Annual Report 2007 - Allianz Sigorta | Ana...

Annual Report

2007

2 Yap› Kredi Sigorta A.fi. Agenda of General Assembly of Shareholders3 From the Board of Directors...

4 Introduction6 Financial Highlights7 Timeline8 Chairman's Message10 General Manager's Message12 Insurance Sector in the World16 Insurance Sector in Turkey20 Developments at Our Company22 Technical Results29 Support for the Arts

30 Board of Directors, Senior Management, Auditors, Headquarters andRegional Management, Corporate Governance Principles Compliance Report

32 Board of Directors34 Senior Management35 Board of Auditors36 Headquarters and Regional Management38 Corporate Governance Principles Compliance Report

42 Statuary Auditor's Report and Financial Information44 Statuary Auditor's Report45 Independent Auditor’s Report67 Profit Distribution68 Information for Shareholders

Contents

Annual Report 2007 1

Özer Kabafl, They even took their trees with them, 1997, Oil on Canvas, 146 x 114 cmYapı Kredi Collection

Yap› Kredi Sigorta A.fi. Agenda of General Assembly of Shareholders

1. Opening the meeting and forming theChairing Council members.

2. Reading and deliberating the Board ofDirectors' annual report; the StatutoryAuditors' Report, and the summarizedIndependent Auditor's Report prepared bythe Baflaran Nas Ba¤›ms›z Denetim veSerbest Muhasebeci Mali Müflavirlik Afi(PricewaterhouseCoopers)concerning thecompany's 2007 activities and accounts;accepting, amending and accepting, orrejecting the Board of Directors' proposed2007 Balance Sheet and Profit & LossStatement.

3. Approving changes made in Board ofDirectors memberships during the year asrequired by article 315 of the TurkishCommercial Code.

4. Acquitting the Board of Directors andStatutory Auditors of their fiduciaryresponsibilities for the company's activitiesin 2007.

5. Informing shareholders about thecompany's profit distribution policy asrequired by Corporate ManagementPrinciples.

6. Accepting, amending and accepting, orrejecting the Board of Directors' proposalconcerning the distribution of 2007 earningsand the date of their distribution.

7. Reelecting or replacing Board of Directorsmembers whose terms of office have expired;determining the terms of office and thenumber of members.

8. Reelecting or replacing statutory auditorswhose terms of office have expired.

9. Determining the gross monthly salariesto be paid to the chairman and members ofthe Board of Directors and to the statutoryauditors.

10. Informing the general assembly ofshareholders about the charitable donationsand assistance that the company providedto foundations and associations in 2007.

11. Approving the independent externalauditors chosen by the Board of Directorspursuant to the “Capital Market RegulationsConcerning Independent Auditing” publishedby the Capital Markets Board.

12. Authorizing the members of the Boardof Directors pursuant to articles 334 and 335of the Turkish Law of Commerce topersonally engage in activities falling withinthe company's object and scope, to engagein such activities on behalf of others, and tobecome a partner in companies engagedin such activities.

13. Authorizing the Charing Councilmembers to sign the minutes of the meetingand acknowledging that this signing issufficient.

14. Requests.

2 Annual Report 2007

Dear Shareholders:

Our company had a successful year in 2007. It generated TRY 628 million in premium revenue and made a net profit amounting toTRY 25 million.

We are a company which employs capable personnel to deliver the highest-quality service and to inspire confidence and trust whichaccomplishes this without ever straying from its innovative and customer-focused working principles. We hereby present for your examinationand approval the Balance Sheet and Profit&Loss Statement reflecting our company's financial position in 2007.

The Board of Directors

From the Board of Directors...


Introduction


Ferruh Bafla¤a, Composition, 1999, Oil on Canvas, 150 x 170 cmYapı Kredi Collection



Financial Highlights

Financial HighlightsTRY thousand 2003 2004 2005 2006 2007 Change (%)

Total Premium Revenue 312,390 405,067 469,738 585,459 628,143 7Total Underwriting Profit (5,529) 21,696 (6,806) 11,645 19,528 68Total Assets 266,768 332,882 469,760 573,694 650,522 14Paid-in Capital 80,000 80,000 80,000 80,000 80,000 -Shareholders’ Equity 101,976 103,202 188,833 203,112 253,598 25Profit before Tax 299 8,088 (465) 19,897 35,948 81Net Profit 299 7,520 (465) 19,464 25,357 30

Key Ratios% 2003 2004 2005 2006 2007

Underwriting Profit/Premium Revenue (0.018) 0.054 (0.014) 0.020 0.031Profit before Tax/Total Assets 0.001 0.024 (0.001) 0.035 0.055Profit before Tax/Shareholder's Equity 0.003 0.078 (0.002) 0.098 0.142Premium Revenue/Total Assets 1.171 1.217 0.999 1.021 0.966Shareholder's Equity/Total Assets 0.382 0.310 0.402 0.354 0.390

Net Profit(TRY thousand)

2003

299

2004

7,520

2005

(465)

2006

19,464

2007

25,357

Total Assets(TRY thousand)

2003

266,768

2004

332,882

2005

469,760

2006

573,694

2007

650,522

Formation and early years

Yap› Kredi Insurance was originally foundedin 1943 under the name Halk Sigorta.

In 1972 Yap› Kredi Bank, then a member ofthe Do¤ufl Group, purchased a 75% stakein Halk Sigorta. In the 1980s, the companyjoined the Çukurova Group when its parentYap› Kredi Bank was acquired by them.

19 October 1994: First public offering

Yap› Kredi Insurance's shares began tradingon the ‹stanbul Stock Exchange on19 October 1994. Today, 33.69% of thecompany's stock is publicly traded.

As required by changes in the legalframework, in 1990 all health and lifeinsurance activities, which hitherto had beencarried out by a separate department of HalkSigorta, were transferred to a separatecompany, Halk Yaflam Sigorta, that was awholly-owned subsidiary of Halk Sigorta.

In 2000 the company's name was changedto Yap› Kredi Sigorta (Yap› Kredi Insurance)and its Halk Yaflam Sigorta subsidiary's namewas also changed to Yap› Kredi YaflamSigorta (Yap› Kredi Life Insurance).

Restructuring in the new millennium

One of the requirements of a draft privatepension system law that was being discussedin the subcommittees of the Grand NationalAssembly of Turkey in late 2000 was a rulethat insurers that set up and manage privatepension funds could not be active in anybranch other than life insurance.

Yap› Kredi Life Insurance's health insuranceactivities were transferred to Yap› KrediInsurance at 1 January 2001 to make itpossible for the former to engage in thebusiness of providing private pensions.

Concurrent with this, Yap› Kredi Insurance'slife insurance portfolio was also transferredto Yap› Kredi Life Insurance.

Yap› Kredi Insurance is currently active in theaccident, fire, marine, engineering,agriculture, legal liability, credit, personalaccident, and health branches.

Joining Koç Financial Services

On 28 September 2005, Yap› Kredi Bank andits subsidiaries were acquired by KoçFinancial Services. Effective the same date,Yap› Kredi Insurance began carrying out itsoperations as a member of the same group.

Continuously strengthening its positionamong Turkey's leading insurers, Yap› KrediInsurance's foresight and innovativenesshave long made it the driving force of theTurkish insurance sector.

Yap› Kredi Sigorta operates out of itsheadquarters in ‹stanbul and through regionaloffices in Adana, Ankara, Antalya, Bursa, and‹zmir and through two representatives (oneeach in Bak›rköy and Kad›köy) in ‹stanbul.In addition, the company provides insuranceproducts and services to customerseverywhere in Turkey through an extensivenetwork consisting of professional agenciesand of branches of Yap› Kredi Bank.


Timeline


Chairman's Message

Dear Shareholders:

The Turkish insurance sector grew 13% in 2007.

In 2007 the Turkish economy was affected by internationaldevelopments that included problems in the US mortgagemarket and strong rises in oil prices as well as bydevelopments on the national front such as the election ofa new president, a referendum, and cross-border militaryoperations in northern Iraq.

Despite these influences, economic and political stabilityendured and no serious fragilities on the economic frontwere experienced while growth, albeit at a reduced pace,also managed to continue in 2007 as well. The posted ratesof inflation were above target but still in the single-digitrange. The year-to-year rise in the consumer price indexwas 8.39% while the rise in the producer price index was amore modest 6.31%.

The Turkish insurance sector registered a13% rate of growth in 2007, a performancethat was substantially above the growth ratesin the national economy as a whole.

This rapid rise in the sector and the potentialfor still stronger growth were the objects ofclose interest on the part of internationalinsurers with the result that foreign directinvestment continued to flow into the Turkishinsurance sector in 2007 as well. This processmade it possible for insurance companiesin Turkey to strengthen their capitalizationwhile also further increasing their servicequality. It is expected that international capitalwill continue to move into the sector in 2008in the form of both mergers and acquisitions.

The sector's total premium production in2007 was worth about TRY 11 billion of whichapproximately TRY 1 billion was in the lifebranch with the remaining TRY 10 billionbeing generated by non-life branches. Therewas a net premium production contractionof 4% in the life branch last year while thenon-life branches averaged a 16% rate ofgrowth.

Yap› Kredi Insurance increased its premiumrevenue, its underwriting profit, and its netprofit.

In 2007 Yap› Kredi Insurance's premiumproduction was up 7% over the previousyear's level and reached TRY 628 million.

Well over half of that (TRY 361 million) wasfrom general (non-health) branches.Nevertheless the company's premiumproduction in health insurance at TRY 267million was up 17% year-on and once againmade Yap› Kredi Insurance the undisputedleader of this branch in our country.

In 2007 Yap› Kredi Insurance achievedimportant results, making a underwriting profiton the order of TRY 19 million and a net profitamounting to TRY 25 million.

In view of the progress and positivedevelopments experienced in the insurancesector in 2007 it is hoped that 2008 will beanother busy and productive year for thesector as well. Expectations are that insurancewill continue to gain importance in our countryand that the number of individuals availingthemselves of insurance products andservices will go on rising while the sectoritself will be registering above-inflation growthrates.

In light of these expectations, our objectiveas Yap› Kredi Insurance will be to furtherincrease our contribution to the Turkisheconomy in the period ahead and gain stillmore impetus for our country's insurancesector.

Speaking on behalf of the Board of DirectorsI extend all our thanks and respects to ourshareholders and the members of the KoçFinancial Services Group for their ongoingsupport in sales and other operations, to ourpolicyholders for preferring to do businesswith us, and next, our sincere thanks also toall the employees and agencies for theirdilligent efforts.

Tayfun BAYAZITChairman of the Board of Directors


In 2007 Yap› Kredi Insurance's premium revenue was up 7%over the previous year's level and reached TRY 628 million.


General Manager's Message

Dear Shareholders:

2007 was a milestone yearfor the Turkish insurancesector.

2007 was a year marked bya number of developmentsthat are of the utmostimportance from thestandpoint of the Turkishinsurance sector. The passageof a new insurance law andthe publication of the sector'sseven-year EU harmonizationaction plan were among theevents that increased people'sconfidence in the sector'sfuture.

In 2007 the sector booked a total premiumproduction worth nearly TRY 11 billion. Havingregistered annual growth rates of between10-15% in recent years, the Turkish insurancesector looks set to continue increasing itsimportance to the national economy in 2008as well.

A new law governing the insurance sector,Statute 5684, went into effect as of14 June 2007. This law, whose passage hadranked highest among the sector'sexpectations for many years, sets out thebasic principles for the establishment,management, and operation of insuranceand reinsurance companies as well as forthe transfer, merger, liquidation, and auditingof such firms. The objectives of the law areto strengthen the financial structures ofinsurers and to improve the service theydeliver to their policyholders. The law alsointroduces an arbitration system designedto more efficiently resolve disputes that ariseunder insurance-related contracts. Byeliminating a serious shortcoming viewed ashindering our sector's development, it isbelieved that the arbitration system, penalties,and more effective auditing mechanismsprovided for under the new law will improvediscipline in the sector while also increasingcustomer satisfaction. On the financial side,the regulations introduced by the new laware designed to reduce irrational pricecompetition while also preventing potentialweaknesses in insurers' financial structures.

In view of all the main points to which I havejust made reference, the new insurance lawcan be expected to play an important role inreforming our sector.

The enactment of the so-called “mortgagelaw” (Statute 5582 concerning theAmendment of Various Laws pertaining tothe Home Financing System) is expected tobring about an increase in home insurancepolicies. This is a growing market and Yap›Kredi Insurance intends to take a significantshare of it. Two other business lines in whichthe company plans to be significantlyincreasing its premium production are liabilityinsurance, which has been growingsubstantially above sector averages lately,and credit insurance, interest in which iscertain to be intensified as our company'smortgage market takes off.

Among the expectations for 2008 are theenactment of a national health insurancesystem, which was recently returned to theagenda after being on and off again, andthe publication of the system's statutoryregulations.

Our company is working on the design ofhealth insurance products which will providecoverage for risks not addressed by thenational system but which will be much moreeffectively priced than the ones that nowexist.

Yap› Kredi Insurance was again the leaderof the health insurance branch in 2007.

As of end-2007 Yap› Kredi Insurance had875 employees and was working with anetwork consisting of 735 agencies, 677 Yap›Kredi branches, 1,786 contractual institutions,and 550 contractual service providers. Lastyear the company increased its premiumproduction 7% compared with 2006, aperformance which ranked it in seventh placewith a 6.5% share of the sector's totalpremium production and which defended itsleading position in the health branch with a22% share of that market.

The company again remain successful in theaccident and fire branches while increasingits market share in the engineering branch.As a result of these and other successes,our company made a net profit of overTRY 25 million in 2007.

Foremost among Yap› Kredi Insurance'snear-term objectives is ensuring thesustained and greater profitability of itspremium production growth.

Among Yap› Kredi Insurance's strategies forthe future, one of the front-runners is pursuinggrowth and greater market penetration inlocalities outside Turkey's major cities, whereprofitability levels are relatively higher andthere is still a largely untouched pool ofuninsured risks.

In 2008 Yap› Kredi Insurance will again adhereto detailed and customized risk assessmentand pricing policies that are based entirelyon sound actuarial information in its ongoingefforts to come up with new products and todevelop existing ones in order to meetcustomers' needs in the most suitable andeffective way possible.

In the health branch we are focused on furtherstrengthening our financial structure and ourservices in keeping with our standing as thesector's trusted leader and in line with ourpolicy of achieving and maintaining thehighest possible level of customersatisfaction.

Foremost among our goals and objectivesfor 2008 and the years that follow is pursuingfaster growth in localities where there are stillextensive uninsured risks and profitability ishigh. In 2008 we will also be furtherstrengthening and making new additions toour company's technological infrastructureinsofar as we see its making an importantcontribution towards achieving Yap› KrediInsurance's growth objectives.

We rank among our country's most likedcompanies.

For many years, Capital, one of Turkey's mosthighly respected economics publications,has been conducting a poll of Turkey's “bestliked companies” in which the business worldassesses itself and which is highly regardedamong that community's members.According to the 2007 results published inNovember last year, Yap› Kredi Insuranceranked second among the best-likedcompanies in the insurance sector.

We are naturally proud of this result but whatmakes it even more precious to us is that itis based on the individual evaluations ofmanagers in our own sector and that evenour competitors view Yap› Kredi Insurance'svalues and working principles as being worthyof admiration.

Having steadily increased the confidencethat people have in it over the years, Yap›Kredi Insurance today continues to expandand develop its objectives as a member ofthe Koç Financial Services Group.

In closing, I extend my sincerest thanks toall those who prefer us, appreciate us, andtrust us.

A. Murat GÜVENELGeneral Manager


Among Yap› Kredi Insurance's strategies for the future, one of thefront-runners is pursuing growth and greater market penetration inlocalities outside Turkey's major cities, where profitability levels arerelatively higher and there is still a largely untouched pool of uninsuredrisks.


Insurance Sector in the World

Sali Turan, No Name, 1990, Various Techniqueson Paper, 50 x 70 cm (detail)Yapı Kredi Collection

Worldwide the insurance sector experienced anoverall increase in technical profitability.

According to a study on the global insurancesector published by Swiss Re, both premiumproduction and technical profitability increasedin the twelve months to end-2006 with totalpremium production in all non-life branchesamounting to USD 1,514 billion worldwide.

A breakdown of worldwide premium productionby country the same year shows the USA rankingfirst, followed by Japan and the UK in secondand third place respectively. Turkey ranked 35thjust after Malaysia and Thailand.

