MILLI REASURANS ANNUAL REPORT 2018

Milli Re Annual Report 2018 56 / Financial Status In 2018, total economic losses from catastrophes reached USD 160 billion, mainly emanating from severe losses recorded in the second half of the year. Even though 2018 catastrophe losses were significantly lower than the USD 350 billion loss amount recorded in 2017, they were still above the USD 140 billion average of the past 30 years’ historical losses. Decreasing by 43% year-on-year basis, global insured losses came down to USD 80 billion level, making 2018 the fourth costliest year on record, following 2011, 2017 and 2005 on inflation-adjusted basis. As was the case in 2017, US losses dominated the statistics, accounting for 65% of the total global industry losses. Even though the total industry loss amount is much lower than last year’s record in the aftermath of Harvey, Irma, Maria hurricanes; tropical cyclone remained as the costliest peril in 2018 as well. In total, 2018 hurricane season caused USD 56 billion losses worldwide, of which USD 29 billion was insured. Even though the first half of the year was quiet, Atlantic hurricane season arrived early September and was followed by a series of notable boom of hurricane activities. First major Atlantic hurricane was Florence, which originated as a tropical wave in Western Africa on August 30, scaling up to Category 4 and making its landfall in North Carolina as a Category 1 hurricane on September 14. The storm dumped torrential rain falls, some places received record- breaking amounts of precipitation which in return caused heavy flooding. Total economic losses are estimated to be USD 14 billion, while insured losses remain roughly at USD 5 billion, pointing to the fact that insurance for flood is not as widespread as windstorm cover in the US Reaching US mainland on October 10 with maximum sustained wind speed of 250 km/h, Hurricane Michael was the costliest hurricane of 2018 and the fourth strongest ever in the US history following “Labour Day” (1935) storm, “Camille” (1969) and “Andrew” (1992). Affecting Florida coast extensively, Hurricane Michael is estimated to have caused a total economic loss of USD 16 billion, of which USD 10 billion is expected to be recoverable from insurance industry due to high penetration of both private and commercial/industrial windstorm coverage in the region. Second year in a row, US rounded up the year with a series of catastrophic wildfires. California state suffered from the most damaging fire events in the US history; Camp, Woolsey and Carr fires. Starting in early November and destroying Paradise area of Sierra Nevada completely, the Camp Fire alone produced a total loss of USD 16.5 billion with insured losses amounting to USD 12.5 billion, making it the costliest individual natural catastrophe event of 2018. Around the same time, Woolsey Fire burned in Los Angeles area, mainly affecting Malibu. Due to high value of houses in the region, Woolsey is expected to have an impact of around USD 4 billion on the insurance market, with total economic burden reaching up to USD 5.2 billion. The least costly among 2018 California wildfires was Carr Fire, yet still causing more than USD 1.5 billion economic loss. Other regions experienced significant natural disasters as well. Being prone to various disasters, Japan was battered by a series of devastating catastrophes in 2018. In terms of weather-related events, Japan suffered from a number of typhoons affecting the mainland with torrential rainfalls and heavy flooding. Flood losses are estimated to cost around USD 9.5 billion, of which roughly USD 2.4 billion is insured. Typhoon Jebi, which stroke Japan and some parts of In 2018, total economic losses from catastrophes reached USD 160 billion. GLOBAL REINSURANCE MARKET AND MİLLİ RE IN 2018