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A.M. Best Affirms Ratings of Milli Reasurans Turk Anonim Sirketi

June 16, 2014

ENP Newswire - 16 June 2014

Release date- 13062014 - A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of 'bbb-' of Milli Reasurans Turk Anonim Sirketi (Milli Re) (Turkey).

The outlook for both ratings remains negative.

The ratings of Milli Re reflect its excellent franchise in the Turkish market and solid operating performance. The negative outlook reflects the sustained deterioration in Milli Re's consolidated risk-adjusted capitalisation and consistently weak technical performance.

Milli Re maintains an excellent domestic franchise in the Turkish market through its reinsurance operations and its direct insurance subsidiary, Anadolu Anonim Turk Sigorta Sirketi (Anadolu), which is the market leader in primary insurance.

In 2013, Milli Re produced solid operating results, as demonstrated by the consolidated return on equity of 17%. However, the company is dependent upon investment income to offset weak underwriting results. Milli Re's technical performance declined on a stand-alone basis in 2013, reporting a combined ratio of 115% (2012: 108%), despite efforts in recent years to focus on profitable business segments. Consolidated underwriting results improved, but remained unprofitable in 2013, producing a technical loss of TRY 33 million (USD 15 million), compared with a loss of TRY 250 million (USD 140 million) in 2012. The improved performance was driven by Anadolu, which reported a solid combined ratio of 95% in 2013.

Milli Re's consolidated risk-adjusted capitalisation weakened in 2013, but remains supportive of the current rating level. Despite full earnings retention, the reduction in capital adequacy was mainly driven by higher underwriting leverage and increased credit risks. On a consolidated basis, A.M. Best remains uncertain as to Milli Re's ability to maintain capital at an adequate level to support its growth strategy.

Positive rating actions could occur if there were to be a material increase in Milli Re's consolidated capital adequacy, coupled with a significant improvement in its technical performance. Negative rating actions could result from further deterioration in Milli Re's consolidated risk-adjusted capitalisation to a level not supportive of its current ratings. A decline in technical results could also lead to a rating downgrade.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure .

This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

A.M. Best's credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best's credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best's rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best - Europe Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institutions (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.

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Source: ENP Newswire

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