An overview of 2007 from the standpoint ofmajor losses experienced in the insurancesector shows that the losses remained belowthe long-term trend worldwide last year.According to statistics published by Sigma,human error caused losses in 2007 amountedto about USD 2 billion. The most significantevents causing losses in 2007 were the Kyrillwindstorm in January, heavy rainfall thatcaused two floods in the UK and one eachin the USA and Australia, and an urban forestfire in the United States. The catastrophecausing the greatest loss of human life wasCyclone Sidr in Bangladesh. Although reportsvary significantly, more than 4,000 peopleeither died or went missing on account ofthat storm.

Total worldwide losses in 2007 amounted toUSD 61 billion of which USD 22 billion werecovered by insurance. Cyclones, severe cold,windstorms, and maritime accidents causedsignificant losses while also costing some20,000 people their lives.

Developments in the UK, the Middle East,and Pakistan indicate that terrorism-relatedlosses are on the rise. In the United States,the federal government is expected to haverecourse to legislative measures that willmake the stopgap role that it plays under theTerrorism Risk Insurance Act (TRIA) a morepermanent one.

The Solvency II Directive and developmentsin Europe

Following up the declaration of 2005 as“Solvency Year”, the “Solvency II Project”launched in 2006 became one of the issuesto which the greatest attention was given inthe European insurance sector, with insurersolvency (capital adequacy) assuming aplace of the highest priority in the work planof the Committee of European Insurance andOccupational Pensions Supervisors(CEIOPS).

After intensive work and debate, a draftSolvency II Directive published by theEuropean Commission on 10 July 2007 metwith widespread approval among Europeaninsurers and especially among members ofComité Européen des Assurances, theEuropean Insurance and ReinsuranceFederation (CEA).

Designed to protect the rights of policyholderswhile also increasing competition in the EUinsurance market, it is expected that whenthe Solvency II Directive goes into force it willhave the effect of strengthening the auditingprocess in the insurance sector while alsoreforming the insurance market's capitaladequacy system. CEA's goal is to cooperatewith all concerned parties throughout theprocess so as to ensure that the Solvency IIDirective lays the groundwork for proper riskmanagement and provides an economicrisk-based framework that incorporates bothtransparency and more effective control.

French insurers created a new industryorganization to represent them last year. Thenew body, called Association Française del'Assurance-French Insurance Association(AFA), is an amalgamation of the FrenchFederation of Insurance Companies (FFSA)and GEMA (Groupement des EntreprisesMutuelles de l'Assurance / Association ofFrench Mutuals).


Total worldwide losses in 2007 amounted to USD 61 billion, of whichUSD 22 billion were covered by insurance.


The European Commission spelled out itsvision concerning EU policies in the futurefor mortgages, investments, and financialproducts offered to individual consumers.

Noting that neither consumers norindustrialists in Europe were taking fulladvantage of the benefits offered by thesingle market, the European Commissionpublished its “Green Paper on Retail FinancialServices in the Single Market” in which it setforth its views and objectives related toproblems on this issue and also specifiedthe areas to which priority was to be given.

Company mergers & acquisitions continue

Insurance company mergers and acquisitionscontinued without letup in 2007. In Holland,Eureko and Agis joined forces to create thatcountry's biggest health insurance firm.

Munich Re announced that it had enteredinto an agreement to acquire the specialistUS primary insurer Midland. Under thisagreement, Munich Re was to acquire 100%of the shares in Midland through its subsidiaryMunich-American Holding Corporation.

Bancassurance gains added moment aroundthe world

In 2007 the magazine Middle East InsuranceReview held its first “Middle East Conferenceon Bancassurance”, which was attended by130 delegates from 20 countries. Among theopinions expressed at the conference wasthe expectation that life insurance policy salesthrough banks would reach USD 100 millionin value by 2010. It was also stated thatamong the countries of the Middle East,Lebanon and Egypt had the greatestadvantage in insurance policy sales due totheir lower distribution costs.

Aviva, the global insurance and investmentgroup, entered into an exclusive 15-yearpartnership agreement with Poland's BankZachodni WBK (“BZ WBK”). Under thisagreement, Aviva will be selling its insuranceproducts through BZ WBK's branch network.The agreement also calls for the two firmsto set up a joint venture in which each controlsa 50% stake worth half of the new company'sGBP 13.2 billion in capital. Aviva also signedwhat it called “a long-term bancassuranceagreement” with the Spanish savings bankCaja de Ahorros de Murcia (Cajamurcia).According to the Aviva announcement,Cajamurcia will provide Aviva with exclusiveaccess to its network of 413 branches.

Insurance Sector in the World


In the report “Middle East Insurance Market Opportunities”published by Dublin-based Research & Markets, Turkey wasidentified as the country generating the highest premiumproduction. Our country also ranked second among thefastest-growing markets in the region.

China on the threshold of strong growth ininsurance

Turning to the Far East, China has been thescene of rapid growth in recent years whileforeign direct investment inflows into thecountry have gained increasingly moremomentum. Analysts say that, in light ofthese developments, there will be a surge inChinese demand for insurance products andservices in 2007 and the years that followand that this demand will attract still moreforeign investors into the country.

The total assets of the insurance sector inChina are put at CNY 2 trillion. Premiumproduction reportedly increased 180% year-on in 2006. The globalization of an insurancemarket in a national economy with thedimensions such as those of China is likelyto have a significant impact on the world'sinsurance sector.

Figures published by the InsuranceRegulatory and Development Authority(IRDA), a national agency of the governmentof India, indicated that the four public-sectorinsurers active in the country's non-life(general) branches had suffered a 9% lossin aggregate market share in the first threequarters of fiscal year 2006-2007. Accordingto IRDA, this was 6% more than the marketshare loss experienced in the entire 2005-2006 fiscal year. Furthermore while the samefour insurers controlled a 74% market sharein 2004, by December of 2005, that hadcontracted to the 65% level.

Turkey: The country with the greatestpremium production in the Middle East

Although accident and property insurancecontinues to dominate the elementaryinsurance markets of developing countries,it is believed that the demand for liabilityinsurance in those countries will rise inresponse to increasing globalization, regionaleconomic alliances, and foreign directinvestment.

In the report “Opportunities in Middle EastInsurance Market” published by Dublin-basedResearch & Markets, Turkey was identifiedas the country generating the highestpremium production. Our country also rankedsecond among the fastest-growing marketsin the region.

The European insurance sector'sexpectations for 2008 are generally positive.This is an important contributor to the highexpectations that are held of the nationalinsurance sector in Turkey as well.


Özer Kabafl, They even took their trees withthem, 1997, Oil on Canvas, 146 x 114 cm (detail)Yapı Kredi Collection

Insurance Sector in Turkey

Total non-life premium production in the Turkishinsurance sector amounted to TRY 9.6 billion in2007.

The growth experienced in the non-life insurancesector in previous years remained on course in2007. Premium production increased 16% in thetwelve months to end-2007 and amounted toTRY 9.6 billion. A total of TRY 5.3 billion was paidout as claims last year while the sector'soutstanding loss claims was on the order ofTRY 2.7 billion. The sector booked an overallunderwriting profit worth TRY 226 million. Thebranch with the highest underwriting profit wasmarine, which also had the highest level (29%)of underwriting profitability.

Existing growth potential as well as a plethoraof uninsured risks in Turkey continued toattract the attention of international investorswith the result that 2007 was witness to stillmore acquisitions in the Turkish insurancesector.

Last year Eureko BV acquired an 80% stakein Garanti Sigorta, the Holland-basedFinancial Services Group purchased 58.2%of Ray Sigorta, and global giant Mapfreacquired an 80% share in Genel Sigorta.

Most recently, the Zurich Financial ServicesGroup signed an agreement with TEB MaliYat›r›mlar to buy another Turkish generalinsurer, TEB Sigorta. Conclusion of the dealis expected to take place in the first quarterof 2008. Besides these acquisitions last year,Coface and Atradius, two of the world'sbiggest credit insurers, set up a companyand began selling credit insurance policiesin Turkey as well.

Nourished by such acquisitions and newstartups, foreign investment inflows into theTurkish insurance sector reachedUSD 1 billion in 2007, twice their previousyear's level of USD 500 million. It is very likelythat foreign interest in the sector will continuein 2008 and that there will be still moreacquisitions and startups. Suchdevelopments are expected to have afavorable impact on the dimensions of theTurkish insurance sector as well as on itsfinancial strength and service quality.

A long-awaited insurance sector law finallygoes into effect

Unquestionably the most importantdevelopment for the Turkish insurance sectorin 2007 was a new law governing theinsurance sector. This law (Statute 5684),which had been in something resemblinglegislative limbo for well over a decade, finallywent into effect in June last year. One of theobjectives of the new law is to bring theTurkish insurance sector into compliancewith international standards and norms andto this end it provides for mechanisms aimed

at more effectively accounting for theactivities, assets, subsidiaries, claims, equity,debts, and financial structures of insurersand reinsurers as well as of all the elementsthat might have an impact on insurers'administration. Two other innovationsprovided for by the law are a system ofarbitration and three executive commissionsrepresenting insurance companies, insuranceagencies, and insurance assessorsrespectively.

A third innovation introduced by the law isthe requirement, which went into effect on1 January 2008, that all insurers employactuaries in the conduct of their business.Prior to this rule change, life and pensioncompanies in Turkey had to employ actuariesbut general insurers did not.

As of the same date, a new insurance branchand sub-branch structure for the sector alsowent into effect. This is an important changein that it represents the passing of anothermilestone in the process of bringing Turkey'sinsurance sector into compliance with EUnorms.


The scope of unemployment insurance in Turkey wasexpanded effective 1 February 2008 while the general clausesfor debt repayment insurance published by the Treasurybecame effective as of the same date.


The scope of unemployment insurance inTurkey was expanded as of 1 February 2008while the general clauses for debt repaymentinsurance published by the Treasury becameeffective as of the same date. The latterchange now makes it possible to provideinsurance coverage for financial obligationsassumed by private individuals as consumer,motor vehicle, and mortgage financing loansmade by banks.

Statute 5684 also calls for regulationsconcerning the information that must beprovided in insurance-related contracts.These new regulations, which went into effectas of 1 March 2008, govern not only thepreparation and establishment of insurancecontracts but also require that all informationconcerning the insured, the policyholder,and the beneficiary, the subject of theinsurance contract, the elements of coverage,and all other features be set down in writing.Another new feature is a requirement thatsomeone wishing to be a party to a insurancecontract must be provided during thenegotiation stage with a summarizedinformation sheet that details the insuranceand whose form and content are specifiedby the Treasury.

The new law makes important changes inthe principles governing the formation andoperation of insurance and reinsurancecompanies, specifically in issues relating tothe calculation of their current risk reservesand of their outstanding loss reserves (bothincurred but not reported and incurred butnot enough reported), as well as in the rulesgoverning the impairment of an insurer'sfinancial structure. These changes will makeit necessary for insurance companies tostrengthen their capital structures which, inthe longer term, will increase confidence inthe sector and as a result boost its profitabilityas well.

By requiring insurance, reinsurance, andpension companies to realistically measureand assess their capital adequacy, the newregulations force insurers to choose one orthe other of two options: either they engagein rational pricing based on what they haveor else, if they are unwilling to do that, theymust increase their capitalization accordingly.

Due to its broad scope, the insurance lawnecessarily deals with a wide range ofsubjects that include professionalorganizations, arbitration, insurance regulationand accountancy, and private pensions. Inthat respect, the law makes it necessary fora large number of secondary regulations aswell. While some of these have already goneinto effect, others have not and hopefullythose will be published in 2008.

Another important development in 2007 wasa partial deregulation of the rates schedulein compulsory traffic insurance.

Under the new system, the Treasury setsbase prices but insurers are allowed to chargepremiums within a band ranging between-5% and +10% of those.

This is viewed as a first step taken towardscomplete deregulation of the rates schedule,which is now supposed to take place in July2008. This change in the rules allows insurersto shape their portfolios based on their ownactuarial information and to price the policiesthey sell more rationally.

Insurance Sector in Turkey

Two other developments that will increasepeople's confidence in the insurance sectorare the introduction of an arbitration systemthat will make it possible to resolve insurancecontract-related disputes without having togo to court and a Council of Ministersresolution concerning international activitiesin the insurance sector that sets out theconditions under which foreign insurers maydo business in Turkey.

Last year an insurance sector roadmap forthe years 2007-2013 was publishedconcerning the sector's involvement inTurkey's European Union harmonizationprogram. This roadmap spells out thechanges that will be made in the legalframework governing the Turkish insurancesector over the next seven years.

Looking to the more immediate future, animportant item on the agenda will beinsurance coverage for the mortgages thatwill be sold under Turkey's new long-termhome financing system. When this systembecomes operational, it is expected that therewill be a significant increase not just inmortgage insurance but also in compulsoryearthquake insurance policies and in home-owner “package” policies.

Passage of a new general health insurancelaw, expected in 2008, will open new avenuesof growth and development in healthinsurance while also increasing the numberof policyholders in the longer term.

In light of the important 2007 developmentsin the sector summarized above, it isreasonable to expect that 2008 will be aneven more successful and profitable year forthe Turkish insurance sector-always with theproviso of course that there be nocatastrophic events.


Passage of a new general health insurance law, expectedin 2008, will open new avenues of growth and developmentin health insurance while also increasing the number ofpolicyholders in the longer term.


fiükriye Dikmen, Still Life with Bird, Oil on Board,80 x 50 cm (detail)Yapı Kredi Collection

30% rise in net profit

Conducting its activities as a memberof the Koç Financial Services Group since28 September 2005, Yap› Kredi Insurancecontinues to grow and develop while furtherincreasing its profitability with a more than6% market share of a sector in which more than50 companies are active. A solid shareholderstructure consisting of Koç Group and UniCredithas further bolstered our standing as a trustedinsurer.

2007 was a productive year for Yap› Kredi Insurance, particularly from thestandpoint of profitability. Premium production was up 7% year-on whilenet profit rose 30% to TRY 25 million. Yap› Kredi Insurance successfullymaintained its position as the leader of the health branch. According tofigures published by the Association of Insurance and ReinsuranceCompanies of Turkey, as of end-2007 the company ranked first in the healthbranch with a underwriting profit amounting to TRY 19.8 million and incomethat was about 2.5 times more than that of its closest competitor.

In the accident branch, in which the sector did not book an overall profit,effective actuarial studies in motor vehicle insurance reduced our loss ratio18 points to 76% (a 24% improvement) as of year-end. A six-point reductionin loss frequency also achieved a 13% improvement on that front as well.As a result of these improvements, there were significant increases in thebranch's underwriting profitability. According to end-2007 figures,Yap› Kredi Insurance ranked fourth in accident branch underwriting profitabilitylast year.

All for the sake of better and more effective service

Two software projects, “Elementary Insurance Solutions” for non-healthbranches and “Health Insurance” for the health branch were substantiallycompleted in 2007. Both projects were designed with the same goals ofenhancing the quality of service we deliver to our customers and agencies,enabling the company to adapt quickly to changes experienced in themarket, and giving us a competitive edge while also making the existingsystem more flexible in the face of changes in the legal framework.

Developments at Our Company

It is expected that both projects will becomeoperational in 2008. When they do, it will bepossible to keep track of customer accountson an individual basis and to increase bothcustomer satisfaction and Yap› KrediInsurance's profitability through individualizedpricing.

Work on the “Process Management” projectthat we believe will further augment theproductivity of our activities also continuedat the company during 2007. Importantprogress was made in revising in-houseprocedures and in drawing up risk maps.Work also began on analyzing and improvingprocesses as well.

Intensive marketing and promotionalactivities

Under the heading of the company'smarketing and promotional activities, twoadvertising campaigns were conducted in2007 that appeared in many different media.In the case of marketing, two new policieswere launched with the aim of expending thecustomer portfolio and offering products thatserve their needs.

“Ekstra Trafik”

Campaigns were carried out for the “EkstraTrafik” product, a policy designed to makethe company more competitive under existingmarket conditions, to better respond tocustomer needs, and to increase ouragencies' commission earnings.

“Ekstra Trafik” is an enhanced motor vehiclepolicy that provides additional coverage forthose portions of material and physical lossescaused to third parties that exceedcompulsory motor vehicle insuranceminimum requirements.

