investor presentation - aksigorta

InvestorPresentation

Email Address [email protected]

Zeynep Eroktem

Contact No 00902162809761

June 2021

IR Officer

Introduction

Company overview

Business overview

Growth drivers

Financial overview

Appendix

• Company overview

• Investment case

Table of contents

Company overview

(*): https://brandirectory.com/download-report/brand-finance-turkey-100-2020-full-report.pdf

Has 673 employees and ranks #1 in Aon Hewitt / Kincentric «Best Place to Work» in 2019 and 2018

Aksigorta brand ranks #73 among top 100 brands of Turkey in 2020,in Brand Finance «Turkey 100 2020» research*

• #4 player in the non-life insurance market with 8.2% share as of Jun.21

• Joint stock company of Turkish conglomerate Sabancı Holding and Belgian Insurance Group «Ageas»

• 60+ years experience in insurance industry

• Has more than 3,300 agencies; 105 brokers and an exclusive agency agreement with Akbank, reaching 714 branches

• 28% of shares are listed with «AKGRT» ticker name on Istanbul Stock Market

• As of June 30, 2021, Aksigorta MCap is 2.4bn TL (270m USD)

3

Well-established company with strong partners and customer base

• Successful Sabancı Holding – Ageas JV (50:50) since 2011• 3.7 Mn customers• Strong capital adequacy

Superior distribution power

• Wide distribution network ~3,300 independent agencies, ~105 brokers• Exclusive partnership with Akbank (~ 714 branches, expert call center, #1 in mobile banking)• 10 regional offices with a strong, advisory sales team

Strong trackrecord

• Strong top-line and net profit growth• High dividend yield• Market share growth

High-performance focused leadership team

• CEO Uğur Gülen with 12 years in the company, 18 years in the sector• Agile and cross-functional teamwork across the company

World-classuse of technology

• Robust core system improved by value added technologies• Investments in CRM, APIs, analytics capabilities• Robot Transformation a first of its kind in the industry and Turkey, automating business processes• Automated claims management enhanced with intelligent capabilities; studies launched for end-to-end digital servicing• Technical operations center established for underwriting• Strong reinsurance treaty led by leading global players

Investment case

4

Table of contents

Introduction

Company overview

Business overview

Growth drivers

Financial overview

Appendix

• Milestones• Board of directors• Management team• Shareholder structure and

commitment to minority shareholders

• Dividend, capital raising, buybacks, and M&A history

Milestones

2000’s80’s

Beginning of bancassurance

60’s

The first insurance

agency

The first insurance

policy

90’s

Public offering of Aksigorta in1994

Opening of the Fire and Earthquake Training Center

First website

First online policy inTurkey’s

bancassurance business

Awarded the certificate of authorization

in the health branch

Opening of the Aksigorta Service Center

Transition to regional management

“Most Reliable Insurance Company" - in a research study conducted by AC

Nielsen in 2009

Merger between Sabancı Holding and Ageas in 2011

6

Haluk Dinçer

Emmanuel Van GrimbergenLütfiye Yeşim Uçtum

Antonio Cano

Kıvanç Zaimler Hüseyin Gürer

Bülent Oğuz Uğur Gülen

Chairman of the Board (since 2011)

Member of the Board (since 2019)Independent Member of the Board (since 2018)

Vice Chairman of the Board (since 2021)

Member of the Board (since 2020) Independent Member of the Board (since 2021)

Member of the Board (since 2020) Member of the Board and General Manager (since 2009)

• President of Sabancı Holding’s Financial Services Group• Served as Sabancı Holding Retail and Insurance Group President from 2011 to 2016• Held important leadership positions within the group since 1995• Mr. Dinçer served as the President of Turkish Industry & Business Association (TÜSİAD) and Chairman of the Foreign

Economic Relations Board (DEİK) Turkish-American Business Council between 2008-2014• Member of the Brookings International Advisory Council, Executive Committee Member of B20 Turkey

• Board member of Cardiff Lux Vie, East West Ageas Life (Philippines) and Intreas• Group Risk Officer of Ageas SA/NV, member of the Ageas Management Committee and former Chairman of

the CRO Forum• Worked for ING for 18 years in the Risk/Actuarial departments and held various senior management positions at

ING Insurance Belgium and ING Central Europe• Became Chief Actuary of ING South West Europe and, in 2004, was appointed Chief Insurance Risk Officer of ING

Insurance Retail Banking. In 2007, he moved to Amsterdam as Chief Risk Officer of ING Central and Rest of Europe

• Started her career at Ernst & Young in 1986 and worked for the company’s Turkey and USA offices for 11 years• Assumed different executive positions throughout her career, as the GM at Strateji Menkul Değerler, Assistant

GM at Yapı Kredi Yatırım Menkul Değerler, Assistant GM at Koçbank, and Financial Coordinator at Koç Holding;respectively

• Since 2012, she has been performing different duties as both Independent Member of the Board of Directors and Board of Control at Burçelik, Aviva Sigorta, Marshall Boya and HSBC Bank; respectively

• CEO of AG Insurance (2009-2015)

• COO of Ageas since 2015

• General Manager of Europe Region of Ageas

• Started his career in 1992 and held various executive positions in Türk Elektrik Endüstrisi, RAM Dış Ticaret and Aygaz companies respectively (1992-2008)

• Previously served as Trade Director, GM of Distribution Companies, GM of Sales Companies and CEO of Enerjisa. Currently, President of Sabancı Holding’s Energy Group

• Takes an active role in non-governmental organizations• Board member of many companies within the Sabancı Group

• Started his career in 1986 at Deloitte. In 1989-1990, he worked as independent auditor in London.

