AgeSA Hayat ve Emeklilik Anonim Sirketi : Q3 2022 Earnings Release

AgeSA

Q3 2022 Financial Results

Earnings Release

November 1, 2022

#1 Leadership Position in Pension AuM and Total Life & PA GWP among private companies

AgeSA maintains Pension&AE AuM leadership and ranked as leader in Life & PA business among private companies with support of sustainable growth in Life business driven by the success of long term credit life product (Kredim Güvende) and strong RoP portfolio.

AgeSA reached successful results in net profit, thanks to strong technical income growth resulting from high profitability in life and pension scalability and financial income increase despite economic volatilities.

FINANCIAL HIGHLIGHTS

• The Pension Assets under Management (AuM) has grown by 82% yoy and reached 58.4 billion TL as of Q3 2022.
• Auto Enrolment AuM increased by 76% yoy resulting mainly from the increasing inforce volume. AgeSA is one of the leader companies in terms of private sector participants and AuM.
• Total protection premiums grew by 76% yoy, driven by 106% growth in stand-alone(non-credit linked) life protection underpinning AgeSA's diverse business model and product positioning.
• Inflation accounting is not applied for 30 September 2022 Financial Statements, all financial figures represent Management Reporting (IFRS Financials excluding inflation accounting effect)
• Management Reporting Net Profit is higher than prior year by 105% at 807 mTL mainly due to strong growth in all major business lines (pension, credit Life and RoP) and increase in net financial income resulting from higher interest and f/x rates.
• Total technical profit has increased by 67% yoy driven by the growth in life protection volumes and pension AuM.
• RoE is 57.6% as of Q3 2022.
• Statutory profit is 669 mTL with an increase of 94% due to mainly growth in life protection technical profit and increase in financial income.
• In order to meet our fast growing company strategy, long term investment and financing policies and shareholders' expectations, and to be prudent for the uncertainties that may arise from IFRS 17 which will be effective from 1.1.2023 and current macroeconomic environment, the company decided to keep 2021 distributable profit as a reserve to strengthen our equity.

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Şirkete Özel (Internal) Note: Management Reporting: IFRS Financials excluding inflation accounting effect

STRATEGIC HIGHLIGHTS

• AgeSA serves 3.1 million customers through an extensive distribution structure, comprised of a bancassurance network, which it established with Akbank, the industry's most productive direct sales team, an exclusive agency network, corporate projects and telesales.
• Our aim in 2022 is to maintain our strong presence in the private pension market and expand our life insurance business even further. In order to achieve this, AgeSA plans to enrich its product range and services through customer-oriented and innovative solutions, both for pensions and life insurance.
• In order to respond to shifting market and customer dynamics, AgeSA continued to improve its distribution capabilities in Q3 2022, in particular with the growth of the direct sales channel.
• In addition to providing financial assurance to customers, AgeSA will also develop innovative business models and projects for sustainable growth. Parallel with the changes in global demographics, Turkey's elderly population is growing rapidly with a lack of qualified services for an ageing population necessitating new initiatives, services and products. The problems faced by senior citizens also come within the scope of our corporate social responsibility project, "Her Yaşta", which addresses a wide range of the age-related issues faced by individuals and society.
• Agesa's "Life Cycle" Pension Funds allows customers to access three different "fund of funds" options, which offer stable and sustained returns in the long run in parallel with investor profiles. These funds offer agile and professional investment alternatives, especially during volatile economic conditions.
• Agesa also released its new product, "Sustainability Funds" for pension business, which allows customers to invest in companies that embrace Environmental, Social and Governance values in order to obtain high real returns for long term perspective.

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Şirkete Özel (Internal) Note: Management Reporting: IFRS Financials excluding inflation accounting effect

TOPLINE HIGHLIGHTS

• AgeSA is the market leader in terms of Pension AuM since June 2015 among the private pension companies.
• Supported by the strong asset performance despite the volatility in financial markets Total AuM has reached 60.6 bnTL with 1.6m participants, including AE.