“Benim Güvencem”

With its newly developed “Benim Güvencem”product, Yap› Kredi Insurance continues toexpand its customer portfolio with a particularfocus on making effective use of alternativedelivery channels. “Benim Güvencem” is apackage policy that provides personalsecurity coverage against a variety of lossessuch as personal accident and theft (includingpurse snatching and pickpocketing) and forstolen identification, keys, and credit cardsetc.

“Gerçek Servet Sa¤l›kt›r”

“Gerçek Servet Sa¤l›kt›r” (“True Wealth IsHealth”) was another campaign that wassuccessfully completed in 2007. Conductedin cooperation with 526 Yap› Kredi Bankbranches in which the branches competedwith one another and performance wasencouraged by means of rewards, theobjective of this campaign was to write newhealth insurance policies.

A variety of activities were organized forsuccessful sales teams and agencies withthe aim of increasing motivation during 2007.

Payment-related campaigns, which arepopular among consumers these days, wereorganized together with WorldCard. Underthese campaigns, policyholders were allowedto pay for their motor vehicle insurancepolicies and for other non-health policies oninstallment without incurring any credit orcarrying charges.

1,786 contractual health service providers

Under another project aimed at improvingthe service quality delivered to healthinsurance policyholders and enhancingcustomer satisfaction, the numbers and thedistribution of the access points of contractualhealth service providers were increased from1,212 in 2006 to 1,786 in 2007.

Just one outcome of our company'ssuccessful efforts is to be seen in its beingvoted second among the best-likedcompanies in the insurance sector in the2007 poll of Turkey's “best liked companies”that is conducted every year by Capital, oneof Turkey's most highly respected economicspublications. What makes this result evenmore precious to our company is that it isbased on the individual evaluations ofmanagers in our own industry and that evenour competitors view Yap› Kredi Insurance'svalues and working principles as being worthyof admiration.

Working with the world's biggest reinsurers

As in previous years, in 2007 proportionalreinsurance agreements were entered intowith a group led by Munich Re, one of theworld's biggest reinsurers, and consisting ofsuch leading reinsurance firms as EverestRe, Mapfre Re, and SCOR.

A surplus relief reinsurance agreement fornatural disaster and earthquake risks wasconcluded with leading underwriters suchas Lloyd's.


Yap› Kredi Insurance successfully maintained its position as theleader of the health branch in 2007. According to figures publishedby the Association of Insurance and Reinsurance Companies ofTurkey, as of year-end the company ranked first in the health branchwith a underwriting profit amounting to TRY 19.8 million and incomethat was about 2.5 times more than that of its closest competitor.


Technical Results

Ömer Uluç, Landscape, 1999, Oil on Canvas,100 x 100 cm (detail)Yapı Kredi Collection

The biggest (32%) year-on rise in Yap› KrediInsurance's premium production in 2007 wasregistered in the engineering branch. The risesin the health and fire branches were 17% and2% respectively.

Ranking among the top 10 insurers in Turkey interms of size, Yap› Kredi Insurance successfullydefended its leading position in the health branch.

Loss Ratios

2003 2004 2005 2006 2007

Premium (TRY thousand) 312,390 405,067 469,738 585,459 628,143Incurred Loss (TRY thousand) 196,991 258,270 328,024 372,652 399,120Loss Ratio (%) 81 72 74 71 66Underwriting Profit (TRY thousand)* (5,529) 21,696 (6,806) 11,645 19,528Underwriting Profit Ratios (%)* (2) 5 (1) 2 3

Premium Revenues in 2007 by Branch

Branch Premium Revenues (TRY thousand) Change (%) Share in the Portfolio (%)

Fire 91,532 2 15Marine 12,538 (7) 2Accident 225,085 (2) 36Engineering 31,572 32 5Agriculture 370 (6) -Health 267,046 17 42

TOTAL 628,143 7 100

* Figures from 2003 - 2004 are based on the uniform chart of accounts that was in effect at that time, according to which, personnel and overhead outlays were not treated as “technical expenditures”. Becausethe figures from 2005 - 2007 are based on the uniform chart of accounts currently in effect, they cannot be meaningfully compared with those from 2003 - 2004.

An examination of premium production onthe basis of individual branches shows thatthe biggest (42%) share of the portfolio wasgenerated by health insurance. Accordingto year-end figures, the health branchincreased its overall share in the portfoliocompared with that of 2006.

In motor vehicle insurance, the branch inwhich the rest of the sector normally booksits biggest losses, Yap› Kredi Insurancesecured a underwriting profit of 2%, makingit one of only a very few insurers showing aprofit in this product.

Although intensive competition in both thehealth and the accident branches (especiallyin motor vehicle insurance) caused difficultiesfor the sector as a whole in 2007, Yap› KrediInsurance had a successful year in bothbusiness lines compared with its previousyears' performance.

An examination of Yapı Kredi Insurance'sprofitability figures shows that the 2% rate ofunderwriting profitability it achieved in 2006was up about a percentage point to around3% in 2007.


An examination of Yap› Kredi Insurance's profitability figures showsthat the 2% rate of underwriting profitability it achieved in 2006 wasup about a percentage point to around 3% in 2007.


Underwriting Profit*(TRY thousand)

2004 2006 2007

(5,529)

21,696

(6,806)

11,645

19,528

Loss Ratio(%)

2003

81

2004

72

2005

74

2006

71

2007

66

Total Premium Revenue(TRY thousand)

2003

312,390

2004

405,067

2005

469,738

2006

585,459

2007

628,143

Breakdown of Total Premium Revenue in 2007by Branches (%)

Health 42%Accident36%

Fire 15%Marine 2%

Engineering 5% Agriculture 0%

2003 2005


Fire Branch

Yap› Kredi Insurance's premium productionin the fire branch was up 2% in 2007 andamounted to TRY 91.5 million.TRY 65.6 million of this was ceded toreinsurers while TRY 25.9 million was retainedby the company. This corresponds to aretention ratio of 28%.

The loss ratio, which was 41% in 2006,slipped two points to 39% in 2007.Claims totaled to TRY 55.1 million, of whichTRY 32.4 million was made as payments andTRY 22.7 million consisted of outstandingloss claims.

The fire branch closed the year with aTRY 2.9 million underwriting loss,corresponding to a underwriting loss ratioof 3%.

Technical Results


2003

52,446

2004

64,734

2005

66,919

2006

89,309

2007

91,532


2,505

4,309

6,168

3,189

(2,873)

2003 2004 2005 2006 2007

Loss Ratio(%)

2003

40

2004

38

2005

39

2006

41

2007

39


Marine Branch

Yap› Kredi Insurance's premium productionin the marine branch was down 7% in 2007and amounted to TRY 12.5 million.TRY 6.7 million of this was ceded to reinsurerswhile TRY 5.8 million was retained by thecompany. This corresponds to a retentionratio of 46%.

Claims in the marine branch totaledTRY 8.8 million, of which TRY 4.6 million wasmade as payments and TRY 4.2 millionconsisted of outstanding loss claims. Therewas a year-to-year decline in the loss ratio,which stood at about 38% in 2007.

The marine branch closed the year with aTRY 872 thousand underwriting profit,corresponding to a underwriting profit ratioof 7%.



2003

7,820

2004

11,443

2005

12,066

2006

13,460

2007

12,538



2,9142,604

(247)

2,205

872

2003 2004 2005 2006 2007

Loss Ratio(%)

2003

22

2004

18

2005

78

2006

53

2007

38


Accident Branch

Yap› Kredi Insurance's premium productionin the accident branch was down 2%year-on in 2007 and amounted toTRY 225.1 million. It has the second highestshare with a proportion 36% in the portfolio.

TRY 64.4 million worth of this risk was cededto reinsurers while TRY 160.6 million of it wasretained by the company. This correspondsto a retention ratio of 71%.

The loss ratio, which was 81% in 2006,declined to 73% in 2007. Total compensationamounted to TRY 224.3 million, of whichTRY 154.3 million was made as paymentsand TRY 70 million consisted of outstandingloss claims.

In motor vehicle insurance the company hada somewhat better year by comparison withprevious ones. Nevertheless, The accidentbranch closed 2007 with a TRY 2 millionunderwriting loss and a underwriting lossratio of 1%.

Technical Results



2003

122,117

2004

167,554

2005

198,403

2006

229,127

2007

225,085


(15,475)

4,520

(21,067)

(8,823)

(2,019)

2003 2004 2005 2006 2007

Loss Ratio(%)

2003

101

2004

81

2005

86

2006

81

2007

73

Engineering Branch

Yap› Kredi Insurance's premium productionin the engineering branch was up 32% year-on in 2007 and amounted to TRY 31.6 million.This result made engineering the bestperforming of all branches in 2007 in termsof premium production increase.TRY 28.1 million of this risk was ceded toreinsurers while TRY 3.4 million of it wasretained by the company. This correspondsto a retention ratio of 11%.

Total compensation in the engineering branchamounted to TRY 17.8 million, of whichTRY 10.4 million was made as payments andTRY 7.4 million consisted of outstanding lossclaims. There was a nine-point year-to-yeardecline in the loss ratio, which stood at 35%in 2007 and which also made engineeringthe branch with the lowest such ratio lastyear.

The engineering branch closed the yearwith a TRY 3.8 million underwriting profit,corresponding to a underwriting profit ratioof 12%, which was also the highest suchratio of any branch last year.




2003

17,224

2004

16,680

2005

20,503

2006

23,958

2007

31,572


2,315

3,4533,842 4,055

3,790

2003 2004 2005 2006 2007

Loss Ratio(%)

2003

81

2004

66

2005

43

2006

44

2007

35


Health Branch

Yap› Kredi Insurance's premium productionin the health branch was up 17% in 2007 andamounted to TRY 267 million. Of this amount,TRY 154.8 million was generated by individualpolicies and TRY 112.2 million by corporatepolicies.

Health insurance policies accounted for a42% share of the company's portfolio in 2007,four percentage points higher than what itwas the year before. On the personal policyside, the number of insureds went from137,515 in 2006 to 138,524 in 2007-a year-to-year increase of 1%. On the corporateside, there was a much stronger (11%) risein insured numbers, which went from 86,014in 2006 to 95,558 in 2007.

Total claims in the health branch amountedto TRY 188.7 million, of whichTRY 184.7 million was made as paymentsand TRY 4 million consisted of outstandingloss claims. The loss ratio in 2007 was 76%while the branch's underwriting profit was up80% year-on and amounted toTRY 19.8 million. This corresponds to aunderwriting profitability ratio of 7% andmakes health the branch generating thehighest underwriting profitability in 2007.

Technical Results



2003

112,782

2004

144,655

2005

171,847

2006

229,211

2007

267,046


2,211

6,8124,498

10,999

19,776

2003 2004 2005 2006 2007

Loss Ratio(%)

2003

86

2004

81

2005

79

2006

77

2007

76

Yap› Kredi Sigorta Afife Theatre Awards

As part of its efforts to support culture andthe arts, in 1996 Yap› Kredi Insurancelaunched the Yap› Kredi Sigorta Afife TheatreAwards, a program whose aims are to fosterinterest in the theatrical arts and to supporttheatrical artists. The program's art consultantis Haldun Dormen.

The award program is named after Afife Jale,the first Muslim Turkish woman to appear onstage as a professional actress. Its firstawards were handed out in April 1997. Sincethen, the program has grown and developed,making the Yap› Kredi Sigorta Afife TheatreAwards a recognition that is held in highesteem among the Turkish theatricalcommunity and a hallmark of respect for thearts and artists that is far more than beingjust a measure of personal success.

The 11th Yap› Kredi Sigorta Afife Tiyatroaward ceremony was held on the evening of30 April 2007, at which time the year's awardswere handed out to their recipients.

For the 11th round of the Yap› Kredi SigortaAfife Tiyatro program, awards were given tocandidates in a total of 14 categories. Inaddition, the ceremony was also the occasionfor handing out the Muhsin Ertu¤rul SpecialAward to Osman fiengezer, the Nisa SerezliAflk›ner Special Award to Nejat Uygur, theCevat Fehmi Baflkut Special Award to CanUtku, the Tiyatroda Yeni Kuflak (“NewGeneration in Theater”) Special Award toEmre Erdem, and the Yap› Kredi SigortaSpecial Award to fiakir Eczac›bafl›.

Because of the meticulous professionalisminvolved in the candidate selection and awardprocesses and also because of its supportfor theatrical arts in Turkey, the Yap› KrediSigorta Afife Theatre awards are regardedas one of the most prestigious awards givento artists in Turkey today.


Support for the Arts

Board of Directors,Senior Management,Auditors, Headquarters andRegional Management,Corporate GovernancePrinciples Compliance Report



fiükriye Dikmen, Still Life with Bird, Oil on Board, 80 x 50 cmYapı Kredi Collection


Tayfun BAYAZIT / Chairman of the Board

After receiving an undergraduate degree inmechanical engineering, Tayfun Bayaz›treceived a master's degree in finance andinternational relations from ColumbiaUniversity. He began his banking career atCitibank. After serving for 13 years in seniormanagement positions in the ÇukurovaGroup at Yap› Kredi Bank (assistant generalmanager and member of the executivecommittee), Interbank (general manager),and Banque de Commerce et de Placementin Switzerland (president & CEO), he wasmade deputy chairman of Do¤an Holdingand managing director of D›flbank in 1999.In April 2001 he gave up his position at Do¤anHolding to become CEO of D›flbank, amember of the same corporate group. In2003 Mr Bayaz›t was elected chairman ofthe bank's board, a position that he heldconcurrently with that of CEO. When Fortisacquired a majority stake in D›flbank in July2005, he was made CEO of Fortis Bank andalso a member of its executive committee.After a general meeting of the same bank inMay 2006, he became chairman of the bank'sboard of directors, a position that he helduntil the conclusion of another generalmeeting held on 18 April 2007. On19 April 2007 he became managing directorof Yap› Kredi Bank and was officiallyappointed the bank's general manager on1 May 2007. Concurrent with this, he servedas chairman of the boards of directors of anumber of Yap› Kredi subsidiaries thatincluded Yap› Kredi Portföy Yönetimi, Yap›Kredi Yat›r›m Menkul De¤erler, Yap› KrediFinansal Kiralama, Yap› Kredi Faktoring, Yap›Kredi Sigorta, Yap› Kredi Emeklilik, YKBNederland, Yap› Kredi Azerbaijan and Yap›Kredi Moscow. Tayfun Bayaz›t currently holdsthe positions of executive director and generalmanager of Yap› Kredi Bank.

Alessandro Maria DECIO / Vice President

Alessandro Maria Decio graduated fromBocconi University (Department ofEconomics) after which he received an MBAfrom Institut Européen d'Administration desAffaires. After serving as a research assistantat Bocconi for six months, he began hiscareer in finance at IMI International, wherehe remained until 1991 and served as vicepresident. In 1992 Mr Decio moved to MorganStanley International and then to McKinsey,where he served as a specialist until 1994,when he began working for the EuropeanBank for Reconstruction and Development(EBRD) late that year. In June 2000 hebecame head of UniCredit's Foreign BanksStrategy, Mergers and Acquisitions, andPlanning and Control Group and in October2002 he was appointed general managerand vice president of the board of directorsof Zagrebacka Bank, a member of theUniCredit Group. He served as managingdirector and vice president of Bulbank,another UniCredit subsidiary, in 2003-2005before being appointed the UniCredit Group'sintegration project manager. In early 2006he was appointed the group's GermanyIntegration Project manager and he servedas deputy head of its Integration Office fromJuly 2006 to June 2007. On 26 April 2007Alessandro Maria Decio was appointedmanaging director of Yap› Kredi Bank, aposition that he currently holds. He wasappointed the banks' chief operating officer(COO) on July 1st of the same year.

‹. Tamer HAfi‹MO⁄LU / Director

After graduating from ‹stanbul TechnicalUniversity (Department of MechanicalEngineering), ‹. Tamer Haflimo¤lu receiveda master's degree in international businessadministration from ‹stanbul University(Institute of Business Administration andEconomics). He began his career in theplanning coordination department of KoçHolding in 1989. Since the beginning of 2004he has been head of that company's strategicplanning unit. Mr Haflimo¤lu has been amember of the Yap› Kredi Insurance Boardof Directors since October 2005.

Board of Directors

Marco CRAVARIO / Director

Marco Cravario is a graduate of InstitutEuropéen d'Administration des Affaires. Hebegan his career at Ernst & Young in 1991,serving first as an audit senior and then asa manager. In 1996 he was appointed headof Ernst & Young's Milan branch. He joinedthe UniCredit Group as a manager in 2001and he served as its New Europe Planningand Control Officer in 2002-2003. In 2006 hewas made a member of the board of directorsof UniCredit Tiriac Bank and the bank'sassistant general manager responsible forfinancial affairs (CFE). Mr Cravario has beena member of the Yap› Kredi Insurance Boardof Directors since October 2007.

