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ANADOLU HAYAT EMEKLİLİK A.Ş. COMPANY PRESENTATION July 2012 Contents Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 2 Turkish Economy 2011 Population (End of 2011 ) Urban Population (%) Civil Employment (Age15+) Unemployment Rate (%) Gross Domestic Product-Current Prices (TL billion) Gross Domestic Product (USD billion) GDP Growth Rate (%) GDP per Capita - Current Prices (USD) Budget Deficit to GDP (%) Current Deficit to GDP (%) Consumer Price Index (%) Producer Price Index (%) Insurance Premium Income (TL billion) Insurance Premium Income/GDP (%) Source: Treasury and AIRCT 3 74.724.269 76,8 23.678.000 9,8 1.295 772 8,50 10.444 1,35 9,98 10,45 13,33 17,16 1,33 Anadolu Hayat Emeklilik Corporate Profile Established in 1990 as a subsidiary of Türkiye İş Bankası First life insurance company in Turkey The only Life & Pension company publicly traded since 2000 Has been operating in pension business since 27.10.2003 Market leader in life insurance and private pension 4 Anadolu Hayat Emeklilik Ownership Structure 5 INSURANCE SECTOR IN TURKEY Total Number of Companies - 31.12.2011 Insurance Companies - Non-Life - Life - Life & Pension Reinsurance Companies Source: AIRCT 6 59 35 7 16 1 INSURANCE SECTOR IN TURKEY Premium Productions 2011 Total Premium Per Capita (USD) Non-Life Premium Per Capita (USD) 116 Life Premium Per Capita (USD) 22 Total Premium Production (Billion USD) Total Premium Production / GDP Source: Treasury & AIRCT 7 138 10,3 1,3% PRIVATE PENSION SYSTEM IN TURKEY Contributions as of 31.12.2011* Total Pension Fund System Contributions Per Capita (USD) 99 Total Pension Fund System Contributions (Billion USD) 7,5 Total Pension Fund System Contributions / GDP *Temporary Source: Treasury 8 1% Anadolu Hayat Emeklilik Growth Strategy Distribution Channel Strategy • Focus on Bancassurance • Expanding Direct Sales Team • Improve agency profile Improve Customer Service Quality Improve HR quality Focus on Corporate Pension Business 9 Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 10 Anadolu Hayat Emeklilik Lines of Business Private Pension Life Insurance Endowment / Permanent Life Individual Corporate Term Life Annuities Unemployment Critical illness 11 PRIVATE PENSION SYSTEM IN TURKEY Basic Features Started on 27.10.2003 17 Licensed pension companies Third pillar system Defined contribution Voluntary participation Tax incentives for both participant & employer Fully funded system Minimum 10 years of contribution payment Minimum retirement age is 56 Funds are managed by asset management companies Separate pension accounts for each participant Participants have the right to; Switch funds or pension plans Transfer accounts between pension companies Merge their separate pension accounts Cease contribution payments Leave anytime 12 PRIVATE PENSION SYSTEM IN TURKEY Tax Incentives – Current Regulation Contribution Stage • Contributions are tax deductible up to %10 of income with a cap of annual minimum wage. • Employer contributions are also tax deductible subject to the same limits. 