• Served as CEO of Deloitte Turkey from 2007 to 2016

• Member of Board of Eczacıbaşı Holding

• Joined Akbank in March 2003 and served as Vice President and Senior Vice President of SME and Consumer Banking; respectively

• Appointed as Executive Vice President in charge of SME Banking in July 2013 and he has overseen Retail Banking since November 2018

• Vice Chairman of AkÖde and Board Member of Ak Asset Management• Held various managerial positions at Corporate Banking and Loans divisions at different private sector banks

• Began his career in 1991 and worked at various positions at Interbank, Denizbank, Ak Internet and MNG Bank• During 2004-2009, he served at AK Emeklilik A.Ş. ve Avivasa Emeklilik ve Hayat A.Ş. as the Assistant General

Manager

Board of directors

7

Uğur Gülen Tolga Okan Tezbaşaran

Fahri Altıngöz Soner Akkaya

Metin Demirel Ayşegül Gürkale

Osman Akkoca Esra Öge

High-performance focused leadership team

General Manager (since 2009)

Assistant GM – Corporate Lines Underwriting, Corporate Sales, Legal and Reassurance (since 2005)

Assistant GM – Claims Customer Experience (since 2017)

Assistant GM – IT, Digital and Fast Flow Underwriting (since 2015) Assistant GM – Human Resources (since 2017)

Assistant GM – Finance (since 2017) Assistant GM – Strategy Transformation (since 2018)

• Began his career in 1991 and worked at various positions at Interbank, Denizbank, Ak Internet and MNG Bank• During 2004-2009, he served at AK Emeklilik A.Ş. ve Avivasa Emeklilik ve Hayat A.Ş. as the Assistant General

Manager

• Served as Regional Manager in Yapı Kredi Pension and Halk Yaşam Insurance before working as Regional Manager and Group Head at Yapı Kredi Insurance

• Joined Zurich Insurance in 2011 and has served as Executive VP of the Individual and Small Business Segment Group and has been a Member of the Board

• Served at various executive positions in several companies before joining Aksigorta in 2005 as the Assistant General Manager responsible for claims

• Served as an auditor at Interbank between 1998-2002 and as Assistant Manager at Tekfenbank between 2003-2005

• Audit manager at Sabancı Holding between 2005-2011• Served for 6 years (2011-2017) as the Head of Internal Audit at Aksigorta

• Started his career at Akbank in 1992 before working as a Senior System Analyst at Sulzer Medica Intermedics and then serving as a consultant for Oracle

• Managed his own company called Midsoft Inc. between 2004 and 2006• Served as Manager of Financial and Commercial Applications at Tofaş and Information Technologies

Management Director at Zurich Insurance

• Started her career as a Management Trainee in Commercial Bancassurance Marketing Unit at Pamukbank • Joined Garanti Emeklilik ve Hayat A.Ş in 2003 and worked as a Product Development Specialist, Regional

Performance Monitoring Manager, Planning Manager, and Regional Manager (2003-2013)• Carried out Human Resources, Organization, Purchasing and Administrative Affairs Directorate position

between 2013-2017 at Garanti Emeklilik ve Hayat A.Ş.

• Began his career as an Assistant Inspector at Sumerbank in 1999• Served as Inspector at Avivasa between 2005-2007• Joined Aksigorta in 2007 and served for 3 years as Internal Control and Compliance Assistant Manager. Then, he

worked as Risk Manager (2010-2011) and Financial Control Manager (2011-2017)

• Started working as a Risk Management Specialist at Sabancı Holding in 2006 and joined Aksigorta in 2010• Served at various positions in Strategic Planning, Bancassurance and Marketing Departments of Aksigorta• Actively participated in strategic business model planning and implementation processes with Ageas

Aksigorta leadership team’s ultimate target and responsibility is to prepare for the future while succeeding today

Management team

Assistant GM – Bancassurance, Health and Agencies (since 2016)

8

Shareholder Structure

Commitment to minority shareholders

We are committed to creating value for minority shareholders and acting in their best interests through:

• Transparency• Easy access to data• Quick response

We keep continuous communication with minority shareholders and investors via:

• Earnings calls at each quarter end• www.aksigorta.com.tr• Querries to [email protected]• Investor roadshows• 1-1 meetings• Announcements through public disclosure platform

Shareholder structure and commitment to minority shareholders

Major shareholders (as of 31 March 2021) No. of shares %

Hacı Ömer Sabancı Holding 110,160,000 36

Ageas Insurance International N.V 110,160,000 36

Public float 85,680,000 28

Total 306,000,000 100.0

36%

28%

36% Sabancı

Public float

Ageas

9

https://www.aksigorta.com.tr/yatirimci-iliskileri/sunumlar/telekonferans-sunumlari-ve-yonetim-degerlendirmesi

http://www.aksigorta.com.tr/

mailto:[email protected]

(*): Total dividend payment in 2021 is 306m TL; to be paid in two installments 202m TL in Mar.21 and 104m TL in Sep.21.

(**): MCap calculated as of June 30, 2021.