Rüfldü SARAÇO⁄LU / Director

Rüfldü Saraço¤lu is a graduate of MiddleEast Technical University (Department ofEconomics and Statistics) and completedhis Ph. D. in economics from MinnesotaUniversity. In 1975-1977 he worked in theresearch unit of the US Federal Reserve Bankand in 1977-1979 as an assistant associateprofessor of economics at Boston College.He joined the International Monetary Fund(IMF) as an economist in 1979 and remainedwith the fund until 1984 when he returned toTurkey. Upon his return, Dr Saraço¤lu servedas the general director responsible forresearch, planning, and training at the TurkishCentral Bank. He became the bank's vicepresident in 1986, a position he held for ayear and a half before taking over the bank'spresidency, a post that he held for the nextsix years. For more than two years until theend of 1995 he served as an incorporatingpartner of Makro Dan›flmanl›k, a consultancyfirm. In 1995 he went into politics and waselected an MP from ‹zmir. In that capacityhe served as a minister of state for the 53rdgovernment. In March 2002 Dr Saraço¤luwas appointed head of Koç Holding's FinanceGroup. He served as the chairman of theboards of directors of Koçbank and Yap›Kredi Bank until the two banks' merger andas head of the Koç Holding Banking andInsurance Group until the end of 2007. RüfldüSaraço¤lu has been serving as chairman ofthe Board of Directors of Koçbank since28 September 2005.

A. Murat GÜVENEL / Managing Director

A. Murat Güvenel is a graduate of Bo¤aziçiUniversity (Department of BusinessAdministration) and holds a master's degreein accounting and finance from the sameschool. He began his career in 1978 as aplanning manager at Çukurova Holding, aposition that he held until 1981 when he wasappointed an assistant general manager atHalk Reasürans. He also served as anassistant general manager at Genel Sigortauntil 1987. In November of that year hebecame an assistant general manager atYap› Kredi Insurance and has been thecompany's general manager since April 2004.



Senior Management

[1] A. Murat GÜVENELGeneral Manager

A. Murat Güvenel is a graduate of Bo¤aziçiUniversity (Department of BusinessAdministration) and holds a master's degreein accounting and finance from the sameschool. He began his career in 1978 as aplanning manager at Çukurova Holding, aposition that he held until 1981 when he wasappointed an assistant general manager atHalk Reasürans. He also served as anassistant general manager at Genel Sigortauntil 1987. In November of that year hebecame an assistant general manager atYap› Kredi Insurance and has been thecompany's general manager since April 2004.

[2] Tamer BAfiKANAssistant General Manager-Elementary Insurance, Health Claims, LegalAffairs, and Agencies

Tamer Baflkan graduated from ‹stanbulUniversity (Faculty of Business Administration,Department of Finance) in 1981. He startedout at Yap› Kredi Insurance in 1984 in theclaims department and in 1997 he was madeassistant general manager of Yap› Kredi LifeInsurance. Mr Baflkan has been an assistantgeneral manager at Yap› Kredi Insurancesince 2001.

[3] Banu DARCANAssistant General Manager-Health Underwriting, Corporate Insurance,System Research & Development, andCustomer Communications Center

Banu Darcan graduated from ‹stanbulTechnical University (Faculty of BusinessAdministration, Department of IndustrialEngineering) in 1989. She began her careeras a specialist assistant at Halk Yaflam 1990and she joined Yap› Kredi Insurance as agroup head in 2001. Ms Darcan has beenan assistant general manager at Yap› KrediInsurance since June 2004.

[4] ‹. Tankut ERENAssistant General Manager-Financial Group, Reinsurance, HumanResources & Training, and Social Services

Tankut Eren graduated from Bo¤aziçiUniversity (Department of BusinessAdministration) in 1994. He began his careerthe same year at Ernst & Young and whileserving as an audit manager at that firm, hemoved to Endi Tüketim Mallar›, a member ofthe Fiba Group, as the company's financialaffairs manager in 1999. He joined Yap› KrediInsurance as a group head in December2001. Mr Eren has been serving as anassistant general manager at the companysince June 2004.

[5] Coflkun GÖLPINARAssistant General Manager-Elementary Insurance, Sales, Marketing,Technical Compliance Consultancy, andRegional Units

Coflkun Gölp›nar is a graduate of Y›ld›zTechnical University (Department ofArchitecture). He began his career in 1984at Koçtafl as an architect and in 1986 hemoved to Akbank, where he served in thesame capacity. He joined Yap› KrediInsurance in 1987 in the company's RiskEngineering Department and served in avariety of other positions as well. Mr Gölp›narhas been an assistant general manager atYap› Kredi Insurance since 1996.

[6] G. fienol ÜNENAssistant General Manager-Information Technologies

G. fienol Ünen graduated from Bo¤aziçiUniversity (Department of ComputerEngineering) in 1988. He began his careerat Ciba-Geigy Türkiye as a programmer in1986. He worked for Malibu Corporation andfor Toshiba Information Systems in the UKin 1988-1989, returning to Ciba-Geigy Türkiyein 1990 as a systems analyst. In 1996-2000he served as a manager at Ciba-Geigy inSwitzerland responsible for supporting groupcompanies in Europe and elsewhere. MrÜnen headed the information technologiesdepartment at Axa Oyak Sigorta (2000-2004)and at Avon Türkiye (2004-2007) beforejoining Yap› Kredi Insurance as an assistantgeneral manager in December 2007.

[1] [2] [3] [4] [5] [6]


M. Erkan ÖZDEM‹R / Auditor

Erkan Özdemir graduated from Middle EastTechnical University (Department ofEconomics) in 1989. In 1994-2001 he servedas a chartered accountant for the BankingRegulation and Supervision Agency. In 2001he joined Koç Holding, where he is currentlyin charge of audit coordination.

A. Giray ÖZTOPRAK / Auditor

A. Giray Öztoprak graduated from AnkaraUniversity (Faculty of Political Sciences,Department of Public Finance andEconomics) in 1966. He served as a financeministry inspector from 1966 to 1975,becoming an assistant director-general forbudget and financial control in the latter year.Since 1976 he has served as a financialaffairs coordinator and general manager fora number of companies. From 1997 to 2000he served as a sworn fiscal consultant atBaflaran Nas Yeminli Mali Müflavirlik(PricewaterhouseCoopers). A. Giray Öztoprakhas been working as a professionalindependent financial advisor since 2000.

Ekin Arca KIRELL‹ / Internal Audit Manager

Ekin Arca K›relli graduated from KoçUniversity (Department of BusinessAdministration) in 1998. In 2003-2004 shecompleted the ESST Master Programconducted jointly by ‹stanbul TechnicalUniversity and L'Université de Louis Pasteurin Strasbourg. She began her career atOttoman Bank in 1998 as an investmentspecialist. In 2000-2003 she served as anaudit senior at Ernst & Young. Mrs K›rellijoined Yap› Kredi Insurance in October 2004as head of the company's internal audit unit.On 1 February 2008 she resigned from thatposition, having been appointed head of theKoç Financial Services National &International Subsidiaries Auditing Group.There is no determined term of office inadvance.

Board of Auditors


Group Heads

Emel Bek Funds Management, Planning&ControlEmin Selim Fenercio¤lu Reinsurance (Consultant)Fatma Dilek ‹zbudak Health Services, Customer Services

(Health)Mehmet U¤ur Kavuflturan Health Sales, Sales SupportNecmettin Y›lmaz Automobile Claims, Non-Automobile

Claims, Subrogation, IntelligenceNurettin Turgay Güleli Legal AffairsRag›p Levent Ece Bank Sales Management Group HeadSuha Özcan FinanceTolga Okan Tezbaflaran Marketing, Advertising&Public

RelationsVehbi Aykut Alp Çelebi Accident Insurance, Marine Insurance,

Fire Insurance, Risk Engineering,Agency Support & Customer Services,Special Risks and Liability Insurance,Engineering, Bak›rköy and Kad›köyRegional Offices

Y›ld›r›m Türe Regional Departments

Department Managers

Abdul Haluk Öztürk Intelligence Assistant ManagerAlper Tan Special Risks and Liability InsuranceAtilla Çilingir Subrogation Assistant ManagerAtilla Karayi¤it Software DevelopmentAyhan Güçlü Human Resources&TrainingBar›fl Vardar Engineering InsuranceBedia Feray Çelebi Legal AffairsBelk›s Tezbaflaran Sales Support Assistant ManagerCemal Gönül Automobile ClaimsFaik Korhan Ürgüp Help Desk Assistant ManagerKadir Burnaz Fire InsuranceKorkut Ç›rak Systems Research&DevelopmentMehmet Cengiz Cantekin AgenciesMehmet Tümer Accident InsuranceMelike Demirel Non-Auto ClaimsMustafa Özgür Gökalp Technical Compliance ConsultationMustafa Teoman Çelen Financial Affairs, Risk ManagementMüge Dürdane Sar›bayraktar Corporate Health SalesNeslihan Kahraman Medical ServicesNurdo¤an Topuz Planning&ControlÖzgür Uysal Systems and Network Management

Assistant ManagerSerap Esma A¤ca Marine InsuranceTevfik Ekmen Health UnderwritingTuncay Ar›c› Administrative AffairsYusuf Kenan Akter FinanceYüksel T›rpan Risk Engineering, Agency Support

&Customer ServicesZümrüt Kulaks›z Customer Communications Center

Assistant Manager

Headquarters and Regional Management

Regional Managers

Adnan Mehmet S›¤›n Southern Regional OfficeAhmet Korkut Güner Central Anatolia Regional OfficeGöksenin Ifl›k Marmara-1 Regional OfficeHüseyin Ören Mediterranean Regional OfficeRuhsan Gezgin Aegean Regional OfficeAsl›han Ö¤üt Marmara Regional Office Health SalesEjder Akbaba Central Anatolia and Southern Regional Offices Health SalesMehmet Murat Beköz Aegean and Mediterranean Regional Offices Health SalesAlper Tunga Araman Bank SalesServet Sevindik Kad›köy Representative Office Assistant ManagerVedat fiahin Bak›rköy Representative Office Assistant Manager


1. Statement of Compliance with Corporate Governance PrinciplesIt has been decided by the Board of Directors of Yap› Kredi Sigorta to accept in principle the 'Corporate Governance Principles'published by Capital Market Board (CMB) with the BOD decision numbered 60 and dated 23 December 2003.

During the fiscal year ending on 31 December 2007, the Company has not performed any application which is contrary to theprinciples included in 'Corporate Governance Principles' published by Capital Market Board.

Part I - Shareholders

2. Shareholders Relations Unit A Shareholder Relations Unit has been set up pursuant to Board of Directors decision numbered 60 dated 23 December 2003. ‹. Tankut Eren ([email protected]), Assistant General Manager for Financial Affairs; (0212 336 06 15) and Mustafa Teoman Çelen([email protected]), Financial Affairs Manager; (0212 338 08 41) are responsible for this unit. Shareholders had no informationrequests from the Company during the reporting period.

In main outline, 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 shareholdersand 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 andare not in the nature of commercial secrets; • Ensure that general meetings are held in accordance with current laws and regulations and with the provisions of the articles ofincorporation; • Prepare the minutes of general meetings and have them registered and announced; send documents to appropriate publicauthorities; • Supervise and monitor all issues related to public disclosures in accordance with the requirements of law and the Company's publicdisclosure policy.

3. Shareholders' exercise of their right to obtain information The Company's corporate website at www.yksigorta.com.tr is used to announce periodical financial statements, annual reports, specialcircumstance announcements and General Meeting minutes to all shareholders' use. Additionally, regarding the Capital Market Boardcommunique numbered VIII/39, shareholders are informed via public announcements which are provided to media through IstanbulStock Exchange.

The Company's corporate website at www.yksigorta.com.tr is used to announce the developments which may affect use of rights ofstock ownership. Shareholders had no information request from the Company during the reporting period. As there is not anyarrangement regarding the request for the private auditor appointment in the Articles of Association, there has not been any privateauditor appointment request during the year.

4. Information about General Meetings Our Company's annual general meeting was held on 28 March 2007 and with the attendance of the legally prescribed quorum.Registered letters inviting shareholders to attend the meetings were sent out and the invitations were also published in two differentnewspapers. There are no specified periods of time in which holders of registered shares of stock are required to have entries made inthe shareholders' register in order to take part in general meeting.

The Company's articles of incorporation contain no provisions requiring decisions of a highly important nature such as demergers orbuying, selling, or leasing substantial amounts of assets and property to be taken at a general meeting.

General meeting minutes will be made available for shareholders to examine on our corporate website in 2007.

To facilitate shareholders' participation in general meetings, announcements concerning the meetings are made through ISE andthrough the media. The annual report, balance sheet, profit/loss statement, and statutory auditors' report as well as information aboutthe date and agenda of general meetings are made available for shareholders to examine 21 days before the meeting date.


YAPI KRED‹ S‹GORTA A.fi.CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

5. Voting rights and minority rights None of our Company's shares incorporate special voting rights. Minority shareholding interests are not represented in management.There are no companies in which there are reciprocal shareholding interests. The Company articles of incorporation contain noprovisions governing the accumulated voting method.

6. Dividend payment policy and timing There are no special rights concerning anyone's participation in the Company's profits. The form and timing of the payment ofdividends are specified in articles 37 and 38 of the Company articles of incorporation. Dividends in previous years were paid within thelegally prescribed periods of time.

7. Transferring shares The Company's articles of incorporation contain no provisions restricting the transfer of shareholding interests.

Part 2 - Public Disclosure and Transparency

8. Company disclosure policyInformation that is publicly disclosed by our Company is divulged in such away as to assist the individuals and organizations whomight have benefit from the information in making decisions while also ensuring that such disclosure is made in a timely manner and inkeeping with the principles of being accurate, complete, intelligible, interpretable, conveniently accessible at low cost, and equallyavailable to all.

In addition, ‹.Tankut Eren and Mustafa Teoman Çelen, who are also responsible for managing shareholder relations, are charged withsupervising and monitoring all issues related exclusively to public disclosures.

9. Special circumstance announcements Our Company made 12 special circumstance announcements in 2007 pursuant to CMB regulations. No special circumstanceannouncements were made on foreign stock exchanges since our Company's shares are not quoted on such exchanges.

10. The internet site and its content Our Company has been using this website www.yksigorta.com.tr to make public announcements for many years. The website containsinformation about our Company's shareholder and management structures, annual reports, financial statements and reports, andspecial circumstance announcements as well as forms for asking questions to our Company.

11. Disclosure of non-corporate ultimate shareholders 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 Because our Company conducts its activities through a large number of different headquarter departments, it is not possible to makean accurate assessment of which individuals might have access to insider information. Information about employees who serve asmanagers at our Company is provided in annual reports.

Part 3 - Stakeholders

13. Keeping stakeholders informed Company employees are kept informed about Company activities by the General Manager and appropriate Assistant GeneralManagers as circumstances dictate.

Publicly disclosed information is also made available to employees and other stakeholders via our corporate website.

14. Stakeholder participation in management Our Company is a joint-stock company and is managed by its legally-prescribed organs. Issues that require these organs to makedecisions are first assessed examined and assessed by the appropriate management levels and then submitted to the appropriatedecision-making organ for its approval. Suggestions and ideas submitted by stakeholders are also assessed and taken intoconsideration 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 soas to recruit qualified human resources and employ them in the most productive way in line with our 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 our operational units and employees' needs and demands are regularly queried and suggestions are entertained atthe workplace. In addition, our corporate intranet is open to all employees and serves as a continuous channel of communicationbetween employees and the Human Resources Department.

We maintain a working environment in which rules and practices are clearly shared with all personnel. Any complaints from personnelare resolved by the Human Resources Department by putting the best interests of both the Company and its employees at the highestlevel. In dealing with any complaints, the managements of the appropriate units are involved as well and every effort is made tounderstand the source of the problem and to prevent its recurrence.

