MILLIRE_2019_Annual Report

222 Milli Re Annual Report 2019 Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2019 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) It is essential that all the authorized personnel in charge of executing policy issuance transactions, which is the initial phase of insurance process, should ensure to gather or provide all the accurate and complete information to issue policies in order to obtain evidence on the acceptable risks that the Group can tolerate from the related insurance transactions. On the other hand, decision to be made on risk acceptance will be possible by transferring the coverage to the reinsurers and/or coinsurers and considering the terms of the insurance policy. In order to avoid destructive losses over Group’s financial structure, company transfers the exceeding portion of risks assumed over the Group’s risk tolerance and equity resources through treaties, facultative reinsurance contracts and coinsurance agreements to reinsurance and coinsurance companies. Insurance coverage and policy terms of reinsurance are determined by assessing the nature of each insurance branch Sensitivity to insurance risk Insurance risks do not generally have significant unrecoverable losses in the course of ordinary transactions, except for risks associated with earthquake and other catastrophic risks. Therefore, there is a high sensitivity to earthquake and catastrophic risks. The case of potential claims’ arising from earthquake and other catastrophic risks exceeding the maximum limit of the excess of loss agreements, such risks are treated as the primary insurance risks and are managed based on the precautionary principle. Maximum limit of excess of loss agreements is determined based on the worst case scenario on the possibility of an earthquake in terms of its severity and any potential losses incurred in accordance with the generally accepted international earthquake models. Insurance risk concentrations The Group’s gross and net insurance risk concentrations (after reinsurance) in terms of insurance branches are summarized as below: Branches December 31, 2019 Gross total claims liability (*) Reinsurance share of total claims liability Net total claims liability Land Vehicles Liability 1.147.132.099 (222.298.884) 924.833.215 Land Vehicles 769.928.845 (4.116.796) 765.812.049 Fire and Natural Disasters 907.754.242 (180.566.480) 727.187.762 Health 672.148.717 (37.946.849) 634.201.868 General Damages 531.705.389 (95.853.717) 435.851.672 General Liability 114.399.766 (17.357.975) 97.041.791 Sea Vehicles 145.393.312 (64.253.374) 81.139.938 Marine 64.346.326 (19.131.539) 45.214.787 Casualty 37.420.502 (4.583.387) 32.837.115 Air Vehicles 256.064.429 (229.485.354) 26.579.075 Financial Losses 52.888.453 (33.344.584) 19.543.869 Life 6.307.867 (882.208) 5.425.659 Fidelity Guarantees 6.148.381 (4.119.721) 2.028.660 Air Vehicles Liability 3.820.485 (2.552.384) 1.268.101 Credits 2.206.515 (1.866.169) 340.346 Legal Protection 150.491 - 150.491 Total 4.717.815.819 (918.359.421) 3.799.456.398