the costs
of claim incurred but not reported as specified above, 5 year guarantee obtained by dividing the ratio of total current account before the 12-month period is calculated by
multiplying the average total amount of guarantee. Group’s outstanding claims reserve as of 31 December 2010 is a net amount of TRY 120,272,576 (31 December 2009:
TRY 85,174,628 TRY).
Deferred Tax:
Deferred tax, taking into consideration the balance sheet liability method, assets and liabilities for financial reporting assets and liabilities and the tax effects of temporary
differences between tax bases are recognized by taking into consideration. Various estimates and judgments used in the calculation of deferred tax assets. The Group, as
of 31 December 2010 amount of TRY 11,112,823 (31 December 2009: TRY 8,528,726) net deferred tax assets calculated and reflected to the records.
4. Management of insurance and financial risk
Insurance risk
The risk under any one insurance contact is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of the
insurance contracts, this risk is random and therefore unpredictable.
For a portfolio of insurance contracts where the theory of probability is applied to pricing and reserving, the principal risk that the Group faces under its insurance contracts
is that the actual claims and claim payments exceed the carrying amount of insurance liabilities. The Group determines its insurance underwriting strategy based on the
type of insurance risk accepted and the claims incurred.
The Group manages the aforementioned risks by its overall underwriting strategy and via reinsurance agreements, which the Group is a party to. In risk acceptance policies
of life and personal accident branches, the following components are considered:
-
-
-
-
In individual insurance, health declarations and reports under consideration of policyholder’s age and insurance coverage,
In group insurance, health declarations and reports based on the number of person in group and if the policyholder’s is voluntary or not,
In pricing, the information about charging sur-premium based on the health condition of the policyholder’s, addition of condition to be added to the contract or the
deduction or the rejection of the coverage,
In high coverage, in additions to the health documents, the documents about the financial position of the insuree.
The concentration of insurance risk (maximum insured loss) under each branch is summarised below (excluding health branch):
Fire
General losses
Life
General liability
Transportation
Accident
Land vehicles
Air vehicles liability
Marine
Air vehicles
Legal protection
Loans
Total
31 December 2010
526,082,542,589
55,298,915,197
28,670,806,466
13,388,377,078
10,943,462,784
5,444,042,064
10,044,680,569
6,209,512,929
2,500,075,250
388,140,861
441,023,793
439,953,500
-
31 December 2009
364,605,767,045
46,191,597,047
22,540,161,551
10,322,392,357
4,888,416,149
3,525,472,332
4,882,894,930
4,540,845,359
2,254,281,200
764,843,559
616,194,574
221,599,000
656,877
659,851,533,080
465,355,121,980
The risks that the Group is exposed to due to the pricing strategies are as follows:
Mortality Risk:
The Group is subject to mortality risk if the actual death claims are higher than expected death rates in the mortality tables used in pricing the policies. The Group uses
the appropriate mortality table for each product. Also the tariffs are updated according to the loss ratio of each product. Group uses the CSO 53-58 and CSO 80 mortality
table while pricing the life insurance agreements.
Technical Interest Rate Risk:
In saving life products, the policyholder’s are guaranteed an income that is equal to “technical interest rate” at a minimum. Group is subject to the technical interest rate
risk if the market interest rate is lower than the guaranteed interest rate. With the tariff change in 2000, technical interest rate has been restricted with the inflation rate.
Sensitivity Analysis
Financial risk
Group is exposed to financial risk through its financial assets, reinsurance assets and insurance liabilities. In particular the key financial risk is that the proceeds from
its financial assets are not sufficient to fund the obligations arising from its insurance contracts. The most important components of the financial risk are market risk
(including foreign exchange risk, fair value interest rate risk, cash flow interest rate risk and price risk), liquidity risk and credit risk. Group’s overall risk management
programme focuses on the unpredictability of financial markets and seeks to minimize potential negative effects on the Group’s financial performance. The Group does not
use derivative financial instruments to hedge certain risk exposures. Risk management is carried out by management under policies approved by the Board of Directors.
(a) Market Risk
i. Cash flow and market interest rate risk
The Group is exposed to interest rate risk through its variable rate financial assets and liabilities. The risk is managed by balancing the assets and liabilities sensitive
against interest rate.
The variable rate financial assets expose the Group to interest rate risk. If market interest rates of variable rate financial assets had been changed by 1% on 31 December
2010, holding all other variables constant, net assets would have been higher/lower by TRY 424,245 (31 December 2009: TRY 1,006,400).
ii. Foreign currency risk
The Group is exposed to foreign exchange risk through the impact of rate changes at the translation of Turkish Lira pertaining to foreign currency denominated assets and
liabilities. These risks are followed by the analysis of the foreign currency position.
As of December 31, 2010, had Euro strengthened/weakened by 10% against TRY with all other variables held constant, net assets would have been higher/lower by TRY
1,624,449 (31 December 2009: TRY 564,340), as a result of foreign exchange gains/losses on the translation of Euro denominated assets and liabilities.
As of December 31, 2010, if USD had strengthened/weakened by 10% against TRY with all other variables held constant, net assets would have been higher/lower by
TRY 1,225,020 (31 December 2009: TRY 995,808), as a result of foreign exchange gains/losses on the translation of USD denominated receivables and payables. As the
Group does not have any available for sale share as of 31 December 2010, the change in foreign Exchange rates will have an effect on the “Valuation of Financial Assets”
account classified under the Group’s shareholders’ equity accounts by TRY 131,009.
Foreign currency denominated assets and liabilities of the Group is disclosed in related notes.
iii. Price risk
The Group’s financial assets expose the Group to price risk. The Group is not exposed to commodity price risk.
The Group’s common stock investments assets have been stated at market value as of 31 December 2010. If market price of common stocks had been changed by 5%
holding all other variables constant, net assets would have been higher/lower by TRY 12,021(31 December 2009: TRY 7,185).
The Group’s available-for-sale financial assets with fixed interest rate have been stated at market value as of 31 December 2010. If market price had been changed by
1% holding all other variables constant, impact on the “Valuation of financial assets” account under shareholders’ equity would have been equal to TRY 2.456.206 (31
December 2009: TRY 4,415,079).
The Group’s “Financial assets at fair value through profit or loss” (Held for trading) financial assets have been stated at market value as of 31 December 2010. If market
price had been changed by 1% holding all other variables constant, net assets would have been higher/lower by TRY 236,668 (31 December 2009: TRY 187,783).
The analysis on price risk explained above reflects the effects on before income tax.
(b) Credit Risk
Ownership of financial assets involves the risk that counterparties may be unable to meet the terms of their agreements. The Group’s exposure to credit risk arises mainly
from cash and cash equivalents and deposits in banks, financial assets, reinsurer’s share of insurance liabilities, amounts due from reinsurers, premium receivables from
policyholders and intermediaries. The Group management deems these risks as total credit risk to the counterparty.
The Group monitors the credit risk of financial assets and receivables from insurance operations (including reinsurance receivables) by limiting the aggregate risk to any
individual counterpart and covered by collaterals. Other explanations in relation to these receivables are included in Note 12.
The Group’s financial assets except for loans and receivables which are subject to credit risk are generally composed of domestic government bonds and time and demand
deposits kept in banks and other financial institutions in Turkey and such receivables are not deemed to have high credit risk.
(c) Liquidity risk
The Group uses its available cash resources to pay claims arising from insurance contracts. Liquidity risk is the risk that cash may not be available to pay obligations when
due at a reasonable cost. Management sets limits on the minimum portion of funds available to meet such claims.
The table below analyses the Group’s financial liabilities and insurance liabilities into relevant maturity groups based on the expected remaining period at the balance sheet
or contractual maturity date. The amounts disclosed in table are the undiscounted cash flows except for payables to insurance and reinsurance companies:
31 December 2010
Up to 3 months 3 months to 1 year
1 to 5 years
Total
3,852,188
6,797,618
10,649,806
3,852,188
6,797,618
-
10,649,806
31 December 2010
Life mathematical reserve - net (***)
Unexpired risks reserve -net
Outstanding claim reserve - net (*)
Equalization reserve - net
Up to 3 months
13,525,826
2,318
56,514,381
-
3 months to 1 year
87,176,801
14,571
34,997,270
-
Expected cash flows
1 to 5 years
276,893,365
282,970
28,760,925
-
Over 5 years
118,786,246
24,897
7,423,016
Total
496,382,238
324,756
120,272,576
7,423,016
70,042,525
122,188,642
305,937,260
126,234,159
624,402,586
3 months to 1 year
1 to 5 years
8,067,650
72,504
-
Total
10,071,908
72,504
31 December 2009
Premium reserves
31 December 2009
Life mathematical reserve - net (***)
Outstanding claim reserve - net (*)
Unexpired risks reserve -net
Equalization reserve - net (**)
Bonus and rebate provision
Up to 3 months
2,004,258
2,004,258
8,140,154
-
10,144,412
Up to 3 months
30,780,727
38,420,786
362,951
-
3 months to 1 year
75,574,760
22,612,795
6,724,089
-
Expected cash flows
1 to 5 years
279,777,075
23,126,341
42,738
-
Over 5 years
126,374,483
1,014,706
4,027,283
1,031,544
Total
512,507,045
85,174,628
7,129,778
4,027,283
1,031,544
69,564,464
104,911,644
302,946,154
132,448,016
609,870,278
(*) The Group foresees that the payment of litigated outstanding claims will be partly made within one year. The total of the outstanding claims reserve and unearned premium reserve is classified in the non-current liabilities in the balance sheet.
(**) It is classified as long-term technical reserves in the balance sheet. Group plans to use its financial assets and cash and cash equivalents to meet such liabilities explained above.
(***) The Group foresees that the payment of life mathematical reserves will be partly made within one year. The total of the life mathematical reserve is classified in the non-current liabilities in the balance sheet.
Group foresees to meet the liabilities of the Group mentioned above with the asset in the financial assets and cash and cash equivalents.
Fair value of the financial assets
Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and
is best evidenced by a quoted market price, if one exists.
The estimated fair values of financial instruments have been determined by the Group using available market information and appropriate valuation methodologies As of
December 31, 2010 and 2009, all financial assets are 1st level of financial assets designated at fair value.
The following methods and assumptions were used to estimate the fair value of the financial instruments for which it is practicable to estimate fair value:
Financial assets
The fair values of balances denominated in foreign currencies, which are translated at period end exchange rates, are considered to approximate carrying values. The fair values of certain financial assets carried at amortised cost, including cash and cash equivalents are considered to approximate their respective carrying values
carried at amortised cost due to their short-term nature. The fair value of premiums receivable along with related provision for overdue receivables is considered to
approximate respective carrying values carried at amortised cost. The cost of the financial assets that are not quoted in an active market, less impairment if any, are
considered to approximate carrying value.
Financial liabilities
The fair values of liabilities on main operations and other financial liabilities are considered to approximate to their respective carrying values.
Capital management
The Group’s objectives when managing the capital are:
-
-
-
to comply with the capital requirements required by Treasury,
to safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders,
to price the insurance agreements in proportion to the risks and to yield return to shareholders
As of the preparation date of the financial statements, the minimum required shareholders’ equity of the Group and its Subsidiary at 31 December 2009 is calculated
separately as 230,682,666 TRY (31 December 2009: 168,435,398 TRY) and 44,902,529 TRY (31 December 2009: 40,580,873 TRY) (*) within the framework of the
related regulations on capital adequacy.
(*) According to regulation article 10, “Measurement and assessment of capital adequacy of Insurance and Reinsurance and Pension Companies” it is prepared twice a
year in June and December.
5. Segment information
Information related to the operational reporting made by the Group to the chief operating decision-maker in the accordance with the “TFRS 8 - Operating Segments” is
disclosed in this part.
Numerical limits in “TFRS 8 - Operating Segments” is also considered as the reporting to the chief operating decision-maker in the determination of segments and
segments those constitute more than 10% of premium production and net technical income are determined as a separate operating segment. The Group’s production
channels are composed of agency sales and direct sales and there are no policyholders that constitute 10% of total premium production. The Group operates in Turkey.
The Group mainly generates income from premiums on policies.
The income from investment of the premiums written also generates a significant income. In pension funds, fund management charge, which is charged in return for
the fund management services, representation and other services provided to pension funds, is recorded as income in the Group’s accounts and is shared between the
Subsidiary and the funds’ portfolio manager according to the ratios specified in the agreement signed between the parties. The total charge is recorded to the Group’s
technical income.