16. Relations with customers and suppliers Detailed information about all our products is available on our website as is complete information about all our special and generalconditions. The website also contains a mechanism whereby users may direct questions, suggestions, and complaints to theCompany. Our email address [email protected] is also available for the same purpose. Thanks to our Customer RelationsCenter, it is possible to gain access to information by means of a single phone call and obtain full details about products and policiesand resolve any problems. Complaints directed to our 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 thehighest levels. A customer who enters into a health insurance policy agreement has the unconditional right to cancel it within onemonth's time of the policy's issue.

17. Social responsibility Since the commissioning of the Statue of Akdeniz, regarded as an important work in the history of Turkish sculpture, and its installationin 1980 in front of the Company's headquarters where it became the Company's symbol, among our other efforts to foster the arts andartists include the Afife Theatrical Awards, the eleventh of which were handed out to winners in 14 main and five special categories in2007.

Part 4 - The Board of Directors

18. Structure and formation of the Board of Directors and Independent MembersThe Board of Directors consists of Tayfun Bayaz›t (Chairman), Alessandro Maria Decio (Vice Chairman), Rüfldü Saraço¤lu (Member),‹brahim Tamer Haflimo¤lu (Member), Marco Cravario (Member), Ahmet Murat Güvenel (Member-General Manager). There are noindependent members on the board. There are no specific rules or restrictions pertaining to Members of Board of Directorsundertaking 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'scorporate governance principles and who possess specific experience and backgrounds and these qualifications had not been alsomentioned in the Company's articles of incorporation.

20. Mission, vision, and strategic goals of the Company

Yap› Kredi Sigorta's vision:To be an enduring and pioneering insurance trademark that is preferred by everyone in the Turkish insurance sector; to possess theexperience and financial strength that makes it a reference point in the international insurance business.

Yap› Kredi Sigorta's mission:To possess the advanced technical and sales infrastructure capable of immediately responding to all the insurance needs of Turkishsociety and in this way to number among the companies providing the best service in the sector by ensuring unconditional customersatisfaction.

Yap› Kredi Sigorta's corporate mission and vision have been publicly disclosed by both the Board of Directors and the Company'ssenior management through interviews, discussions, and publications appearing in the written and audiovisual media.



The Company's senior management periodically identifies, reviews, and revises Yap› Kredi Sigorta's long, medium, and short-termstrategic objectives. After these have been approved by the Board of Directors, the action plans needed to accomplish them aredeveloped by management. During its regular monthly meetings, the members of the Board of Directors review the Company'sactivities and performance as well as the degree to which short-term objectives have been met. Every six months, the degree to whichmedium and long-term objectives have been met is also reviewed, any instances of under-performance are scrutinized, and themeasures 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 reports directly to the Board of Directors and is responsible for all activities in the areas ofrisk management and internal control. This department issues reports on its 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 our Company's articles ofincorporation.

23. Operating principles of the Board of Directors Under our Company's articles of incorporation, the Board of Directors is required to meet at least once a month. During the reportingperiod, the board convened 29 times. There is a secretariat whose duty is to keep Board Members informed and maintaincommunication with and among them. This office also notifies members of meeting agendas prior to the meeting. Board membersmust 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 withthe prohibition on competing with the Company.

25. Rules of ethics Yap› Kredi Sigorta adheres to the principle of achieving maximum satisfaction among its shareholders by managing its insured risks inthe best way possible and among its policyholders by fulfilling, at the highest level possible, their compensation and serviceexpectations and its own commitments towards them. The Company has earned an outstanding reputation for itself in the sector as anupright and principled insurer that brooks no opportunity for misappropriation. It continuously strives to build on that standing. A varietyof interactive communication channels are employed so that shareholders and policyholders are able to make their feelings clear to theCompany and gain access to information. Making sure that information that is needed is accessible is a high-priority duty of everyemployee of the Company.

Yap› Kredi Sigorta is mindful of all the rules of law to which it is subject and it is respectful of individual rights and liberties. It pursuesits activities honestly and openly, stressing at the highest level the importance of the element of confidence that is the foundation onwhich our sector stands.

Our Company's employees are expected to protect the reputation of Yap› Kredi Sigorta wherever they may be and to be bound by ourCompany's principles in all their actions. Employees are enjoined from adopting any attitude or from engaging in any act that iscontrary to law or to social order.

26. Numbers, structures, and independence of committees within the Board of Directors Marco Cravario (Member) and ‹brahim Tamer Haflimo¤lu (Member) are elected as responsible for audit committee by Board ofDirectors.

27. Financial rights provided to the Board of Directors Members of the Company's Board of Directors are not paid an honorarium as decided upon by the Ordinary General Meeting on 28March 2007.

During the reporting period, the Company made no loans or extended any credit to any board member or manager; did not extend theterms or improve the conditions of any existing loans or credit already provided to them; did not extend credit under the rubric ofpersonal loan or surety to them through any third party.




Statuary Auditor’s Report and Financial Information


Sali Turan, No Name, 1990, Various Techniques on Paper, 50 x 70 cm Yapı Kredi Collection

Statutory Auditors’ Report to the General Meeting of Yap› Kredi Sigorta A.fi.

Company Name : Yap› Kredi Sigorta A.fi. Headquarters : Büyükdere Caddesi Yap› Kredi Plaza A Blok Levent - ‹stanbul Paid-in Capital : TRY 80,000,000 Principal Business Activity : Insurance

Statutory Auditors : Mehmet E. Özdemir - Adil G. ÖztoprakTerm of Office : 01.01.2007 – 31.12.2007Shareholder Status : Not shareholders in the Company

Number of Board of Directors meetings attended and number of auditors’ meetings held: The Audit Committee members attended allof the Board of Director’s meetings and six Audit Committee meetings were performed.

Scope, dates, and results of examinations performed on the Company’s accounts, books, and documents: Yap› Kredi Sigorta A.fi.’sbooks of accounts were examined during 2007. No issues deserving of criticism were observed.

Number of cash counts performed at the Company cashier’s office in accordance with the requirements of subparagraph 3 ofparagraph 1 of article 353 of the Turkish Commercial Law and the conclusions reached: Five examinations conducted during 2007.Our examinations determined that negotiable instruments were present and conformed to the records.

Charges or complaints of improprieties received and the action taken: No charges or complaints of improprieties were referred to us.

We have examined the accounts and transactions of Yap› Kredi Sigorta A.fi. for the period 1 January 2007-31 December 2007 forcompliance with the requirements of the Turkish Commercial Law, the Company’s Articles of Incorporation, relevant laws andregulations, and generally accepted accounting principles and standards.

In our opinion: the enclosed balance sheet audited by independent auditing firm as of 31 December 2007 accurately reflects the truefinancial standing of the Company on that date, the income statement audited by independent auditing firm for the period 1 January2007-31 December 2007 accurately and truly reflects the results of business activities during the same period.

We hereby recommend that the balance sheet and income statement be approved and that the members of the Board of Directors beacquitted of their fiduciary responsibilities.

Statutory Auditors

Mehmet Erkan ÖZDEM‹R Adil Giray ÖZTOPRAK


YAPI KRED‹ S‹GORTA A.fi.STATUTORY AUDITORS’ REPORT

YAPI KRED‹ S‹GORTA A.fi.CONVENIENCE TRANSLATION OF

THE INDEPENDENT AUDITOR’S REPORTFOR THE PERIOD 1 JANUARY-31 DECEMBER 2007

(ORIGINALLY ISSUED IN TURKISH)

To the Board of Directors of Yap› Kredi Sigorta A.fi.

1. We have audited the financial statements of Yap› Kredi Sigorta A.fi. (“the Company”) as of 31 December 2007. These financialstatements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audit.

2. The audit was conducted in accordance with the regulations on independent audit as required by Insurance Law numbered 5684.These regulations require that the audit is planned and performed to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation. We believe that the audit conducted providesa reasonable basis for our opinion.

3. As explained in Note 11.1 to the balance sheet, Capital Markets Board (“CMB”) Law, Section VII, article 50, paragraph (a), statesthat insurance companies are required to comply with their own specific laws in their establishment, audit, supervision, accountingfinancial statements and report standards. Therefore, the accounting principles and standards set out in the regulations, effective inaccordance with the Insurance Law numbered 5684 governing the insurance and reinsurance companies, are applicable in thepreparation of the accompanying financial statements.

4. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at31 December 2007 and the results of its operations for the year then ended in accordance with the regulations issued on accountingstandards and principles as required by the Insurance Law numbered 5684.

5. Additional paragraph for convenience translation into English:As discussed in Note 43 to the accompanying balance sheet, the effects of differences between the accounting principles described inNote 11 to the balance sheet, accounting principles generally accepted in countries in which the accompanying financial statementsare to be distributed and International Financial Reporting Standards (“IFRS”) have not been quantified in the accompanying financialstatements. Accordingly, the accompanying financial statements are not intended to present the financial position and results ofoperations and changes in financial position and cash flows in accordance with accounting principles generally accepted in suchcountries and IFRS.

Baflaran Nas Ba¤›ms›z Denetim veSerbest Muhasebeci Mali Müflavirlik A.fi.a member of PricewaterhouseCoopers

Talar Gül, SMMMPartner

‹stanbul, 6 March 2008


Audited AuditedASSETS Notes 31 December 2007 31 December 2006I- Current AssetsA- Cash and Cash Equivalents 117.505.767 60.746.2081- Cash 2.475 9.7352- Cheques Received - -3- Banks 94.036.999 38.167.0094- Cheques given and Payment Orders (-) - -5- Other Cash and Cash Equivalents 23.466.293 22.569.464B- Financial Assets and Financial Investments at Policyholder’s Risk 137.400.167 133.187.7941- Available for Sale Investments 25 137.400.167 133.187.7942- Held to Maturity Investments - -3- Held for Trading Investments - -4- Loans - -5- Provision for Loans (-) - -6- Financial Assets at Policyholder’s Risk - -7- Company's Shares - -8- Provision for Diminution in value (-) - -C- Receivables from Operational Activities 207.327.769 194.506.1961- Due from Insurance Operations 222.264.996 205.428.9772- Provisions for Due from Insurance Operations (-) (20.656.090) (17.729.666)3- Due from Reinsurance Operations 4.576.436 5.633.5364- Provisions for Due from Reinsurance Operations (-) - -5- Premium Reserves - -6- Policy Loans - -7- Provisions for Policy Loans (-) - -8- Due from Private Pension Fund Operations - -9- Doubtful Receivables from Operational Activities 3.118.246 2.875.67610- Provisions for Doubtful Receivables from Operational Activities (-) (1.975.819) (1.702.327)D- Due from Related Parties 462.733 676.0501- Due from Shareholders - -2- Due from Investments - -3- Due from Subsidiaries 461.128 530.9374- Due from Joint -Ventures - -5- Due from Personnel 1.358 -6- Due from other Related Parties 247 145.1137- Rediscount on due from Other Related Parties (-) - -8- Doubtful Receivables from Related Parties - -9- Provisions for Doubtful Receivables from Related Parties (-) - -E- Other Receivables 2.103.201 2.821.4961- Leasing Receivables - -2- Unearned Leasing Interest Income (-) - -3- Deposits and Guarantees Given 31.615 33.4944- Other Receivables 27 2.071.586 2.788.0025- Rediscount on Other Receivables (-) - -6- Other Doubtful Receivables 54.984 98.1797- Provisions for Other Doubtful Receivables (-) (54.984) (98.179)F- Deferred Expenses and Income Accruals 1.900.244 380.8861- Deferred Expenses 1.900.244 380.8862- Accrued Interest and Rent Income - -3- Income Accruals - -4- Other Deferred Expenses and Income Accruals - -G- Other Current Assets 2.856.527 740.3581- Office Supplies 219.867 185.8232- Prepaid Taxes and Funds 2.636.346 554.5353- Deferred Tax Assets - -4- Job Advances 314 -5- Advances to Personnel - -6- Count Shortages - -7- Other Current Assets - -8- Provisions for Other Current Assets (-) - -I- Total Current Assets 469.556.408 393.058.988


YAPI KRED‹ S‹GORTA A.fi.BALANCE SHEETS AT31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (“YTL”) unless otherwise indicated)

Audited AuditedASSETS Notes 31 December 2007 31 December 2006II- Non-Current AssetsA- Receivables from Operational Activities - -1- Due from Insurance Operations - -2- Provision for Due from Insurance Operations (-) - -3- Due from Reinsurance Operations - -4- Provisions for Due from Reinsurance Operations - -5- Premium Reserves - -6- Policy Loans - -7- Provisions for Policy Loans (-) - -8- Due from Private Pension Fund Operations - -9- Doubtful Receivables from Operational Activities - -10- Provisions for Doubtful Receivables from Operational Activities (-) - -B- Due from Related Parties - -1- Due from Shareholders - -2- Due from Investments - -3- Due from Subsidiaries - -4- Due from Joint-Ventures - -5- Due from Personnel - -6- Due from Other Related Parties - -7- Rediscount on Due from Related Parties (-) - -8- Doubtful Receivables from Related Parties - -9- Provisions for Doubtful Receivables from Related Parties (-) - -C- Other Receivables - -1- Leasing Receivables - -2- Unearned Leasing Interest Income (-) - -3- Deposits and Guarantees Given - -4- Other Receivables - -5- Rediscount on Other Receivables (-) - -6- Doubtful Receivables - -7- Provisions for Doubtful Receivables (-) - -D- Financial Assets 31 148.545.298 148.564.2751- Investment Securities 295.317 314.2942- Investments - -3- Investments Capital Commitments (-) - -4- Subsidiaries 148.249.981 148.249.9815- Subsidiaries Capital Commitments (-) - -6- Joint-Ventures - -7- Joint-Ventures Capital Commitments (-) - -8- Financial Assets and Financial Investments at Policyholder’s Risk - -9- Other Financial Assets - -10- Provisions for Other Assets Receivables (-) - -E- Tangible Assets 30.715.845 31.071.0371- Investment Property - -2- Provision for Diminution in Value of Investment Property (-) - -3- Property for Operational Usage 37.714.270 37.559.3284- Machinery and Equipment - -5- Furniture and Fixtures 22.424.853 22.355.4936- Motor Vehicles 183.843 353.4067- Other Tangible Assets (including leasehold improvements) 6.941.467 5.685.8078- Leased Assets - -9- Accumulated Depreciation (-) (37.721.091) (35.527.845)10- Advances Given for Tangible Assets (including construction in progress) 1.172.503 644.848F- Intangible Assets 1.704.232 1.000.1021- Rights - -2- Goodwill - -3- Start-up Costs - -4- Research and Development Expenses - -5- Other Intangible Assets 4.111.359 2.990.9086- Accumulated Amortization (-) (2.407.127) (1.990.806)7- Advances Given for Intangible Assets - -G- Deferred Expenses and Income Accruals - -1- Deferred Expenses - -2- Income Accruals - -3- Other Deferred Expenses and Income Accruals - -H- Other Non-Current Assets - -1- Effective Foreign Currency Accounts - -2- Foreign Currency Accounts - -3- Office Supplies - -4- Prepaid Taxes and Funds - -5- Deferred Tax Receivables - -6- Other Non-Current Receivables - -7- Other Non-Current Assets Depreciation (-) - -8- Provision for Diminution in Value of Other Non-Current Assets - -II- Total Non-Current Assets 180.965.375 180.635.414