37%

Dividend history

Buybacks and M&A History

Stock Price CAGR (‘17-’21)

Dividend, buybacks and M&A history

0

110

202 202

306

1,49

2,162,61

5,07

8,70

7,70

0

50

100

150

200

250

300

350

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

2016 2017 2018 2019 2020 2021

Dividends Paid (m TL)

Stock Price (Year-end)

TL m 2016 2017 2018 2019 2020 2021**

MCap 456 661 799 1,551 2,662 2,356

P/E 7.98 5.20 3.51 4.23 6.16 6.87

P/B 1.13 1.05 1.11 1.73 2.37 2.44

DPS 0.00 0.00 0.36 0.66 0.66 1.00

• 30.99% of Aksigorta shares were acquired byAgeas from Sabancı Holding in 2011 for 220m USD

• Sabancı Holding and Ageas jointly buyed back 5.00% each from the stock market in Nov.11-Nov.12

10

*

Introduction

Company overview

Business overview

Growth drivers

Financial overview

Appendix

• Business model and growth strategy• Product portfolio• Sustainability and ESG• Risk management policy• COVID-19 impact

Table of contents

Reshaping the insurance industry

Empowered people

Technology Business model

Aksigorta Trend

Framework

Challenges

Personalization, connected & mobile citizens, living services, healthy

living and social responsibility

Artificial intelligence, blockchain, augmented reality, 3D printing, internet of things, autonomous

vehicles anddata analytics

Ecosystems orchestration, partnerships, sharing,

aggregators, subscriptioneconomy, on-demand and

peer-to-peer

• Economy and employment

• Global warming and climate change• Increasing inequality• Global tension• Security risks• Tight regulations• Changing demographics• Change management

Insurance industry trends

Business model and growth strategy

12


Pivoting to the “New World”

Product-based business model, leveraging existing

technologiesto improve efficiency

Meeting today’s requirements and

transformingto the new

Technology and analytics-based business model, offering high-value propositions for customers

Meeting today’s requirements and

transformingto the new

Customer preferences are changing

Today

Transition New World

Transition

Customer centricity”Do what people like to be preferred”

Use technologyAdapt business

to developing technology

Product centricity“Make people buy what we like to sell more”

13


Priorities

Way of Working Values

Mission

Vision

Targets

Strategic Choices

• Listen our customers and understand their needs• Design relevant products and services• Interact in a simple and meaningful way• Build deep and long term relationships

• Provide insurance advisory across all channels• Bring physical and digital experience together• Be at everywhere our customers are, supporting our

partners

• Achieve excellence in technical practices• Scale our business with digital• Keep our core systems robust and secure• Become faster and flexible with new intelligent tech

• Support self-managed teams working in a agile way• Invest on our employee’s capabilities• Raise, retain and attract talent as their choice

Strategy house

30%+ 1.0 Bn USD 10%

Self Development – Driving Results – Collaboration

Customer Centricity – Innovation – Analytics – Digital – New Technologies

Make insurance experience easy, lean and accessible by leveraging data and

technology

Support continuity and ease of life by providing unique insurance experience creating value for all stakeholders (customers, employees, distributors, business partners, shareholders, society)

Return on Equity Market Cap Market Share

We arecustomer-centric

We are accessible

We grow by leveraging data and technology

We are engaged and execution driven

14


Focus on sustainable profitable growth through human resources and technology

High performance deliver results today

•Profitable growth•Technical excellence•Sales productivity•Financial asset

management•Efficiency for scale

Transformation adapt capabilities for future

•Profitable growth•Technical excellence•Sales productivity•Financial asset

management•Efficiency for scale

To decide with data instead of deciding with instincts, beliefs and past experiences

Develop and scale our business in digital

To transform Aksigorta from a supplier perspective into a customer perspective

Agile work with cooperation

Make well-defined works with machines and robots and unidentified works withemployees

Run the company in a two-sided way, with a sustainability approach

15

Customer Journey Program

Analytics Program

Employee Way of Working Program

Customer Centric and Innovation Programs

Execution of Analytics Use Case

Realizing the best practices in the sector and continuing preparations with the next step

With high delivery on capability building and results by leveraging digital and analytics

Internal Digitalization Program

Technology Foundation Program


Mobile Application of Field Administration Aksiyon

Execution of Internal Process Digital Mirror

Customer/Channel Journey and Competence Design

Execution ofArtificial Intelligence and Robot Automatisation – ADA

16

Product portfolio

Motor Third Party Liability (MTPL):The Traffic Insurance covers damages caused by the insured car to another vehicle and to third parties in that vehicle, within specified limits. It is a compulsory insurance type.

Motor Own Damage (MoD):It is an optional insurance which covers the damages incurred on the insured vehicle. Also known under the name CASCO, this insurance can include a lot of different perils: fire, natural disaster, theft of the vehicle, personal belongings, professional belongings, and hail etc.

Fire: Property insurance that covers damage and losses caused by fire.

Engineering: Provides economic safeguard to the risks faced by the ongoing construction project, and machines and equipment.

Liability: Covers risks of liabilities imposed by lawsuits and similar claims and protects the insured if the purchaser is sued for claims that come within the coverage of the insurance policy.

Marine: Transportation insurance is a policy that offers coverage on the insured’s property while it is in transit from one location to another on any necessary mode of transport.

General Losses: Covers risks of routine life.

Aksağlık Insurance: Offers privileges according to your needs with more than 4000 contracted institutional options and different policy plans to get to the health care solutions “just for you.”

Critical Illness Insurance: Should any of the 13 dangerous conditions and illnesses covered under the scope of “Hayata Devam!” Insurance occur, indemnities starting from TL 30,000 are available.

Health Insurance for Foreigners: In accordance with the law, Health Insurance for Foreigners,a must for non-citizens who come to Turkey to obtain a residency permit, is available at Aksigorta.

Motor Non-Motor Health

17

ESG & Sustainability

We act with the awareness of our responsibilities to ensure that future generations have a green world.We started to protect nature with completely different innovations, first from our own office.

We have been working in cooperation with the World Wildlife Foundation (WWF)since 2015 to reduce our carbon footprint for a sustainable green future.

We started to invest in green funds in 2020, we plan to increase ESG investments in 2021.

Each year 5% of PBT is donated to Sabancı Foundation. This policy reflects the life philosophy of the late Haci Ömer Sabanci "sharing what we have obtained from this land with its people"

• We have located informative labels to reduce water, electricity and paper consumption

• We use air conditioning automation system forefficiency

• We have recycling boxes for batteries, plastics and glasses at our office

• We dissociate the wastewater to special tanks and prevent the nature pollution by 4 tons of domestic waste oil

18

UN Sustainable Development Goals (SDGs)

19

Gender equality is not only a fundamental human right, but a necessary foundation fora peaceful, prosperous and sustainable world. We have equal number of employees in both gender.

