Anadolu Anonim Turk Sigorta Sirketi's (Anadolu Sigorta) 2020 financial performance was strong, with net income increasing 14% (to TRY460.6m [$62m] on an unconsolidated basis) compared with 2019, while the combined ratio improved to 106%, from 111%, notes Fitch Ratings. These improvements largely reflect lower claims frequency in motor and health insurance as a consequence of the COVID-19 pandemic.
Revision of the outlook on IFS Rating
Fitch Ratings has revised Anadolu Sigorta's outlook to 'Stable' from 'Negative'. At the same time, Fitch has affirmed the company's Insurer Financial Strength (IFS) Rating at 'BB'.
The revision of the outlook follows Fitch's similar action on the outlook on Turkey's Long-Term Local-Currency Issuer Default Rating (IDR) on 19 February 2021. The rating action reflects Anadolu Sigorta's substantial exposure to Turkish financial assets and to the wider Turkish economy, says Fitch.
The IFS Rating of Anadolu Sigorta reflects its favourable business profile in Turkey, substantial exposure to Turkish assets, notably government bonds and local-bank deposits/bonds, and adequate capitalisation.
The rating also reflects adequate profitability and reinsurance protection. Fitch expects the company's credit profile to be resilient to coronavirus pandemic-related pressures in 2021.
Most of Anadolu Sigorta's investment portfolio comprised Turkish government bonds and deposits/bonds in Turkish banks at end-2020. The company's credit quality is therefore highly correlated with that of the sovereign and of Turkish banks.
Fitch views Anadolu Sigorta's overall business profile as 'favourable', as measured against other Turkish market players', supported by the company's very strong position in the highly competitive Turkish insurance market. Anadolu Sigorta was the third-largest non-life insurer in Turkey by premium income in 2020, with a market share of 12%.
Anadolu Sigorta's capitalisation, as measured by Fitch's Prism Factor-Based Model, was 'Adequate' at end-2019, and Fitch expects a similar score based on end-2020 results. The company's regulatory solvency ratio was comfortably above 100% at end-2020.
National IFS Rating
Furthermore, Anadolu Sigorta's 'AA+' National IFS Rating largely reflects a robust franchise in Turkey, with total premiums growing faster than the market in 2020, and a regulatory solvency ratio consistently over 100%. The outlook on the National IFS Rating is 'Stable'.