On an inflation-adjusted basis pursuant to IAS29, Aksigorta’s gross operating income increased 31.7% from TL 21,540 billion in 2Q01 to TL 28,368 billion in 2Q02. This improvement in the operating margin is the direct result of the management’s better risk assessment and risk management strategies. The 77,8 % decrease in net income from TL 39,460 billion in 2Q01 to TL 8,746 billion in 2Q02 is not related with operations and is the direct result of the decrease in financial income arising from the fact that Akbank did not distribute dividends in 2002. No dividend distribution by Akbank is an extraordinary situation related to the extraordinary conditions that banking sector went through in 2001.

 (USD 1 = 1,570,000)   

General Overview

Established in 1960 in İstanbul, Aksigorta is one of the leading companies in non-life insurance sector in Turkey with 11.1% market share at the end of 2Q02 compared with 8.3% at YE01. The Company is the largest Turkish non-life insurance company based on equity as of the end of 2001. At the end of 1995, Aksigorta stopped operating in the life business with the establishment of the life insurance company, Akhayat in which it has a 26% interest. Today, the Company still holds the life portfolio of its former customers. Currently, the Company's organization is composed of 1,486 agents, of which 884 are independent and 602 are Akbank branches.

§         Financial Review - Improved operating margin reflects better risk management

·         According to the 2Q02 IAS results, net premium revenue is TL 47,914 billion  as of June 30, 2002. This is 7.9 % less than the net premiums recorded for the same period in 2001. The reason for this decline is the result of an increased percentage of revenues allocated to the reinsurers. As some large corporate accounts have been added to the portfolio such as Botaş and Petkim, it became necessary from the perspective of risk management to increase the reinsurance coverage as a tool to metigate risks more efficiently.  

·         The positive results of the risk management strategy employed are reflected in the net claims where the amount has declined by 20.5 % from TL 34,831 billion in 2Q01 to TL 27,676 in 2Q02. Although the claims increased from TL 63,035 billion to TL 69,437 billion in 2Q02, the reinsurers’ share increased from TL 31,920 billion to TL 41,051 billion.

·         The commission income related to the reinsurer part of the commissions also increased by 17.5 % from TL 16,362 billion in 2Q01 to TL 19,224 billion in 2Q02 as a result of increased reinsurance coverage on the premiums written.

·         Other revenues are mainly derived from profit shares of the reserves for the life branch. This amount also increased by 56.4 % from TL 4,174 billion in 2Q01 to TL 6,528 billion in 2Q02. 

·         As a result gross operational income of the company increased to TL 28,368 billion showing 32 % increase compared with 2Q01.

·         The market share of Aksigorta increased to 11.1 % at the end of 2Q02 compared with 8.3% at YE01. Increase in the market shares is from the high profitable areas such as fire, accident and engineering improving the quality of earnings (e.g. fire from 10.4 % to 15%).

·         Net financial income decreased to TL 19,097 billion as of June 30, 2002, compared with TL 84,888 billion in 2Q01. The main reason for the decrease in net financial income is the fact

that Akbank did not distribute any dividends as of June 30, 2002. Due to a decrease in net financial income, net income recorded as TL 8,746 billion shows a 78 % drop compared to 2Q01.

§         Sectoral Developments

The capital requirement for establishing new insurance and reinsurance companies is increased to TL 8 trillion in July 23, 2002.

§         Recent Developments

Aksigorta has completed the Bank-Assurance project with Akbank in July 1999. The aim of this project is to increase the share of Akbank branches in total premium production through increasing the policies for individuals, which is a more profitable line. Four new products in fire and accident insurance branches have been launched in addition to the existing ones which are easy-to-sell and easy-to-write. All of the products are currently being utilised in all Akbank branches, and all Akbank branches are connected real time on-line to Aksigorta's headquarters.

Aksigorta is also improving the existing conventional agency channel through bonus plans with predetermined objectives and by increasing the number of independent agents.

At the end of 2001, 50 new customer representatives were employed to give service to free agencies to improve customer focus.

Aksigorta has a strong balanced presence in all the main branches. The two major government accounts, Botaş and Petkim, were added to the customer portfolio. 

The web site was, restructured to give better services for customers and agencies, put into effect at the end of June 2002.

§         Outlook

The "call center" will be operational in October 2002 (currently only informative).

With its financial strength, name recognition, experienced management team and sophisticated underwriting policy, advanced and efficient operational technologies, Aksigorta has the necessary competitive advantages to be the leader in the Turkish non-life sector.