Clean, accessible water for all is an essential part of the world we want to live in. We dissociate the wasting water to special tanks and prevent the nature pollution by 4 tons of domestic waste oil.

Sustainable consumption and production is about doing more and better with less.It is also about decoupling economic growth from environmental degradation, increasing resource efficiency and promoting sustainable lifestyles. We have recycling boxes for batteries, plastics and glasses at our office.

SustainabilityGender equality Avoid wasting water

COVID-19 impact

The Covid-19 is a systematic risk that is unavoidable

Cash flows

Asset devaluations

Business continuity

Economic slowdown

Decline in claim frequency

We don’t see any risk in our business since:

• 62% of our receivables have a credit card collateral,

• 4% of our receivables are collected via bank accounts,

• 12% of our receivables has other collaterals (such as letter of credit, cash etc.) provided by agency,

• Our bad debt ratio is less than 0,01%.

Health

Due to slowing down in mobility, trade and economic activities we foresee that the cash flows will be the biggest challenge in the coming periods.

Equity markets decreased by 30-40% all over the world.Weight of equities in our investmentportfolio at that time was limited at 6%.

is also another risk we all face today. Thanks to our last 10 years of invesment in IT; 100% of our teams work home office veryefficiently.

New business salesget hurt but we donot foresee a majordecline in our renewals.

Underwriting result inhealth business is notaffected by Covid-19 dueto full reinsurance.

Slowdown in mobility (curfews, lockdowns) leads to lower claim frequency in Motor.

20

Introduction

Company overview

Business overview

Growth drivers

Financial overview

Appendix

• Macroeconomic outlook• Industry drivers• Competitive advantages• Business outlook

Table of contents

Macroeconomic outlook

Real GDP growth (%) 2020 population (83,6 million)Long-term TR government bond yields (%)

A break in growth trend; rebound is expected in 2021

Government bond yields (%)Yield returns are representative as of 30 June 2021

Source: IMF, Bloomberg, Turkish Statistical Institute

Turkey’s real GDP growth has been 4% in the last 5 years, which is higher than that of the world and the advanced economies. Growth is expected to be back on track starting from 2021.

68% of total population is in working age

(15-64 ages)

22

6,1%

3,3%

7,5%

3,0%

0,9%1,8%

6,0%

2,4%1,8%

2,5% 2,3%1,6%

-4,7%

5,1%3,5% 3,3%3,8% 3,6%

2,8%

-3,3%

6,0%

2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1

Turkey Advanced Economies World

18,79% 18,75%

18,35%

18,02%18,11%

18,27% 18,33%

17,69%

17,63%

17,48%

17,37%

17,00%

18,00%

19,00%

Government bonds with 10-year maturity has ~17,5% yields offering high yield return in 2021.

22,8%

67,7%

9,5%

0-14

15-64

65+

Macroeconomic outlook

Government gross debt (% of GDP) Budget balance (% of GDP)

Budget discipline is maintained despite volatility in macroeconomic conditions

Turkey’s government debt as percentage of GDP is significantly low compared to that of emerging markets and advanced economies.

Budget deficit as % of GDP is expected to be back on track startingfrom 2020; at a rate lower than that of comparable countries inemerging markets

(*): includes India, Mexico, South Africa, Russia, Indonesia, Ukraine

Source: IMF, Bloomberg

23

*

27% 28% 28% 30% 33%37% 37%

104% 107% 104% 104% 105%

120% 123%

44% 46% 48% 50% 53%

64% 65%

2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1

Turkey Advanced Economies Emerging Markets and Middle-Income Economies

-1,0% -1,1%-1,5%

-1,9%

-2,9%

-5,3%

-3,8%

-3,6% -3,5% -3,5% -3,3%-3,9%

-7,6%

-3,9%

2015 2016 2017 2018 2019 2020 2021

Turkey Emerging Markets *

(*): includes India, Mexico, South Africa, Russia, Indonesia,Ukraine

Source: Swiss Re Sigma No3/2021 World insurance report, Insurance Information and Monitoring Center (2021)

Industry drivers

Non-life GWP production / GDP in Europe (%, 2020)

GWP per capita (USD, 2020)

Low penetration levels signal growth potential

Strong growth potential in non-life insurance sector

Turkish non-life insurance market is underpenetrated

in millions# of

insurable# of

insuredPenetration

MTPL 24,7 20,0 81%

MOD 24,7 6,9 28%

TCIP* 17,7 10,2 58%

HEALTH 83,6 4,0 5%

(*): Compulsory earthquake insurance.

24

0,9

1,0

1,2

1,3

1,3

1,4

1,4

1,5

1,6

1,8

1,8

1,8

1,8

2,0

2,0

2,0

2,0

2,2

2,3

2,3

2,4

2,4

2,7

2,7

3,0

3,2

3,4

3,5

3,5

4,0

4,1

8,1

Romania

Russia

Turkey

Slovakia

Ukraine

Greece

Hungary

Malta

Serbia

Luxembourg

Ireland

Sweden

Finland

Norway

Czech Republic

Bulgaria

Poland

Croatia

Italy

United Kingdom

Cyprus

Europe Average

Portugal

Belgium

Denmark

Spain

Austria

France

Slovenia

Germany

Switzerland

Netherlands

47

105

111

116

120

212

237

241

295

314

314

407

469

602

639

721

871

899

945

949

969

1.011

1.187

1.328

1.359

1.495

1.619

1.774

1.827

2.060

3.557

4.223

Ukraine

Russia

Turkey

Romania

Serbia

Bulgaria

Greece

Hungary

Slovakia

Croatia

Poland

Malta

Czech Republic

Portugal

Cyprus

Italy

Spain

Finland

Sweden

United Kingdom

Europe Average

Slovenia

Belgium

Norway

France

Ireland

Austria

Denmark

Germany

Luxembourg

Switzerland

Netherlands

Industry drivers

Factors driving insurance penetration in Turkey

Premium production by segment and factors driving penetration

Premium production is affected by socio-economic status of cities and per capita income

Top 15 cities generate 75% of total premium production.Higher per capita income leads to higher premium generation. Top 15 cities in premium production have higher per capital income levels compared to the rest.