13 Investment Stage Benefit payments • Investment income of pension funds are tax exempt. • %25 of retirement payments are exempt from income tax. • No stamp tax in setting up pension funds. • Residual is subject to a witholding tax of 5%. • No tax on transactions in pension system. • Early surrenders are subject to 15% or 10% (in case of completion of 10 yrs within the system) withholding tax with no exemption. PRIVATE PENSION SYSTEM IN TURKEY Upcoming Regulation – What Is New? 1. Totally different tax advantage structure for the participants: • • • An additional pension account will be opened in the name of each participant, called ‘Government Contribution Sub-account’. Government will install an amount equal to 25% of each contribution made by the participant, with a cap of 25% of annual minimum wage. Vesting Period: Participants will earn: %15 of this additional account in 3 yrs, 35% in 6 yrs, 60% in 10 yrs, and 100% in 10 yrs and 56 years of age. 2. Withholding tax will be applied only on the investment income. 3. Real estate and precious metal based pension funds will be established. 4. Partial redemption from the system will be possible . 5. After completing the initial two years in the system, participants will be able to change their pension companies once a year. 14 Private Pension System In Turkey 15 Anadolu Hayat Emeklilik Distribution Network Bancassurance 1214 Branches 87 Branches Direct Sales Agents & Brokers Other 16 319 326 Branches 3 Branches Licensed Salesperson 240 Exclusive Agencies 55 Brokers Internet Call Centre 133 Branches Total of 5 Banks & 1757 Branches Anadolu Hayat Emeklilik Pension Production By Channel 2012 / 6 2010 2011 2012 / 6 Direct to Customer 12% 10% 10% Broker 2% 2% 1% Agency 10% 13% 11% BANCASSURANCE 76% 75% 78% Is Bank 4% 3% 2% Is Bank + Direct Sales 41% 42% 52% Is Bank + Agency 14% 13% 11% HSBC 16% 15% 11% TEB + Agency 2% - - Anadolubank - 1% 1% Albaraka - 1% 1% Total 17 100% 100% 100% Key Drivers For Growth In Pension Business 18 Economic Improvements in Turkey • Structural reforms • Extended maturities • Purchasing power • Lack of confidence in the social security system Advantages of Pension System • Tax incentives • Transparent system • Participating to the investment process • Mobility of the pension accounts Key Drivers For Our Market Leadership Distribution network Diversified products Fund performance Charging structure Service quality 19 Private Pension System In Turkey Overview as of 31.07.2012 3.500.000 Fund Size (TL mio) 18.000 3.000.000 16.000 2.500.000 14.000 12.000 2.000.000 10.000 1.500.000 8.000 6.000 1.000.000 4.000 500.000 2.000 - 0 2004 2005 2006 2007 2008 2009 2010 2011 2012/7 Funds (TL mio) 20 Number Of Participants Number Of Participants 20.000 Pension System Outlook 2009 % 2010 % 2011 % 2012 % 31.12.08 Change 31.12.09 Change 31.12.10 Change 31.12.11 Change 31.07.12 Fund Size (Million TL) AHE 1.323 48% 1.954 34% 2.620 16% 3.029 27% 3.836 Sector Market Share 6.384 43% 9.107 32% 12.017 19% 14.333 25% 17.854 20,7% 21,5% 21,8% 21,1% 21,5% Number of Participants (Thousands ) AHE Sector Market Share 21 376 16% 438 15% 503 14% 574 6% 613 1.745 14% 1.988 14% 2.274 17% 2.650 10% 2.901 21,5% 22,0% 22,1% 21,7% 21,1% Private Pension System Sectoral Expectations - 1 Consolidated Expectations of Pension Companies for 2012 Number of New Participants Within the Year 825.516 Total Number of