Operating segments determined by the Group management as of December 31, 2010 and 2009 is as below:
Non-Health Insurance
Non-Health or elementary insurance mainly consists on Land Vehicles (Casco), Land vehicles liability (Traffic), Fire, transportation, engineering and other industries’
production. Premium production of non-health branches mainly carried out through brokers and banks as insurance risks are usually held within the borders of Turkey.
Especially fire, casco and traffic branch insurance policies are arranged annually. For products with a concentration of high-risk domestic and foreign reinsurance
companies held concurrently with the discretionary policy is necessary transfers are made with reinsurance contracts.
Health Insurance
Health insurance provides guarantees for sickness or expenses incurred due to injuries and indemnities if applicable and on the ground of general and special conditions if
any during the policy period. Geographical area that the guarantee is given is disclosed on the policy.
Life Insurance
Life insurance provides guarantee against the risks that the policyholder may encounter (death) throughout the period within the clauses and conditions defined in the
insurance contract or the risks that the policyholder may survive throughout the defined period within the insurance contract, or both risks together.
Pension Funds Saving and Investment System
Pension funds is individual saving system on the ground of voluntary participation and defined contributions, so as to increase welfare of the individuals by providing an
additional income after their retirement by investing their pension oriented savings.
Group considers the reporting to the chief operating decision-maker according to the “Regulation on Financial Reporting of Insurance and Reinsurance Companies and
Pension Companies”, and in accordance with TMS and TFRS as issued by TMSK and other regulations, communiqués and explanations issued by the Treasury regarding
accounting and financial reporting issues.
Group does not distribute the assets of non-life part to the branches, considers them together.
Net Profit/(Loss)
Investment income
Personnel expenses
General expenses
Tax
Investment expense
Other
Private Pension Technical Income
Private Pension Technical Expense
TECHNICAL EXPENSE
1- Incurred Losses - (Net of Reinsurance Share)
1.1- Paid Claims - (Net of Reinsurance Share)
1.2- Change in Outstanding Claims
(Net of Reinsurance Share and Returned Reserve) (+/-)
2- Change in Bonus and Rebate Provision
3- Change in Life Mathematical Reserves
4- Other Technical Expense
TECHNICAL INCOME
1- Earned Premiums - (Net of Reinsurance Share)
1.1- Written Premiums - (Net of Reinsurance Share)
1.2- Change in Unearned Premiums Reserve
1.3 - Unexpired Risks Reserve
2- Life Investment Income i
3- Other Technical Income - (Net of Reinsurance Share)
40,979,669
29,390,901
-
29,390,901
40,979,669
-
-
(26,597,446)
(63,937,989)
590,936
(23,707,566)
-
(256,166,490)
(192,228,501)
(165,631,056)
Non-Health
285,557,391
257,708,591
289,542,022
(38,638,452)
6,805,021
27,848,800
(271,118,139)
(247,410,573)
(248,001,509)
Health
312,097,808
309,120,866
333,368,763
(24,247,897)
2,976,942
12,603,140
19,765,275
(43,718,150)
-
36,556,015
-
(1,399,686)
279,871
16,212,855
(12,722,704)
(102,116,703)
(105,886,725)
(104,487,039)
Life
138,672,718
96,756,013
101,337,963
(4,581,950)
38,642,340
3,274,365
41,709,920
79,807
-
41,630,113
63,300,351
(21,670,238)
-
-
Private
Pension
-
(59,545,528)
68,414,177
(61,831,820)
(38,245,521)
(4,172,889)
(10,855,026)
(10,423,755)
(5,200,575)
2,769,880
-
-
-
-
Undistributed
-
(26,480,569)
(27,346,483)
2,408,509
865,914
-
(2,408,509)
-
-
-
Adjustments
among
segments
(2,408,509)
(2,408,509)
(2,743,710)
335,201
-
38,657,533
60,832,969
(103,141,461)
(37,299,800)
(4,172,889)
(10,855,026)
(10,423,755)
(5,200,575)
2,769,880
146,148,190
63,300,351
(21,670,238)
(27,406,196)
279,871
16,212,855
(100,368,259)
(629,401,332)
(545,525,799)
(518,119,604)
Total
733,919,408
661,176,961
721,505,038
(67,133,098)
6,805,021
38,642,340
34,100,106
Net Profit/(Loss)
Investment income
Personnel expenses
General expenses
Tax
Investment expense
Other
Private Pension Technical Income
Private Pension Technical Expense
TECHNICAL EXPENSE
1- Incurred Losses - (Net of Reinsurance Share)
1.1- Paid Claims - (Net of Reinsurance Share)
1.2- Change in Outstanding Claims
(Net of Reinsurance Share
and Returned Reserve) (+/-)
2- Change in Bonus and Rebate Provision
3- Change in Life Mathematical Reserves
4- Other Technical Expense
TECHNICAL INCOME
1- Earned Premiums - (Net of Reinsurance Share)
1.1- Written Premiums - (Net of Reinsurance Share))
1.2 Change in Unearned Premiums Reserve
1.3 - Unexpired Risks Reserve
2- Life Investment Income
3- Other Technical Income - (Net of Reinsurance Share)
8,441,385
(45,064,740)
-
(45,064,740)
8,441,385
-
-
(8,477,787)
(100,818,939)
296,610
(23,542,889)
-
(236,888,670)
(136,069,731)
(127,591,944)
Non-Health
191,823,931
160,198,981
185,849,191
(18,600,995)
(7,049,215)
31,624,950
(275,055,005)
(251,512,116)
(251,808,726)
Health
283,496,390
281,178,223
280,516,861
661,362
2,318,167
34,289,197
26,514,368
(23,908,909)
-
31,683,737
-
(1,167,275)
(123,377)
37,001,723
(8,747,264)
(105,073,072)
(133,204,154)
(132,036,879)
Life
136,756,808
86,503,458
86,913,346
(409,888)
48,848,521
1,404,829
19,088,018
(17,542,043)
-
36,630,061
53,534,916
(16,904,855)
-
-
Private
Pension
-
(8,520,854)
49,881,819
(56,709,238)
7,948,316
(3,749,278)
(1,390,504)
(8,253,254)
(3,601,525)
7,352,810
-
-
-
-
Undistributed
-
(6,894,867)
(7,643,218)
2,359,106
648,351
-
(2,359,106)
-
-
-
Adjustments
among
segments
(2,359,106)
(2,359,106)
(2,492,048)
132,942
-
1,238,138
68,752,969
(95,801,084)
8,596,667
(3,749,278)
(1,390,504)
(8,253,254)
(3,601,525)
7,352,810
29,431,336
53,534,916
(16,904,855)
(9,348,452)
(123,377)
37,001,723
(133,109,092)
(617,016,746)
(520,786,001)
(511,437,549)
Total
609,718,023
525,521,556
550,787,345
(18,216,579)
(7,049,215)
48,848,521
35,347,946
6. Property and equipment
6.1 Depreciation and amortisation expenses for the period: TRY 4,172,889 (31 December 2009: TRY 3,749,278).
6.1.1 Depreciation expenses: TRY 2,729,701 (31 December 2009: TRY 2,864,732).
6.1.2 Amortisation expenses: TRY 1,443,188 (31 December 2009: TRY 884,546).
6.2 Changes in depreciation calculation methods and effect of such changes on depreciation expenses for the year: None (31 December 2009:
None).
6.3 Movements of property and equipment in the current period:
6.3.1 Cost of property and equipment purchased: TRY 3,586,487 (31 December 2009: TRY 1,926,069).
6.3.2 Cost of property and equipment sold or used as scrap: TRY 11,265,038 (31 December 2009: TRY 9,922,732).
6.3.3 Revaluation increases in the current period:
6.3.3.1 Cost of fixed assets (+): None (31 December 2009: TRY 866,752).
6.3.3.2 Accumulated depreciation (-): None (31 December 2009: None).
6.3.4 Nature, amount, beginning and ending dates of construction-in-progress: (*): TRY 89,455 (31 December 2009: TRY 395,573).
(*) Data processing automation project starting in December 2010 and planned to be completed in 2011 is followed under other financial assets.
Movement table of tangible assets is as follows:
1 January
2010
Additions
Transfers
Impairment
Disposals
31 December
2010
Cost:
Motor vehicles
Leased assets
32,398,107
6,598,287
19,338,397
219,047
16,718,901
504,512
134,219
1,137,494
1,072,734
482,406
-
504,512
33,712
(33,712)
(504,512)
41,451
-
(10,348,032)
(786,690)
(75,746)
(54,570)
-
22,225,745
8,240,293
19,624,441
177,013
17,113,025
-
Total
75,777,251
2,826,852
-
41,451
(11,265,038)
67,380,516
(6,689,182)
(5,381,651)
(16,721,316)
(117,668)
(15,596,641)
(456,387)
(450,420)
(800,255)
(835,457)
(33,770)
(491,483)
-
(456,387)
(10,114)
10,114
456,387
-
2,509,173
765,158
75,747
49,995
-
(4,630,429)
(6,638,293)
(16,791,615)
(85,805)
(16,028,015)
-
(44,962,845)
(2,611,385)
-
3,400,073
(44,174,157)
30,814,406
215,477
-
(7,864,965)
23,206,359
Motor vehicles
Leased assets
Total
Net book value
41,451
1 January
2009
Additions
Transfers
Impairment
Disposals
31 December
2009
Cost:
Motor vehicles
Leased assets
31,327,239
5,466,554
27,791,188
528,648
16,497,156
1,296,377
204,116
343,441
993,289
385,223
-
791,865
(791,865)
866,752
-
(3,573)
(9,446,080)
(309,601)
(163,478)
-
32,398,107
6,598,287
19,338,397
219,047
16,718,901
504,512
Total
82,907,162
1,926,069
-
866,752
(9,922,732)
75,777,251
Motor vehicles
Leased assets
(6,046,444)
(4,358,679)
(25,439,852)
(367,151)
(15,093,063)
(655,738)
(642,738)
(697,642)
(619,716)
(36,157)
(634,241)
(126,128)
(325,479)
325,479
-
149
9,338,252
285,640
130,663
-
(6,689,182)
(5,381,651)
(16,721,316)
(117,668)
(15,596,641)
(456,387)
Total
(51,960,927)
(2,756,622)
-
-
9,754,704
(44,962,845)
Net book value
30,946,235
30,814,406
In circumstances where the fair value of the tangible assets is lower than the inflation adjusted costs, impairment is accounted for these differences. The Group has
accounted for impairment amounting to TRY 474,214 for the property for operational usage as of 31 December 2010 (31 December 2009: TRY 227,336).
The mortgage on the properties for operational usage in favour of Treasury amounts to TRY 3,328,729 (31 December 2009: TRY 5,356,015) (Note 43).
The details of the tangibles assets obtained from financial leasing agreements as a lessee is follows:
Cost - capitalised leasing agreements
Accumulated depreciation
Net book value
31 December 2010
4,203,591
(4,171,662)
31 December 2009
4,708,103
(4,308,923)
31,929
399,180
7. Investment properties
Cost:
Buildings
Buildings
Net book value
Cost:
Buildings
Buildings
Net book value
1 January 2010
Additions
Disposals
31 December 2010
5,550,539
232,955
-
5,783,494
5,550,539
232,955
-
5,783,494
(1,879,619)
(118,314)
-
(1,997,933)
(1,879,619)
(118,314)
-
(1,997,933)
3,670,920
114,641
3,785,561
1 January 2009
Additions
Impairment 31 December 2009
5,562,464
-
(11,925)
5,550,539
5,562,464
-
(11,925)
5,550,539
(1,771,509)
(108,110)
(1,879,619)
(1,771,509)
(108,110)
(1,879,619)
3,790,955
3,670,920
The fair value of investment properties of the Group is determined by the independent, professionally qualified valuation companies. In the circumstances where the
fair value of the investment properties is lower than the costs adjusted for inflation, the differences are accounted for in provision for impairment. Impairment provision
amounting to TRY 11,925 TRY is accounted for investment properties as of 31 December 2010. (31 December2009: TRY 11,925). The fair value of investment properties
of the Group are determined by valuation companies as at the year 2009 as TRY 11,096,524 (31 December 2009: TRY 10,670,000).
The Group obtained the expertise report dated December 31, 2010 for these properties amounting to TRY 2,205,000 (31 December 2009 -2,000,000 TRY). Subsidiary has
rental income from mentioned investment properties totally per month TRY 9,700 in 2010. (31 December 2009-9,600).
The Group has a total monthly rent income from these investment properties amounting to TRY 48,540 (1 January - 31 December 2009: TRY 45,363).
