Presentation to Investors FY 2018 February 2019 AvivaSA at a - PowerPoint PPT Presentation

Presentation to Investors FY 2018 February 2019

AvivaSA at a Glance: Unique Positioning and Attractive Business Model 2

Leading Life and Pension Player in Turkey Unique demographic profile: second largest country in Europe (~81million) with almost 50% under 30 years old • 19,2% market share in terms of AuM #1 • 835 k participants; 16,9 billion TL AUM • 24% CAGR in terms of AUM (2014-2018) Pension Turkey’s • Strong position at corporate pension attractive growth and #1 • 21,5% market share in terms of AUM demographics Auto Enrolment • 20,3% market share in terms of participants • 593 k participants; 432 million TL AUM (exc. state comp.) • 7,1% market share #6 • 490 mTL GWP and ~1.5m customers Life Total • 23% CAGR in terms of GWP (2014-2018) • 13,7% market share #3 • 75 mTL GWP and ~0.5m customers Personal Accident • 14% CAGR in terms of GWP (2014-2018) Source: TSB as of 31.12.2018 and EGM as of 28.12.2018 3

Blue- chip “Sponsoring” Shareholders: A Unique Blend of Expertise and Reputation Established in 2007 as a joint venture of Ak Emeklilik and Aviva Hayat Global diversified insurer with One of the largest Turkish presence in 14 countries and “multi - business company” over 100 bancassurance with wide franchise of partners. consumer brands and networks Best practice policies based on UK international standards Unparalleled local trust and on governance / audit. reputation 4

Cultural Change Initiatives Are Based on 5 Top Priorities 1-0/BE WELL AHEAD CUSTOMER FIRST 5

DIGITAL FIRST: 5 ambitions to Being a «Digital Insurance Company» Leading the Innovation • Digital Garage • Insurtech eco-system • Innovation Culture Being a Cost-Efficient Company New Working Culture • Lowering operating costs • Agile Development • Straight through processing • Collaborative working • Automation (Robotics etc.) • Cross-functional Project Teams Creating a Unique Digital User Experience Being a Data Driven Company • Holistic Data Strategy • B2I: Understanding customers • Analytical Excellence • User-Centric Design • Big Data • Unique Digital UX • Data Driven Culture 6

AvivaSA Mobil App is in live… ≈ 100k Downloads 4.7 Rating from Customers • Pension & Life policy summary & detail monitoring • Pension basic transactions & changes • Pension contribution change and lum-sum payment • FonPro- Robo advisory tool • Pension demo calculations & Tax Advantage Calculation Tool • Product Application Request • Push Notifications – State Contribution and ve Unpaid period notifications • Live Chat • Customer loyalty campaigns & Life side benefits • Financial News • Life Insurances – Risk test and product suggestions 7

Solid Sales Culture through a Multidistribution Platform to Expand Scale and Penetration in Pension and Life Exclusive 15-year Fastest growing Bancassurance distribution distribution Agencies agreement channel # Branches Akbank: ~ 800 # Agencies: ~ 380 Akbank sales coaches: ~ 330 Total PVNBP: 636m (12%) Total PVNBP: 2231m (43%) Corporate # Corporate Sales Team: ~ 60 Direct sales force (DSF) Key Distribution # Total PVNBP: 277m (5%) Channels # FAs: ~ 370 (covering 17 cities) # PVNBP (AE): 1325m (25%) Total PVNBP: 767m (15%) Strong position in employer-sponsored Largest direct sales force group pension in the sector Direct (web+call center) contracts by market (Developing) share Total PVNBP: 8m (0.1%) 8

Captive Agency Leveraging Existing Direct Sales Force Team and Providing True Customer Composite with Health & GI Products Captive Agency Model  Creating a separate business entity in the form of an agency that will make DSF financial advisors eligible to sell also health insurance and GI products in addition to existing life & pension products, which will leverage the potential of direct sales force and provide True Customer Composite.  According to existing regulations, pension and life insurance companies are not allowed to sell non-life insurance products. Our strategy is, by making our current strengths stronger, « Customer Focus » Providing all insurance products and services by a GI & Health single financial advisor: One-stop shop concept Third Party Ins. Company Large « Efficient DSF» Strong Brand Experienced GI & Health GI & Health Customer Base Equity Sales Team Know-How Increasing productivity and supporting extra income Products opportunity with new products To imagine a « Lifelong» insurance shopping friend who knows you better than anyone else and chooses for you 9

