Kaan ACUN
Deputy General Manager
MILLI Re

XPRIMM: How would you describe the progress made by your company last year?
Kaan ACUN:
MILLI Re maintained its key position in the Turkish Market and successfully met the reinsurance needs of market-players by providing proportional and non-proportional treaty capacity, as well as facultative support in all lines of business.

In 2016, MILLI Re participates in 19 proportional bouquets, leading 14 and its market share in respect of proportional treaties is 25%. MILLI Re also participates in Gross XL programs of 4 multinational cedants which do not have pro-rata treaties. MILLI Re does not have a leadership position in Cat XL programs, but kept a stable engagement of around 8.5% across 25 programs, including group programs of multinationals.

In spite of the prevailing soft market conditions and excess reinsurance capacity on a global scale along with the slowdown of the economic growth in emerging markets as well as price competition amongst primary market-players translating to lower premium income, thanks to our well-established relationships and commitment to render top-quality services to our clients, we continue to prudently expand our International Portfolio, which reached 26% of total premiums by the end of 2015. There was an 8.5% increase in the income from international operations.

In 2015, MILLI Re closed the year with a net profit of TL 130 million, yielding a return on equity of 15% for the year.

XPRIMM: Which are the main trends observed in the Turkish reinsurance market during the previous year?
K.A:
2016 renewals in the Proportional and Excess of Loss reinsurance agreements were concluded smoothly in the Turkish market. Rates of catastrophic agreements have been kept low as a result of losses from natural disasters remaining low in recent years as well as insurance companies' tendency to keep higher retentions even with the increase in reinsurance capacity. These developments had positive effects on the Turkish insurance industry.

The market continued to obtain their risk protection through proportional reinsurance contracts written on a bouquet basis, except five companies which obtained their risk protections through Excess of Loss programs. Major factors in easing the reinsurance placements were the absence of significant risk and catastrophe losses in 2015, positive results and the continuation of companies' disciplined business acceptance policies in a consistent manner.

The renewals of the Cat XL programs was rather easier for 2016. These are bought for protection of retained risks under Fire and Engineering branches against natural catastrophes.

While the increased limit of the cover indicated that companies bought more protection than last year, the 8% decline in the amount of premiums paid for Cat XL cover compared to last year demonstrates that more protection was purchased at a lower cost. Accordingly, it could be calculated that in our market, the cost of risk-adjusted Catastrophe Excess of Loss programs decreased by approximately 5-10%.

XPRIMM: Which are your plans for the near future? In which markets are you active and which do you target in near future?
K.A:
Due to the strong commitment to the local insurance industry, Turkish market remains to be the major operating market and MILLI Re aims to continue its leadership of the market. On the other hand, as part of the strategy of transforming from a local reinsurance leader into an international player, MILLI Re has actively engaged in accepting business from emerging markets including Middle East, Asia, Northern and Continental Africa, CIS and Eastern Europe as well as from some developed markets such as Continental Europe and Lloyd's, starting from 2006 to create a geographical diversification in the portfolio, having been able to increase the volume of overseas business from 2.5% in 2006 to 26% at the end of 2015.

Given the fact that MILLI Re has been able to penetrate into most of its target territories, the main aim for the medium term is, under soft market conditions across the emerging markets, to maintain the existing portfolio and to achieve further diversity in business written from these markets by adding accounts which would be selected on the basis of their potential profitability and related exposure and further continue to avoid the retro element in this book in order to avoid clash of exposures.

MENA being the largest business source for Foreign Inward portfolio, it keeps its importance to MILLI Re followed by Asia-Pacific. Our branch office in Singapore puts a valuable effort to develop our portfolio in the region.

MILLI Re, considering the potential in CIS, CEE as well as the African and Latin American markets, has been trying to establish a stable portfolio in these regions by regularly visiting some specifically selected countries to establish long-lasting relationships as well as attending the international conferences to gather market information and the latest developments in each region.

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