Investment properties amounting to TRY 1,703,850 (31 December 2009: TRY 3,235,209) mortgaged over their costs in favour of the Treasury (Note 43).
8. Intangible assets
Cost:
Rights
Other intangible assets *
Rights
Other intangible assets
Net book value
Cost:
Rights
Other intangible assets (*)
Rights
Other intangible assets
Net book value
(*) Other intangible assets consist of computer software and licenses.
1 January 2010
Additions
Disposals
31 December 2010
3,484,396
5,303,112
2,836,044
526,681
7,430,516
89,455
(2,836,044)
4,011,077
12,733,628
89,455
11,623,552
8,046,652
(2,836,044)
16,834,160
(1,586,586)
(3,098,772)
(880,162)
(563,026)
-
(2,466,748)
(3,661,798)
(4,685,358)
(1,443,188)
-
(6,128,546)
6,938,194
6,603,464
(2,836,044)
10,705,614
1 January 2009
Additions
Disposals 31 December 2009
1,893,962
4,848,912
2,440,471
1,590,434
739,476
395,573
(285,276)
-
3,484,396
5,303,112
2,836,044
9,183,345
2,725,483
(285,276)
11,623,552
(1,077,124)
(2,723,688)
(509,462)
(375,084)
-
(1,586,586)
(3,098,772)
(3,800,812)
(884,546)
-
(4,685,358)
5,382,533
1,840,937
(285,276)
6,938,194
9. Investments in associates
The Group has no investments in associates accounted for by the equity accounting method. (31 December 2009: None).
10. Reinsurance assets
Reinsurance share of outstanding claim reserve (Note 17)
Reinsurance share of unearned premium reserve (Note 17)
Reinsurance companies’ current account - net
31 December 2010
77,150,771
56,265,513
(21,480,726)
31 December 2009
60,118,976
55,008,663
(11,245,358)
44,025,122
30,137,136
1,188,987
(143,890,315)
1,256,850
(15,138,422)
-
68,456,021
29,313,367
2,871,053
(147,081,153)
(12,039,868)
(3,924,576)
(10,251,681)
Reinsurance income/ (expenses)
Reinsurers share of claims paid
Commissions received from reinsurance companies (gross)
Postponement of the commissions that received from reinsurers
Ceded premiums (Note 24)
Reinsurance share of change in unearned premiums reserve
Reinsurance share of change in outstanding claim reserve
Effect of reinsurance agreement change (*)
Information about reinsurance agreements are disclosed in Note 2.14.
(*) The total effect of the increase in the net technical insurance reserve due to decrease in the related reinsurance share is calculated as of 31 December 2009 and the
reserve accounted for regarding decline has been presented in the other technical reserves on the balance sheet.
11. Financial Assets
11.1 Financial assets are summarised below by measurement category in the table below:
Financial assets at policyholders’ risk
Blocked
Free
Eurobond and government Bonds
denominated in
Common stocks
Government bonds denominated in
Turkish Lira
Common stocks
Turkish Lira
Investment funds
Total
Total
31 December 2010
Group’s portfolio
Blocked
Free
Total
Total
278,832,236
-
1,303,550
278,832,236
1,303,550
-
-
-
278,832,236
1,303,550
72,442,847
-
1,825,296
-
74,268,143
-
147,942,293
-
89,291,049
401,048
237,233,342
401,048
311,501,485
401,048
351,275,083
3,128,846
354,403,929
147,942,293
89,692,097
237,634,390
592,038,319
13,904,471
54,507,185
3,616,770
1,721,328
17,521,241
56,228,513
4,311,549
-
19,451,477
5,740,397
23,763,026
5,740,397
41,284,267
61,968,910
68,411,656
5,338,098
73,749,754
4,311,549
25,191,874
29,503,423
103,253,177
419,686,739
8,466,944
428,153,683
152,253,842
114,883,971
267,137,813
695,291,496
(*) TRY 1,265,284 of the shares is listed on the stock market, TRY 160,633 of the shares is not listed on the stock market.
31,12,2009
Financial assets at policyholders’ risk
Blocked
Free
Turkish Lira
Eurobond and government Bonds
denominated in Foreign currency
Common stocks (*)
Investment funds
Turkish Lira
Total
Total
Blocked
Group’s portfolio
Free
Total
Total
50,591,871
22,315,733
72,907,604
187,738,853
85,724,627
273,463,480
346,371,084
294,015,040
-
-
294,015,040
-
-
304,330
304,330
294,015,040
304,330
344,606,911
22,315,733
366,922,644
187,738,853
86,028,957
273,767,810
640,690,454
49,704,090
1,646,405
51,350,495
-
5,218,211
5,218,211
56,568,706
18,691,364
9,343,659
28,035,023
3,884,682
14,929,448
18,814,130
46,849,153
68,395,454
10,990,064
79,385,518
3,884,682
20,147,659
24,032,341
103,417,859
413,002,365
33,305,797
446,308,162
191,623,535
106,176,616
297,800,151
744,108,313
(*) TRY 143,696 of the shares is listed on the stock market, TRY 160.634 of the shares is not listed on the stock market.
In addition to the financial assets described above, as of 31 December 2010, amongst the financial investments at policyholders’ risk the Group has a time deposit
account amounting to TRY 55,131,068 (31 December 2009: TRY 49,232,976 ) and all respective amount is blocked. (31 December 2009: TRY 47,642,852) and the
total financial assets at policyholders’ risk amounts to TRY 483,284,751 (31 December 2009: TRY 495,541,138.The weighted average interest rates of the time deposits
denominated in TRY, USD and EUR at policyholders’ risk are 9.10%, 2.98% and 2.84% (31 December 2009: TRY 9.28%, USD 2.44%, EURO 2.50%) respectively, they
have maturities less than 3 months.
The interest rates of the available-for-sale financial assets vary between 7.75% and 19.46% (31 December 2009: 7.23% and 27.5%). The interest rates of Eurobonds are
between 3.62% and 11.56% (31 December 2009: 4.64% and 14.74%). The interest rate of the held-for- trading financial assets vary between 7.57% and 8.22%
(31 December 2009: 7.36% and 18.88%).
Loans and receivables (Note 12)
Total
31 December 2010
2,097,370,090
31 December 2009
1,570,097,392
2,097,370,090
1,570,097,392
The Group does not have foreign currency available for sale financial assets (31 December 2009: None).
11.2 Marketable securities issued during the year other than share certificates: None (31 December 2009: None).
11.3 Debt securities issued during the year None (31 December 2009: None).
11.4 Market value of marketable securities and financial assets carried at cost and carrying value of marketable securities and financial assets
shown at market value:
Marketable securities
Eurobond and government bonds denominated in foreign currency
Government bonds denominated in Turkish Lira
Investment funds
Corporate bonds
Common stocks
31 December 2010
Inflation
Adjusted Cost
Book Value
242,040,730
278,832,236
250,077,745
352,785,752
53,259,126
61,968,910
1,261,721
1,303,550
187,425
401,048
410,597,373
542,208,048
31 December2009
Inflation
Adjusted Cost
Book Value
272,227,754
294,015,040
351,687,269
393,220,237
44,112,116
56,568,706
179,317
304,330
668,206,456
744,108,313
11.5 Marketable securities under “Marketable Securities and Investment Securities” account group and issued by the company’s shareholders,
investments or subsidiaries and the issuers: None (31 December 2009: None).
11.6 Revaluation of property and equipment in the last three years: None (31 December 2009: None).
11.7 - 11.9 Other information about financial assets
Interest income from available for sale financial assets and realized fair value differences is TRY 54,790,573 (31 December 2009: TRY 65,266,287) and accounted in the
investment income in profit and loss statement.
The unrealised fair value changes during the period are amounting to TRY 15,038,555 (31 December 2009: TRY 44,044,428) and TRY 2,907,314 (31 December 2009:
TRY 10,312,568) are classified in account “Valuation of financial assets” in the shareholders’ equity, TRY 2,133 (31 December 2009: TRY 7,568) are classified in “Minority
interest” in the shareholders’ equity, TRY 12,129,108 (31 December 2009: TRY 33,724,292) are classified in the other long term technical reserves (Note 17).
The interest income and fair value changes during the current period from held-for-trading financial assets are TRY 11,618,126 (31 December 2009: TRY 22,296,574) and
are classified under investment income in the income statement.
The maturity analysis of financial assets is as follows:
31 December 2009
3-6
6 months 1 to 3
months
to 1 year
years
25,887,169
49,271,358 146,464,769
No stated
maturity
-
0-3
months
38,144,403
61,968,910
401,048
-
1,120,730
-
9,201,658
-
62,369,958
39,265,133
35,088,827
Government bond denominated in Turkish Lira
Eurobond and government bonds denominated in
foreign currency
Investment funds
Common stock
No stated
maturity
-
0-3
months
88,217,515
56,568,706
304,330
21,194,807
-
15,325,119
-
6,733,808
-
Total
56,873,036
109,412,322
116,849,284
89,820,922
Government bond denominated in Turkish Lira
Eurobond and government bonds denominated in
foreign currency
Investment funds
Common stock
Corporate bond
Total
More than
3 years
93,018,053
Total
352,785,752
255,531,719
-
278,832,236
61,968,910
401,048
1,303,550
50,574,908 159,442,898 348,549,772
695,291,496
1,303,550
12,978,129
-
31 December 2009
3-6
6 months 1 to 3
months
to 1 year
years
101,524,165
83,087,114 101,653,842
More than
3 years
18,737,601
Total
393,220,237
11,352,108
-
239,409,198
-
294,015,040
56,568,706
304,330
113,005,950
258,146,799
744,108,313
12. Loans and Receivables
12.1 Classification of the receivables as receivables from main customers, receivables from interested parties, receivables for the advance
payment (short-term and long-term prepayment) and the others:
31 December 2010
104,453,098
102,956,319
6,565,107
31 December 2009
88,015,276
85,859,308
59,385,892
213,974,524
233,260,476
68,150,779
3,120,360
7,750,457
1,871,943,927
3,747,568
3,094,123
75,511
11,236,161
1,376,877,262
2,164,940,047
1,628,291,101
(64,581,474)
(2,559,389)
(1,751,387)
(54,654,208)
(2,314,737)
(1,224,763)
(68,892,250)
(58,193,708)
2,096,047,797
1,570,097,393
31 December 2010
71,146,581
(19,661,820)
31 December 2009
59,385,891
(21,609,488)
Receivables for salvage and claim recovery - net
51,484,761
37,776,403
Provision for salvage and claim recovery under follow-up
Provision for salvage and claim recovery under follow-up - reinsurance share (**)
(64,581,474)
19,612,513
(54,654,208)
20,720,989
(44,968,961)
(33,933,219)
6,515,800
3,843,184
Receivables from intermediaries
Receivables from policyholders
Receivables for salvage and claim recovery - gross
Due from insurance operations
Doubtful receivables from main operations
Receivables from insurance and reinsurance companies
Deposits from insurance and reinsurance companies
Policy loans
Receivables from private pension operations
Due from main operations - gross
Provision for claim recovery receivables under legal follow-up (*)
Provision for receivables from policyholders and intermediaries (*)
Provision for overdue and non overdue receivables
Receivables from main operations - net
The details of claim recovery and salvage receivables are as follows:
Receivables for salvage and claim recovery - gross (including doubtful receivables)
Receivables for salvage and claim recovery reinsurance share (**)
Provision for salvage and claim recovery - net
Total
(*)
(**)
(***)
Disclosed under provision for doubtful receivables from main operations in the balance sheet.
Disclosed under provision for due from insurance operations in the balance sheet.
In accordance with the draft circulars regarding subrogation and salvage receivables as of December 31, 2009 together with subrogation receivables in administrative and legal follow up amounts are made re-classification by the group to the related accounts.
12.2 Due from / due to shareholders, investments and subsidiaries:
Balances and transactions with the related parties are disclosed in Note 45.
