MILLI RE 2020 ANNUAL REPORT

Activities and Major Developments Related to Activities General Information Financial Rights Provided to the Members of the Governing Body and Senior Executives Research & Development Activities Milli Re Annual Report 2020 12 Chairperson’s Message Even though a more disciplined pricing environment was expected during January 2021 renewals, as a result of the capital inflows and the relative improvements in investment markets in the second half of 2020, the upward movements in prices remained below the expectations. At the early stages of the outbreak, with the help of the measures taken in order to accelerate the economic activity, the impacts of the Covid-19 have been confined; however, as a consequence, inflation has inevitably increased. In 2020, the inflation based on consumer prices was registered as 14.6%, mainly driven by the prices in food and transportation group. On the other hand, volatility in financial markets increased as the capital outflows accelerated, and the domestic dollarization trend became notable. The foreign trade deficit, which has increased with the effect of the more pronounced restrictive measures in European countries that are our most important export market, as well as the rapid decrease in transportation and tourism revenues continued to put pressure on the current account balance. Although the emergence of the second wave of the pandemic as of November restrained the economic activity which was showing signs of recovery, the attempts to extend the vaccination and the structural measures taken to maintain the robust functioning of financial markets indicate that outlook for 2021 will be more positive. The pandemic, which caused significant changes in consumer behaviors and working conditions by affecting all aspects of our lives, especially the health and economy,has undoubtedly touched our field of activity, the insurance and reinsurance markets as well. While the ultimate cost of the Covid-19 outbreak to the global economy remains uncertain, it is evaluated that the total insured loss amount arising from the outbreak may exceed USD 100 billion. On the other hand, the natural catastrophes in 2020 which gave rise to a total economic loss of USD 210 billion globally by mainly affecting developing countries where the insurance penetration is quite low, is expected to have an impact of around USD 82 billion on the global insurance and reinsurance markets. In addition to the natural disasters whose frequency has increased in recent years, considering the pressure on profitability caused by the economic stagnation and the pandemic conditions, a more disciplined pricing environment was expected during the January 2021 renewals in the reinsurance market. However, as a result of capital inflows and the relative improvements in investment markets in the second half of 2020, the upward movements in prices remained below the expectations.