MILLIRE_2019_Annual Report

Milli Re Annual Report 2019 10 Taking advantage of the drop recorded in the inflation rate in addition to the favourable global liquidity conditions arising from the slowdown in the global economic activity and loose monetary policies adopted by the developed economies’ central banks, starting in the second half of the year, Central Bank of the Republic of Turkey (CBRT) gradually reduced the policy interest rate by 1200 basis points and pulled it down to 12%. In line with the effective policies implemented, the economy assumed the growth trend once again. While Gross Domestic Product (GDP) surged by 6% in the fourth quarter of the year compared to the same period of the previous year; Turkish economy rounded up the year 2019 with 0.9% overall growth. Increasing by 14.9% compared to the previous year, GDP at current prices reached TL 4,280 billion in 2019. In 2019, the actors of global insurance and reinsurance industry covered around USD 52 billion of the losses arising from the global natural catastrophes which caused a total economic loss of USD 150 billion. In 2019, while developing countries with low insurance penetration levels, were severely impacted by the natural disasters; most of the damages were caused by flood, which is not a peril as widely insured as windstorm, the total economic burden of natural disasters to the insurance industry remained far below the 10 year average of USD 65 billion. In 2020 January renewals, although the reinsurance capacity remained at sufficient levels, owing to the differentiations by reinsurers based on the geographical scope as well as the line of business of the underlying portfolio, loss record and relationships with clients, the trend of variations in prices and terms has become more notable compared to the previous periods. According to the data published by the Insurance Association of Turkey, the premium volume of Turkish insurance market reached TL 69.2 billion in 2019, with 27% increase in nominal and 13% in real terms compared to the previous year. With 84% ratio, majority of the market premium was generated from Non-life business, nonetheless as a result of the acceleration seen in the consumer loans with the positive impact of the interest rate cuts in the second half of the year, Life business grew by 64%. On the other hand, Insurance and Private Pension Regulation and Supervision Authority starting its operations, establishment of Turk Reinsurance A.S in an effort to support local reinsurance capacity and consolidation of state-owned insurance companies under the same roof with the aim of achieving economies of scale as well as their transfer to Turkey Wealth Fund, were amongst the most important actions taken for the reorganisation of Turkish Insurance Industry. Growing by 27% in nominal terms and 13% in real terms compared to the previous year, the premium volume of Turkish insurance market reached TL 69.2 billion in 2019. CHAIRPERSON’S MESSAGE