Solid Financial Foundations and Historical Track Record of Value Creation YoY /Δ 2018 Pension AUM (inc AE) 13% 17.3bTL ● AvivaSA has maintained #1 position in terms of AuM ● Focus on standalone products (ROP) helped to move #5 position in GWP market share Total GWP (Life+PA) 20% 565 mTL Total Technical Profit 20% ● Steady increase thanks to pension scalability and high profitability in protection segments 454 mTL Expense Ratio (1) 4.6 pts 45.6% ● The decrease is due to higher increase in profit compared to the expense base for the ratio ● In Addition to 20% increase in technical profit, financial income is higher than prior year due to Profit for the Period (IFRS) 201 mTL 39% higher interest and f/x income ROE (IFRS) +4.6 pts ● Strong profit combined with lean capital 34.3% ● SFRS Profit started to converge to IFRS Profit Profit for the Period (SFRS) 88% 191 mTL ● Strong dividend growth in accordance with strong growth in SFRS profit, Dividend (proposal) 107% 100 mTL while maintaining the Solvency1 Ratio >150% MCEV 1,882 mTL 13% ● MCEV has continued its growth underpinned by the quality of the in-force book VNB 233 mTL 0% ● Nogrowth due to lower pension volume in a challenging environment Note: (1) Expense ratio=(Opex-AE Related Expenses-Sales Expenses)/(Opex-AE Related Expenses-Sales Expenses+IFRS Proft Before Tax) « Opex=G&A+Financial Expense » 10

Pension and Auto Enrolment 11

Pension – Sustainable Growth and Scale Ambitions Pension System Pillar I Pillar II Pillar III Social Security Auto Enrolment (2017) Pension (2003) Defined Benefit Defined Contribution Defined Contribution State Subsidized State Supported State Supported Semi-Mandatory Mandatory Voluntary (enter mandatory / stay voluntary) New Topic Severance Payment and Covering Basic Needs for Saving and Improving Life Saving and Improving Life under 18 is Retirement and Health Standard for Retirement Standard for Retirement under discussion - Admin by Pension Companies - Admin by Pension Companies Admin by government - Asset management by Asset - Asset management by Asset under discussion Management Companies Management Companies 12

Pension – Sustainable Growth and Scale Ambitions 408 Total population ~ 80m Fast Growing Working-age population CAGR: +36% Pension AUM ~ 60m (TLbn) Workforce ~ 30m Social security participants CAGR: +28% ~ 21m Pension + AE participants 88 78 ~ 11 m (7+4) 61 48 38 Incentives 26 20 12 14 Auto Enrolment Pension 2010 2011 2012 2013 2014 2015 2016 2017 2018 2023 E - 25% state contribution - 1,000 TRY one-off state - 25% state contribution contribution - Defered tax in terms of pension - 5% state contribution of their Auto 25% State investment income total savings for retired 10 years Enrolment Contribution annuities buyers (2017) (2013) - Defered tax in terms of pension investment income 13 Source: EGM, TSB vision 2023 report, Turkstat.

One of the Leading Company in Auto Enrolment Market Supported by Selective Presence Resu esults s and and Less Lessons s Lea Learned So So Far ar  More fragmented than regular pensions  Servicing capability is very important  Banks play a key role: AvivaSA achieved it’s targets mainly utilizing Akbank potential  Cannibalization on private pension system was lower than expected  Average opt-out ratio ~60% in the market Source: EGM as of 28.12.2018 14

Pension – Fee Structure Pension System – Fee Structure Auto Enrolment Pension Fund Management Fee Max: Max: 0,85% yearly Money market: 1,09% yearly Fixed Income: 1,91% yearly Initial Fund Equity-Flexible: 2,28% yearly Standard Fund State Contribution: 0,365% yearly Variable Fund (4 different risk appetite) Avivasa average: 1,5% including state contribution Bonus mechanism: For the policy older then 5 year old. No bonus for the fund management fee below 1,1%. It will start at 2021. 0-5 years; No bonus 6th year: 2.5% bonus of yearly fund mng. fee collected 7th year: 5.0% bonus of yearly fund mng. fee collected 14th year: 22.5% bonus of yearly fund mng. fee collected +15th year: 25.0% bonus of yearly fund mng. fee collected Management Fee None Max: %8,5 of the monthly minimum wage Collectible for the first 5 years of the policy 15