Participants at the Year-end 3.149.774 Net Cumulative Amount of Contributions at the Year-end (TL) 15.940.839.562 Net Cumulative Amount of Accumulations at the Year-end (TL) 18.900.141.864 Source: Pension Monitoring Center - Most Probable Scenario 22 Private Pension System Sectoral Expectations - 2 Consolidated Expectations of Pension Companies for 2012 (Year-end) Number of Contracts to be Transferred Amount of Transfers (TL) Expected Number of Contracts to Withdraw Expected Amount of Accumulations to be Withdrawn (TL) Expected Number of Participants to Retire Expected Amount of Accumulations Related to Retired Participants (TL) Source: Pension Monitoring Center - Most Probable Scenario 23 289.281 2.301.725.270 1.790.633 14.188.411.369 5.976 249.599.240 Private Pension System In Turkey Overview as of 31.07.2012 XXX XXX XXX XXX 24 XXX XXX XXX XXX XXX XXX XXX XXX Private Pension System In Turkey Lapse Ratio: Sector Average vs. Anadolu Hayat Emeklilik 12.01.2004 - 31.07.2012, Weekly Data Source: Pension Monitoring Center 25 AHE Pension Products Fund Menu As of 31.07.2012 Conservative Cash Fund Balanced International Mixed Fund Aggressive Equity Fund Eurobond $/€ Fund Conservative Fund Agressive Fund Alternative Balanced F. Bond Fund 54 % 26 Balanced Fund 28 % BRIC Fund 18 % Pension Funds & Mutual Funds Fund Type Average Maturity Net Asset Value (mio TL) Equity (%) T-Bills & G. Bonds Reverse (%) Repo (%) Money Market Inst. (%) Foreign T.Deposits / Currency Sec.(%) Other (%) PRIVATE PENSION FUNDS 30.12.2011 554 14.308 12,10 60,77 11,36 0,47 0,85 14,46 01.08.2012 518 17.854 13,70 58,98 8,36 1,53 0,69 16,74 MUTUAL FUNDS – BANKS & Others 30.12.2011 77 27.082 3,57 23,24 46,61 9,15 0,38 17,06 01.08.2012 85 30.110 4,02 22,38 40,02 9,45 0,35 23,79 Source: Capital Markets Board of Turkey 27 Pension Funds Net Asset Values as of 31.07.2012 28 Pension Funds Weighted Average Returns as of 31.07.2012 29 Anadolu Hayat Emeklilik Pension Funds’ Weighted Average Return Performance Weighted Average Returns (%) % 30 Pension Products Charging Structure Entrance Fee Management Fee • At the phase of entrance to the System for each pension account • To cover administrative expenses • To cover fund management expenses • On contributions • On NAV of each fund • Can be deferred till the leaving date or can be collected by installments • Legal upper limit: 8% • Legal upper limit: 1/10,000 (daily) ≈ 3,65% (annual) • ½ of Monthly Minimum Wage 31 Fund Management Fee Life Insurance In Turkey Market Shares (Top 7 in Premium Production) 35% 30% 30% 27% 28% 25% 20% 16% 13% 15% 10% 11% 10% 9% 6% 7% 4% 5% 6% 5% 5% 4% 4% 5% 3% 4% 0% 0% XXX XXX XXX GARANTI 2009 HALK XXX XXX 32 ZİRAAT YKE 2010 VAKIF 2011 XXX AHE FİNANS 5% Life Insurance In Turkey Market Shares (Mathematical Reserves) 2010 AHE 33 2011 % (Mio TL) 40% 1.977 % (Mio TL) 36% 2.025 XXX 6% 290 11% 612 XXX 10% 496 10% 549 XXX 9% 467 8% 463 XXX 8% 413 7% 416 XXX 6% 276 5% 285 Others 21% 1081 22% 1202 TOTAL 100% 5.000 100% 5.553 Anadolu Hayat Emeklilik Profit Sharing Rates – TL Based Life Products 34 Anadolu Hayat Emeklilik - Life Portfolio Total Number of Policies – 2010 vs 2011 35 Anadolu Hayat Emeklilik - Life Portfolio Total Number of Policies – 2011/6 vs 2012/6 36 Anadolu