MILLIRE_2019_Annual Report

Milli Re Annual Report 2019 49 Activities and Major Developments Related to Activities 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 General Information Financial Rights Provided to the Members of the Governing Body and Senior Executives Research & Development Activities TURKISH REINSURANCE MARKET AND MİLLİ RE In Turkey, economic slowdown, volatility in the currency and inflation, combined with the high interest rate environment which significantly hampered economic activities during 2018 and in the first half of 2019, have had adverse impact on the insurance industry, reducing the growth potential especially in lines such as life, motor own damage, motor liability, construction and residential risks. On the other hand, existing portfolios of corporate commercial and industrial risks of insurers have been largely maintained. Signs of recuperation of the economy in the second half of 2019 were to some extent reflected to the insurance industry. Premium estimates for reinsurance treaties across the market showed increases in line with market trends in Fire, Marine and Non-Motor Accident; whereas notable reduction was observed in the estimated income for most of Engineering treaties in comparison with the previous year. In line with the economy and developments in the industry, there was modest growth in premium income from proportional treaties in Turkish Lira terms. However, there were more notable increases in loss levels given the large number of policies being either in hard currency or were indexed to inflation; resulting with some deterioration in loss ratios. Growth in commercial and industrial lines, which form the bulk of proportional reinsurance agreements and the relative stabilisation of the Turkish Lira have led to an upward movement in natural cat exposures, hence increases in the event limits of some treaties. Commissions and other treaty conditions were reviewed and/or revised depending on the performance and requirements of individual treaties, bouquets and lines vis-à-vis market conditions. Generally, proportional treaty renewals were completed without major problems for reinsurance buyers. Milli Re provided capacity to 22 companies that utilised proportional treaties, leading 17 bouquets and having a 27% market share in 2020. Most companies operating in the Turkish insurance market continued to protect their risk portfolios by proportional treaties. Milli Re participates in the programs of 5 of the 7 companies that solely utilise excess of loss agreements to cover their risk portfolios. Milli Re provided capacity to 22 companies that utilised proportional treaties, leading 17 bouquets and having a 27% market share in 2020.