MILLIRE_2019_Annual Report

Milli Re Annual Report 2019 50 Milli Re’s premium income from proportional treaties is expected to increase by 15% in 2020. Anticipated stabilisation in the economy and its effect on premium levels of proportional treaties as well as the impact of rate of exchange and inflation on sums insured are likely to elevate premium income particularly in Fire and Marine, along with the growth expectation in Non- Motor Accident due to increased loan utilisation in relation with the decrease in interest rates. The dominance of Fire and Natural Perils in proportional bouquet income showed a slight increase due to the notable decline in Engineering, reflecting the slowdown in investments and stagnation in construction industry. The split of proportional treaty premium across the market is as follows: Fire 56%, Engineering 23%, Marine 11% and Accident 10%. Coverage provided by catastrophe excess of loss programmes - protecting insurers’ retentions in Fire and Engineering against natural catastrophe perils including earthquake, flood, windstorm and hail - increased in line with the movements in nat cat exposures, reflecting to some extent organic market growth, but also the effect of relatively stronger Turkish Lira - as the currency of nearly all programmes in the market is Euro. A few programmes were restructured and optimised to attain better cost/reward balance. Although there has been a nominal increase in the total premium paid to reinsurers in line with larger limits bought, Turkish market saw risk- adjusted rate discounts up to 5%-7.5% on a general level. Milli Re maintained its existing 8% involvement in catastrophe excess of loss programmes in 2020. There was no significant change in the appetite of the current reinsurers in market and the renewal of proportional and non-proportional agreements was completed without any capacity problems. Any capacity deficit caused by the withdrawal or share reduction of a limited number of reinsurers was readily closed by current and new market players. The split of Milli Re’s domestic premium income differs significantly from that of market Non-life premiums. Largest contributors to revenue in the Turkish insurance market are Land Vehicles Compulsory Liability and Land Vehicles (Casco), as well as Agriculture and Health insurances. While the share of these lines in the Non-life premium of the sector stands at 67%, they account only for 8% in Milli Re’s premium income, reflecting the conservative approach under the current conditions hence the limited appetite of Milli Re. Milli Re maintained its existing 8% involvement in catastrophe excess of loss programmes in 2020. 8% TURKISH REINSURANCE MARKET AND MİLLİ RE