12.3 Total mortgages and collateral obtained for receivables:
The details of mortgages and collaterals received are as follows:
USD
31 December 2010
EUR
TRY
Total
Pledges
Cash
108,629
85,184
-
2,108
34,580
-
44,872,700
14,245,111
787,990
262,967
57,980
44,872,700
14,355,848
787,990
382,731
57,980
Total
193,813
36,688
60,226,748
60,457,249
31 December 2009
EUR
TRY
Total
USD
Pledges
Cash
109,562
113,785
-
2,222
27,036
-
42,540,305
9,962,216
859,873
270,587
57,980
42,540,305
10,074,000
859,873
411,408
57,980
Total
223,347
29,258
53,690,961
53,943,566
12.4 Receivables and payables denominated in foreign currencies having no foreign exchange rate guarantees, assets in foreign currencies and
conversion rates:
Foreign
currency type
USD
EUR
GBP
CHF
SEK
JPY
DKK
AUD
31 December 2010
Foreign currency
amount
Exchange rate
10,994,144
1.5460
9,096,489
2.0491
19,846
2.3886
138,689
1.6438
16,656
0.2262
492,167
0.0189
(11,647)
0.2749
23
1.5685
Amount TRY
16,996,946
18,639,616
47,404
227,977
3,767
9,312
(3,202)
36
35,921,856
Euro
USD
CHF
GBP
DKK
JPY
SEK
AUD
885,964
1,079,949
12,763
2,649
14,085
9,300
83
5
2.0491
1.5460
1.6438
2.3886
0.2748
0.0189
0.2261
1.5685
1,815,429
1,669,601
20,980
6,327
3,871
176
19
8
3,516,411
Loans to Insurees
Foreign Currency type
USD
EUR
Original Amount
4,226,077
551,926
Foreign Currency type
Foreign currency premiums receivables and receivables from policyholders
USD
EUR
CHF
GBP
SEK
DKK
JPY
CAD
31 December 2010
Exchange rate
1.5460
2.0491
31 December 2009
Original Amount
Exchange rate
6,578,985
5,205,707
141,611
34,760
31,650
(12,484)
185,310
32
1.5057
2.1603
1.4492
2.3892
0.2082
0.2902
0.0163
1.4368
Amount TRY
6,533,515
1,130,951
7,664,466
Amount TRY
9,905,978
11,245,889
205,223
83,049
6,590
(3,623)
3,021
46
21,446,173
Commission debt in foreign currency
USD
EUR
CHF
GBP
DKK
JPY
SEK
CAD
887,808
617,714
30,611
6,138
14,778
16,292
521
5
1.5057
2.1603
1.4492
2.3892
0.29024
0.0163
0.20822
1.4368
1,336,773
1,334,448
44,361
14,665
4,289
266
108
7
2,734,917
Loans to Insurees
USD
EUR
6,090,865
737,588
1,5057
2,1603
9,171,015
1,593,411
10,764,426
12.5 - 12.7 Other information about loans and receivables:
The aging of due from insurance operations is as follows:
31 December 2010
65,973,488
97,115,762
36,997,920
6,147,746
3,092,703
31 December 2009
48,468,934
90,647,195
31,795,566
5,011,672
-
209,327,619
175,923,367
71,146,581
(1,918,202)
59,385,891
(2,048,783)
278,555,998
233,260,475
Opening balance - 1 January
2010
1,224,763
697,078
(170,454)
2009
1,299,878
86,431
(161,546)
Closing balance - 31 December
1,751,387
1,224,763
2010
33,933,219
12,576,570
(1,540,828)
2009
24,853,146
11,259,046
(2,178,973)
44,968,961
33,933,219
2010
2,314,737
244,652
2009
48,600,009
8,368,937
2,559,389
56,968,946
Overdue
Up to 3 months
3 to 6 months
6 months to 1 year
Over 1 year
Subrogation receivables (gross)
Total
The movement of provision for receivables from policyholders and intermediaries is as follows:
The movement of provision for doubtful net subrogation receivables is as follows:
The movement of provision for doubtful receivables from main operations is as follows:
The aging of the overdue but not impaired receivables from policyholders and agencies are as follows:
Up to 3 months
3 to 6 months
6 months to 1 year
Over 1 year
Total
31 December 2010
55,477,328
8,035,177
2,148,598
1,112,859
31 December 2009
43,786,874
2,526,276
1,214,982
940,802
66,773,962
48,468,934
31 December 2010
20,964,223
7,491,231
553,803
31 December 2009
21,159,146
6,025,401
572,268
29,009,257
27,756,815
The details of the guarantees received for the receivables stated above are follows:
Mortgages
Total
13. Derivative financial instruments
14. Cash and cash equivalents
Cash and cash equivalents that are included the statement of cash flows for the year ended 31 December 2010 and 2009 are shown in Note 2.12.
15. Share capital
Other Capital Reserves:
In accordance with the Corporate Tax Law article 5.1.e, 75% of the profit obtained from the sales of the properties of the Group is considered as tax exempt in such
condition that the amount is kept in capital reserves under liabilities for 5 years. The profit assumed as tax exemption cannot be transferred to any account except for the
capital account or retrieved from the Group. In accordance with the notification of the Treasury numbered 2008/41, dated 27 October 2008, the Group accounted TRY
3,711,141 TRY total investment sales income calculated according to the TMS regulations, generated from the sales of the building realised in 2008 is recognised in the
statement of income calculated according to TMS regulations. The Group classified TRY 3,898,754 which consists of 75% of investment sales income, amounting to TRY
5,198,339, generated from the sales of the building realised in 2010 and calculated using the book values as determined by Tax Procedural Law, in “Profit not Subject to
Distribution” included in “Net Profit for the Period” account group under shareholders’ equity and this amount is transferred to account “Other Capital Reserves” in 2011.
Other profit reserves as of December 31, 2010 and 2009 in the shareholders’ equity accounts express earthquake Claims Reserves come up in the balance sheet as of
December 31, 2006 and revenue obtained from this account and revenue followed until the date of 14 June 2007.
Legal Reserves:
Retained earnings as per the statutory financial statements, other than legal reserve requirements, are available for distribution subject to the legal reserve requirement
referred to below. The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code. The Turkish Commercial Code
stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the Group’s paid-in share
capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash distributions in excess of 5% of the paid-in share capital. Under the Turkish
Commercial Code, the legal reserves can only be used to offset losses and are not available for any other usage unless they exceed 50% of paid-in share capital.
The movement of legal reserves in the period is as follows:
Reserves accounted in dividend payment
2010
6,927,682
3,365,695
2009
2,207,340
4,720,342
10,293,377
6,927,682
Valuation of Financial Assets:
The unrealised gains and losses that result from the changes in the fair values of available-for-sale financial assets are directly recognized in the shareholders’ equity as
“Valuation of Financial Assets”.
The movement of valuation of financial assets in the period is as follows:
Opening balance - 1 January (net of tax effect)
Fair value increase
Outflows due to matured or sold financial assets
Tax effect of fair value change (Note 35)
2010
11,798,392
2,909,447
(5,800,081)
578,127
2009
3,656,658
10,320,136
(161,643)
(2,016,759)
Net change
(2,312,507)
8,141,734
9,485,885
11,798,392
The Group has 8,000,000,000 units of shares all fully paid (31 December 2009: 8,000,000,000 units).
Movement of common stocks at opening balance and closing balance is as follows:
Paid in capital
Total
Paid in capital
Total
1 January2010
Unit Nominal TRY
8,000,000,000
80,000,000
8,000,000,000
Unit
-
Amortised
Nominal TRY
-
-
-
-
Issued capital
Unit Nominal TRY
-
Unit
-
Amortised
Nominal TRY
-
-
-
80,000,000
1 January2010
Unit Nominal TRY
8,000,000,000
80,000,000
8,000,000,000
Issued capital
Unit Nominal TRY
-
80,000,000
-
-
31 December 2010
Unit Nominal TRY
8,000,000,000
80,000,000
8,000,000,000
80,000,000
31 December 2009
Unit Nominal TRY
8,000,000,000
80,000,000
8,000,000,000
80,000,000
Other Reserves:
As of December 31, 2010 and 2009, TRY 18,811,781 which is classified under the Sales Profit Addition to the Capital account, is related with the sale of Group’s
subsidiary in 2007 and the profit from the sale of subsidiary which has been accounted for in the equity accounts of the Group as of 31 December 2007.
16. Other reserves and equity component of discretionary participation feature
Information about other reserves classified in share capital is explained in Note 15.
17. Insurance liabilities and reinsurance assets
17.1 Guarantees to be provided and guarantees provided for life and non-life branches:
31 December 2010
Non-Life
72,458,832
77,121,090
Required guarantee amount to be provided (*)
Guarantees provided
Life
508,352,975
541,021,498
Required guarantee amount to be provided (*)
Guarantees provided
31 December 2009
Life
Non-Life
509,030,269
56,313,517
543,248,974
103,086,223
(*) In accordance with the article 4 of Communiqué regarding “The Financial Structure of Insurance, and Reinsurance and Pension Companies”, published in the Official
Gazette (No: 26606) dated 7 August 2007 in accordance with the adaptation to the Insurance Law, the insurance and pension fund companies operating in personal
accident and life branches should be provided guarantees that equals to one third of required capital amount in each capital adequacy calculation period. The same
regulation, in accordance with Article 7, the Group as at 30 July 2010 for the amount of collateral remaining nominal value of TRY 9,750,000 has been blocked in
favor of Treasury securities.
17.2 Number of life policies, the number and mathematical reserve amount of the life policies that enter and exit during the year and current
status:
Transferred from previous period
Number of Policies
797,014
31 December 2010
Mathematical reserve
512,507,045
Increase in mathematical reserves
Saving policies
Non-saving policies
Entered during the period
9
717,319
717,328
53,726,153
38,057
23,325,866
77,090,076
Saving policies
Non-saving policies
Exit during the period
(9,506)
(353,022)
(362,528)
(92,219,091)
(995,792)
(93,214,883)
Grand total
1,151,814
496,382,238
Transferred from previous period
Increase in mathematical reserves
Non-saving policies
Increase in current period
Saving policies
Non-saving policies
Decrease in current period
Grand Total
31 December 2009
Number of Policies
Mathematical reserve
709,769
549,508,768
344,733
344,733
72,465,868
14,093,954
86,559,822
(11,161)
(246,327)
(257,488)
(122,857,237)
(704,308)
(123,561,545)
797,014
512,507,045
17.3 Guarantee amount to be provided for non-life branch:
17.4 Unit prices of pension funds and savings founded by the Group:
Pension Funds
Yapı Kredi Emeklilik A.Ş. Gelir Amaçlı Kamu Borçlanma Araçları Emeklilik Yatırım Fonu-YEK
Yapı Kredi Emeklilik A.Ş. Para Piyasası Likit Kamu Emeklilik Yatırım Fonu-YEP
Yapı Kredi Emeklilik A.Ş. Gelir Amaçlı Kamu Dış Borçlanma Araçları Emeklilik Yatırım Fonu-YGD
Yapı Kredi Emeklilik A.Ş. Büyüme Amaçlı Hisse Senedi Emeklilik Yatırım Fonu-YEH
Yapı Kredi Emeklilik A.Ş. Esnek Emeklilik Yatırım Fonu-YEE
Yapı Kredi Emeklilik A.Ş. Gelir Amaçlı Uluslararası Karma Emeklilik Yatırım Fonu-YEU
Yapı Kredi Emeklilik A.Ş. Esnek (Döviz) Grup Emeklilik Yatırım Fonu-YEY
Yapı Kredi Emeklilik A.Ş. Esnek (Türk Lirası) Grup Emeklilik Yatırım Fonu- YTL
Yapı Kredi Emeklilik A.Ş. Para Piyasası Emanet Likit Karma Emeklilik Yatırım Fonu-YEL
Yapı Kredi Emeklilik A.Ş. Gelir Amaçlı Kamu Dış Borçlanma Araçları Emeklilik Yatırım Fonu (Euro)-YGE
Yapı Kredi Emeklilik A.Ş. Gelir Amaçlı Kamu Borçlanma Grup Tahvil Bono Fonu-YEB
Yapı Kredi Emeklilik A.S. Büyüme Amaçlı Esnek Emeklilik Yatırım Fonu-YEN
31 December 2010
0,036420
0,026240
0,021655
0,053707
0,039430
0,013075
0,015428
0,035633
0,020542
0,012991
0,015146
0,010414
31 December 2009
0,033640
0,024890
0,019594
0,042144
0,035365
0,013051
0,014347
0,031285
0,019674
0,013258
0,013842
-
(*) Was issued on August 31, 2010, it is publicly traded as of January 3, 2011.
