MİLLÎ REASURANS T.A.Ş.
(MİLLÎ RE)

It was by the Act No. 1160 that the compulsory cession in Turkey was introduced on the 25th June, 1927 to reduce the outflow of foreign currency as well as to provide revenue for the Treasury.  It took two years of research and preparation for the government to decide in March 1929 to entrust the concession of operating the compulsory cessions to a company to be formed by the Türkiye Iş Bankası A.Ş.  Thus, Millî Reasürans T.A.Ş. which was the first and only private company in the world to operate the compulsory cessions in all branches, was established on the 19th July, 1929 with a capital of one million Turkish Liras to function on the basis of compulsory quota share cessions from each and every insurance company operating in Turkey, percentages of quota share being altered from time to time. As of the 1st January, 1982 the quota share basis of the compulsory cessions was replaced by surplus after retentions of the ceding companies, for all branches except life which was left out of the compulsory cessions and motor business where the quota share system was maintained.  With effect from 1st January, 1992 “the system increasing the local retention and the reinsurance capacity in the insurance sector” came into force for a period of ten years.  As at 31st December, 2001 the first section of this system, i.e. the compulsory cession which organized the percentages of reinsurances to be ceded to the Millî Re, has come to an end after 72 years of operation.  The second section which involved a proportion of each reinsurance contract of the insurance companies to be reinsured with the Millî Re, is maintained for a further period of five years.  Thus, as of 1st January, 2002 Millî Re continues to handle the management of this second section which is called the “Decree Pool” and was formed as at the 1st January, 1970 to fulfill the local reinsurance capacity before approaching international markets.  The business thus pooled, is retroceded back to the Turkish insurance companies which are willing to accept a share, remaining part being retained by the Millî Re.  The premium of the Pool since inception has reached US Dollars 527 million as at the end of 2002.  Apart from the Decree Pool, Millî Re is continuing to accept business from the local market on voluntary basis.  After the abolishment of the compulsory cessions, Millî Re increased its acceptances from the local treaties and the facultative reinsurance to fill the raised need of capacity in the market due to this abolishment.  After 72 years of management of the compulsory cessions in the Turkish insurance industry, it is observed that the foreseen targets have been succesfully realized by the Millî Re: -          the Turkish insurance market is nationalized; -          a moderate but steady revenue for the Treasury is provided; -          the outflow of foreign currency by way of reinsurance from the country is considerably reduced; -          the education of insurance is successfully carried out;  -          very good international business relations have been established; -          the retentions of the companies have increased.  In the meantime, by the ten years’ application of the “system increasing the local retention and the reinsurance capacity in the insurance sector” it can be observed that the target of strengthening the financial structures of Turkish insurance companies has to a great extent been materialized and the retentions of insurance companies have increased more in comparison to a decade ago.  Also, Turkish insurance industry has gained a financially strong national reinsurance company which is for years among the world’s top reinsurers and has always been and still is helpful for the Turkish insurance industry in finding the appropriate reinsurance protections with the most suitable underwriting conditions and providing financial support the companies need in respect of major losses. Millî Reasürans T.A.Ş. is the managers of  the F.A.I.R. Reinsurance Pool since 1974 and for certain years was the managers for E.C.O. Pool and the Turkish Reinsurance Pool and TCIP.  After a long compulsory cession period, Millî Reasürans T.A.Ş. has succeeded again to achieve a real increase in the premium income and continued its growth in terms of other financial markers which can be seen from the comparative figures given herebelow:

 

	2003 (in U.S. Dollars)	2004 (in U.S. Dollars)
Gross Written Premium	340,385,656	427,082,726
Net Retained Premium	293,753,088	364,985,800
Net Earned Premium	249,087,574	339,287,377
Net Losses Incurred	(181,561,107)	(250,965,603)
Net Commissions	(77,151,911)	(86,196,324)
General Underwriting Expenses	( 9,787,110)	( 12,353,611)
Other Technical Income (Outgo)	2,320,447	2,414,011
Underwriting Result	(17,092,108)	(7,814,150)
Financial Income	44,523,989	60,469,661
Net Profit/ (Loss) before tax.	27,431,880	52,655,511
Contingency Earthquake Loss Reserve	( 14,918,609)	( 14,139,579)
Taxes, Tax Reserves + Others	(10,441,910)	(29,933,120)
Balance Sheet Profit	2,071,361	8,582,812
Total Assets	323,996,319	515,779,453
[- Liquidity	237,660,276	376,601,608 ]
- Bonds	177,576,955	272,672,018
- Real Estates	39,971,899	88,501,226
- Affiliates	30,088	331,728
- Insurance Debts	54,964,541	54,696,640
- Cash	47,479,837	89,255,838
- Other Assets	3,972,999	10,322,003
Total Liabilities	190,160,584	257,136,814
- Technical Reserves	163,424,287	221,662,733
- Premium Reserve	97,291,766	126,883,519
- Loss Reserve	66,132,521	94,779,214
- Other Liabilities	26,736,297	35,474,081
Shareholders' Fund	133,835,735	258,642,639
- Capital	15,881,594	46,715,112
- Legal Reserve Fund	2,947,779	3,937,022
- Contingency Reserve Funds	115,006,362	113,238,384
- Capital Reserves due to Inflation Adjustment	-	94,752,121
Number of Employees	187	184
Year-end Rate of Exchange / 1USDollar = TL	1,402,567	1,348,600

Please contact webadmin@millire.com for comments, problems and suggestions.