MILLIRE_2019_Annual Report

Milli Re Annual Report 2019 75 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 Total reinsurance capital, including alternative capital, increased by 7% in the first three quarters of 2019, reaching USD 625 billion. In January 2020 renewals, while it was observed that the reinsurance demand remained high due to increasing loss frequencies, major natural disasters, and legal regulations such as Solvency II, with supply level sufficient to meet demand; reinsurance prices on a global scale showed an upward trend due to increasing claim costs and declining profitability levels. According to 2019 year-end figures released by the Insurance Association of Turkey, insurance industry in Turkey produced TL 69.2 billion premium with an increase of 27%. This amount reflects the double counting effect emanating from the “High Risk Insurance Pool” for Land Vehicles Liability Insurance on market data. 84% of the total premium was generated by Non-life and 16% from Life insurance. In the second half of 2019, due to the impact of the reduction in interest rates, especially on consumer and housing loans, there has been 64% growth in life insurance and its share in total premium production increased from 13% in 2018 to 16%. While a growth of 21% on nominal basis was recorded in Non-life businesses in 2019, in real terms growth was around 8%. While 49% of the Non-life premium was obtained from Land Vehicles Liability and Land Vehicles, due to continuation of price cap and the sluggish vehicle sales compared to previous years, the growth rate in these lines was muted and constrained the overall Non-life premium production. In addition to the above, commercial and industrial risk premiums in Fire and Natural Catastrophe Perils which have approximately 15% share in Non-life premium production have increased despite the price driven competition and relative stagnation in investments, due to the fact that a significant portion of the insured risks and premiums are indexed to foreign exchange or inflation and the premiums of the Fire and Natural Catastrophe Perils contributed to total premium production with a growth rate of 21% in nominal and 8% in real terms. Having 14% share in Non-life premium, Health and Sickness premiums, recorded a 34% growth in nominal and approximately 21% in real terms, owing to the positive developments in products with important growth prospect such as Health and Complementary Health Insurance. Reinforcing its know-how and experience in the local market with the reputation earned in the international markets, Milli Re participates in a significant number of the reinsurance programmes of companies operating in the Turkish insurance market, most of which have international shareholders. Milli Re provided capacity to 22 companies that utilised proportional treaties, leading 17 bouquets and having a 27% market share in 2020. Providing reinsurance capacity to the Turkish insurance market since 1929, our Company started to underwrite business from the international markets in 2006 and Singapore Branch began its operations in 2008, as part of Milli Re’s strategy to expand to international markets. Marking its 91 st anniversary in 2019 and being one of the oldest reinsurance companies active in Europe, Milli Re provides reinsurance capacity to various insurance companies operating in over 50 countries. Focusing on profit-oriented risk management and sustainable growth targets, our Company continues its efforts to achieve digital transformation in order to increase efficiency and reduce expenses. The total premium production of our Company by the end of 2019 reached TL 1,659 million indicating a year-on-year growth of 26%. 64% of total premium amounting to TL 1,061 million was obtained from local business while 36% equalling to TL 598 million originated from international markets. In 2019, taking into account the investment income and expense transferred from non-technical operations, our Company obtained a profit of TL 85.1 million in respect of our technical operations and TL 227.4 million from financial operations and closed the 2019 operating year with a profit of TL 312.5 million. The assets of our company reached TL 4,532 million and shareholders’ equity was TL 2,136 million as at the end of 2019. As always, our Company aims to continue its success in the future and progress through a sustainable profit oriented growth. We would like to thank our esteemed stakeholders for supporting our Company, while it continuously paves the way in determination to add value to the Turkish Insurance Market with its expertise and know- how gained over the long years of operation, and positions itself as a preferred business partner in the international markets. BOARD OF DIRECTORS