			AuM (mTL)			# of Total Participants		Total APE (mTL) *
			82%	60.578	2.212		7%	1.644.630			135%	2.334
					1.541.215
								8%					793
Pension	1.258						956.844			67%
33.287				882.052
							991
(inc. Auto
Enrolment)								4%		476	199% 1.541
			32.029	58.367			659.163		687.786	516
			2021 Q3	2022 Q3
					2021 Q3		2022 Q3		2021 Q3		2022 Q3

Source: Pension Monitoring Center 30.09.2022

*Before opt-out

• AgeSA is the market leader in terms of Total Life & PA Premium among private companies as of September'22
• Total Protection gross written premiums reached 2.453 mTL; higher than prior year by 76% continuing the momentum in a sustainable manner.

Credit Linked Life Protection	Non-Credit Linked Life	Personal Accident GWP (mTL)
GWP (mTL)	Protection GWP (mTL)		37%
			111%
	44%
670	964	678	1.429	43	59
2021 Q3	2022 Q3	2021 Q3	2022 Q3	2021 Q3	2022 Q3
		Total Protection GWP (mTL)
			76%

1.392	2.453
2021 Q3	2022 Q3

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Şirkete Özel (Internal) Note: Management Reporting: IFRS Financials excluding inflation accounting effect

AGESA MANAGEMENT REPORTING SEGMENT RESULTS

(mTL)	2021 Q3	2022 Q3	Change
Life Protection	557	956	71%
Personal Accident	21	22	3%
Savings	3	5	73%
Pension	237	382	61%
Total Technical Income	818	1.364	67%
Total General Expenses	-415	-777	87%
Net Technical Profit	404	587	46%
Total Investment & Other Income	125	459	266%
Total Tax	-135	-239	77%
Net Profit	394	807	105%

• Total technical income grew by 67% mainly driven by protection and pension profitability growth.
• • Pension technical profit increased by 61% mainly due to higher total fund management fee regarding AuM increase
  • Life protection technical profit increased by 71% due to increase in premiums thanks to both our credit linked and non-credit linked RoP products.
  • Personal accident technical profit is parallel with previous year.
• General expenses are 777 mTL with a yoy increase of 87% mainly due to high inflationary environment for major cost items (i.e. Personnel, IT, Outsourcing, Consultancies)
• Total investment and other income is 459 mTL with a yoy increase by 266% mainly due to higher interest gains, returns and f/x rates, in addition to higher shareholders' fund.

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Şirkete Özel (Internal) Note: Management Reporting: IFRS Financials excluding inflation accounting effect

AGESA STATUTORY / SFRS SEGMENT RESULTS

(m TL)	2021 Q3	2022 Q3	Change
Life	274	363	33%
Non-Life	2	-3	-282%
Pension	-26	-202	675%
Net Technical Profit	249	157	-37%
Total Investment & Other Income	207	697	237%
Tax	-112	-186	65%
Net Profit	344	669	94%

• Net profit for the period is 669 mTL with an increase of 94% mainly due to growth in Life technical profit and financial income.
• Total net technical profit increase;
• • Life net technical profit is higher than prior year by 33% due to increasing volume; even though the SFRS profitability is negatively impacted from the commissions paid which are not deferrable in SFRS.
  • Non-life(personal accident) net technical profit after general expenses is lower than prior year by 5 mTL mainly due to higher expenses despite higher premium production.
  • Due to higher expense allocation, which is done according to the local regulation rules, pension net technical profit after general expenses is lower than prior year. Since new business sales commissions are not deferrable in SFRS, higher NB results in lower SFRS profit for the year.

BRIDGING FROM MANAGEMENT REPORTING TO STATUTORY PROFIT

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Şirkete Özel (Internal) Note: Management Reporting: IFRS Financials excluding inflation accounting effect