17.5 Units and amounts of share certificates in portfolio and in circulation:
Share certificates in circulation
Share certificates in portfolio
Share certificates in circulation
Share certificates in portfolio
31 December 2010
Unit
Amount
57,968,957,639
1,860,834,605
31 December 2009
Unit
Amount
48,623,894,789
1,366,293,701
-
-
Numbers and portfolio amounts of the individual and group pension funds’ participants (entered, left, cancelled during the period and the current participants):
Individual
Group
Individual
Group
Cancelled during the period
Individual
Group
Actual
31 December 2010
Number
Assets under
of Contracts
Management
35,712
161,890,903
20,638
33,474,398
56,350
195,365,301
28,170
161,666,868
17,607
54,453,773
45,777
216,120,641
240,185
1,440,738,614
72,537
420,095,991
312,722
1,860,834,605
Individual
Group
Individual
Group
Cancelled during the period
Individual
Group
Actual
31 December 2009
Number
Assets under
of Contracts
Management
43,152
109,340,586
20,384
24,217,459
63,536
133,558,045
40,170
171,581,782
7,467
29,696,725
47,637
201,278,507
234,369
1,076,607,206
67,779
289,686,495
302,148
1,366,293,701
17.7 Valuation methods of profit share calculation for life insurance:
Investment Type
Government Bonds/Treasury Bills
Eurobonds
Repo and Deposits in TRY/Foreign Currency
Investment Fund
Common Stock
Valuation Method
Market Value/Internal rate of return
Internal rate of return
Daily simple interest method
Unit price values announced
Weighted average value of IMKB 2nd session of the last 5 days
17.8 Number of units and individual/group allocation of gross/net contribution amounts of the private pension fund participants during the
period:
Individual
Group
Total
Individual
Group
Total
Number of Agreements
35,712
20,638
1 January - 31 December 2010
Gross Contribution Amount
162,421,398
32,467,407
Net Contribution Amount
159,490,472
32,273,946
56,350
194,888,805
191,764,418
43,152
20,384
108,064,653
22,768,312
105,500,213
22,595,140
63,536
130,832,965
128,095,353
17.9 Number of units and individual/group allocation of gross/net contribution amounts of the private pension fund participants transferred
from another company during the period:
1 January- 31 December 2010
Group
112
2,164,794
2,161,011
Individual
225
3,359,552
3,359,183
Total
Group
Individual
337
5,524,346
5,520,194
Gross Number of Agreements
706
128
3,342,184
1,777,383
Contribution Amount
3,341,821
1,773,667
834
5,119,567
5,115,488
Total
17.10 Number of units and individual/group allocation of gross/net contribution amounts of the private pension fund participants transferred
from the life insurance portfolio to the private pension fund portfolio during the period: None (31 December 2009: None).
17.11 Number of units and individual/group allocation of gross/net contribution amounts of the private pension fund participants that left the
Group and transferred to another company or that left the Group but did not transfer to another company:
Individual
Group
28,170
17,607
139,333,931
44,632,374
131,309,573
44,360,822
45,777
183,966,305
175,670,395
Gross Number of Agreements
40,170
7,467
155,110,079
23,943,908
Contribution Amount
145,838,084
23,723,210
47,637
179,053,987
169,561,294
Total
Individual
Group
Total
17.12 Number of units, gross/net premiums and individual/group allocation for life policyholders that joined the portfolio during the period:
The Group does not have new saving life policyholder that joined the portfolio during the year (31 December 2009:None).
17.13 Number of units, gross/net premiums and individual/group allocation of mathematical reserves for life policyholders that left the
portfolio during the period:
Number of Agreements (*)
Gross Premium
Net Premium
Mathematical Reserve
Individual
9,365
3,475,861
2,400,419
89,094,790
Group
141
81,247
72,450
3,124,301
Total
9,506
Individual
Group
Number of Agreements (*)
10,693
468
Total (**)
11,161
3,557,108
2,472,869
92,219,091
Gross Premium
Net Premium
4,510,533
2,903,102
80,910
68,589
Mathematical Reserve
105,819,808
17,037,429
4,591,443
(*) Only saving policies have been taken into account.
(**) USD and EUR policies are converted into TRY to TCMB Exchange rate as of 31 December 2010 and 2009
2,971,691
122,857,237
17.14 Profit share allocation rate to the life policyholders
TRY
USD
EUR
10,55%
7,17%
5,03%
16,94%
7,12%
6,43%
2010
512,507,045
41,568,800
38,642,340
(92,219,091)
(4,337,502)
(4,351,403)
(3,410,019)
7,982,068
2009
549,508,768
52,219,217
48,848,521
(122,185,569)
(5,305,151)
(5,349,753)
(2,843,892)
(2,385,096)
496,382,238
512,507,045
31 December 2010
Foreign Currency Rate (*)
1.5467
2.0510
Amount TRY
223,760,299
50,065,950
17.15 - 17.19 - Other required information about liabilities from insurance agreements:
Life mathematical reserves
Premiums from saving policies
Investment income
Surrender and maturity payments
Risk premiums
Commission expense
Loadings
Change in mathematical reserves of non-saving policies
Life mathematical reserves denominated in foreign currency are as follows:
Currency
USD
EUR
Foreign Currency Amount
144,672,198
24,409,914
273,826,249
Currency
USD
EUR
Foreign Currency Amount
163,224,493
24,734,704
31 December 2009
Foreign Currency Rate (*)
1.5063
2.1630
Amount TRY
245,866,531
53,492,458
299,358,989
(*) Since the foreign exchange rates used are different for the products, average rates are disclosed.
Outstanding claims reserve:
Paid claims
Increase
- Outstanding claims of current period
- Prior years’ outstanding claims
Gross
122,070,258
(47,351,978)
86,827,253
83,885,719
2,941,534
31 December 2010
Reinsurance share
(53,732,151)
15,589,602
(29,162,230)
(35,447,662)
6,285,432
Net
68,338,107
(31,762,376)
57,665,023
48,438,057
9,226,966
Closing balance
161,545,533
(67,304,779)
94,240,754
35,873,459
4,355
(9,845,759)
(233)
26,027,700
4,122
Total
197,423,347
(77,150,771)
120,272,576
Paid claims
Increase
- Outstanding claims of current period
- Prior years’ outstanding claims
Gross
114,784,812
(43,540,933)
50,826,379
59,686,325
(8,859,946)
31 December 2009
Reinsurance share
(53,392,643)
11,590,003
(11,929,511)
(25,574,787)
13,645,276
Net
61,392,169
(31,950,930)
38,896,868
34,111,538
4,785,330
Closing balance
122,070,258
(53,732,151)
68,338,107
23,985,364
3,993,620
(9,585,124)
4,829,486
(7,902,888)
(377,310)
1,893,373
-
16,082,476
3,616,310
(7,691,751)
4,829,486
145,293,604
(60,118,976)
85,174,628
31 December 2010
Reinsurance share
(55,008,665)
(1,256,849)
Net
257,377,866
67,133,099
Expected salvage and claim recovery income accrual (*)
Chain ladder reserve (*)
Total
(*) The related provisions are calculated on a gross and net basis and recorded in the consolidated financial statements.
Unearned premium reserve:
Net change
Gross
312,386,531
68,389,948
380,776,479
Net change
Gross
306,209,819
6,176,712
312,386,531
(56,265,514)
31 December 2009
Reinsurance share
(67,048,531)
12,039,868
(55,008,663)
324,510,965
Net
239,161,288
18,216,580
257,377,868
As of 31 December 2010, deferred commission income and deferred commission expenses are TRY 10,751,862 (31 December 2009: TRY 12,118,556) and TRY
47,204,254 (31 December 2009: TRY 37,971,078), respectively, and recorded in deferred income and expense accruals account on balance sheet.
Unexpired risk reserve (*):
Gross
7,129,778
(6,805,022)
31 December 2010
Reinsurance Share
-
Net
7,129,778
(6,805,022)
324,756
-
324,756
Gross share
80,563
7,049,215
31 December2009
Reinsurance
-
Net
80,563
7,049,215
7,129,778
-
7,129,778
Net change
Gross
4,027,283
3,395,733
31 December 2010
Reinsurance Share
-
Net
4,027,283
3,395,733
7,423,016
Net change
Gross
1,902,446
2,124,837
2009
Reinsurance Share
-
Net
1,902,446
2,124,837
4,027,283
-
4,027,283
Foreign Type Amount
3,544,724
2,996,665
5,447
11,423
555
3,256
5,764
31 December 2010
Currency Rate (*)
2.0521
1.5468
2.4010
0.3138
1.6541
1.05275
0.2762
Currency Amount TRY
7,274,128
4,635,241
13,078
3,585
918
3,428
1,592
Net change
Net change
Equalization reserve (*):
7,423,016
Foreign currency denominated items in claims provision are as follows:
EUR
USD
GBP
FRF
CHF
DEM
DKK
11,931,970
EUR
USD
GBP
FRF
CHF
Foreign Type Amount
2,439,349
843,153
2,071
11,423
713
31 December 2009
Currency Rate (*)
2.1707
1.5114
2.4017
0.3309
1.4585
Currency Amount TRY
5,295,095
1,274,341
4,974
3,780
1,040
6,579,230
Bonus and rebates reserves:
Gross
1,031,544
(279,873)
2010
Reinsurance Share
-
Net
1,031,544
(279,873)
751.671
-
751.671
Net change
Gross
1,208,567
(177,023)
2009
Reinsurance Share
-
Net
1,208,567
(177,023)
1,031,544
-
1,031,544
Net change
Other long term technical reserves:
Equalization reserve and the unrealised profit and losses which do not belong to the Group due to changes in the fair values of the available for sale financial assets are
classified in “Other long term technical reserves” (Notes 2.8 and 47.1).
Other long-term technical reserves for the period are as follows:
Increase in fair value
Outflows due to financial assets sold or matured
2010
23,325,661
12,129,108
(2,928,689)
2009
(7,373,385)
33,724,292
(3,025,246)
32,526,080
23,325,661
333,517,294
Total net paid claim
616,602,553
588,913,851
20,111,596
3,534,240
2,229,776
1,813,090
-
1 January 200631 December
2006
480,762,193
463,258,959
14,901,590
1,349,440
1,252,204
-
2007
526,089,659
514,962,681
10,083,155
1,043,823
-
2008
312,520,672
13,651,745
1,972,274
2,272,207
896,046
942,601
-
260,618,705
15,659,478
1,825,029
285,399
1,185,919
1,328,197
1,223,483
282,126,210
Accident year
Payment made in the year of the
accident
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
Total net paid claim
454,899,823
424,539,167
25,798,217
4,319,599
3,915,242
(3,672,402)
-
2006
617,689,420
589,939,653
21,031,159
3,693,372
3,025,236
-
2007
479,804,700
463,383,625
15,036,128
1,384,947
-
2008
525,260,359
515,194,538
10,065,821
-
2009
563,256,016
559,103,895
4,152,121
-
2009
555,978,931
555,978,931
-
2010
568,334,413
568,334,413
-
2010
3,248,714,98
3,122,175,291
101,242,548
13,195,221
9,498,084
(1,590,437)
2,270,798
1,223,483
Total Net
Paid Paid
3,544,213,592
3,432,598,885
88,561,388
12,135,561
9,452,986
(1,016,041)
2,458,269
522,548
Total Net
Paid Paid
In accordance with the Regulation on Technical Reserves, since the outstanding claim provision per branch in the current period is less than the amount calculated by chain ladder method issued by
Treasury, the Group has accounted for net additional outstanding claim provision in total amounting to TRY 23,886,276.
332,255,545
2005
1 January 2004
31 December
2004
The Group prepares the claim development table by considering net paid claims in accordance with the Regulation on Technical Reserves.
424,533,319
25,727,420
4,300,355
3,762,508
(3,684,955)
1,512,817
-
313,491,767
13,585,504
1,907,703
2,208,496
855,824
945,452
522,548
Accident year
Payment made in the year of the
accident
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
456,151,464
2005
1 January 2004
31 December
2004
The Group prepares the claim development table by considering net paid claims in accordance with the Regulation on Technical Reserves.
18. Investment contract liabilities
19. Trade and other payables and deferred income
Payables from pension operations
Other main operations payables (Note 47.1)
Payables from insurance operations
Reinsurance payables
Other liabilities (Note 47.1)
Other deferred income
Total
31 December 2010
1,893,282,503
41,276,404
25,547,103
23,671,757
10,929,569
12,906,656
160,941
31 December 2009
1,394,062,077
36,989,372
19,729,964
14,339,481
12,118,556
12,960,944
168,326
2,007,774,933
1,490,368,720
Related party transactions are disclosed in Note 45.
