Milli Reasurans Turk Anonim Sirketi (Milli Re) has a track record of adequate earnings generation, evidenced by consolidated and unconsolidated return on equity (ROE) that on average has exceeded 40% over the past five years (2021-2025), AM Best noted.
The company’s ROE should be viewed in the context of its main operating environment of Turkiye, which has experienced extremely high inflation since 2021. Overall returns are driven by solid investment income, supported by Turkiye’s high-interest-rate environment, and foreign exchange gains.
Underwriting performance continues to be a drag on earnings, demonstrated by a consolidated and unconsolidated five-year weighted average combined ratio of 117% and 149%, respectively, adversely impacted by the depreciation of the Turkish lira and inflation. The depreciation of the lira has had a particularly significant impact on unconsolidated underwriting results given that approximately half of Milli Re’s business is underwritten in foreign currency.
Ratings upgraded
AM Best has upgraded Milli Re’s Financial Strength Rating (FSR) to ‘B-’ (Fair) from ‘C++’ (Marginal) and Long-Term Issuer Credit Rating (Long-Term ICR) to ‘bb-’ (Fa’ir) from “b” (Marginal). The outlook of the FSR has been revised to ‘Positive from ‘Stable’ while the outlook of the Long-Term ICR is ‘Positive’.
These credit ratings reflect Milli Re’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management.
The rating upgrades reflect the improvement in Milli Re’s balance sheet strength fundamentals, primarily driven by strengthened risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio. This development stemmed from good earnings retention and the stabilising economic conditions in Turkiye, where the company is headquartered and where the majority of its business and assets are located. The positive outlooks reflect expected further improvements in Milli Re's balance sheet strength fundamentals over the short-to-medium term.
Business profile
Milli Re has a strong market position in Turkiye as the only domestically capitalised, privately owned reinsurer. In addition, the company’s profile benefits from its ownership of Anadolu Sigorta, which is among the top five largest insurance companies in Turkiye.