MILLI_RE_ANNUAL REPORT 2022

retrocession catastrophe excess of loss rates escalated by around 50% on average at January 1 st renewals. EUROPE 2022 was another active year in Europe in terms of natural catastrophe activity, with large losses mainly driven by record levels of high temperatures and drought conditions prevailing during the summer as well as a series of severe convective storms and historic hail events in France. Although an increase in demand for reinsurance capacity was expected heading into January 2023 renewals primarily driven by double-digit inflation, given the restrained capacity, many buyers had to adapt to changing market conditions and increased retention levels in order to secure total protection required. On the other hand, inflation adjustment of portfolios was a critical point in renewal discussions. While risk-adjusted price increases fluctuated between 20% to 40% even for loss- free cat programs, price adjustments for loss hit programs reached up to 100% in some cases. As far as the property risk programs are concerned, loss-free programs renewed with price uplifts changing between 20% to 30%. On the other hand, similar to cat programs, risk-adjusted price increases for loss impacted programs showed great variation based on loss history and treaty performance. NORTH AMERICA With the impact of high inflation, rising interest rates as well as the historically high losses driven by Hurricane Ian, the US market came under great pressure at January 2023 renewals and faced the most challenging renewal season of the last couple of decades. Given the supply and demand mismatch, many buyers failed to complete program placements, especially for the first layers of both risk and catastrophe excess of loss programs as reinsurers tend to allocate their capacity to higher attaching layers. As a result, many buyers were compelled to retain more by increasing program attachment levels or annual aggregate deductibles. Moreover, in consideration of the high inflation environment and its impact on exposures, many cedants sought to buy extra capacity, which resulted in sharper rises on top layer pricing due to substantially increased baseline rate-on-line requirements as capital protection became a top priority in consideration of the macroeconomic conditions as well as the above average loss activity over the past couple of years. In consequence of market conditions, placing programs with differential terms became more prevalent as buyers preferred securing capacity needed at higher costs over having shortfall in placements. While risk-adjusted prices for loss affected cat programs hiked between 45% to 100%, for loss free cat programs, upward adjustments remained in the range of 25% to IAN IS RANKED AS THE COSTLIEST NATURAL DISASTER ON RECORD IN 2022 FOR THE INDUSTRY. ACCORDING TO CURRENT ESTIMATES, THE TOTAL ECONOMIC COST OF IAN IS ANTICIPATED TO EXCEED USD 100 BILLION. IAN HURRICANE 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 63 MİLLİ RE 2022 ANNUAL REPORT