TOTAL ASSETS 650.521.783 573.694.402



Audited AuditedLIABILITIES Notes 31 December 2007 31 December 2006III- Current LiabilitiesA- Financial Liabilities 322.133 166.0141- Due to Credit Institutions - -2- Leasing Payables 341.993 176.9123- Deferred Leasing Costs (-) (19.860) (10.898)4- Short Term Instalments of Long Term Borrowings - -5- Issued Debt Securities - -6- Other Issued Debt Securities - -7- Value Differences of Other Issued Debt Securities (-) - -8- Other Financial Payables - -B- Payables from Operational Activities 84.741.118 86.491.6631- Payables from Insurance Operations 38.477.373 34.610.0512- Payables from Reinsurance Operations 19.463.908 24.612.2193- Premium Reserves 947.383 2.236.5394- Payables from Private Pension Operations - -5- Payables from Other Operational Activities 27 25.852.454 25.032.8546- Rediscount on Payables from Other Operational Activities (-) - -C- Due to Related Parties 1.799.014 1.021.6571- Due to Shareholders 276.034 66.2122- Due to Investments - -3- Due to Subsidiaries - -4- Due to Joint-Ventures - -5- Due to Personnel 23.347 3.6506- Due to Other Related Parties 27 1.499.633 951.795D- Other Payables 5.491.279 3.330.4081- Deposits and Guarantees Received 59 592- Other Payables 27 5.491.220 3.330.3493- Rediscount on Other Payables (-) - -E- Insurance Technical Provisions 279.802.553 238.859.8071- Unearned Premium Reserve-Net 217.966.011 185.227.9602- Unexpired Risks Reserve-Net - -3- Life Mathematical Reserve-Net - -4- Outstanding Claim Provision-Net 61.836.542 53.631.8475- Bonus Provision-Net - -6- Provision for Life Policies at Policyholder’s Risk-Net - -7- Other Technical Reserves-Net - -F- Taxes and Other Fiscal Liabilities and Provisions 10.290.629 7.484.9061- Taxes and Funds Payable 5.525.437 5.788.9782- Social Security Withholdings Payable 880.175 1.672.9053- Overdue, Deferred or Restructured Taxes and Other Fiscal Liabilities4- Other Taxes and Fiscal Liabilities - -5- Corporate Tax Provision and Other Fiscal Liabilities - -6- Prepaid Corporate Tax and Other Fiscal Liabilities (-) 10.591.296 432.7047- Other Taxes and Fiscal Liabilities Provision (7.327.001) (671.950)G- Provisions for Other Risks 620.722 262.2691- Provision for Employment Termination Benefits - -2- Provision for Social Benefit Fund Deficits - -3- Provision for Expense Accruals - -H- Deferred Income and Expense Accruals - -1- Deferred Income 3.155.992 3.102.7062- Expense Accruals 61.370 60.5543- Other Deferred Income and Expense Accruals 3.094.622 3.042.152I- Other Current Liabilities - -1- Deferred Tax Liability - -2- Count Surpluses - -3- Other Current Liabilities - -III- Total Current Liabilities 385.602.718 340.457.161



Audited AuditedLIABILITIES Notes 31 December 2007 31 December 2006IV- Non-Current LiabilitiesA- Financial Liabilities - -1- Due to Credit Institutions - -2- Leasing Payables - -3- Deferred Leasing Costs (-) - -4- Issued Debt Securities - -5- Other Issued Debt Securities - -6- Value Differences of Other Issued Debt Securities (-) - -7- Other Financial Payables - -B- Payables from Operations - -1- Payables from Insurance Operations - -2- Payables from Reinsurance Operations - -3- Premium Reserves - -4- Payables from Private Pension Operations - -5- Payables from Other Operations - -6- Rediscount on Payables from Other Operations (-) - -C- Due to Related Parties - -1- Due to Shareholders - -2- Due to Investments - -3- Due to Subsidiaries - -4- Due to Joint-Ventures - -5- Due to Personnel - -6- Due to Other Related Parties - -D- Other Payables - -1- Deposits and Guarantees Received - -2- Other Payables - -3- Rediscount on Other Payables (-) - -E- Insurance Technical Provisions 27 - 20.594.3201- Unearned Premium Reserve-Net - -2- Unexpired Risks Reserve-Net - -3- Life Mathematical Reserve-Net - -4- Outstanding Claim Provision-Net - -5- Bonus Provision-Net - -6- Provision for Life Policies at Insured's Risk-Net - -7- Other Technical Reserves-Net - 20.594.320F- Other Liabilities and Related Provisions - -1- Other Payables - -2- Overdue, Deferred or Restructured Taxes and Other Fiscal Liabilities - -3- Other Taxes and Fiscal Liabilities Provision - -G- Provision for Other Risks 11.12 11.320.986 9.531.2581- Provision for Employment Termination Benefits 11.320.986 9.531.2582- Provision for Social Benefit Fund Deficits - -H- Deferred Income and Expense Accruals - -1- Deferred Income - -2- Expense Accruals - -3- Other Deferred Income and Expense Accruals - -I- Other Non-Current Liabilities - -1- Deferred Tax Liabilities - -2- Other Non-Current Liabilities - -IV- Total Non-Current Liabilities 11.320.986 30.125.578



Audited AuditedSHAREHOLDER’S EQUITY Notes 31 December 2007 31 December 2006V- Shareholders’ EquityA- Share Capital 198.495.352 198.495.3521- Nominal Capital 2 80.000.000 80.000.0002- Unpaid Capital (-) - -3- Adjustments to Share Capital 118.495.352 118.495.3524- Adjustments to Share Capital (-) - -B- Capital Reserves - -1- Share Premium - -2- Profit from Stock Abrogation - -3- Sales Profit addition to the capital - -4- Foreign Currency Translation Differences - -5- Other Capital Reserves - -C- Profit Reserves 29.745.831 (2.173.592)1- Legal Reserves 339.495 -2- Statutory Reserves - -3- Extraordinary Reserves 4.949.846 -4- Special Reserves - -5- Valuation of Financial Assets 2.465.224 (2.173.592)6- Other Profit Reserves 21.991.266 -D- Retained Earnings - -1- Retained Earnings - -E- Accumulated Deficit (-) - (12.673.951)1- Previous Years' Losses - (12.673.951)F- Net Profit (Loss) for the Period 25.356.896 19.463.8541- Net Profit for the Period 25.356.896 19.463.8542- Net Loss for the Period (-) - - V- Total Shareholder’s Equity 253.598.079 203.111.663

Total Liabilities 650.521.783 573.694.402



Audited Audited01.01.2007 01.01.2006

I-TECHNICAL SECTION Notes 31.12.2007 31.12.2006A- Non-Life Technical Income 433.914.906 387.185.8631- Earned Premiums -Net of Reinsurer's Share 427.918.127 376.736.0501.1- Written Premiums -Net of Reinsurer's Share) 460.656.179 417.405.8601.2- Change in Unearned Premiums Reserve-Net of Reinsurer's Share and Reversals (+/-) 2 (32.738.052) (40.669.810)1.3- Change in Unexpired Risks Reserve-Net of Reinsurance Share and Reversals (+/-) - -2- Investment Income Transferred from Non-Technical Section 8.253.755 7.944.0113- Other Technical Income-Net of Reinsurer's Share (2.256.976) 2.505.802B- Non-Life Technical Expense (-) (414.387.139) (375.540.815)1- Incurred Losses-Net of Reinsurer's Share (309.622.650) (280.883.221)1.1- Paid Claims-Net of Reinsurer's Share (301.417.956) (271.355.296)1.2- Change in Outstanding Claims- Net of

Reinsurance Share and Reversals (+/-) 2 (8.204.694) (9.527.925)2- Change in Bonus Provision- Net of Reinsurance Share and Reversals (+/-) - -3- Change in Other Technical Reserves- Net of

Reinsurance Share and Reversals (+/-) - (2.543.440)4- Operating Expenses (-) (104.764.489) (92.114.154)C- Net Technical Income- Non-Life (A-B) 19.527.767 11.645.048D- Life Technical Income - -1- Earned Premiums -Net of Reinsurer's Share - -1.1- Written Premiums -Net of Reinsurer's Share -1.2- Change in Unearned Premiums Reserve- Net of

Reinsurance Share and Reversals (+/-) - -1.3- Change in Unexpired Risks Reserve-Net of

Reinsurance Share and Reversals (+/-) - -2- Life Investment Income - -3- Unrealized Gain Generated from Investments - -4- Other Technical Income-Net of Reinsurer's Share - -E- Life Technical Expense - -1- Incurred Losses-Net of Reinsurer's Share - -1.1- Paid Claims-Net of Reinsurer's Share - -1.2- Change in Outstanding Claims- Net of Reinsurance Share and Reversals (+/-) - -2- Change in Bonus Provision- Net of Reinsurance Share and Reversals (+/-) - -3- Change in Life Mathematical Reserves- Net of Reinsurance Share and Reversals (+/-) - -4- Change in Provision for Policies at Life Insureds' Risk- Net of Reinsurance Share and Reversals (+/-) - -5- Change in Other Technical Reserves- Net of

Reinsurance Share and Reversals (+/-) - -6- Operating Expenses (-) - -7- Investment Expenses (-) - -8- Unrealized Loss Generated from Investments (-) - -9- Investment Income Transferred to Non-Life Technical Section (-) - -F- Net Technical Income- Non-Life (D-E) - -G- Pension Funds Technical Income - -1- Fund Management Income - -2- Management Fee - -3- Entrance Fee Income - -4- Management Expense Charge in case of Suspension - -5- Special Service Expense Charge - -6- Capital Allowance Value Increase Income - -7- Other Technical Income - -H- Pension Funds Technical Expense - -1- Fund Management Expense (-) - -2- Capital Allowance Value Decrease Expense (-) - -3- Operating Expenses (-) - -4- Other Technical Expenses (-) - -I- Net Technical Income - Pension Funds (G – H) - -


YAPI KRED‹ S‹GORTA A.fi.STATEMENTS OF INCOME FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006(Amounts expressed in New Turkish lira (“YTL”) unless otherwise indicated)

Audited Audited01.01.2007 01.01.2006

I-NON-TECHNICAL SECTION Notes 31.12.2007 31.12.2006C- Net Technical Income-Non-Life 19.527.767 11.645.048F- Net Technical Income-Life - -I- Net Technical Income-Pension Funds - -J- Total Net Technical Income (C+F+I) 19.527.767 11.645.048K- Investment Income 34.433.889 29.620.7281- Income from Financial Investments 24.988.330 10.638.6212- Income from Liquidation of Financial Investments 704.866 498.5343- Valuation of Financial Investments 3.612.095 9.908.4394- Foreign Exchange Gains 4.342.398 4.522.5055- Income from Investments 11.634 6.9206- Income from Subsidiaries and Joint-Ventures - -7- Income from Property, Plant and Equipment 774.566 4.045.7098- Income from Derivatives - -9- Other Investments - -10- Investment Income Transferred from Life Technical Section - -L- Investment Expense (-) (17.249.598) (17.064.486)1- Investment Management Expenses - (Interest incl.) (-) (38.325) (92.876)2- Diminution in Value of Investments (-) - (1.084.743)3- Loss from Liquidation of Investments (-) - -4- Investment Income Transferred to Non-Life Technical Section (-) (8.253.755) (7.944.011)5- Loss from Derivatives (-) - -6- Foreign Exchange Losses (-) (6.107.095) (5.051.471)7- Depreciation Expenses (-) 1 (2.850.423) (2.891.385)8- Other Investment Expenses (-) - -M- Income and Expenses from Other and Extraordinary Operations (+/-) (763.865) (4.304.732)1- Provisions (+/-) 2 (327.894) (2.992.286)2- Rediscounts (+/-) 2 (637.517) (882.151)3- Compulsory Earthquake Insurance (+/-) - -4- Inflation Adjustment (+/-) - -5- Deferred Tax Assets (+/-) - -6- Deferred Tax Liability Expenses (-) - -7- Other Income and Gains 449.802 126.6748- Other Expenses and Losses (-) (248.256) (556.969)9- Prior Year's Income and Gains - -10- Prior Year's Expenses and Losses (-) - -N- Net Profit/(Loss) for the Period 25.356.896 19.463.8541- Profit/(Loss) for the Period 35.948.193 19.896.5582- Corporate Tax Provision and Other Fiscal Liabilities (10.591.297) (432.704)3- Net Profit/(Loss) for the Period 25.356.896 19.463.8544- Inflation Adjustment - -


YAPI KRED‹ S‹GORTA A.fi.STATEMENTS OF INCOME FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006(Amounts expressed in New Turkish lira (“YTL”) unless otherwise indicated)

1- Nature of operations: Yap› Kredi Sigorta A.fi. (“the Company”) was established on 24 December 1943. The Company’sheadquarters and the central office are located in Istanbul, at “Yap› Kredi Plaza A Blok Büyükdere Cad. 34330 Levent-‹stanbul”. TheCompany operates in fire, marine, accident, personal accident, engineering, agriculture and health branches. The Company’s regionaloffices are named as “Central Anatolia”, “Marmara I”, “South”, “Aegean” and “Mediterranean”.

2- Shareholders with a nominal share of 10% or more of capital:

31 December 2007 31 December 2006Name Shareholding Shareholding Shareholding Shareholding

Percentage (%) Amount Percentage (%) Amount

Yap› ve Kredi Bankas› A.fi. 53.10% 42.480.000 53.10% 42.480.000Public Shares 33.69% 26.951.880 33.69% 26.951.880Other 13.21% 10.568.120 13.21% 10.568.120

Total 100.00% 80.000.000 100.00% 80.000.000

3- Privileged shares and the nature of privileges granted to such shares: None (31 December 2006: None).

4- Registered share capital: YTL 80.000.000 (31 December 2006: YTL 80.000.000).

5- Capital increases and sources of capital increases during the year: None (31 December 2006: None).

6- Marketable securities issued during the year other than share certificates: None (31 December 2006: None).

7- Debt securities issued during the year: None (31 December 2006: None).

8- Property and equipment movements in the current period:

31 December 2007 31 December 2006

a) Cost of property and equipment purchased, produced or constructed: 2.758.423 1.092.669

b) Cost of property and equipment sold or used as scrap: 327.573 2.481.994c) Revaluation increases in the current period: - -

- Cost of fixed assets (+): - -- Accumulated depreciation (-): - -

d) Nature, amount, beginning and ending dates completionrate of construction-in-progress (*): 527.655 308.518

(*) Related to two information technology automation projects started in July 2005 and 2006 and planned to be completed in 2008.

9- Investment allowances to be utilized in the current and following periods: None (31 December 2006: None).


YAPI KRED‹ S‹GORTA A.fi.NOTES TO BALANCE SHEETS AT 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (“YTL”) unless otherwise indicated)

10- Due from/due to shareholders, investments and subsidiaries:

31 December 2007 31 December 2006Due To Due From Due To Due From

Trade Non-Trade Trade Non-Trade Trade Non-Trade Trade Non-Trade

1) Shareholders 5.190.292 - 19.189.191 58.646 3.827.140 - 17.401.256 -2) Subsidiaries

Yap› Kredi Emeklilik A.fi. - - 809.320 461.128 - - 535.868 -3) Investments-Yap› Kredi

Kültür Sanat A.fi. - - 101.698 - - - 116.966 -

11- The valuation of inventories and other balance sheet items, costing and depreciation methods applied, changes inaccounting policies compared to previous periods and the effect of these policy changes, significant events or indicators thatmay affect the going concern and accrual concepts, and their reasons:

11.1 Preparation of financial statementsCapital Markets Board (“CMB”) Law, Section VII, article 50, paragraph (a), states that insurance companies are required to comply withtheir own specific laws in their establishment, audit, supervision, accounting financial statements and report standards. Therefore theCompany prepares its financial statements in accordance with the Insurance Law numbered 5684 and the regulations issued forInsurance and Reinsurance Companies by the Undersecretariat of Treasury (“Treasury”). The financial statements are prepared inaccordance with the Insurance Chart of Accounts included in the Communiqué of the Treasury regarding the Insurance Chart ofAccounts and Prospects, published in the Official Gazette (No:25686) dated 30 December 2004 (Insurance Accounting SystemCommuniqué No:1).

The Insurance Supervisory Law numbered 7397 being effective from 21 December 1959 has been ceased to be effective with theInsurance Law numbered 5684 (“New Insurance Law”) issued on 14 June 2007. The regulations of New Insurance Law regarding thecalculations of technical provisions which are included in “Financial Structure” section will be published by the Ministry to which theTreasury is related with. Until the new regulations stated by New Insurance Law come into force, the current regulations which are notcontrary to the New Insurance Law will be effective. In this respect, Treasury has published on 4 July 2007 the Circular numbered2007/3 about the Adaptation of the Provisions of Insurance, Reinsurance and Pension Fund Companies with the Legal Aspects ofInsurance Law numbered 5684. The amendments made in the measurement principles in line with the Circular published have beenexplained in the balance sheet notes 11.4, 11.6 and 11.7.

According to the “Regulation on Financial Reporting of Insurance, Reinsurance and Pension Companies” issued on 14 July 2007,starting from 1 January 2008, except for the communiqués to be issued by the Treasury, operations of insurance companies should beaccounted for according to the above mentioned new regulation and legislations on preparation and presentation of financialstatements which will be issued by the Turkish Accounting Standards Board.

11.2 Premium incomePremium income represents premiums on policies written during the year, net of cancellations.

11.3 Commissions received and paid Commissions paid to intermediaries related to the underwriting of insurance policies and commissions received from reinsures relatedto premium cessions, are accounted for on an accrual basis.

