Presentation to Investors August 2017 (2017 Q2 Results) AvivaSA - PowerPoint PPT Presentation

Presentation to Investors August 2017 (2017 Q2 Results)

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 (78million) with almost 50% under 30 years old Turkey’s attractive • 19,3% market share growth and #1 • ~885 k participants; 13,5 billion TL AUM demographics • 31% CAGR in terms of AUM (2012-2016 CAGR) Pension • Market Leadership at Corporate Pension • 6,0% market share (2017 May) #8 • 157 m TL GWP and ~1.5m customers (2017 May) Life Protection • 17% CAGR in terms of GWP (2012-2016 CAGR) #2 • 16% market share (2017 May) • 29 m TL GWP and ~0.5m customers (2017 May) Personal • 13% CAGR in terms of GWP (2012-2016 CAGR) Accident 3 Source: HAYMER, EGM, TBB.

Blue- chip “Sponsoring” Shareholders: A Unique Blend of Expertise and Reputation Established in 2007 as a joint venture, after the merger of Ak Emeklilik and Aviva Hayat  Global diversified insurer with presence in  One of the largest 17 countries and over Turkish “multi -business 100 bancassurance company” with wide partners franchise of consumer brands and networks  Best practice policies based on UK  Unparalleled local trust international standards and reputation on governance / audit 4

Solid Sales Culture through a Multidistribution Platform to Expand Scale and Penetration in Pension and Life Distribution Platform At a Glance Fastest Exclusive 15- Bancassurance growing Agencies year distribution distribution # Branches Akbank: ~ 1000 agreement # Agencies: ~ 350 channel Akbank sales coaches: ~ 400 Total PVNBP: 925 m (20%) 2016 Total PVNBP: 2656 m (58%) 2016 Corporate Direct sales force (DSF) # Corporate Sales Team: ~ 80 Key Distribution Channels # Total PVNBP: 304 m (7%) 2016 # FAs: ~ 450 (covering 17 cities) Total PVNBP: 681 m (15%) 2016 #1 in employer- sponsored group Largest direct sales pension contracts force in the sector Direct (web+call center) by market share (Developing) Total PVNBP: 7 m (0.1%) 2016 5

Strategic Objectives Built on AvivaSA Strengths Solid financial and operational foundation: “Focus on Profitable Growth” Maintain Leadership and Improve Penetration of Profitability in Pension Akbank Deliver Customer Enhance Competitive Diversifying and Value Positioning & Market Strengthening Non-bank Share in Life Distribution Optimise Operational Excellence 6

Solid Financial Foundations and Historical Track Record of Value Creation YOY /Δ H1 2017 Pension Contributions 696 mTL 13% ● AvivaSA has maintained #1 position in terms of AuM and net contribution Pension AUM 13.5 bTL 28% ● Growing Life & PA business supporting both by credit and non-credit linked products Total GWP 226 mTL 60% (Life Protection+PA) ● Steady increase thanks to pension scalability and protection segments Total Technical Profit 178 mTL 21% ● Mainly due to increase in auto enrolment expenses Expense Ratio (1) 14.4% -0.6 pts ● 21% increase in technical profit. Profit for the Period 66 mTL 22% ● Strong financial and other income ● One of the leaders in the sector ROE 29.2% 0.4 pts ● High ROE level ● Higher VNB due to strong life protection sales and a better reflection of cost VNB 126.3 mTL 30% for risks taken ● Growth in MCEV in the first half of the year; however, the pension lapse MCEV 1,714 mTL 16% assumption change to be carried out at year-end could create headwinds Note: Segmental reporting data (1) General expenses, as % of insurance GWP and pension net contributions. MCEV data is unaudited 7

Differentiated Management of Trends and Dynamics per Segment Pension Life Protection Personal Accident AUM (TLm) Gross Written Premium (TLm) Gross Written Premium (TLm) FMC % CAGR: 17% 2,4 1,8 1,7 1,6 1,6 1,6 1,5 CAGR: 13% 254,2 28% 66% CAGR: 31% 13.528 52,1 11.792 178,3 196,9 181,0 34% 189,0 45,7 45,4 10.553 9.212 36,8 134,1 32,3 32,4 7.127 113,9 27,5 5.019 4.049 2012 2013 2014 2015 2016 H1 H1 2012 2013 2014 2015 2016 H1 H1 2012 2013 2014 2015 2016 H1 H1 2016 2017 2016 2017 (restated) 2016 2017 Technical Profit (TLm) Technical Profit (TLm) Technical Profit (TLm) As Percentage Of Net Earned Premium As Percentage Of Net Earned Premium CAGR: 12% 155,7 55 59 60 54 57 64 58 39 43 41 49 34 50 35 138,7 28% 114,2 CAGR: 20% CAGR: 10% 98,8 96,3 111,8 91,8 103,4 21% 22,2 75,4 86,8 86,1 -22% 71,2 16,7 15,2 13,9 58,8 54,3 11,4 11,7 9,2 2012 2013 2014 2015 2016 H1 H1 2012 2013 2014 2015 2016 H1 H1 2012 2013 2014 2015 2016 H1 H1 2016 2017 (restated) 2016 2017 2016 2017 Source: Company information. 8