Hayat Emeklilik - Life Portfolio Total Premium Production (TL) – 2009 - 2011 37 Anadolu Hayat Emeklilik - Life Portfolio Total Premium Production (TL) – 2011/6 vs 2012/6 38 Anadolu Hayat Emeklilik - Life Portfolio Premium Production – New Business (TL) - 2010 vs 2011 39 Anadolu Hayat Emeklilik - Life Portfolio Premium Production – New Business (TL) - 2011/6 vs 2012/6 40 Anadolu Hayat Emeklilik Life Production By Channel 2012 / 06 41 2010 2011 2012 / 06 Agency & Broker 35% 29% 20% Direct to Customer 32% 27% 19% BANCASSURANCE 33% 44% 61% Is Bank 24% 36% 54% Is Bank & Direct Sales & Agency 8% 7% 6% HSBC 1% 1% 1% Total 100% 100% 100% Life Products Charging Structure Agency Commission • Paid out to our distribution channels • Charged on premiums • No limits since 05.11.2007 42 Management Fee • To cover administrative expenses • Charged on premiums • No limits Fund Charge • To cover fund management expenses • Charged on current year’s returns • Max. 15% of the returns Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 43 Anadolu Hayat Emeklilik Financial Highlights & Key Metrics 44 TL Million 2009 2010 2011 2012/06 Written Premium General Technical Profit Life Technical Profit Private Pension Technical Profit Period Net Profit Private Pension AUM Math. & Profit Sharing Provisions Shareholders' Equity Paid-in Capital Total Assets 500 19 7 12 79 1.953 1.976 430 250 4.480 358 27 14 13 71 2.620 2.091 451 250 5.299 348 34 34 0 65 3.030 2.027 430 300 5.648 182 25 16 9 39 3.695 2.061 447 300 6.391 Key Valuation Metrics 2009 2010 2011 2012/06 ROAE Earnings Per Share P/E P/BV 20% 0,26 15,6 2,9 16% 0,24 18,8 3,0 15% 0,22 12,8 1,9 9% 0,13 31,9 2,8 ANHYT 2009 2010 2011 2012/07 Average Monthly Traded Volume (Million TL) 45,81 36,37 36,78 41,82 Anadolu Hayat Emeklilik Dividend Payout 2008 2010* 2011* Gross Profit (TL) 67.310.238 97.993.428 88.179.608 76.335.800 Net Profit (TL) 52.905.238 79.284.428 72.744.608 62.920.800 Net Distributable Profit (TL) 50.211.779 75.661.865 69.176.772 59.687.324 Dividend to Shareholders (TL) 42.000.000 55.000.000 40.000.000 40.000.000 - Cash 42.000.000 55.000.000 40.000.000 40.000.000 - - - Cash / Net Profit (%) 79,39 69,37 54,99 63,57 Cash / Net Distributable Profit (%) 83,65 72,69 57,82 67,02 Bonus Share / Net Profit (%) - - - - Bonus Share / Net Distributable Profit (%) - - - - Dividend to Shareholders / Net Profit (%) 79,39 69,37 54,99 63,57 Dividend to Shareholders / Net Distributable Profit (%) 83,65 72,69 57,82 67,02 - Bonus Share 45 2009 * Consolidated Anadolu Hayat Emeklilik Capital Adequacy 31.12.2009 (TL) Capital required for Non-Life Branch 31.12.2011 (TL) 28.753 178.239 186.997 96.160.222 100.852.982 106.373.431 6.757.190 8.424.900 9.450.175 TOTAL CAPITAL REQUIRED 102.946.165 109.456.121 116.010.603 TOTAL CAPITAL 429.892.005 450.645.954 430.162.083 EXCESS CAPITAL 326.945.840 341.189.833 314.151.480 Capital required for Life Branch Capital Required for Pension Branch 46 31.12.2010 (TL) Anadolu Hayat Emeklilik Income Statement (mio TL) 2010 2011 0,17 0,32 NON-LIFE TECHNICAL EXPENSES -0,40 -0,33 NON-LIFE TECHNICAL PROFIT / LOSS -0,23 -0,01 551,20 563,17 -537,25 -528,72 LIFE TECHNICAL PROFIT / LOSS 13,95 34,45 PENSION FUND TECHNICAL INCOME 95,16 113,85 -82,04 -113,85 