MILLI RE 2020 ANNUAL REPORT

Financial Status Risks and Assessment of the Governing Body Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon Consolidated Financial Statements Together with Independent Auditors’ Report Thereon 61 Milli Re Annual Report 2020 The government of India has amended the Foreign Direct Investment (FDI) policy to allow 100% foreign investment in insurance intermediaries last February, however, the FDI limit on insurance companies remained at 49%. Since Covid‑19 pandemic has strained capital in the insurance sector, the government considers raising FDI limit for insurance companies to 74% in the future. Competitive market conditions, poor pricing in major lines such as motor, health and agriculture (approximately 80% of total Non‑Life premiums) and economic reflection of Covid‑19 outbreak continue to be the key factors of India’s Non‑Life market’s outlook. As far as April 2020 renewals are concerned, the prices of loss hit non‑proportional programs increased by 5% to 10%, while rate decreases up to 5%were witnessed in respect of loss‑free programs. For proportional treaties, although commission levels were highly dependent on results, treaties with favorable performance have seen increases up to 8%. Pakistan 2020 has been a difficult year for the insurance industry due to the consequences of Covid‑19 pandemic, which aggravated the economic stagnation prevailing in the country. The Non‑Life insurance segment was severely impacted from the Covid‑19 induced disruptions in the first two quarters of the year which prompted the insurance regulator, Securities and Exchange Commission of Pakistan (SECP) to take protective measures like deferred premiums and cover extensions. The market in total is expected to grow maximum by 3% in 2020 with some underwriting profitability compensated by above average investment income. The market, with the support of the SECP, is successful in leveraging digital solutions to improve the accessibility to insurance products. The SECP has revamped the regulatory regime by reducing obstacles in many of its regulated sectors to ensure Ease of Doing Business (EODB). The Commission is also in the process of preparing new legislation for insurance and non‑banking financial sector to allow digital distribution channels in addition to issuing amendments in respect of the insurance regulation to fill the gaps in the current law and enhance market developments. The Indian Non‑Life insurance industry maintained robust growth during 2020 and reported a gross direct premium of USD 26.7 billion, registering a growth rate of 11.72%. 3% The Pakistan insurance market in total is expected to grow maximum by 3% in 2020.