MILLI_RE_ANNUAL REPORT 2022

severe floods across Oman and Iran at the beginning of January 2022 was the most significant natural disaster affecting the region. During January 2023 renewals, due to the increased risk loss activity more treaties and programs were restructured in order to better align interests. Proportional programs saw drastic structural changes, including the reduction and removal of surplus lines and increases in gross retentions. Terms were as expiring for good performing accounts while there were some changes in favor of the reinsurers for poor performing treaties. As far as the non- proportional programs are concerned, there were increases in retention levels coupled with higher prices for even loss-free accounts. There was a contraction in cat capacity as well as a reduction in coverage and scope. The prices of loss free non-proportional programs increased by 5% to 30% while rate increases up to 50% were witnessed in respect of loss hit programs. INDIA India’s economy demonstrated resilience despite a challenging external environment and compared to most other emerging markets, it is relatively well-positioned to weather global spillovers. However, inevitably there will be some short- term unfavorable effects on India’s economy and following a strong recovery from the pandemic-induced slump to 8.7% growth in 2021, it is estimated that real gross domestic product (GDP) growth will slow to 7.0% in 2022 and to 5.4% in 2023. India is the fourth largest insurance market in Asia and the tenth largest globally in respect of premium production. However, India is a significantly under-penetrated market with only 1% penetration rate, with per capita non-life premium corresponding to meagre USD 22. India’s insurance market, one of the largest and fastest growing in the world, is expected to rank sixth by 2032. It is predicted that the overall insurance premiums will grow on average by 14% annually in nominal local currency terms and 9% per annum in real terms over the next decade. The demand for life insurance in India has surged as a result of Covid-19 pandemic which increased the risk awareness among the population. Regulatory developments and digitalization are also expected to support market growth and by 2032, life insurance premiums is projected to grow by 9% annually, making India the fifth-largest life market worldwide. India is exposed to a wide range of natural catastrophes such as earthquake, tropical cyclone, flood and wildfire. Many regions of the country are at risk from multiple perils. In 2021, India’s natural disaster protection gap was 95%, or USD 2.61 billion, one of the highest in the world and significantly higher than the average for emerging markets. In terms of the effects of climate change, higher temperatures are causing more intense rainfall and a greater risk of drought. By making insurance products more accessible and affordable, innovative re/insurance solutions like parametric or index-based insurance can significantly contribute to closing this protection gap. In India, a number of regulatory developments are being implemented to boost the insurance penetration, increase capital inflow and facilitate the entry of small, specialized and niche players. The regulator is pushing for reforms to develop India as a reinsurance hub. The government has increased the limit on foreign direct investment in the insurance market to 74% from 49% and the risk-based capital (RBC) requirement is planned to be implemented. The regulator is also periodically suggesting amendments to the current regulatory sandbox that could foster further innovation in the market. As far as April 2022 renewals are concerned, prices of loss hit non- proportional cat programs increased by 5% to 20% while rate decreases up to 5% were witnessed in respect of loss free programs. The non-proportional cat program limits of companies remained largely the same as in the previous year. On the risk side, the programs saw rate increases up to 20%. GIC Re remained to be the biggest cat capacity provider. Their focus on improving underwriting results was evident in all classes, especially in property treaties, for which higher rate adjustments were applicable. The obligatory cessions to GIC Re have reduced to 4% and buyers dealt differently with the consequent increase in their retention. Improvement in terms for proportional treaties continued but loss participation corridors remained. Buyers managed to obtain modest increases in treaty and event limits. CENTRAL AND EASTERN EUROPE The CEE economy is expected to slow down in 2023 as domestic demand will be hampered by still-high inflation, restrictive financing conditions, and decreased savings. Additionally, a less favorable global economic environment is expected to restrain industrial production and exports. Possible energy price swings and geopolitical uncertainty stemming from Global Reinsurance Market and Milli Re ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES GENERAL INFORMATION FINANCIAL RIGHTS PROVIDED TO THE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES RESEARCH & DEVELOPMENT ACTIVITIES 66 MİLLİ RE 2022 ANNUAL REPORT