Agesa Hayat ve Emeklilik : H1 2022 Earnings Release

AgeSA

H1 2022 Financial Results

Earnings Release

August 10, 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 63% yoy and reached 50.6 billion TL as of H1 2022.
• Auto Enrolment AuM increased by 57% 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 84% yoy, driven by both 64% growth in credit linked and 101% 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 June 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 102% at 521 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 63% yoy driven by the growth in life protection volumes and pension AuM.
• RoE is 55.7% as of H1 2022.
• Statutory profit is 458 mTL with an increase of 100% 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 2.9 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 H1 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 52.5 bnTL with 1.6m participants, including AE.

		AuM (mTL)	1.837	# of Total Participants	Total APE (mTL) *
		62%	52.467		6%	1.596.972		138%	1.405
			1.506.445
	1.172	32.311				10%			69%	464
Pension
				924.609
			839.076
(inc. Auto								590
Enrolment)						1%		274	197%	941
		31.139	50.630		667.369		672.363	316
		2021 H1	2022 H1		2021 H1		2022 H1	2021 H1		2022 H1

Source: Pension Monitoring Center 30.06.2022

*Before opt-out

• AgeSA is the market leader in terms of Total Life & PA Premium among private companies as of June'22
• Total Protection gross written premiums reached 1.573 mTL; higher than prior year by 84% 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%
	64%		105%
396	648	433	889	27	37
2021 H1	2022 H1	2021 H1	2022 H1	2021 H1	2022 H1
		Total Protection GWP (mTL)
			84%

856	1.573
2021 H1	2022 H1

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

AGESA MANAGEMENT REPORTING SEGMENT RESULTS

(mTL)	2021 H1	2022 H1	Change
Life Protection	355	608	71%
Personal Accident	15	13	-9%
Savings	2	1	-50%
Pension	159	242	52%
Total Technical Income	531	864	63%
Total General Expenses	-264	-486	84%
Net Technical Profit	267	378	42%
Total Investment & Other Income	79	298	279%
Total Tax	-88	-155	77%
Net Profit	258	521	102%

• Total technical income grew by 63% mainly driven by protection and pension profitability growth.
• • Pension technical profit increased by 52% 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 decreased by 9% due to lower earned premiums.
• General expenses are 486 mTL with a yoy increase of 84% mainly due to high inflation environment for major cost items (i.e. Personnel, IT, Outsourcing, Consultancies)
• Total investment and other income is 298 mTL with a yoy increase by 279% 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 H1	2022 H1	Change
Life	167	239	43%
Non-Life	1	-3	-379%
Pension	4	-82	-2319%
Net Technical Profit	171	154	-10%
Total Investment & Other Income	132	434	230%
Tax	-74	-131	77%
Net Profit	229	458	100%

• Net profit for the period is 458 mTL with an increase of 100% 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 43% 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 4 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