Different premium segments are driven by three different factors. Insurance penetration also depends on economic development.

Individual

Corporate Mandatory49% 25%

26%

Economic growth

Regulation

Insurance awareness

25

28%

34 36 43 5261 68

7891

2016 2017 2018 2019 2020 2021F 2022F 2023F

+16%

+14%

Insurance is the core business in agencies while it is a part of financial services in banks

Market GWP* (TL bn) Key growth assumptions

Channels

(*): Normalized figures by excluding double-count premiums of MTPL, agriculture and medical malpractice pools.

Agency channel is 57% of total market, whereas corporate and bank channels constitute 28% and 15%; respectively.**

78% of Motor products (MTPL and MOD) are sold by Agency channel in the market, portfolio weight of motor products

in Agency channel is 59%.**

Bank slows down due to low credit appetite and shift of customers from branch to digital (esp. in retail segments) as a global trend. Growth in bank channel is expected to shift to commercial/ corporate segments.

Corporate channel outperformed others with accelerated investments (infrastructure, construction etc.) supported by the economical development. Corporate channel will continue to act as a major channel to penetrate in commercial/corporate segments.

Industry drivers

Growth

Channel CAGR ‘16-’20 CAGR ’20-‘23F

Agency 12% 14%

Bank 21% 14%

Corporate 33% 14%

CAGR

CAGR

26(**): As of 30th June, 2021.


Non-Motor and Health products are leading the market growth

Line of Businesses (LoBs)

Profitability (UW margin) Growth (CAGR)* Key growth assumptions

MTPL: Price increase in line with inflation (price is capped by regulation)

MOD: Growth driven by new car sales and fleets

Non-motor: Major growth driver of the market is commercial businesses

Health: Medical inflation and expansion of complementary health supports growth

Industry drivers

5% to 15%

5% to 15%

0% to 10%

-10% to 0%

Health

Non-Motor

MOD

MTPL

2021E-2023F

LoB CAGR ‘16-’20 CAGR ‘20-‘23F

MTPL 7% 19%

MOD 15% 14%

Non-Motor 21% 14%

Health 24% 14%

27

Industry drivers

Penetration development is correlated with several attributes, quantified with single-factor analysis

Average vehicle age

Vehicle prices

Number of vehicles per person

Fraud

Number of offices and houses

Labor force participation

Total health expenditure

MTPL MOD TCIP Health Insurance

VehiclesVehicles IndividualsHouses

81% 28% 58% 5%

24.7M24.7M 83.6M17.7M

Frequency of claims

GDP per capita

Claims cost per GDP

Number of vehicles

Crime rate

GDP per capita

Public share

GDP per capita

28

Competitive advantages

Aksigorta GWP CAGR (’16 -’20)

Aksigorta GWP and market share development

Aksigorta is the #4 player in the market, with 8.2% market share**

28% (market: 16%)

(*): Normalized figures by excluding double-count premiums of MTPL, agriculture and medical malpractice pools.(**): Source: Insurance Association of Turkey, data as of 30.06.2021, double count premiums of MTPL, med-mal and agriculture pools are excluded.

1.896

2.566

3.305

4.330

5.055

2.157

2.860

5,5%

7,0%

7,7%

8,3% 8,3%

7,4%

8,2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

1.000

2.000

3.000

4.000

5.000

6.000

2016 2017 2018 2019 2020 2020 H1 2021 H1

Aksigorta GWP* Market share

Company #1; 14,4%

Company #2; 12,8%

Company #3;12,4%

Aksigorta; 8,2%

Company #5; 6,5%

Other;45,7%

Company #1 Company #2 Company #3 Aksigorta Company #5 Other

29

Aksigorta GWP 1H21 YoY

33% (market: 20%)

196516

10051354 1449

620797

657

706

773

9421157

470

643 824

1086

1250

1643

1977

821

1.175

219

259

277

391

472

247

245

2016 2017 2018 2019 2020 2020 H1 2021 H1

MTPL MoD Non-Motor Health


Source: Insurance Association of Turkey

Aksigorta GWP (m TL)*

Aksigorta performance

+28%CAGR ‘16-’20

Aksigorta Market Share*

30

1.896

2.566

3.305

4.330

5.055

1,6%

4,6%

7,8%

8,9%9,0%

10,2%9,9%

9,4%9,2%

9,3%

9,9%

9,9%

7,0%

7,8%

7,5%

8,2%7,8%

7,4%

6,3%

6,4%

5,5%

5,9%5,8%

5,0%5,5%

7,0%

7,7%

8,3% 8,3%8,2%

2016 2017 2018 2019 2020 2021

MTPL MoD Non-Motor Health Total

2.157

2.860

+33%YoY Growth


Aksigorta is a well-established company with strong partners and customer base

Sabancı Holding

Hacı Ömer Sabancı Holding A.Ş., one of Turkey’s leading industrial and financial conglomerates, is the parent company and manages the Sabancı Group companies with a strategic portfolio approach.

