MILLI REASURANS ANNUAL REPORT 2018

Milli Re Annual Report 2018 16 / General Information GENERAL MANAGER’S MESSAGE 65% of the total global industry losses were caused by natural catastrophes driven by hurricane and wildfire events in USA. Europe started off the year with heavy weather conditions and Extratropical Cyclone Friederike, being effective in January, stood out as the costliest natural disaster recorded in the first half of 2018. Other regions experienced significant natural disasters as well and Typhoon Jebi striking Japan and some parts of Philippines in September is recorded to be the strongest storm in Japan’s history since Typhoon Yancy in 1993. On the other hand, the severest event of 2018 Pacific hurricane season was Typhoon Mangkhut, which took hundreds of lives. Despite the increased frequency of catastrophe events in 2018 and deterioration of losses related to 2017 catastrophes beyond expectations, with abundant capacity available, no major changes with regards to terms and conditions were observed during January 2019 renewals. Moreover, new regulations regarding capital adequacy requirements as well as buyers’ tendency to purchase more cover in the aftermath of increasing frequency of natural catastrophe losses caused overall demand for reinsurance to show modest growth. In terms of pricing, while the market did not follow a common trend; due to reinsurers opting for a tailor-made approach in assessing their cedants, some buyers were able to secure rate reductions whereas some others renewed with higher costs. Even though no major natural catastrophe or risk event losses occurred in 2018, factors such as slowdown in the general economy, the stagnation in investment activity and its adverse effects on construction and real estate sectors as well as the falling prices in a competitive environment, caused a pressure on premium incomes of reinsurance treaties of ceding companies operating in Turkey. As of 2019 renewals, Milli Re maintained its market share of 27% in the local market by leading the reinsurance contracts of the majority of ceding companies buying reinsurance protection on proportional bouquet basis. For the same period, Milli Re’s liability in the catastrophe excess of loss programmes is around 8%. Being one of the oldest reinsurers active in Europe, Milli Re aims to sustainably foster its portfolio. As part of its strategy to expand to international markets in order to achieve a diversified portfolio, Milli Re provides reinsurance capacity to insurance companies active in over 50 countries, with the contribution of our Singapore Branch operating since 2008. 17% According to 2018 year-end figures released by the Insurance Association of Turkey, insurance industry in Turkey has produced TL 54.7 billion premium with an increase of 17% over the previous year.