MILLI_RE_ANNUAL REPORT 2022

that at least 10% of the maximum retention of Fire treaties (irrespective of insured value) be retained for policyholder groups which are deemed to be risky or which frequently file claims. In addition to these conditions, which applied uniformly to everyone, retention ratios in proportional reinsurance bouquet treaties were variously increased between 20% and 50% depending on branch across the market while plan numbers and capacities were reduced in quite a few treaties taking into account such considerations as portfolio structure, risk profile, and growth trends. Event limits throughout the industry were determined based on such considerations as portfolio structure and the course of and potential growth in catastrophe liabilities. The industry- wide aggregate of all event limits covered by proportional reinsurance contracts, which was somewhat less than in 2022, was constrained by placement worries over the effect of exchange rates on accumulations despite the fact that some companies’ risk clusters are euro-based. In the determination of commission charges and other terms, the utmost attention was given to bouquet and associated branch performance. Commissions were reduced by 2-10% in nearly all branches but particularly in the case of Fire, Machinery breakdown, Electronics, and Liability policies. In 2022 stricter exemption terms were introduced in all treaties providing coverage for power plant, power line, and mobile equipment risks, which have significantly proliferated in recent years and have been leading to increasingly bigger and more frequent claims. The performance of these exemptions was tracked throughout the year and they were observed to result in price and term improvements in certain risk groups. In addition to the contagious disease and cyber risk exception clauses whose inclusion in treaties has been the norm since 2021, so-called “LMA 3100 embargo clauses” which exclude coverage for losses that are caused by or arise out of any embargo etc are becoming increasingly more common in treaties. Finally, coverage for political risk and war-related claims has become a significant issue in reinsurance renewals. Providing capacity to 25 companies making use of proportional reinsurance after their 2023 renewals and as the leading provider in the reinsurance treaties of 21 companies, Milli Re secured a 30% market share of overall premium production that once again made the company the market leader last year. Most Turkish insurers buying reinsurance coverage last year continued protecting their 2023 risk portfolios by means of surplus proportional “bouquet” treaties. Milli Re participated in the programs of nine of the twelve insurers that make use of excess-of-loss contracts to cover their risk portfolios. In non-proportional agreements, 2023 catastrophe coverage to be provided for each company was determined by modelling the company’s risk cluster and using the results to adjust the amount of coverage so as to reflect the anticipated course of claims and portfolio growth as well as exchange rate movements. In some cases, program structures were optimized taking into account not only the potential impact of exchange rate movements on minimum limits and total coverage but also the program’s anticipated costs. In the face of shrinking capacity, reduced reinsurer appetite, and expectations of higher costs, the Turkish insurance industry’s catastrophe program minimums for 2023 were generally higher than they had been for 2022. Total accepted coverage was down by as much as REINSURANCE BOUQUET TREATIES WERE VARIOUSLY INCREASED BETWEEN 20% AND 50% DEPENDING ON BRANCH ACROSS THE MARKET 20-50% 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 57 MİLLİ RE 2022 ANNUAL REPORT