TECHNICAL PART NON-LIFE TECHNICAL INCOME I- LIFE TECHNICAL INCOME LIFE TECHNICAL EXPENSES II- PENSION FUND TECHNICAL EXPENSES III- PENSION FUND TECHNICAL PROFIT / LOSS 13,12 - IV- GENERAL TECHNICAL PROFIT / LOSS 26,84 34,44 INVESTMENT INCOME 70,03 57,22 INVESTMENT EXPENSES -7,90 -7,60 PROFIT FROM OTHER & EXTRAORDINARY ACTIVITIES -2,14 -5,98 V- COMPANY ASSETS PROFIT / LOSS 59,99 43,64 VI- PERIOD PROFIT / LOSS (IV+V) 86,83 78,08 -15,44 -13,41 71,39 64,67 VII- PROVISION FOR TAX & OTHER LEGAL LIABILITIES 47 IX- PERIOD NET PROFIT / LOSS (VII - VIII) Anadolu Hayat Emeklilik Income Statement (mio TL) 2011 / 06 2012 / 06 0,10 0,39 NON-LIFE TECHNICAL EXPENSES -0,17 -0,22 NON-LIFE TECHNICAL PROFIT / LOSS -0,07 0,17 281,18 241,89 -266,43 -225,38 LIFE TECHNICAL PROFIT / LOSS 14,75 16,51 PENSION FUND TECHNICAL INCOME 55,28 64,78 -57,02 -56,08 TECHNICAL PART NON-LIFE TECHNICAL INCOME I- LIFE TECHNICAL INCOME LIFE TECHNICAL EXPENSES II- PENSION FUND TECHNICAL EXPENSES 48 III- PENSION FUND TECHNICAL PROFIT / LOSS -1,74 8,70 IV- GENERAL TECHNICAL PROFIT / LOSS 12,94 25,38 INVESTMENT INCOME 40,40 32,88 INVESTMENT EXPENSES -4,03 -4,36 PROFIT FROM OTHER & EXTRAORDINARY ACTIVITIES -7,35 -3,23 V- COMPANY ASSETS PROFIT / LOSS 29,02 25,29 VI- PERIOD PROFIT / LOSS (IV+V) 41,96 50,67 VII- PROVISION FOR TAX & OTHER LEGAL LIABILITIES -6,46 -11,69 IX- 35,50 38,98 PERIOD NET PROFIT / LOSS (VII - VIII) Anadolu Hayat Emeklilik Balance Sheet (mio TL) 2010 2011 129 120 ASSETS I- LIQUID ASSETS II- MARKETABLE SECURITIES 2.453 2.384 IIII- RECEIVABLES 2.682 3.098 IV- INVESTMENTS 6 9 V- FIXED ASSETS 24 24 VI- OTHER ASSETS (NET) 5 13 5.299 5.648 TOTAL ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY I- PAYABLES 2.680 3.106 II- TECHNICAL PROVISIONS 2.155 2.093 IIII- OTHER PROVISIONS IV- TAX PROVISIONS 8 5 9 10 V- SHAREHOLDERS' EQUITY 451 430 5.299 5.648 TOTAL LIAB. AND SHAREHOLDERS’ EQUITY 49 Anadolu Hayat Emeklilik Balance Sheet (mio TL) 2011 / 06 2012 / 06 102 99 ASSETS I- LIQUID ASSETS II- MARKETABLE SECURITIES 2.399 2.479 IIII- RECEIVABLES 2.972 3.768 IV- INVESTMENTS 9 9 V- FIXED ASSETS 23 24 VI- OTHER ASSETS (NET) 7 12 5.512 6.391 TOTAL ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY I- PAYABLES 2.976 3.782 II- TECHNICAL PROVISIONS 2.095 2.138 IIII- OTHER PROVISIONS 8 12 IV- TAX PROVISIONS 12 12 V- SHAREHOLDERS' EQUITY 421 447 5.512 6.391 TOTAL LIAB. AND SHAREHOLDERS’ EQUITY 50 Corporate Profile Lines of Business - Life & Pensions Financials Stock Data 51 Anadolu Hayat Emeklilik Stock Data 52 Year MCAP (Million $) 2005 401 2006 458 2007 569 2008 185 2009 740 2010 816 2011 423 13.08.2012 791 THANK YOU… For further information: investorrelations@anadoluhayat.com.tr Website: www.anadoluhayat.com.tr DISCLAIMER: The information in this document has been obtained by Anadolu Hayat Emeklilik A.Ş. from sources believed to be reliable, however, Anadolu Hayat Emeklilik A.Ş. can not guarantee the accuracy, completeness or correctness of such information. This document has been issued for information purposes only. The financial reports and statements announced by Anadolu Hayat Emeklilik A.Ş. to the public and relevant corporations are accepted to be the sole material. 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