11.4 Unearned premiums reserveThe Company has calculated the unearned premiums reserve (‘‘UPR’’) as the unearned portion of the premiums accrued for thepolicies in-force at 31 December 2007 after the commissions are deducted, on a daily basis, except for premiums written in marinebranch and earthquake premium written before 14 June 2007. For marine policies, UPR is calculated as 50% of the last three months’premiums.

Within the framework of the Circular dated on 4 July 2007 in accordance with the adaptation to Insurance Law numbered 5684 issuedon 14 June 2007, the calculation of unearned premium reserves for earthquake premiums written after 14 June 2007 is required.


YAPI KRED‹ S‹GORTA A.fi.NOTES TO BALANCE SHEETS AT 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish Lira (“YTL”) unless otherwise indicated)

In that respect, the Company has recorded unearned premiums reserve amounting to net YTL 7.681.986 in the financial statements at31 December 2007 for the earthquake premiums included in fire and engineering branch policies issued after 14 June 2007.Furthermore, in accordance with the Circular, the Company continues to deduct commission expense in the calculation of unearnedpremiums reserve.

11.5 Claims provisionFull provision is recorded for the estimated ultimate cost of settling claims incurred and not paid as of the balance sheet date. Claimprovisions are accounted for based on reports of experts or initial assessments of policyholders and experts.

Within the framework of the regulations regarding the change in the regulations on the principles of the establishment and operationsof insurance and reinsurance companies issued in the Official Gazette No:25359 dated 27 January 2004, in each accounting periodstarting from 2004, insurance companies are required to prepare the outstanding claims adequacy schedules on a branch basis andto issue those schedules together with other financial statements. Within this framework, when the average outstanding claimsadequacy ratio for the past five years, excluding the current period, is less than 90%, insurance companies are required to account foradditional claims provision in the amount of the difference between the outstanding claims adequacy ratio and 90%.

The Company has accounted for additional provision amounting to YTL 3.180.642 for the branches with an outstanding claimsadequacy ratio below 90% as of 31 December 2007 (31 December 2006: YTL 3.225.280).

Starting from the year 2004, insurance companies are required to account for provisions for claims incurred but not reported (IBNR).The Company has recorded additional claims provision amounting to YTL 11.986.972 as of 31 December 2007 regarding incurred butnot reported claims (31 December 2006: YTL 11.222.666).

11.6 Earthquake reserveThe provision for earthquake claims that the Company was required to record regarding the earthquake premiums written during theprevious periods is not included within the clauses relating to the provisions to be recorded under Insurance Law numbered 5684published on 14 June 2007. In this framework, the Company has cancelled the provision for earthquake claims amounting to YTL1.375.452 calculated until 14 June 2007 and therefore did not record provision for earthquake claims for the premiums written duringthe related period.

Within the framework of the Circular published in accordance with the adaptation to New Insurance Law on 4 July 2007, the Companyhas added the income amounting to YTL 1.396.946, generated in the current period over the funds of the earthquake reservesaccumulated until 31 December 2006, to the earthquake reserves. In accordance with the same Circular, the earthquake reserves as of30 June 2007, has been transferred into the shareholders’ equity accounts as of 1 September 2007. The amount recorded under otherprofit reserves under shareholders’ equity will not be subject to profit distribution.

11.7 Provision for insurance receivablesThe Insurance Law numbered 5684, issued on 14 June 2007, does not include the clause related to the provision for insurancereceivables that the Company was required to account in the previous periods for the premium receivables which are overdue for morethan two months. Within the framework of the Circular published on 4 July 2007 in accordance with the adaptation to the NewInsurance Law, the right of initiative has been given to the companies regarding the conservation or the cancellation of the samereserve in the financial statements. Within this framework, YTL 2.059.079 of the total provision amounting to YTL 2.861.791 as of 31December 2006 has been cancelled and reflected to the income statement. The remaining provision of YTL 802.712 has been carriedin the balance sheet with respect to the doubtful receivables determined based on management estimates.

In addition to the provision for insurance receivables, in line with the Turkish Tax Code article No:323, the Company provides provisionfor doubtful receivables under legal follow-up which are not included in the premium receivable provision, stated above, consideringthe amount and nature of these receivables.

11.8 Claim recoveries and salvage incomeAs of 31 December 2007, in line with the declaration numbered B.02.1.HM.O.SGM.0.3.1.1 of the Treasury, the Company accounts forthe claim recoveries from insurance companies and from individuals whom the Company and the individual have agreed on payment,on an accrual basis. The Company records doubtful receivables provision for the claim recovery receivables under legal follow-up.



11.9 Marketable securitiesIn accordance with the Insurance Chart of Accounts which came in force as of 1 January 2005 with the communiqué regarding theInsurance Chart of Accounts and Prospects, published in the Official Gazette No.25686 dated 30 December 2004, the Companyclassifies its marketable securities in 3 different groups as available-for-sale investments, held to maturity investments and held-for-trading investments. In that respect, interest income accruals of held-to-maturity investments and value increase or decreases arisingfrom the revaluation of held-for trading investments are recorded in the statement of income. Available-for-sale investments are valuedat market value. The interest income accruals of these investments are recorded in the statement of income, and the unrealized gainsor losses arising from the change in the market values are recorded in “Valuation of Financial Assets” under shareholders’ equityaccount.

11.10 Non-Current Financial assetsNon-current financial assets acquired prior to 1 January 2005 are accounted with inflation adjusted value less impairment, if any, andthe non-current financial assets acquired after 1 January 2005 are accounted with the acquisition cost less impairment, if any.

11.11 Tangible and intangible assetsThe tangible and intangible assets are accounted in the restated financial statements of the Company as of 31 December 2004 withtheir inflation adjusted values calculated by multiplying the historical costs of these items by the relevant conversion factors in line withthe regulations in “Financial Reporting in Hyperinflationary Economies” stated in “Accounting Standards in Capital Markets”(Communiqué XI, No.25). Depreciation and amortization of tangible and intangible assets have been calculated on restated valuesusing the straight-line method retrospectively.. The Company records a provision for impairment when the fair value of the these assetsis less than their restated value.

At 31 December 2007, the Company has reversed YTL 3.132.532 of the total impairment amounting to YTL 9.352.417 recorded on thefinancial statements as of 1 January 2005, based on the valuation report dated 6 April 2006 prepared by Elit Gayrimenkul De¤erlemeA.fi. and in accordance with the same report, the Company has accounted for additional provision for impairment amounting to YTL1,084,743.

The useful lifes for the tangible and intangible assets are as follows:

Buildings 50 yearsEquipment 10-20 yearsFurniture and fixtures 3-15 yearsVehicles 5 yearsLeasehold improvements 5 years

For assets acquired before the year 2004, the depreciation rates are 2% and 20%.

11.12 Provision for employment termination benefitsUnder the Turkish Labour Law, the Company is required to pay termination benefits to each employee who has completed one year ofservice 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). The amount payable consists of one month’s salary limited to a maximum of YTL 2.030,19for each year of service. The liability of the Company arising from employment termination benefits as of 31 December 2007 has beencalculated as YTL 11.320.986 and a full provision has been accounted for in the financial statements (31 December 2006: YTL9.531.258).

11.13 Transactions in foreign currenciesTransactions in foreign currencies during the year are translated into New Turkish lira at the exchange rates prevailing at the dates ofthe transactions. Cash and cash equivalents, banks and marketable securities denominated in foreign currencies are translated at bidrates declared by the Central Bank of Turkey; and payable balances denominated in foreign currencies are translated at ask ratesdeclared by the Central Bank of Turkey. The foreign exchange valuation differences are recorded to the related exchange gains andlosses accounts in the statement of income.



11.14 Tax provisionThe Corporate Tax Law was amended by Law No.5520 dated 13 June 2006. Most of the articles of the new Corporate Tax Law inquestion, No.5520, have come into force effective from 1 January 2007. Corporation tax is payable at a rate of 20% (2006: 20%) on thetotal income of the Company and its Subsidiaries registered in Turkey after adjusting for certain disallowable expenses, exempt income(participation income and investment incentive allowance) and investment and other allowances (e.g. research and developmentallowance). No further tax is payable unless the profit is distributed (except withholding tax at the rate of 19,8% on the investmentincentive allowance utilized within the scope of the Income Tax Law transitional article 61)

Dividends paid to non-resident corporations, which have a place of business in Turkey, or resident corporations are not subject towithholding tax. Otherwise, dividends paid are subject to withholding tax at the rate of 15%. An increase in capital via issuing bonusshares is not considered as a profit distribution and thus does not incur withholding tax.

Corporations are required to pay advance corporation tax quarterly at the rate of 20% (2006: 20%) on their corporate income. Advancetax is declared by 14th of the following second month and payable by the 17th of the following second month each calendar quarterend. Advance tax paid by corporations is credited against the annual corporate tax liability. The balance of the advance tax paid afterthe annual corporate tax payment may be refunded or used to set off against other liabilities to the government.

In accordance with Tax Law No.5024 “Law Related to Changes in Tax Procedural Law, Income Tax Law and Corporate Tax Law”published in the Official Gazette on 30 December 2003 to amend the tax base for non-monetary assets and liabilities, effective from 1 January 2004 income and corporate taxpayers are required to prepare the statutory financial statements by adjusting the non-monetary assets and liabilities for the changes in the general purchasing power of the Turkish lira. In accordance with the Law inquestion, the cumulative inflation rate for the last 36 months and the inflation rate for the last 12 months must exceed 100% and 10%respectively (TURKSTAT WPI increase rate). Since these conditions in question were not fulfilled in 2006 and 2007, no inflationadjustments were performed.

There is no such application for the reconciliation of payable taxes with the tax authority. Corporate tax returns are submitted to therelated 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 maychange due to tax assessment.

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.

11.15 Related partiesFor the purpose of the accompanying financial statements, Yap› Kredi Group Companies and the companies controlled by theirshareholders are considered and referred to as related parties.

11.16 Other balance sheet accountsOther balance sheet items are principally stated at their face values.

11.17 Comparative informationWhen necessary, comparative information is reclassified in order to ensure compatibility with current year financial statements.

12- Subsequent events to be disclosed: As of 1 January 2008, the ceiling for employee termination benefit has been increased to YTL 2.087,92.

13- Information on contingent losses and gains: (The nature of legal disputes which could affect the financial results for the period isdisclosed in this section.)

31 December 2007 31 December 2006Lawsuits against the Company 40.714.731 22.865.382Claim recovery lawsuits in favour of the Company 38.910.178 29.594.267Execution proceedings by the Company 1.975.819 1.514.551



The provision for the lawsuits against the Company and in favour at the Company for the execution proceedings and claim recoveriesare accounted for under related provision accounts in the accompanying financial statements.

14- Changes in accounting estimates which may have a material effect on the profitability ratios and the monetary value ofsuch effects: None (31 December 2006: Due to the personnel transfers in previous periods between Yap› Kredi Sigorta A.fi. and itssubsidiary Yap› Kredi Emeklilik A.fi. additional provision for employment termination benefits amounting to YTL 586.657 has beenaccounted for in the current year).

15- Mortgages or collaterals on assets:


Marketable securities (*) 79.691.348 49.920.102Real estate 20.755.307 24.755.307

(*)Marketable securities with a total of nominal values amounting to YTL 76.200.916 are held as blocked in favour of Treasury. Theremaining bond blockage amount of YTL 3.356.185 is held as blocked in favour of Yap› ve Kredi Bankas› and total of nominal valuesamounting to YTL 134.247 are held as blocked in favour of Tarsim A.fi..

16- Total insurance coverage on assets: YTL 53.131.543 (31 December 2006: YTL 57.671.717).

17- Total mortgages and other collateral obtained for receivables:


Received mortgage guarantees 35.369.850 28.629.385Letters of guarantee 6.200.066 5.410.565Government Bonds 295.784 644.052Mortgage guarantee from agencies under legal follow-up 1.905.605 650.055Guarantees obtained from companies 188.837 155.337

The checks, credit card slips, notes receivable obtained for receivables and followed under off balance sheet accounts are as follows:


Credit cards slips 41.064.339 39.723.217Cheques 119.499 773.777Notes receivable - 134.731

18- Commitments and contingent liabilities not recorded under liabilities:


Letters of guarantee (domestic) 2.757.628 2.300.189



19- Guarantees to be provided and guarantees provided for life and non-life branches:


Accident 33.682.895 29.159.944Health 31.723.723 23.984.523Fire 13.396.251 8.704.047Engineering 3.593.734 3.075.441Marine 2.019.036 1.809.942Agriculture 58.998 65

Total Blockage as of 28 February 84.474.637 66.733.962

Value Increase 12.481.587 4.740.425

Total Blockage as of 31 December 2007 96.956.224 71.474.387

20- Number of life policies, the number and mathematical reserve amount of the life policies that enter and exit during the yearand current status: None (31 December 2006: None).

21- Insurance coverage given for non-life branches:

31 December 2007 31 December 2006Accident 256.754.824.879 265.492.044.770Fire 34.443.662.344 31.174.081.594Engineering 8.817.553.260 7.623.019.590Marine 4.360.831.599 4.478.415.174Agriculture 1.592.159 14.689.798

304.378.464.241 308.782.250.926

22- Pension investment funds founded by the Company and the prices: None (31 December 2006: None).

23- Units and amounts of share certificates in portfolio and in circulation: None (31 December 2006: None).

24- Number and portfolio amounts of the individual and group pension funds’ participants (entered, left, cancelled during theperiod and the current participants): None (31 December 2006: None).

25- Market value of marketable securities and financial assets carried at cost and carrying value of marketable securities andfinancial assets shown at market value:

Marketable Securities :

31 December 2007 31 December 2006Cost Book Value (*) Cost Book Value

Government Bonds and Treasury Bills 121.300.279 134.612.853 121.835.135 133.137.375

Investment Funds 2.623.851 2.787.314 50.359 50.419

123.924.130 137.400.167 121.885.494 133.187.794

(*) At 31 December 2007 and 2006 all the government bonds and treasury bonds are classified as available for sale (AFS) and shownat market value in the balance sheet.



Financial Assets:

The listed financial asset of the Company is stated below and is accounted per its fair value in the financial statements.

31 December 2007 31 December 2006Financial Asset Description Cost Book Value Cost Book Value

T. S›nai Kalk›nma Bankas› A.fi. 1.478.847 101.587 1.474.060 101.850

26- Marketable securities under “Marketable Securities and Investment Securities” account group and issued by thecompany’s shareholders, investments or subsidiaries and the issuers: None (31 December 2006: None):

27- Details of “Other” items in the balance sheet which exceed 20% of its respective account group or 5% of total assets:


a) Other receivablesReceivables from earthquake insurance policies 1.489.650 1.823.146Other 581.936 964.856

2.071.586 2.788.002

b) Payables from other operational activitiesPayables to contracted corporations 24.837.658 25.032.854Other 1.014.796 -

25.852.454 25.032.854

c) Due to other related partiesPayables to related parties 1.499.633 951.795

1.499.633 951.795

d) Other payablesPayables to agencies 2.547.423 1.882.341Payables to suppliers 1.115.640 1.322.375Other 1.828.157 125.633

5.491.220 3.330.349

e) Other technical reservesEarthquake claim provisions - 20.594.320

- 20.594.320

28- Due from and due to personnel classified in "Other receivables" and "Other short-term or long-term payables" that exceed1% of total assets: None (31 December 2006: None).



29- Doubtful receivables from shareholders, investments and subsidiaries: None (31 December 2006: None).

30- Provision for overdue doubtful receivables and receivables not due yet (the amounts to be disclosed separately):

a) Provision for receivables under legal follow-up: YTL 3.073.083 (31 December 2006: YTL 2.830.512).b) Provision for premium receivables: YTL 802.712 (31 December 2006: YTL 2.861.791).c) Provision for receivables from insurance and reinsurance companies: YTL 45.163 (31 December 2006: YTL 45.163).d) Provision for claim recoveries under legal follow-up: YTL 19.853.378 (31 December 2006: YTL 14.867.875).e) Provisions for receivables from suppliers: YTL 3.057 (31 December 2006: YTL 79.700).f) Provisions for other receivables under legal follow-up: YTL 51.927 (31 December 2006 : YTL 18.479).