Pension – Sustainable Growth and Scale Ambitions 9

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 New Topic Severance Mandatory Voluntary (enter mandatory / stay Payment: voluntary) under discussion Covering Basic Needs Saving and Improving Saving and Improving for Retirement and Life Standard for Life Standard for Health Retirement Retirement - Admin by Pension - Admin by Pension Companies Companies Admin by government - Asset management by Asset - Asset management by Asset Management Companies Management Companies 10

Pension – Sustainable Growth and Scale Ambitions Underpenetrated Pension Market Fast Growing Pension AUM (TLbn) 408 Total population ~ 80m Working-age population CAGR: +31% ~ 60m Workforce ~ 30m Social security participants ~ 21m CAGR: +31% Pension participants 70 ~ 6,8 m 61 48 38 26 20 Incentives 12 14 Auto Enrolment Pension 2010 2011 2012 2013 2014 2015 2016 2017 Q2 2023 E - 25% state contribution - 1,000 TRY one-off state - 25% state contribution contribution Auto 25% State - Defered tax in terms of - 5% state contribution of their Enrolment Contribution pension investment income total savings for retired 10 (2017) (2013) years annuities buyers - Defered tax in terms of pension investment income 11 Source: EGM, TSB vision 2023 report, Turkstat.

Pension – Sustainable Growth and Scale Ambitions Technical Profit (TLm) Pensions AUM including State Contribution (TLm) 28% 13.528 CAGR: +12% CAGR: +31% 155,7 11.792 138,7 10.553 28% 9.212 114,2 98,8 96,3 91,8 7.127 75,4 5.019 4.049 2012 2013 2014 2015 2016 H1 2016 H1 2017 2012 2013 2014 2015 2016 H1 2016 H1 2017 AE AuM (m tl) 53 Market Share Of AvivaSA % (in terms of AUM) Inc. AE Number of Participants (x1000) 2012 2013 2014 2015 2016 H1 H1 2016 2017 26% CAGR: +16% Pension 19,9 19,1 18,8 19,2 19,4 19,3 19,3 1071 AE - - - - - - 8,8 876 849 825 733 617 Total - - - - - - 19,2 492 885 Average Monthly Contribution Size / Policy (TL) Exc. AE 2012 2013 2014 2015 2016 H1 H1 2012 2013 2014 2015 2016 H1 2016 H1 2017 2016 2017 Cont. 179 202 217 261 288 283 254 AE # of part.. 186 12

Pension Auto Enrolment Automatic enrolment Phasing structure for the employees older based on company size 45 Potential Phasing Type of Employer Participants Structure (Million) Jan/2017 1000+ Private 1,9 Jan/2017 1000+ State 0,3 Re-enrolment every April/2017 250+ Private 1.0 Simplified enrolment two year for opted-out April/2017 250+ State 2,7 and collection process participants July/2017 100+ 1,5 Jan/2018 50+ Private 1,2 Jan/2018 50+ State 0,4 July/2018 10+ 2,7 3% employee Jan/2019 5+ 2,5 contribution Total 14,2 Simplified fund and structure New Topic No employer Auto Enrolment: contribution Different sales, commission, service and - 25% state contribution marketing model - 1,000 TRY one-off state contribution Corporate and SME type - 5% state contribution of their total savings for retired 10 business line years annuities buyers - Defered tax in terms of pension investment income 13

Pension- Fee Structure Pension System – Fee Structure Auto Enrolment Pension Fund Management Max: Max: Fee 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 +15th year: 25.0% bonus Management Fee None Max: %8,5 of the monthly minimum wage Collectible for the first 5 years of the policy 14

Pension – Fixed Income Dominance State Contribution Fund Type 11,5% 9,9% Fund Type Allocation 7,5% (include state contribution fund) (AvivaSA 2016) 4,0% 2011 2012 2013 2014 2015 2016 Gold State 3% Equity Contribution Equity Fund Type 8% 12% (exclude state contribution) International 3% 9,3% 8,9% 8,7% 8,6% 7,7% 6,2% Flexible 21% FX Public Borrowing 2011 2012 2013 2014 2015 2016 10% FX Related Fund Type 18,2% TL Public Borrowing Money Market (exclude state contribution) 31% 12% 13,3% 8,1% 5,1% 4,8% 3,9% 2011 2012 2013 2014 2015 2016 15

Pension - Strong Real Return 16

Life Protection – High Growth Potential and Strong Profitability 17