Turkey’s rapidly growing sectors including banking, insurance, energy, cement, retail and industrials are the main business areas of Sabancı Group.

In June 2021, consolidated revenue of Sabancı Holding wasTL 13,0billion with consolidated net income TL 6,2 billion.

As of Jul.21 Sabancı Group companies account for 6,5% ofthe market value of Borsa Istanbul (BIST100)

More than 60k employeesMore than 40 million customers

Sabancı HoldingNet Asset ValueBreakdown Jun.21 (%)

Banking

Energy

Industry

Retail

Cement

Insurance

Social

Other

31

37

7

18

9

16

12

Bank

Financial Services

Industrials

Building Materials

Energy

Retail


Ageas Insurance International NV Insurance net results 1H21 total: €407m

Gross inflows Ageas’s Part 1H21 total: €22,2b

Aksigorta is a well-established company with strong partners and customer base

United KingdomNon-life

#2 motorcycle insurer

#6 private car insurer

5.1 million customers

Continental EuropeLife and non-life

in 3 markets

#1 health insurer in Portugal

4,9 million customers

BelgiumLife and non-life

#1 life and #2 non-life

#1 real estate

3 million customers

AsiaLife and non-life

25 million customers in 9 markets

32

Group’s Solvency Ratio

196%

Group’s Combined Ratio

93%

28%

8%

13%

51%

Belgium

UK

Continental Europe

Asia

37%

7%12%

39%

6%

Belgium

UK

Continental Europe

Asia

Interas


Cross-functional and agile working organization, empowered people are key for success

Innovation

Customer centricity

Digital

Analytics

New technology

Un

der

wri

tin

g

Sale

s an

d m

arke

tin

g

Cla

ims

Fin

ance

Tech

an

d d

igit

al

Hu

man

res

ou

rces

Strategy and transformation

Business unitsW

ork

ing

pla

tfo

rms

Since 2017, we have established cross functional and agile working “platform” structures within the organization to:

• Gain competitive advantage in the existing markets

• Create new markets and ensuring presence

• Build new capabilities in the organization

Aksigorta Platforms aim to prepare Aksigorta ‘for being leader in the new world’ by taking required actions and managing this transition with a common target and coordination across the company.

All human resource policies (career paths, performance, skill sets, trainings etc.) are being reviewed to fully support our strategy and targets.

33


Superior distribution power

Agency

agencies

GWP

as of 30 June 2021 as of 30 June 2021

Broker

GWP

brokers

Aksigorta Akbank

branchescustomers employees

digital customers

ATMs POS machine

in digital banking

net profit total consolidated

assets

capital adequacy

ratio

Agencies’ and brokers’

insuranceknowledge and

expertise

More than 3,300

1.8b 538m

~105

71418 m 12k+

4.8m

~5200

Leader

4.1 b 20.0%537.8b

34

650k+


Digitalization by using Next Generation Technologies, RPA, AI, Digital Twin enables to create efficiency andneeds driven insurance experience for all our stakeholders including customers, distribution channels and employees.

Internal Digitalization

Agile Way of WorkingDigital Products & ServicesDigitize the Core

ADA Program Digital MirrorRobotics Transformation Program

World-class use of technology

Provide Aksigorta with

virtual workforce to sustain high growth.

Best in class G&A/GWP ratio in

the market 4% in 2021

Make Aksigorta competitive in the market

minimizing operation cost with RPA and AI

Virtual workforce corresponding to

~135 FTE is in place

External Digitalization

• ADA, Aksigorta Digital Assistant,first digital assistant with AI in sector.

• We embed new human skills to ADA by using next generation technologies.(AI, RPA, Chatbot) step by step.

• Focus on processes touch on customers or agencies with high transaction volume.

• Creating Digital Twins of insurance processes to improve process productivity and efficiency by solving identified pain points of processes

• Solve these pain points by using new Technologies, lean processes or re-organization.

• Using Robotics Process Automation (RPA) technology to automate well defined processes.

• Self managed teams are empowered and trained to work with agile principles.

• ~6 agile teams in place running continuous sprints and delivering with a minimum viable product approach.

• WhatsApp channel is utilized as a communication channel.

• Smart applications developed for customers, agencies and sales force management enabling to scale our business.

• End to end segment-based customer journey designation onboarded for retail products leveraging analytics and digital

Respond to rising expectation of our

customers and agencies especially

regarding speed, easiness and availability

35


Strong revenue generation

SFRS Net Profit

IFRS Net Profit

102 148 132251

450110

169350

456

378

2016 2017 2018 2019 2020 2021

UWR Financial Income

48 127 366

71 137 213

228

309

432

374

+10%*

+10%*

(*) Excluding corporate tax rate change impact

36

Aksigorta 2021 actions

Strengthen our finance and

collection structure

Configure our product management

Continue to transform our business and

competencies

Always prioritize investment in our

employees

Constantlytarget andmeasure

Increase our agency efficiency and continue to

expand our network

We willStrengthen our

pricing and claims management

Align on the bank channel and grow

faster

Manage our processes efficiently and controlled

by technology

Maintain our strength on the

corporate channel

Evaluate opportunities in

health

Business outlook

37

Table of contents

Introduction

Company overview

Business overview

Growth drivers

Financial overview

Appendix

• Scorecard• Financial performance• TFRS vs IFRS• Summary financial statements and key

financial ratios• Earnings guidance

2021 Q2 2021 YTD

Scorecard

2021 Q2 financial indicators (TL m) y/y

Gross written premiums 1,422 +38%

Financial income 135 +41%

Net income 93 -45%

Shareholders’ equity 968 +3%

2021 Q2 operational ratios y/y

Combined ratio (net) 101% 22 pp

Loss ratio (net) 78% 23 pp

Commission ratio (net) 15% 0 pp

Expense ratio (net) 8% -1 pp

RoE 33% -17 pp

2021 dividend payment

Dividend paid 306

Payout ratio 71%

2021 financial indicators (TL m) y/y

Gross written premiums 3,000 +32%

Financial income 282 +59%

Net income 169 -35%

Shareholders’ equity 968 +3%

2021 operational ratios y/y

Combined Ratio (net) 103% 17 pp

Loss ratio (net) 80% 18 pp

Commission ratio (net) 14% -1 pp

Expense ratio (net) 9% 0 pp

RoE 33% -17 pp

39

25% 21%

17% 18%

43%

46%

15%

15%

1Q2020 1Q2021

15.230

Market GWP Distribution (%) (m TL)

