The Turkish insurance industry is in its most secure period in terms of capital adequacy, liquidity, risk management and similar indicators, according to Mr Davut Mentes, president of the Insurance and Private Pension Regulation and Supervision Agency (SEDDK).
He said, "Our sector is in a safer environment than ever before in terms of risk management and the capital adequacy of our companies. As of the last five years, it has entered its most secure period in terms of capital adequacy, liquidity and similar matters. We believe it will be even better."
Mr Mentes revealed that the insurance sector's return on assets is around 6% and return on equity is around 50%, reported the business news platform Finansi Gundemi. He said that the insurance industry is in a very good position compared to banks.
"This is a positive development because it delivers real profitability, even when adjusted for inflation. Our sector has positively differentiated itself from banking over the last two or three years. We're also doing quite well in terms of liquidity and financial leverage, which is around ‘1’. Generally speaking, things are improving in the insurance sector.
Capital adequacy is at highest level
“One of the most important criteria in the finance sector is capital adequacy, which is currently at historic highs,” he added.
He added, “Of course, even though the averages are at historic highs, we have to focus on those at the bottom. There's also significant improvement at the bottom. Very few companies are below our desired levels. We hope there will be improvement in those as well."
The Turkish insurance sector, which generated a net profit of TRY112bn in 2024, saw its return on equity stand at 49% in 2024, according to the SEDDK report titled “Insurance and private pension sector developments and key indicators (2024)”.
The average capital adequacy ratio in 2024 increased compared to 2023 for both non-life and pension companies. The capital adequacy ratio for non-life insurance companies increased from 147% in 2023 to 157% in 2024, while for life and pension companies, it increased from 291% to 323%.