Payables denominated in foreign currencies are as follows:
EUR
USD
FRF
GBP
10,590
502,116
35,915
3,094
31 December 2010
Exchange rate (*)
2.0491
1.5481
0.3139
2.4011
Amount TRY
21,700
777,313
11,270
7,429
817,712
USD
EUR
FRF
GBP
303,060
5,974
35,915
3,094
31 December 2009
Exchange rate (*)
1.5090
2.1604
0.3309
2.4017
Amount TRY
457,331
12,906
11,885
7,431
489,553
20. Borrowings
21. Deferred income tax
Deferred income tax was calculated for the temporary differences in the balance sheet items arising due to measurement in financial statements and measurement in
accordance with Tax Law.
The enacted tax rate used for the calculation of deferred income taxes on temporary differences that are expected to be realised in the following periods under the liability
method is 20%.
.
As of 31 December 2010 and 2009 the temporary differences giving rise to deferred income tax assets and deferred income tax liabilities with using appropriate tax rates
are as follows:
Cumulative temporary differences
Deferred income tax assets / (liabilities)
Deferred income tax assets
Financial liability due to pension agreements
Provision for premium and commission for employee
Provision for lawsuits
Provision for receivables from intermediaries and policyholders
Provision for unused vacations
Fixed asset depreciation difference
Provisions for not received invoices
Provisions of effect of renewal of reinsurance agreements (Note 47.1)
Chain ladder provision
Deferral of asistance premiums
Expense Accruals
Subrogation provisions
Other
6,032,045
7,914,665
8,436,611
3,008,257
1,751,387
2,647,147
324,756
715,688
552,115
19,927,576
2,887,052
3,398,105
4,582,439
4,746,503
433,458
8,209,597
6,830,953
7,193,835
2,175,912
1,224,763
2,052,651
7,129,778
10,251,681
4,829,486
2,145,094
2,709,985
1,206,411
1,582,933
1,687,320
601,651
350,277
529,429
64,951
143,138
110,423
3,985,515
577,410
679,621
916,488
949,301
86,692
1,641,919
1,366,191
1,438,767
435,182
244,953
410,530
1,425,956
2,050,336
965,897
429,019
541,997
Total deferred income tax assets
67,357,802
54,753,735
13,471,560
10,950,747
(4,530,752)
(4,864,016)
(906,150)
(972,803)
(3,093,686)
(2,536,442)
(2,731)
(1,630,078)
(3,080,034)
(1,305,870)
(1,754,934)
(10,644)
(1,094,593)
(618,737)
(507,288)
(546)
(326,016)
(616,007)
(261,174)
(350,987)
(2,129)
(218,919)
(11,793,689)
(12,110,091)
(2,358,737)
(2,422,021)
55,564,113
42,643,644
11,112,823
8,528,726
Deferred income tax liabilities
Deferred acquisition costs for pension contracts
Net difference between the carrying values and tax base values of
tangible assets
Provision for other income
Eurobond valuation difference
Total deferred income tax liabilities
Net deferred income tax assets (Note 35)
The movement of deferred income tax is as follows:
Deferred tax income
Deferred income tax assets booked in equity due to increase in value of
available-for-sale financial assets (Eurobond and government bond)
Closing balance - 31 December (Note 35)
2010
8,528,726
2,614,593
2009
4,277,889
4,561,168
(30,496)
(310,331)
11,112,823
8,528,726
31 December 2010
8,436,611
31 December 2009
7,193,835
8,436,611
7,193,835
22. Retirement Benefit Obligations
Under Turkish Labour Law, the Group is required to pay termination benefits to each employee who has completed one year of service and whose employment is
terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement
age (58 for women and 60 for men). After the changes made on 23 May 2002 in the legislation, some process of transition clauses related to the length of service before
retirement have been omitted.
The amount payable consists of one month’s salary limited to a maximum of TRY 2,517.01 (31 December 2009: TRY 2,365.16) for each year of service at 31 December
2010.
The liability is not funded, as there is no funding requirement.
The provision has been calculated by estimating the present value of the future probable obligations arising from the retirement of the employees.
For the employees who have been notified before the date of December 31, 2010, the provision for employment termination benefits is TRY 400,945 and notice provision is
TRY 161,026 and classified with in short term liabilities.
TMS 19 requires actuarial valuation methods to be developed to estimate the enterprise’s obligation. Accordingly, the following actuarial assumptions were used in the
calculation of the total liability:
Discount rate per annum (%)
Turnover rate for estimating the probability of retirement (%)
31 December 2010
4.66
94.71
31 December 2009
5.92
94.93
The principal assumption is that the maximum liability will increase in line with inflation. Thus, the discount rate applied represents the expected real rate after adjusting
for the anticipated effects of future inflation. As the maximum liability is revised semi-annually, the maximum amount of TRY 2,623.23 (1 January 2010: TRY 2,427.04)
which is effective from 1 January 2011, has been taken into consideration in calculating the provision for employment termination benefits.
Movement in the provision for employment termination benefits in the current period is as follows:
Paid during the period (Note 33)
Charge for the period
Provision for employment termination benefits – Short term
Provision for employment termination benefits – Long term
2010
7,193,835
(1,943,025)
3,185,801
8,436,611
2009
6,188,273
(1,841,157)
2,846,719
7,193,835
31 December 2010
561,971
7,874,640
31 December 2009
7,193,835
8,436,611
7,193,835
31 December 2010
8,280,355
552,114
883,000
1,921,625
11,637,094
31 December 2009
6,116,453
511,859
1,659,606
8,287,918
23. Provisions for Other Liabilities and Charges
Commitments and contingent liabilities not recognised as liabilities are disclosed in Note 43.
Guarantees and pledges received are disclosed in Note 12.3.
The details of provisions that are classified under provisions for expense accruals in balance sheet are as follows:
Personnel bonus provision
Provision for marketing and general administrative expenses
Sales staff bonus accrual
Other
24. Net Insurance Premium Revenue
The distribution of premium income is as follows:
Sickness\Health
Life
Land vehicles
General losses
General liability
Accident
Transportation
Other
Gross
334,791,119
109,653,515
147,683,262
103,561,926
55,182,439
61,902,739
19,279,183
16,605,212
11,105,191
5,630,766
865,395,352
1 January- 31 December2010
Reinsurance
(4,061,315)
(8,359,412)
(971,219)
(63,561,038)
(42,335,305)
(4,089,379)
(9,721,564)
(2,478,515)
(4,647,297)
(3,665,271)
(143,890,315)
Net
330,729,804
101,294,103
146,712,043
40,000,888
12,847,134
57,813,360
9,557,619
14,126,697
6,457,894
1,965,495
721,505,037
Sickness\Health
Life
Land vehicles
Accident
General losses
Transportation
General liability
Other
Gross
282,237,809
92,209,467
99,728,087
48,954,385
90,838,478
13,247,222
43,318,070
9,683,478
9,982,051
7,669,455
697,868,502
Reinsurance
(4,054,878)
(5,375,181)
(13,300,455)
(7,529,318)
(60,851,664)
(2,395,989)
(34,620,153)
(5,313,845)
(7,225,061)
(6,414,609)
(147,081,153)
Net
278,182,931
86,834,286
86,427,632
41,425,067
29,986,814
10,851,233
8,697,917
4,369,633
2,756,990
1,254,846
550,787,349
25. Fee Income
Income related with pension operations are disclosed in Notes 2.21 and 2.25.
26. Investment Income
The Group’s share
Policyholder’s share
Interest income
Net sales income
Dividend income
Interest income
Interest income
Valuation and net sales income
Foreign exchange income/(expense)
Total
30,504,542
262,691
12,055
24,023,340
-
18,307,333
3,587,064
1,425,156
1,410,484
188,215
6,528,896
1,900,787
2,602,253
52,110,476
38,642,340
The Group’s share
Policyholder’s share
Interest income
Interest income
Dividend income
Net sales income
Interest income
Valuation and net sales income
Foreign exchange income/(expense)
Total
35,296,212
28,059,112
19,902,122
13,017
1,910,963
4,246,563
-
2,775,871
3,478,916
438,274
13,440,453
2,142,600
959,793
63,815,375
48,848,521
27. Net Realised Gains on Financial Assets
Information about realised gain/loss on available-for-sale financial assets is disclosed in Notes 11 and 15.
28. Net Fair Value Gains on Assets at Fair Value Through Income
Information about net fair value gains on assets at fair value through income is disclosed in Note 11.
29. Insurance Benefits and Claims
30. Investment Contract Benefits
31. Other Expenses by Destination
Operating expenses classified under technical part - non-life
Operating expenses classified under technical part - private pension
Operating expenses classified under technical part - life
Total (Note 32)
137,629,764
41,653,337
35,122,637
115,986,755
44,193,157
29,627,133
214,405,738
189,807,045
103,141,461
83,393,361
9,274,321
8,844,444
7,130,742
5,032,460
13,820,195
3,151,739
1,984,793
2,758,489
112,088
2,964,546
333,266
(3,150,527)
(25,797,622)
1,411,982
95,801,084
65,828,154
6,904,886
5,349,753
7,460,782
4,918,914
12,699,049
2,860,553
2,097,535
3,213,792
192,182
692,762
2,503,804
(1,230,212)
(30,954,208)
11,467,915
214,405,738
189,807,045
32. Expenses by nature
Details of the operating expenses in the income statement is as below:
Personnel expenses (Note 33)
Commission expenses - Non-life
Commission expenses - Pension
Commission expenses - Life
Office expenses
Advertising and marketing expenses
Outsource expenses
Rent expenses
Communication Expenses
Transportation expenses
Maintenance and repair expenses
Other operating expenses
Deferred acquisition costs for pension contracts
Production commission revenue (life)
Reinsurance commission income
Other technical (income)/expense
Total
33. Employee Benefit Expense
Salary payments
Bonus payment
Sales personnel expense
Social security deductions
Employment termination benefits
Notification benefit
Unused vacation benefit
Other
Total (Note 32)
53,102,086
23,467,070
6,109,377
11,257,692
1,943,025
283,585
129,249
6,849,377
49,640,016
22,756,862
4,819,434
10,347,541
1,841,157
304,776
432,907
5,658,391
103,141,461
95,801,084
Total salaries and benefits paid to the members of the Board of Directors, General Manager, General Coordinator, Assistant General Manager and other executive
management are explained in Note 1.6.
The Group does not have any shared-based payments. (31 December 2009: None).
34. Financial Costs
34.1
Total financial expenses for the period: None (31 December 2009: None).
34.1.1
34.1.2
34.1.3
Expenses related to production cost: None (31 December 2009: None).
Expenses related to tangibles: None (31 December 2009: None).
Directly recorded as expense: None (31 December 2009: None)
34.2 Financial expenses related to shareholders, subsidiaries and investments (any amount exceeding 20% of total will be illustrated
separately): None (31 December 2009: None).
34.3 Sales to/purchases from shareholders, subsidiaries and investments (any amount exceeding 20% of total will be illustrated separately):
34.4 Interest, rent or other charges received from or paid to shareholders, subsidiaries and investments (any amount exceeding 20% of total
will be illustrated separately):
35. Income taxes
Tax income and expense recognised in the income statement for the year ended 31 December 2010 and 2009 are summarised below:
Reversal of prior year’s corporate tax provision booked in excess
Corporate tax for the current period
Tax expense classified in equity on available-for-sale financial assets (Note 15) (*)
Deferred tax income
Total tax
(*) Classified under deferred income tax asset account in the income statement.
788,180
(11,211,935)
(555,423)
2,614,593
40,408
(8,667,701)
1,706,838
4,561,168
(8,364,586)
(2,359,287)
31 December 2010
11,211,935
(6,983,932)
31 December 2009
8,667,701
(10,744,970)
Total
4,228,003
(2,077,269)
Deferred income tax asset
Deferred income tax liability
13,471,560
(2,358,737)
10,950,747
(2,422,021)
Deferred income tax asset, net (Note 21)
11,112,823
8,528,726
31 December 2010
49,081,288
(2,059,169)
47,022,119
20%
(9,404,424)
(1,275,879)
782,161
788,180
745,376
31 December 2009
9,905,839
(6,308,414)
3,597,425
20%
(719,485)
(4,063,421)
2,423,619
-
(8,364,586)
(2,359,287)
Tax
Prepaid taxes (-)
The reconciliation between the expected and the actual taxation charge is as follows:
Profit before income tax
Minus: Deferred tax income
Profit before current and deferred income tax
Enacted tax rate
Tax calculated by enacted tax rate
Expenses not allowable for tax purposes
Income not subject to tax
Provision of excess of previous period corporate tax
The effect of temporary differences of not calculated tax asset on deferred tax
Tax charge for the period
36. Net Foreign Exchange Gains
Investment income, net
Technical income, net
General administrative expenses
Total
9,896,412
(17,760,374)
7,576,071
24,195,290
(32,720,009)
9,056,885
(287,891)
532,166
37. Earnings per share
Earnings per share is calculated by dividing net profit for the period into weighted average unit share of the Group.