Market GWP Development

20Q120Q220Q3 20Q4 21Q1

YoY

MTPL MOD Non-motor Health

+12% +25% +32% +21%

Agency Bank Corporate Market

+19% +30% +30% +23%

Portfolio Share


63% 13% 24% 100%

YoY


+1% +31% +32% +24%


+16% +24% +35% +23%

Portfolio Share


54% 17% 29% 100%

+23% +23%

Health Non-motor MOD MTPL

33% 30%

21%21%

34%

37%12%

12%

3Q2019 3Q2020

13.69918.693

11.178

YoY


+0% +23% +31% +21%


+15% +15% +38% +19%

Portfolio Share


60% 15% 25% 100%

28% 24%

20% 21%

38%

42%

13%

14%

4Q2019 4Q2020

15.402

18.317

+19%

Note: Retro premiums from pools are excluded.

Po

rtfo

lio

Sh

are

27% 24%

17%19%

43%

44%

13%

13%

2Q2020 2Q2021

13.849

YoY


+6% +29% +20% +18%


+30% +38% -7% +17%

+17%16.257

21Q2

26% 22%

17% 19%

43%

45%

14%

14%

1H2020 1H2021

29.079

34.950

YoY


+3% +30% +26% +21%


+22% +30% +12% +20%

+20%

21H1

Portfolio Share


57% 15% 28% 100%

Portfolio Share


60% 14% 26% 100%

40

Aksigorta GWP Development

Aksigorta GWP Distribution (%) (m TL)

20Q3 20Q4 21Q1

YoY


+7% +25% +45% +32%

Agency Bank Corporate Company

+18% +1% +83% +27%

Portfolio Share


60% 12% 28% %100

YoY


+29% +50% +28% -11%


+35% +11% +20% +28%

Portfolio Share


64% 10% 26% 100%

+28%

28%29%

21%

25%

38%

38%13%

9%

1Q2020 1Q2021

1.173

Health Non-motor MOD MTPL

32% 27%

23%22%

36%

41%9%

9%

4Q2019 4Q2020

+27%

1.318

Note: Retro premiums from pools are excluded.

YoY


+8% +26% +66% +19%


+19% +37% 65% +31%

Portfolio Share


59% 11% 30% 100%

37% 31%

27%26%

30%

38%6%

5%

3Q2019 3Q2020

+31%

1.221

930

1.677

1.500

Po

rtfo

lio

Sh

are

YoY


+28% +22% +61% +15%


+30% +36% +55% +38%

Portfolio Share


58% 10% 32% 100%

+38%

29% 27%

23%

20%

38%

45%9%

8%

2Q2020 2Q2021

984

1.360

YoY


+29% +37% +43% -1%


+33% +22% +36% +33%

Portfolio Share


61% 10% 29% 100%

+33%

29% 28%

22%

22%

38%

41%11%

9%

1H2020 1H2021

2.157

2.860

21Q2 21H1

41

14-3

50

12

21

-7

14

20

1Q2020 1Q2021

UWR Development

Decreasing positive impact of lock-down coupled with big claims led to a YoY decline in 21Q2 UW result

UWR Business Mix (TL m)

20Q3 20Q4 21Q1

-78%

UWM


+8% +1% +3% +12%


+4% +29% -1% +5%

UWM


-1% +4% -1% +18%


+0% +23% +3% +2%

UWM: UWR / Gross earned premiumsHealth Non-motor MOD MTPL

10

3213

428

11

1313

3Q2019 3Q2020

6460

-7%

110

30

30

34

38

12

17

4Q2019 4Q2020

UWM


+2% +11% +8% +16%


+6% +27% +7% +8%

77

9995

+23%

22

85

-6

134

27

47

25

29

37

1H2020 1H2021

21H1

-72%

UWM


-1% +4% +2% +17%


+2% +22% +3% +3%

71

-3

84

15

26

32

15

17

2Q2020 2Q2021

21Q2

-69%

UWM


-1% +5% +6% +16%


+5% +21% +3% +4%

196295

62 83

42

CoR Development

Decreasing positive impact of lock-down coupled with big claims resulted in increase in loss ratio, thus combined ratio in Q221

20Q3 20Q4 21Q1

Commission Ratio Expense RatiıoLoss Ratio

73% 76%

16%16%

9%9%

3Q2019 3Q2020

97%100%

72% 72%

16% 15%

9% 10%

4Q2019 4Q2020

96%

69%

82%

16%

15%9%

9%

1Q2020 1Q2021

106%

94%96%

21Q2 21H1

55%

78%

15%

15%

9%

8%

2Q2020 2Q2021

79%

62%

80%

15%

14%

9%

9%

1H2020 1H2021

103%

86%

101%

43

Financial Income Development

As of June 2021, AuM has reached TL 3.7b with 24% YoY growth

(*): Yield figures are net of BITT (BSMV), (**): Financial income includes FX gain / loss

