MILLI RE 2023 ANNUAL REPORT

GLOBAL REINSURANCE MARKET AND MİLLİ RE NORTH AMERICA Despite a relatively calm hurricane season in 2023, the increased frequency and severity of mid-sized severe convective storms with total industry losses reaching up to USD 58 billion put further pressure on pricing and led to challenging renewals at January 1 for loss-impacted programs. Although there was adequate level of capacity, with adjustments on view of risk, reinsurers continued to be sensitive in terms of the pricing of loss-hit programs. While rates for lower cat layers came under great pressure, mid and top layers faced more favorable terms given the high competition from the ILS market players. Moreover, reinsurers adopted a client-based approach and focused on ceding companies’ overall performance, strategy as well as financial stability and level of reliance on reinsurance. While risk-adjusted prices of loss affected cat programs increased between 10% to 50%, for loss free cat programs, price adjustments remained flat to up by 10%. Following a similar trend to cat program prices, loss-impacted risk programs saw upward price movements changing between 7.5% to 50%, while loss-free risk programs renewed stable to up by 10%. ASIA 2023 was the first full year since the region emerged from the Covid pandemic. Regional economies continue to quicken the pace of economic activities. However, global instability continues to dull these efforts. The strained global supply chains have yet to recover to pre-pandemic level with new challenges from the attacks on ships in the Red Sea and the Gulf of Aden. Inflationary challenges persist as the world’s largest economy, the U.S. maintains high interest rates. In the region, the world’s second largest economy, China, is still tackling with local economic uncertainty mired by high unemployment rate in its younger population and real estate market woes. Regional insurance markets, while generally stable, did not achieve the desired growth as hoped for in some areas. The global hard market continues to be felt in the region albeit renewals were more orderly than the previous year. Reinsurance capacity was more forthcoming after last year’s adjustments. However, non-performing treaties experienced comparatively greater challenges. Treaty restructures and retention level increases have been observed in some cases continuing the trend from last year. Overall, reinsurers and clients were more aligned than the previous year providing better clarity and facilitating smoother negotiations and placements. 2023 was a relatively benign year for large insured natural catastrophes event. However, there were still notable occurrences. Between January and February, New Zealand experience widespread flooding in Auckland and then a devastating Cyclone Gabrielle. These resulted in USD 2.3 billion of insured losses. DESPITE A RELATIVELY CALM HURRICANE SEASON IN 2023, THE INCREASED FREQUENCY AND SEVERITY OF MID-SIZED SEVERE CONVECTIVE STORMS WITH TOTAL INDUSTRY LOSSES REACHING UP TO USD 58 BILLION PUT FURTHER PRESSURE ON PRICING. The recurring summer floods in China between May and September 2023 and Typhoon Doksuri added strains on the results in the property class. The total economic loss is estimated at USD 32 billion while insured losses reached USD 1.4 billion. Clearly, protection gaps persist. It is estimated that the protection GAP in the Asia Pacific region is about of 80%; some markets are expected to have significantly greater protection gaps. As regional economies face headwinds, protection gap challenges will be prolonged. 60 MİLLİ RE