31- Breakdown of investments and subsidiaries having an indirect shareholding and management relationship with theCompany, participation rates and amounts of these investments and subsidiaries; profit/loss, net profit/loss in the latestfinancials, the period of these financials and the type of opinion of the independent audit report if the company isindependently audited as unqualified, qualified and adverse:

31 December 2007 31 December 2006Participation Participation Participation Participation

Rate Amount Rate Amounta) Subsidiaries

- Yap› Kredi Emeklilik A.fi. 99.93% 148.249.981 99.93% 148.249.981

148.249.981 148.249.981

b) Other Financial Assets- Tar›m Sigortalar› Havuz ‹flletmesi A.fi. 4.55% 272.728 5.88% 352.941- Satel A.fi. 11% 95.479 11% 95.479- T. S›nai Kalk›nma Bankas› A.fi. less than 1% 101.587 less than 1% 101.851- T. Genel Sigorta A.fi less than 1% 27.829 less than 1% 28.717- Genel Yat›r›m A.fi. less than 1% 2.227 - -- Yap› Kredi Kültür Sanat Yay›nc›l›k Tic. A.fi. less than 1% 10 less than 1% 10- Other less than 1% 2 less than 1% 2

499.862 579.000

Capital Commitments- Tar›m Sigortalar› Havuz ‹flletmesi A.fi. (204.545) (264.706)

295.317 314.294

Total 148.545.298 148.564.275



The information on the recent financials of Yap› Kredi Emeklilik A.fi. is stated below. These financials are not prepared in accordancewith Capital Markets Board Regulations.

Financial Statement Profit Net Profit Compliance Independently Auditor’s Shareholders’Period (YTL) (YTL) with CMB Audited Opinion Equity (YTL)

31.12.2007 30.986.999 27.982.675 No Subject to - 96.582.649

32- Bonus shares obtained through internally funded capital increases of equity investments and subsidiaries: None (31December 2006: None).

33- Rights on immovables and their value: None (31 December 2006: None).

34- Receivables and payables denominated in foreign currencies having no foreign exchange rate guarantees, assets inforeign currencies and conversion rates:

31 December 2007 31 December 2006Original Original

Type Amount Rate (YTL) Amount (YTL) Amount Rate (YTL) Amount (YTL)

a) Cash - Banks USD 1.753.067 1.16470 2.041.797 527.666 1.40560 741.687EUR 1.038.463 1.71020 1.775.979 1.751.925 1.85150 3.243.689GBP 38.527 2.32590 89.610 2.452.064 2.75690 6.760.095CHF 161.741 1.02730 166.157 19.491 1.15030 22.420

4.073.543 10.767.891

b) Payables USD 138.829 1.17030 162.472 137.394 1.41240 194.055EUR 193.112 1.71840 331.844 91.327 1.86040 180.112GBP 3.094 2.33810 7.234 2.693.184 2.77130 7.463.621

501.550 7.837.788

35- As of 31 December 2007, YTL equivalent of receivables from policies denominated in foreign currencies is YTL 15.689.163(31 December 2006: YTL 17.193.277)

As of 31 December 2007, YTL equivalent of outstanding claims denominated in foreign currencies is YTL 2.224.545 (31 December2006: YTL 2.485.924)

36- Guarantees, commitments and securities given for shareholders, investments and subsidiaries: None (31 December 2006 :None).

37- Average number of employees during the period by category:


Middle and Upper Management 43 42Other Employees 811 794



38- Valuation methods of profit share calculation for saving life insurance: None (31 December 2006: None).

39- Purposes for the short-term or long-term loans received: None (31 December 2006:None).

40- Other matters that may have a material effect on, or may prevent the clear understanding of the financial statement: None.(31 December 2006: Based on the decisions taken in the 2005 Ordinary General Assembly held on 20 March 2006, out of the previousyears’ losses amounting to YTL 82.174.778 which arose from the inflation adjustment made in accordance with Turkish Tax Laws, theCompany has netted-off YTL 5.429.219 from the inflation difference accounts of extraordinary reserves and statutory reservesaccounts, YTL 35.740.130 from the inflation difference accounts of legal reserves and other capital reserves accounts and theremaining YTL 41.005.429 from adjustments to the share capital account).

41- Receivables from claim recoveries followed under off-balance sheet accounts: YTL 3.789.720 (31 December 2006: YTL 4.427.228).

42- Other notes related to financial statements presented in Appendix 4: None (31 December 2006: None).

43- Additional paragraph for convenience translation into English:The financial statements are prepared and presented in accordance with the accounting principles and applications of TurkishCommercial Law and Tax Legislation and Insurance Law, which are different from the accounting principles generally accepted in thecountries in which the financial statements are to be distributed and International Financial Reporting Standards ("IFRS"). The effects ofsuch differences have not been quantified. Accordingly, the financial statements are not intended to present the financial position,results of operations and changes in the financial position and cash flows in accordance with the accounting principles generallyaccepted in such countries and the IFRS.



1- Depreciation and amortisation expenses for the period:

1 January 2007 - 1 January 2006 -31 December 2007 31 December 2006

Depreciation and amortisation expenses for the period : 2.850.423 2.891.385

a) Depreciation expenses 2.655.935 2.235.194aa) Depreciation expenses on historical cost 2.655.935 2.235.194ab) Depreciation expenses due to revaluation - -

b) Amortisation expenses 194.488 656.191

2- Provision and rediscount expenses for the period:


Provisions and rediscount expense (income) for the period : 41.908.157 56.615.611

a) Rediscount expenses, net 637.517 882.151b) Technical provisions, net 40.942.746 52.741.175c) Other provision expenses, net 327.894 2.992.286i) Expenses for doubtful receivables

under legal follow-up, net 306.940 433.679ii) Provision for premium receivables expense in accordance

with the regulation, net (2.059.079) 644.635iii) Provision for employment termination benefits 1.789.728 1.818.756 iv) Other provision expenses 290.305 95.216

3- Total financial expenses for the period: None (31 December 2006: None).

4- Financial expenses related to shareholders, subsidiaries and investments (any amount exceeding 20% of total will beillustrated separately): None (31 December 2006: None).

5- Sales to/purchases from shareholders, subsidiaries and investments (any amount exceeding 20% of total will be illustratedseparately:


Sales Purchases Sales Purchasesa) Shareholders

- Yap› Kredi Bankas› A.fi. 42.475.418 - 36.745.938 -- Yap› Kredi Faktoring A.fi. 375.830 - 215.228 -- Yap› Kredi Yat›r›m A.fi. 1.301.364 - 921.882 -

b) Subsidiaries- Yap› Kredi Emeklilik A.fi. 2.907.570 1.096.191 1.243.120 545.867

c) Investments- Yap› Kredi Kültür Sanat A.fi. 246.250 - 247.786 -


YAPI KRED‹ S‹GORTA A.fi.NOTES TO STATEMENTS OF INCOME FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish Lira (“YTL”) unless otherwise indicated)

Gross premium income arising from the transactions with the Yap› ve Kredi Bankas› A.fi. Group companies and Koç Holding Groupcompanies for the period ended 31 December 2007 amounted to YTL 1.289.517 and YTL 1.463.431, respectively (31 December 2006:Gross premium income arising from the transactions with the Yap› ve Kredi Bankas› A.fi. Group companies and Koç Holding Groupcompanies amounted to YTL 338.417 and YTL 924.817, respectively).

6- Interest, rent or other charges received from or paid to shareholders, subsidiaries and investments (any amount exceeding20% of total will be illustrated separately):


Received Paid Received Paida) Shareholders

- Yap› Kredi Bankas› A.fi. 9.751.405 10.578.614 1.618.240 8.439.165- Yap› Kredi Faktoring A.fi. - - 54.615 -- Yap› Kredi Yat›r›m A.fi. 22.187 - 21.736 -

b) Subsidiaries- Yap› Kredi Emeklilik A.fi. 99.746 518.814 58.524 617.901

c) Investments - - - -

7- Total salaries and benefits paid to the members of the Board of Directors, General Manager, General Coordinator, AssistantGeneral Manager and other executive management for current period: YTL 2.700.625 (31 December 2006: YTL 2.525.740).

8- Changes in depreciation calculation methods and effect of such changes on depreciation expenses for the year:Depreciation expense for the period has been calculated using the straight-line method.

9- The criteria set by the Company for the allocation performed for general administrative, research & development andmarketing & selling expenses that cannot be allocated directly: In accordance with the Insurance Chart of Accounts andProspects, published in the Official Gazette dated 30 December 2004, insurance companies are required to record some of theirgeneral expenses under technical accounts. In line with this regulation, some of the expenses are directly allocated to the relevanttechnical accounts and the rest are allocated to the technical accounts according to the average distribution of premiums and numberof policies between branches.

10- Income and expenses related to prior periods and the amounts and sources of expenses and losses: None (31 December2006: None).

11- Profit and dividend per common and preferred shares: As of 31 December 2007 nominal value per share is YTL 0,0005, profitper share is YTL 0,000158 (31 December 2006: YTL 0,000121).

12- Number of units and individual/group allocation of gross/net contribution fees of the private pension fund participantsentering the Company during the period: None (31 December 2006: None).

13- Number of units and individual /group allocation of gross/net contribution fees of the private pension fund participantstransferred from another company during the period: None (31 December 2006: None).

14- Number of units and individual /group allocation of gross/net contribution fees of the private pension fund participantstransferred from the life insurance portfolio to the private pension funds portfolio during the period: None (31 December 2006:None).



15- Number of units and individual /group allocation of gross/net contribution fees of the private pension fund participants thatleft the Company and transferred to another company or that left the Company but did not transfer to another company: None (31 December 2006: None).

16- Number of units, gross/net premiums and individual/group allocation of life policyholders that joined the Company duringthe period: None (31 December 2006: None).

17- Number of units, gross/net premiums and individual /group allocation of mathematical reserves for life policyholders thatleft the Company during the period: None (31 December 2006: None).

18- Profit share allocation rate provided to the life policyholders: None (31 December 2006: None).

19- Other notes related with the financial statements presented in Appendix-4: None (31 December 2006: None).



Dear Shareholders,

We propose the allocation of the profit for the year 2007 to be made in conformity with the provisions of Article 37 of our Article ofAssociation as follows;

Pursuant to Capital Markets Board communique numbered IV:27 dated 13 November 2001, we recommend that the shareholders’ firstand second dividend be paid in cash on May 12, 2008.

Board of Directors

(New Turkish Lira)1. Paid in Capital 80.000.000,002. Legal Reserves(Per Legal Book) 339.495,16Information on whether Articles of Association has any privilege regarding profit distribution (None)3. Gross Profit 35.948.192,364. Reserve for Taxes (-) 10.591.296,595. Net Profit(=) 25.356.895,776. Prior Years’ Losses ( -) -7. 1st Legal Reserves (-) 1.267.844,798. Distributable profit amount, which is not decided for distribution, of the equity participation

which is consolidated (-) -9. NET DISTRIBUTABLE PROFIT(=) 24.089.050,9810. Donations made during the year (+) 130.307,5011. Net distributable profit including donations to be used in the calculation of 1st dividend 24.219.358,48 12. 1st dividend to shareholders 4.843.871,70- Cash 4.843.871,70- Bonus shares- Total 4.843.871,7013. Dividend to shareholders which possess preferred shares -14. Dividend to Members of Board of Directors and employees etc. -15. Dividend to shareholders which possess redeemed shares -16. 2nd dividend to shareholders 5.156.128,3017. 2nd Legal reserves (-) 600.000,0018. Statutory Reserves -19. Special Reserves -20. EXTRAORDINARY RESERVES 13.489.050,9821. Other sources which are accepted as distributable- Retained Earnings- Extraordinary Reserves- Other distributable reserves in accordance with the related laws and Articles of Association.


YAPI KRED‹ S‹GORTA A.fi.PROFIT DISTRIBUTION

GeneralNo change has been made in the Main Articles of Associationduring the accounting period.

Chairman and the Members of the Board of Directors are electedin every General Assembly. Accordingly, their service period is theperiod between two General Assembly Meetings.

The risk group that the company falls under is explained in the5th and 6th footnotes of the Statements of Income.

Stock Exchange Yap› Kredi Sigorta's shares are traded on the ‹stanbul StockExchange (ISE) in the national market under the symbol YKSGR.Information about the Company's shares is published on theeconomics pages of daily newspapers and on the internet portalsof brokerage houses.

Investor Relations Copies of Yap› Kredi Sigorta's annual reports and otherinformation about the Company may be obtained from thefollowing address as well as from the corporate website locatedat www.yksigorta.com.tr.

Yap› Kredi Sigorta Investor Relations ( ‹. Tankut Eren - M. Teoman Çelen) Yap› Kredi Plaza A Blok, Büyükdere Caddesi Levent, 34330 ‹stanbul , TURKEY

Annual Ordinary General Meeting Annual Ordinary General Meeting of Yap› Kredi Sigorta will beheld on Friday 28 March 2008 at 14:30 at the address of Yap›Kredi Plaza D Blok Conference Room, Levent/‹stanbul, TURKEY.

Independent Auditor Baflaran Nas Ba¤›ms›z Denetim ve Serbest Muhasebeci MaliMüflavirlik Anonim fiirketi (PriceWaterhouseCoopers) Tel: (+90 212) 326 60 60 - Fax: (+90 212) 326 60 50

Tax Certification Kuzey Yeminli Mali Müflavirlik Anonim fiirketi An Affiliated Firm of Ernst & Young International A. Feridun Güngör - ‹stanbul TURKEY Tel: (+90 212) 315 30 00 - Fax: (+90 212) 234 10 67

The lowest price per share during the year was TRY 5.55 and thehighest was TRY 15.00. The average trading price for the wholeyear was TRY 10.34. Share price quarterly lows and highs arepresented below.

TRY low high 01.01.2007-31.03.2007 5.55 9.90 01.04.2007-30.06.2007 9.00 12.80 01.07.2007-30.09.2007 10.00 15.00 01.10.2007-31.12.2007 9.80 12.50


YAPI KRED‹ S‹GORTA A.fi.INFORMATION FOR SHAREHOLDERS

Yap› Kredi Sigorta share performance in 2007 According to its year-end balance sheet, Yap› Kredi Sigorta's capital amounts to TRY 80 million, which is divided into 160 billion shares.

The following chart shows the performance of Yap› Kredi Sigorta's shares in 2007 compared with the ISE general index.

Yap› Kredi Sigorta share performance in 2007(YTL & USD)

Janu

ary

Febr

uary

Mar

ch

Apr

il

May

June

July

Aug

ust

Sep

tem

ber

Oct

ober

Nov

embe

r

Dec

embe

r

ISE 100 YKSGR25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

5.25

6.50

7.75

9.00

10.25

11.50

12.75

14.00

Directory

CENTRAL ANATOLIA REGIONAL OFFICEMithatpafla Cad. No: 43/E K›z›lay,06420 Ankara TURKEYTel: (+90 312) 458 60 60Fax: (+90 312) 458 60 00

MEDITERRANEAN REGIONAL OFFICESinan Mah. Recep Peker Cad. Antalya2000 ‹fl Merkezi No: 22/4,07100 Antalya TURKEYTel: (+90 242) 311 41 21Fax: (+90 242) 314 11 05

SOUTHERN REGIONAL OFFICEZiya Pafla Bulvar› No: 74,01130 Adana TURKEYTel: (+90 322) 457 95 95Fax: (+90 322) 453 13 52

AEGEAN REGIONAL OFFICEHalit Ziya Bulvar› No: 74/2 Alsancak,35210 ‹zmir TURKEYTel: (+90 232) 498 64 64Fax: (+90 232) 498 64 00

MARMARA-1 REGIONAL OFFICEAtatürk Cad. No: 25/4,16010 Bursa TURKEYTel: (+90 224) 220 54 41Fax: (+90 224) 280 90 33

BAKIRKÖY REPRESENTATIVE OFFICEG. Ali R›za Gürcan Cad. Metropol CenterNo: 31 K: 8 Büro No: 33 Merter,34150 ‹stanbul TURKEYTel: (+90 212) 481 01 03Fax: (+90 212) 481 05 04

KADIKÖY REPRESENTATIVE OFFICEfiemsettin Günaltay Cad. No:213 Erenköy,34738 ‹stanbul TURKEYTel: (+90 216) 363 36 96Fax: (+90 216) 363 53 77

Yap› Kredi Sigorta A.fi.Head Office

Yap› Kredi Plaza A Blok Büyükdere CaddesiLevent 34330 ‹stanbul

Tel: (+90 212) 336 06 06Fax: (+90 212) 336 08 08

Call Center: (+90 212) 336 09 09www.yksigorta.com.tr

Annual Report 2007 - Allianz Sigorta | Ana...

Documents

Transcript of Annual Report 2007 - Allianz Sigorta | Ana...