AuMm TL 2,970m TL 3,065m TL 3,280m TL 3,250m TL 3,671m TL

Average annualized yield* 13% 11% 14% 16% 16%

Quarterly financial income** 101m TL 121m TL 89m TL 154m TL 141m TL

JUN 20

37%

36%

11%

11%5%

Equity Government Board Eurobond Corporate Band Time Deposit

34%

40%

9%

11%

6%

SEP 20 DEC 20

43%

35%

5%

9%

8%

MAR 21

52%

29%

5%

8%5%

JUN 21

51%

32%

6%

9%3%

44

Discounting of O/S claims is the major difference between two ledgers

TFRS vs. IFRS

as of June 2021 (TL m) Equity YTD P&L adjustment

TFRS result 967,5 169,1

Equalization reserve 105,4 8,9

Unexpired risk reserve 25,6 1,7

Unallocated loss adjustment expenses -23,2 -1,5

Discounting of outstanding claims -367,3 -35,0

Deferred tax 61,4 8,7

IFRS result 769,5 151,9

45

Summary of financial statements and key financial ratios

Balance sheet(m TL)

2Q20 3Q20 4Q20 1Q21 2Q21YoY %

change

Receivables 1,417 1,618 1,885 2,061 1,861 31%

AuM 2,970 3,065 3,280 3,250 3,671 24%

Total assets 4,818 5,044 5,620 5,719 6,049 26%

Reserves 2,730 2,942 3,166 3,466 3,561 30%

Payables 877 807 946 974 968 10%

Equity 942 995 1,123 851 968 3%

Total liabilities 4,818 5,044 5,620 5,719 6,049 26%

RoE 50% 48% 43% 42% 33% -17pp

Profit and loss(m TL)

2Q20 3Q20 4Q20 1Q21 2Q212020 YTD

2021 YTD

YoY % change

GWP 1,032 1,270 1,736 1,578 1,422 2,266 3,000 32%

GEP 1,152 1,186 1,264 1,354 1,466 2,252 2,819 25%

NEP 655 675 692 746 808 1,293 1,554 20%

UWR 196 60 95 22 62 295 83 -72%

Expenses -58 -58 -68 -66 -68 -114 -134 17%

Financial income 96 118 83 147 135 177 282 59%

PBT 222 114 109 89 148 332 237 -29%

Net profit 169 86 88 76 93 259 169 -35%

46

Earnings guidance

Risks and opportunities are factored in our 2021 year-end guidance

15%-25% growth in GWP

Risks

• Downsizing economy limits insurance growth

• Natural disasters due to climate change (e.g.: hail, flood, fire, EQ etc.)• Decreasing UW profit margin due to competition• Uncertainty, high volatility on currency• Decrease in interest rates• Possible churn in individual segments due spending cut offs• Sudden increase in mobility and use of private cars instead of public transportation

with easing of restrictions

Opportunities

• Increase in interest rates

• Increasing new vehicle and mortgage home sales

• Pandemic enabling new products opportunities in health and revealing of interest to health insurance

• Accelerating digital transformation with the pandemic

• Increasing efficiency, quality and innovation with remote working

• Higher premiums and improved UW Margin with the introduction of new products (cyber, credit etc.)

• High focus of industry on technology and analytics to generate value

10%-20% increase in Net Profit

47

Table of contents

Introduction

Company overview

Business overview

Growth drivers

Financial overview

Appendix

Capital adequacy

Capital adequacy Jun ‘20 Sep ‘20 Dec ‘20

Required capital 923 971 964

Asset risk 399 420 388

Reinsurance risk 75 78 94

Reserve risk 104 115 115

UW risk 324 337 350

FX risk 21 21 18

Available capital 1,034 1,094 1,220

Capital adequacy ratio 112% 113% 126%

Main drivers:

by asset size

by re-insurance portfolio

by growth

by growth

by fx exposure

Please note that CARs can differentiate from final version shared with the Treasury49

Technical Result Bridge btw TFRS & Management Reporting

1. Guarantee Fund (premiums ceded to Assurance Account as a % of MTPL production)2. Assistance Premiums3. Subrogation Accrual4. Other Technical Inc. / Exp.5. Bad Debt for Subrogation Receivables6. Commissions vs. General Expense (only commissions are subject to UWR in management reporting)

(*) Claims, net in CMB reporting includes non-life technical expenses, namely incurred claims, bonus and rebates and other reserve provisions

Technical result in

TFRS

Re-classifications UW result in management

reporting1 2 3 4 5 6 7

Net earned premiums 1.604 -10 -40 - - - - - 1.554

Claims, net (*) -1.225 - - 22 -17 -28 - - -1.248

Other technical income and expense

-70 10 40 -22 14 - - - -

Commissions, net - - - - - - -223 - -223

General expenses -339 - - - - - 339 - -

Allocated financial income 295 - - - - - - -295 -

Total 265 - - - -2 - 116 -295 83

50

Glossary

AUM

Ceded Premiums

Combined Ratio

FI

FTE

GEP

GWP

HC

LoB

MOD

MTPL

NEP

Net Written Premiums

Retention Ratio

TCIP

Tech. Margin

Tech. Result

UWM

UWR

Asset Under Management

Premiums transferred to reinsurers

Total of Loss ratio, commission ratio and expense ratio

Financial Income

Full-Time Employee

Groos Earned Premium

Gross Written Premium

Headcount

Line of Business

Motor Own Damage

Motor Third Party Liability

Net Earned Premiums

Premium net of reinsurer share

Net Written Premiums as a share in GWP

Turkish Catastrophic Insurance Pool

Technical Margin, Technical Result as a share in NEP

Technical Result = UWR + Financial Income + Expenses

Underwriting margin , Underwriting Result as a share in GEP

Underwriting Result

51

Thank you!

Email Address [email protected]

Contact No 00902162809761

Zeynep EroktemIR Officer

investor presentation - aksigorta

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