Turkish Insurance Industry by Sezi Meric Milli Re

Turkish Insurance Industry by Sezi Meric, Milli Re

Contents § Market History § General Market Conditions § Role of Foreign Capital § Turkish Reinsurance Market § Future Outlook § Milli Re

The History of the Turkish Insurance Market History Market Overview Foreign Capital Reinsurance Market • The first developments regarding insurance activities in Turkey were seen following the big fire which occurred in Istanbul in 1870. • The pioneering insurance companies established in Turkey (during the Ottoman times) were the agencies of the English and French companies (Sun, Northern, North British, La Fonciere). • The first Turkish capitalized insurance company was established in 1918. Future Outlook Milli Re

Market History The History of the Turkish Insurance Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re 2005 2006 2007 2008 2009 Non-Life 32 32 35 36 36 Life – Pension 11 11 10 12 12 Life 10 10 14 12 11 2 1 1 Reinsurance

Turkish Insurance Market: a brief overview Market History Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re Premium Production TL Branches 2007 2008 2009 Share (%) 1. 482. 841. 577 1. 596. 779. 128 1. 670. 810. 100 13, 43 364. 887. 256 413. 600. 680 374. 352. 036 3, 01 Accident (*) 3. 574. 502. 835 3. 330. 869. 728 3. 237. 041. 576 26, 02 Motor TPL 1. 650. 517. 911 2. 062. 285. 306 2. 249. 245. 391 18, 08 523. 356. 482 535. 217. 981 623. 890. 948 5, 01 95. 331. 476 125. 111. 095 151. 119. 651 1, 21 1. 217. 976. 563 1. 326. 125. 505 1. 415. 189. 392 11, 37 39. 216. 024 32. 412. 600 36. 028. 946 0, 28 400. 666. 470 467. 501. 881 505. 591. 674 4, 06 13. 784. 873 40. 944. 611 28. 436. 157 0, 22 Non- Life Total 9. 597. 468. 685 10. 203. 673. 199 10. 614. 317. 698 85, 35 Life 1. 412. 198. 649 1. 576. 208. 875 1. 821. 653. 559 14, 65 11. 009. 667. 334 11. 779. 882. 075 12. 435. 971. 258 100, 00 Fire Marine Eng. Agriculture Health Legal Protection Pers. Acc. Credit G. Total (*) Including Motor Own Damage

Market History Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re Premium Production vs. Annual Growth

Market History Market Overview Turkish Insurance Market: a profitability check * Including both life and non-life branches. Foreign Capital 2007 2008 2009 447. 558. 788 481. 931. 039 217. 007. 460 11. 009. 667. 334 11. 774. 219. 813 12. 435. 971. 258 4, 65 4, 10 1, 74 Reinsurance Market Future Outlook Profit (TL) Milli Re Premium (TL) (%) Branch Loss Ratio Market Share Accident (including M. O. D) 90% 26% MTPL 92% 18% Health 92% 11% 91 -92% 55% Total

Profit / Shareholder‘s Fund Ratios Market History Market Overview Foreign Capital 2007 2008 2009 447. 558. 788 481. 931. 039 217. 007. 460 Shareholde r’s Fund (TL) 6. 848. 092. 633 7. 021. 692. 161 8. 821. 077. 683 Profit/ Shareholde r’s Fund (%) 6, 53 6, 86 2, 50 Reinsurance Market Future Outlook Milli Re Profit (TL)

Market History Market Overview Foreign Capital Reinsurance Market Future Outlook Important Insurance Organizations in the Market TARSIM: Agricultural Insurance Pool Insurance Data Center TRAMER Milli Re TCIP: Turkish Catastrophe Insurance Pool Earthquake insurance for dwellings became compulsory after 1999 earthquake in the Marmara region. The main objectives of TCIP are: • To provide an earthquake insurance cover for dwellings in return for an affordable premium • To reduce or mitigate the financial burden of potential earthquakes suffered by the State, by spreading it to the international financial and reinsurance markets • To make contribution in developing insurance awareness in the society.

Market History Foreign Capital Development in the Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re No. of Foreign Capital Companies Non-Life Companies Life / Pension Companies 2005 2006 2007 2008 2009 20 24 35 41 43 11 14 19 22 24 9 10 16 19 19 2005 2006 2007 2008 2009 16, 81% 23, 00% 38, 09% 51, 37% 54, 98% Non-Life Companies 13, 64% 19, 00% 38, 10% 51, 20% 55, 40% Life / Pension Companies 24, 85% 38, 07% 51, 92% 54, 76% Foreign Share in Paid-up Capital

Turkish Reinsurance Market (Premium Ratio) Market History 2009 million TL Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re Branches Fire Market Insurance Premium Market Reins. Prem. Ratio. in % 1. 671 952 57. 00 374 183 49. 00 Accident (*) 3. 807 720 18. 93 Motor TPL 2. 249 333 14. 82 Engineering 624 424 68. 00 Agriculture 151 128 85. 40 1. 415 268 19. 00 10. 291 3. 011 29. 25 Marine Health Total (*) Including Motor Own Damage, Personal Accident, Legal Protection and Credit.

Turkish Reinsurance Market in Brief. . Market History Market Overview Per Risk Protection in General Foreign Capital Reinsurance Market • Currently 23 companies employ proportional reinsurance protection for the risks they have written. • On the other hand, the number of the companies that have excess of loss protection on gross account basis is only 4. • Milli Re being the leader of 13 of the proportional treaties, working on bouquet basis, holds a 25% share within proportional reinsurance premium of the market. Future Outlook Milli Re

Market History Outlook for 2010. . Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re • Despite the Global Economic Crisis, Non-Life premiums rose by nearly 13% in Q 1 2010. • A number of regulatory initiatives have acted as a catalyst for the development of the insurance industry: • authorities are implementing more compulsory insurances • encourage strong reserving, correct and appropriate reinsurance purchasing, and credit risk control

Market History Outlook for 2010. . Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re • Companies are forced for stricter financial compliance (Auditors, Shareholders, Regulatory Bodies) • Trend of increased foreign investments/take-overs, consolidation expected in the coming years.

Milli Re Market History Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re Corporate Profile • Est. in 1929 as the World‘s first and only private company to operate compulsory reinsurance for each insurance branch & promote the development of the Turkish Insurance Market. • Run the compulsory reinsurance system in all lines of business until 31. 12. 2001. • Actively started writing business from emerging markets as from 01. 2006. Financial Strength Ratings • A. M. Best 11. 08. 2009 B++ (outlook stable) • Standard & Poor‘s 24. 02. 2010 tr AA

Milli Re Market History Market Overview Foreign Capital Reinsurance Market Future Outlook Milli Re Key Figures (2009) • Gross Premiums: $547 Million • Paid-Up Capital: $256 Million • Assets: $1 Billion • Net Profit: $59 Million Portfolio Mix

Thank you for your Attention. . . Vă multumesc … ie t n e t a u r t n e p Sezi Meric (Area Underwriter) T: +90 212 231 47 30/ext. 1261 smeric@millire. com F: +90 212 246 16 08 www. millire. com