Net profit for the period
Weighted average number of shares with face value of Kr 1 per share
Earning per share (Kr)
38,657,533
8,000,000,000
0.4832
1,238,138
8,000,000,000
0.015
38. Dividends per share
Distribution of profit for the year ended 31 December 2010 with a decision of the Board of Directors or the General Assembly are not taken yet. The Group Management
Board meeting held on 2 March 2010, distribution of profit for the year 2009 closed with a loss so is not to be presented to the approval of the General Assembly. The
General Assembly approved this decision on March 23, 2010. (December 31, 2009: The Group Management Board meeting held on 12 March 2009, profit for the year
2008 amounting to TRY 10,739,894 as part of the April 15, 2009 cash distribution to shareholders from the date of the decision was taken. Dividend rate was 0.1342 Kr
per share dividend amount.) then a subsidiary of the General Assembly approved in March of 2010 the dividend was TRY 19,431. (December 31, 2009: subsidiary, with
the approval of the General Assembly of 2008, profits amounted to TRY 5,133 in cash to shareholders as of March 31, 2009).
39. Cash generated from operations
Disclosed in the statement of cash flows.
40. Bond convertible to shares
41. Redeemable preference shares
42. Contingencies
Outstanding claims litigations against the Group (*)
Lawsuits against the Group for refund of premiums
Labour litigations against the Group
Other lawsuits against the Group
31 December 2010
48,042,648
1,032,120
661,892
1,090,858
31 December 2009
42,685,004
896,630
651,210
628,072
50,827,518
44,860,916
Total
(*) Related item is accounted for in outstanding claim reserve and the movement table of outstanding claim provision is disclosed in Note 17. Related provision’s net
amount is TRY 26,619,907(31 December 2009: TRY 18,432,125)
43. Commitments
The amount of guarantees and pledges and foreign currency details are as follows:
Letter of guarantee
USD
15,460
Total
15,460
31 December 2010
Euro
TRY
4,644,658
-
Letter of guarantee
USD
15,057
Total
15,057
Total
4,660,118
4,644,658
4,660,118
31 December 2009
TRY
5,986,973
5,986,973
Total
6,002,030
6,002,030
Mortgages or restrictions on assets:
Marketable securities portfolio (*)
Property for operational usage (Note 6)
Investment properties (Note 7)
Banks
Policyholders’ portfolio (Note 11)
Group’s portfolio (Notes 2.12 and 14)
Total
31 December 2010
572,029,691
3,328,729
1,703,850
31 December 2009
604,502,501
5,356,015
3,235,209
55,131,068
28,874,250
47,642,852
22,482,360
661,067,588
683,218,937
(*) As of 31 December 2009, marketable securities amounting to TRY 556,528,439 (31 December 2009: TRY 604,370,336) are blocked in favour of the Treasury and
148,992 (31 December 2009: TRY 132,165) in favour of TARSİM.
44. Business combinations
45. Related-party transactions
Yapı Kredi Group Companies, Yapı Kredi Group Companies’ shareholders and the companies under control of the shareholders are considered as related parties in these
financial statements.
a) Deposits and financial assets
Total
31 December 2010
31 December 2009
339,647,606
243,166,980
339,647,606
243,166,980
31 December 2010
31 December 2009
b) Trade receivables
Yapı Kredi Yatırım Ortaklığı A.Ş.
Türkiye Eğitim Gönüllüleri Vakfı
Yapı Kredi Leasing
Unicredit (San) Menkul Değerler A.Ş.
Agrosan Kimya San.veTic.A.Ş.
Ford Otomotiv
29,473,834
5,635
94,246
122,130
22,273
16,144
262,875
74,236
23,526
378
10,993
97,601
263,332
-
24,725,971
81,588
6,188
117,961
96,471
16,699
13,612
227,284
62,871
77,844
259,070
5,278
Total
30,467,203
25,690,837
31 December 2010
31 December 2009
c) Trade Payables
3,144,563
3,494,448
Total
3,144,563
3,494,448
d) Due to insurance and pension operations
888,458
476,790
Total
888,458
476,790
e) Other payables
Koç Sistem A.Ş.
Yapı Kredi Bankası A.Ş.
KoçNet Haberleşme Teknolojileri ve İletişim Hizmetleri. A.Ş.
Otokoç A.Ş.
Koç Holding A.Ş.
Opet Petrolcülük A.Ş.
809,674
632,563
28,829
12,818
11,648
79,466
26,626
8,260
19,976
667,052
86,696
35,329
60,999
65,730
33,192
7,869
14,590
1,629,860
971,457
Total
31 December 2010
31 December 2009
f) Other receivables
8,293
6,166
-
Total
8,293
6,166
112,163
11,261
106,593
26,100
Total
123,424
132,693
h) Rent expense
1,416,420
1,330,916
Total
1,416,420
1,330,916
i) Interest income
24,716,476
23,961,974
24,716,476
23,961,974
j) Interest expense
289
1,796
Total
289
1,796
g) Rent income
Total
62,101,238
805,444
362,729
24,208
910,539
521,179
245,375
320,172
197,377
3,817
307,749
41,156
15,799
43,148
7,886
10,178
24,012
122,527
128,218
296,026
144,998
5,411
49,349,177
972,664
665,333
598,998
569,913
482,092
219,433
231,857
166,521
41,731
21,335
12,376
10,218
10,556
87,669
133,460
248,839
116,479
6,363
Total
66,638,916
53,976,660
l) Commission expense and insurance premiums
Yapı Kredi Portföy A.Ş.
30,972,627
1,832,793
7,950,134
87,786
21,137,843
1,873,440
5,803,579
87,248
40,843,340
28,902,110
k) Written premiums
Setair Hava Taşımacılığı ve Hizm. A.Ş.
Koç Holding A.Ş.
RMK Marine Gemi Yapım San. A.Ş.
Yapı Kredi Moscow
Aygaz A.Ş.
Yapı Kredi Koray GYO A.Ş.
Yapı Kredi Yatırım Ort. A.Ş.
Otokoç A.Ş.
Agrosan Kimya Sanayi ve Ticaret A.Ş.
Koç Leasing A.Ş.
YKS Tesis Yönetim Hizm. A.Ş.
Sanal Merkez Ticaret A.Ş.
T.Eğitim Gönüllüleri Vakfı
Yapı Kredi Kültür Sanat Yayıncılık San. ve Tic. A.Ş.
Unicredit (San) Menkul Değ. A.Ş.
Tümteks Tekstil ve Gıda Sanayi Tic. Ltd
Total
m) Other expenses
YKS Tesis Yönetim Hizm. A.Ş.
Otokoç Otomotiv Tic.ve San. A.Ş.
2,067,222
1,130,513
753,461
1,925,800
745,899
677,484
Total
3,951,196
3,349,183
9,623
9,622
186
5,702,885
856,201
567,640
3,618,301
Total
19,431
10,745,027
o) Dividends received
Other
12,055
13,017
Total
12,055
13,017
n) Dividends paid
Other
The Group has written premiums amounting to TRY 125,066,385 (31 December 2009: TRY 131,202,198) by the intermediary of Yapı ve Kredi Bankası A.Ş. during the
period.
45.1 Doubtful receivables from shareholders, investments, subsidiaries: None (31 December 2009: None).
45.2 Breakdown of investments and subsidiaries having an indirect shareholding and management relationship with the Group, participation
rates and amounts of these investments and subsidiaries; profit/loss, net profit/loss in the latest financials, the period of these financials and
the opinion type of the independent audit report if the company is independently audited:
Financial Assets
Çimsataş A.Ş.
Emeklilik Gözetim Merkezi
Çukurova Çelik End. A.Ş.
Çimsataş A.Ş.
Emeklilik Gözetim Merkezi
Çukurova Çelik End. A.Ş.
(%)
0.01
7.69
0.17
(%)
0.01
7.69
0.17
Restated
Cost
368,613
263,221
6,308,122
6,939,956
Book
Value
368,613
263,221
631,834
Restated
Cost
368,613
263,221
6,308,122
Book
Value
368,613
263,221
-
6,939,956
631,834
Independent
audit
opinion
-
31 December 2010
Financial
statement
Total
period
Asset
30.09.2010
31.12.2010
7,336,205
30.09.2010
-
Independent
audit
opinion
-
31 December 2009
Financial
statement
Total
period
Asset
31.12.2009
298,833,739
31.12.2009
6,097,858
31.12.2009 2,401,845,085
Total
liabilities
3,034,258
-
Net
sales
4,938,578
-
Net profit/
(loss)
22,372
-
Total
Net
liabilities
sales
19,926,990 49,585,921
1,818,553
5,215,935
184,170,469
-
Net profit/
(loss)
(8,838,798)
39,539
(491,163)
45.3 Bonus shares obtained through internally funded capital increases of equity investments and subsidiaries: None (31 December 2009: None).
45.4 Rights on immovable and their value: None (31 December 2009: None).
45.5 Guarantees, commitments and securities given for shareholders, investments and subsidiaries: None (31 December 2009: None).
46. Subsequent events after the balance sheet date: None (31 December 2009: The employment termination benefits ceiling has increased to TRY 2,423.88
effective from 1 January 2010.).
47. Other
47.1 Details of “Other” items in the balance sheet which exceed 20% of its respective account group or 5% of total assets:
p) Other cash and cash equivalents:
Credit card collections
Bank payment document
Other
r) Other receivables:
Receivables due from related parties
31 December 2010
31 December 2009
83,617,229
62,562
27,261
55,511,687
88,724
12,942
83,707,052
55,613,353
31 December 2010
31 December 2009
8,293
-
8,293
-
31 December 2010
31 December 2009
2,318,583
3,873,504
1,895,781
895,412
6,192,087
2,791,193
1,859,893,915
7,873,053
3,036,269
940,690
200,000
1,365,310,672
8,340,532
2,243,029
983,029
-
Receivables from pension operations:
1,871,943,927
1,376,877,262
Payables to participants
Participants’ transitory account
Participants of withdrawal account
Other
1,860,834,605
29,198,521
660,553
1,829,624
759,200
1,366,293,701
23,827,560
674,058
2,705,867
560,891
1,893,282,503
1,394,062,077
66,678
124,788
191,466
16,728
1,537
18,265
2,095,002
2,095,002
2,437,452
2,437,452
2,435,750
2,435,750
2,426,566
2,426,566
39,082,328
2,194,076
41,276,404
36,059,896
929,476
36,989,372
484,321
632,484
11,648
204,199
1,332,652
342,486
86,696
24,392
306,637
760,211
s) Other Receivables:
Mandatory earthquake insurance receivables
Other
t) Receivables and payables from pension operations :
Receivables from custody institutions
Receivables from participants (entrance fee)
Fund management expense fee
Sales orders
Advance payment of pension funds
Payables from pension operations:
u) Other current assets
Receivables from suppliers
Other
v) Other Deferred Expenses and Income Accruals – short term:
Deferred pension branch production expense (Note 2.25)
w) Other non-current deferred income and expense accruals-Long term:
Deferred acquisition costs for pension contracts (Note 2.25)
x) Other payables from main operations:
Payables to contracted institutions
Other
y) Due to other related parties
Zer A.Ş.
Koç Sistem A.Ş.
Other
z) Other payables:
Payables to suppliers
Personnel health insurance
Other
aa) Other short-term technical reserves:
Effect of rate change of reinsurance agreements
Provision expense for financial asset
bb) Provisions for other tax and liabilities
Provision for lawsuit against company
cc) Other non-current technical reserves:
Other technical reserves (*)
31 December 2010
31 December 2009
4,571,366
5,271,235
1,664,201
1,399,854
6,258,800
4,276,752
1,437,466
987,926
12,906,656
12,960,944
150,000
10,251,681
160,000
150,000
10,411,681
3,174,668
1,976,911
3,174,668
1,976,911
7,423,016
32,526,080
4,027,283
23,325,661
39,949,096
27,352,944
(*) Other technical provisions consist of unrealised gains and losses not belonging to the Group due to changes in the market values of available for sale financial assets.
dd) Other non-current deferred income and expense accruals:
Unused vacation provision
ee) Other long-term liabilities:
Financial liability (loyalty bonus) due to pension contracts (Note 2.25)
31 December 2010
2,647,147
31 December 2009
2,052,651
2,647,147
2,052,651
6,032,045
8,209,597
6,032,045
8,209,597
ff) Change in other technical reserves (Life branch):
IGP Pool
Profit sharing provision expense
Provision expense for financial assets
Incorporation fee
Reinsurance foreign exchange expense
Union membership dues
Other
gg) Other technical expenses (Pension branch):
Credit commission expense
Loyalty bonus expense
EGM. E-BEAS.
