MILLIRE_2019_Annual Report

According to the 2019 year-end figures released by the Insurance Association of Turkey, total premium production of the insurance industry is registered as TL 69.2 billion, increasing by 27% year-on-year basis. With the positive impact of the interest rate cuts on consumer and mortgage credits, share of Life Insurance in the total premium production increased to 16%, from last year’s figure of 13%. Generating the majority of the total Non-life Insurance premium with 49% share, Land Vehicles Liability Insurance and Land Vehicles Insurance achieved very limited growth in 2019; which mainly emanated from the factors such as car sales remaining at low levels as a result of the recent economic developments and the ongoing price cap enforcement. As far as Fire and Natural Disasters Insurance is concerned, there has been increase in the premium especially from the commercial and industrial risks due to the exchange rate movements and inflation. Health Insurance premiums also grew on the back of new products such as Supplementary Health Insurance. On the other hand, 2019 was marked with important structural arrangements for the sector as well. Insurance and Private Pension Regulation and Supervision Authority started its operations in order to centralise regulation and supervision functions in the insurance industry, raise insurance awareness while helping companies strengthen their financial structures. Moreover, Turk Reinsurance A.S. has been established in order to increase the local reinsurance capacity while the insurance companies owned by the public banks have been consolidated under the same roof and transferred to Turkey Wealth Fund, with the aim of achieving economies of scale and enhancing the capacity of non-bank financial sector. Natural catastrophes in 2019 caused significant burden to the global economy. Similar to the previous years, majority of the disasters occurred as a result of the extreme weather events stimulated by the global climate change, and an increase in the loss frequency was recorded. Decreasing by 35% compared to 2018 and having a total economic loss amount of USD 150 billion, the total cost of natural disasters to the global economy remained below last year’s figure of USD 160 billion; while global insured losses fell back to around USD 52 billion from USD 80 billion. The main reason for the decline in the total loss amount, borne by the insurance industry, was the fact that developing countries, where the insurance penetration remains very low, had the most severe damages from natural disasters of 2019. 49% of the total economic loss was recorded in Asia, yet only 35% of the global insured losses arose from the natural catastrophes which affected the region. As it was the case in the last 10 years, majority of the losses affecting the insurance industry were caused by the disasters that occurred in North America and the USA. While Hurricane Dorian was the most important catastrophe recorded in North America, besides Winter Storm Eberhard which hit Europe in March, the region experienced a series of flood events in the second half of the year. Affecting Japan extensively, Typhoon Hagibis and Faxai were the costliest natural catastrophes for the insurance industry in 2019. Bushfires which spread across the whole country in Australia, Cyclone Fani as well as the flood disasters coming along with the monsoon season in India and Typhoon Lekima which affected China stood out as the other major natural catastrophes in 2019. Growing by 7%, total reinsurance capacity reached USD 625 billion in the first nine months of 2019. As a result of the increase in loss frequencies, major natural disaster events and the new legislative arrangements, the reinsurance demand has remained strong during the January 2020 renewal season. Despite the sufficient levels of supply capacity, increasing loss costs and diminishing profit margins caused prices to move upwards in general. While reinsurers continued to opt for tailor-made approaches, cedant companies faced differentiations in pricing and terms based on the criteria such as; the geographical scope of the reinsured business, underlying portfolio and the loss record. Being one of the oldest reinsurance companies active in Europe, in line with our strategy to expand into global markets, Milli Re provides reinsurance capacity to around 130 insurance companies in over 50 countries with the contribution of our Singapore Branch, which started its operations in 2008. GENERAL MANAGER’S MESSAGE