Expenses paid to Takasbank
Other
hh) Other expenses and losses:
Personnel bonus not distributed in the previous year
Other
1,647,452
1,229,065
640,854
(10,000)
126,240
33,599
112,043
99,007
1,302,845
1,478,848
300,401
160,000
114,764
103,054
117,703
120,297
3,878,260
3,697,912
3,329,723
342,699
478,872
382,024
2,320,435
1,009,640
306,793
464,832
225,315
4,533,318
4,327,015
481,279
518,907
106,737
833,859
1,000,186
940,596
47.2 Due from and due to personnel classified in “Other receivables” and “Other short-term or long-term payables” that exceed 1% of total
assets: None (31 December 2009: None).
47.3 Receivables from salvage and subrogation followed under off-balance sheet item: None (31 December 2009: TRY 2,500,673).
47.4 Income and expenses related to prior periods and the amounts and sources of expenses and losses: None (31 December 2009: None).
47.5 Information that the Treasury requires to be presented:
Provision and rediscount expense for the period:
Technical Provisions:
Unearned premium reserves-net
Effect of renewal of reinsurance agreements
Outstanding claim provision-net
Other technical reserves -life
Other technical reserves -non-life
Deferred commission expenses
Life mathematical reserve
Tax provisions:
Tax provision
Deferred tax provision
Other provisions
Payable and receivable Discount income/(expense)
Potential subrogation (The opposite balance as 2009)
Provision for receivables from policyholders and intermediaries
Provision for other liabilities and expenses
Other provisions
67,133,097
27,406,196
(6,671,660)
3,878,260
2,842,926
(7,745,140)
1,188,987
(16,212,855)
18,216,580
314,078
9,348,452
7,049,215
3,697,912
1,824,436
(6,296,984)
(2,871,053)
37,001,723
10,423,755
(2,059,169)
8,667,701
(6,308,414)
(41,698)
7,691,751
526,625
594,497
1,242,776
224,651
554,727
(1,803,024)
(75,115)
61,647
1,005,562
(61,336)
459,746
Note
I.
1.1.
1.2.
A
1.3.
1.4.
1.5.
B
1.6.
1.7.
1.8.
1.9.
1.10.
1.11.
1.12.
1.13.
1.14.
1.15.
II.
2.1.
2.2.
2.3.
2.4.
2.5.
III.
3.1.
3.2.
3.3.
3.4.
IV.
4.1.
4.2.
4.3.
4.4.
DISTRIBUTION OF PROFIT FOR THE PERIOD
PROFIT FOR THE PERIOD
TAXES PAYABLE AND LEGAL LIABILITIES
1.2.1. Corporation tax (Income tax)
1.2.2. Income tax deduction
1.2.3. Other taxes and legal liabilities
NET PROFIT FOR THE PERIOD (1.1 - 1.2)
PREVIOUS YEARS’ LOSSES (-)
FIRST LEGAL RESERVE
LEGAL RESERVES KEPT IN THE COMPANY (-)
NET DISTRIBUTABLE PROFIT FOR THE PERIOD [ (A - (1.3 + 1.4 + 1.5) ]
FIRST DIVIDEND TO SHAREHOLDERS (-)
DIVIDENDS TO PERSONNEL (-)
DIVIDENDS TO FOUNDERS (-)
SECOND DIVIDENDS TO SHAREHOLDERS (-)
STATUTORY RESERVES (-)
OTHER RESERVES
SPECIAL FUNDS
DISTRIBUTION FROM RESERVES
DISTRIBUTED RESERVES
DIVIDENDS TO SHAREHOLDERS (-)
DIVIDENDS TO EMPLOYEES (-)
PROFIT PER SHARE
DIVIDENDS PER SHARE
31 December 2010
Current Period
31 December 2009
Previous Period
49,060,822
(10,419,852)
(10,419,852)
38,640,970
-
9,886,308
(8,662,955)
(8,662,955)
1,223,353
-
General Assembly is the responsible body for profit distribution and General Assembly was not held as of the preparation date of the financial statements. Since the
statement of profit distribution for the year 2010 is not prepared by the Board of Directors yet, only net profit for the period is disclosed in the statement of profit
distribution.
Information Regarding Consolidated Partnerships
Yapı Kredi Emeklilik (Yapı Kredi Pension)
Yapı Kredi Emeklilik, which carries on business activities in the fields of private pension and life insurance, offers
services utilizing different products designed for individual and corporate demands. In addition to its “Akıllı Adım
Private Pension Plans”, the Company also offers risk products in the life insurance market.
One of the leading companies in the Private Pension System, Yapı Kredi Emeklilik preserved its position in the
market in 2010, in terms of both the fund size and the number of contracts. In the Private Pension System,
where 13 companies in total are operating, the Company is in third place in terms of the size of the funds
managed with a market share of 15.46%, and in fourth place in terms of the number of contracts with a market
share of 12.32%. As of end-2010, Yapı Kredi Emeklilik has a market share of 5.03% and holds the sixth place
in the life insurance branch, with a life insurance premium production of TRY 109.7 million and mathematical
reserves of TRY 496.38 million.
99.93% of Yapı Kredi Emeklilik is owned by its parent company, Yapı Kredi Sigorta. Yapı Kredi Emeklilik posted
a net profit of TRY 22,589,031 in 2010. The Company has eight regional offices in Turkey, ten branches, and 54
provincial representatives in 33 provinces. Its 133 agencies create a wide network of sales and service, and there
are 820 administrative and sales staff in the Yapı Kredi Emeklilik organization. In addition, 868 Yapı Kredi Bank
branches act as agencies to serve Yapı Kredi Emeklilik customers.
Developments in 2010…
• In 2010, in the personal accident branch, two new products were introduced to the market, namely
My Child’s Education Insurance (“Çocuğum Okusun Eğitim Güvencesi”) and Multi-Protection Accident
Insurance (“Multi Koruma Kaza Sigortası”). In the life insurance branch, on the other hand, the products
Credit Card Payment Insurance (“Kredi Kartı Ödeme Güvencesi”), Commercial Credit Insurance (“Ticari
Kredi Güvencesi”) and Credit Payment Insurance (“Kredi Ödeme Güvencesi”) were launched. • The Gaziantep Branch officially commenced operations in October 2010, under the umbrella of Yapı Kredi
Emeklilik’s Southern Region.
• The Company was designated one of the “Superbrands of Turkey” by Superbrands International, and was
also featured in the book “Superbrands of Turkey 2010”.
• The Company completed its systemic integration with Yapı Kredi Bank and launched the “Dataset”
(“Veriseti”) project, allowing products sales via Yapı Kredi Bank monitors.
Information for Shareholders
General
At each General Assembly Meeting, the Chairman and Members of the Board of Directors are elected.
Accordingly, their term of office is the duration between two General Assembly Meetings.
The risk group that the Company falls under is explained in the 45th footnote of the Income Statement.
Stock Exchange
Yapı Kredi Sigorta’s shares are traded on the Istanbul Stock Exchange (ISE) in the national market under
the symbol YKSGR. Information about the Company’s shares is published on the economics pages of daily
newspapers and on the Internet portals of brokerage houses.
Investor Relations
Copies of Yapı Kredi Sigorta’s annual reports and other information about the Company may be obtained from
the following address as well as from the corporate website at www.yksigorta.com.tr.
Yapı Kredi Sigorta
Investor Relations (Emel Bek - M. Teoman Çelen)
Yapı Kredi Plaza A Blok, Büyükdere Caddesi
Levent, 34330 Istanbul, Turkey
Annual Ordinary General Assembly Meeting
Annual Ordinary General Assembly Meeting of Yapı Kredi Sigorta will be held on Tuesday, March 22, 2011 at
14:45 at the address of Yapı Kredi Plaza D Blok Conference Room, Levent/Istanbul, Turkey
Independent Auditor
Büyükdere Caddesi Beytem Plaza Kat: 9/0 80220 Şişli/Istanbul, Turkey
Tel: +90 (212) 315 30 00 Fax: +90 (212) 230 82 91
Tax Certification
DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.
Sun Plaza Maslak Mah. Bilim Sok. No: 5 Şişli/Istanbul, Turkey 34398 Niyazi Çömez
Tel: +90 (212) 366 60 00 Fax: +90 (212) 366 60 10
YKSGR Share Performance in 2010
According to its year-end balance sheet, Yapı Kredi Sigorta’s paid-in capital amounts to TRY 80 million and its registered capital is TRY 250 million. The following chart
shows the performance of Yapı Kredi Sigorta’s shares in 2010, in comparison with the ISE general index.
The lowest price per share during the year was TRY 9.20 and the highest TRY 16.70. The average trading price for the year 2010 was TRY 11.97. Share price quarterly lows
and highs are presented below.
Low
10.60
9.20
9.40
12.95
01.01.2010 - 31.03.2010
01.04.2010 - 30.06.2010
01.07.2010 - 30.09.2010
01.10.2010 - 31.12.2010
80.000
High
13.80
12.70
13.20
16.70
18
16
70.000
14
12
60.000
10
8
50.000
IMKB
6
YKSGR
December
November
October
September
August
July
June
May
April
March
February
4
January
40.000
Information Regarding Subsidiaries
Yapı Kredi Emeklilik figures among the leading, pioneering companies of the life insurance and private pension sectors as of December 2010. In the Private Pension
System, where 13 companies are active, Yapı Kredi Emeklilik is in third place in terms of the size of the funds managed with a market share of 15.46%, and in fourth place
in terms of the number of contracts with a market share of 12.32%.
Directory
Head Office
Yapı Kredi Plaza A Blok Büyükdere Cad.
Levent 34330 Istanbul, Turkey
Tel: +90 (212) 336 06 06 Fax: +90 (212) 336 08 08
E-mail: [email protected]
Internet Address: www.yksigorta.com.tr
Call Center: +90 (212) 336 09 09
Mediterranean Regional Office
Sinan Mah. Recep Peker Cad. Antalya 2000 İş Merkezi
No: 22 Kat: 4. 07100 Antalya, Turkey
Tel: +90 (242) 310 39 39 Fax: +90 (242) 314 11 05
Aegean Regional Office
Halit Ziya Bulvarı No: 74 Alsancak 35210 Izmir, Turkey
Tel: +90 (232) 498 64 64 Fax: +90 (232) 498 64 00
Southern Regional Office
Ziya Paşa Bulvarı No: 74 01130 Adana, Turkey
Tel: +90 (322) 455 57 57 Fax: +90 (322) 453 13 52
Central Anatolia Regional Office
Mithatpaşa Cad. No: 43/E Kızılay 06420 Ankara, Turkey
Tel: +90 (312) 458 60 60 Fax: +90 (312) 458 60 00
Marmara-1 Regional Office
Atatürk Cad. No: 25 Kat: 4 16010 Bursa, Turkey
Tel: +90 (224) 294 59 59 Fax: +90 (224) 280 90 33
Istanbul Regional Office
Yapı Kredi Plaza A Blok Büyükdere Cad.
Levent 34330 Istanbul, Turkey
Tel: +90 (212) 336 06 06 Fax: +90 (212) 336 84 93
Bakırköy Representative Office
G. Ali Rıza Gürcan Cad. Metropol Center No: 31
K: 8 Büro No: 33 Merter 34150 Istanbul, Turkey
Tel: +90 (212) 481 01 03 Fax: +90 (212) 481 05 04
Kadıköy Representative Office
Şemsettin Günaltay Cad. No: 213 Erenköy 34738 Istanbul, Turkey
Tel: +90 (216) 363 36 96 Fax: +90 (216) 363 53 77
Yap› Kredi Sigorta A.Ş.
Head Office
Yapı Kredi Plaza A Blok
Büyükdere Caddesi
Levent 34330 Istanbul-TURKEY
Tel: +90 (212) 336 06 06
Fax: +90 (212) 336 08 08
Call Center: +90 (212) 336 09 09
www.yksigorta.com.tr

Yapı Kredi Sigorta A.Ş.

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