MILLI_RE_ANNUAL REPORT 2022

premium production growth in these two branches was 18.5%. The biggest reason for this relatively slower growth was a contraction (again in real terms) in compulsory DASK (Turkish Catastrophe Insurance Pool) premium production. In the fire branch, premium production was up 100% ; the share of these policies’ premiums in the non-life total increased from 68% to 70%. This growth reflects increases in house prices covered by homeowners’ insurance, of which fire coverage is one of the components. There was a supply-side contraction in reinsurance capacity. On a worldwide basis, natural disaster claims in 2022 remained close to their 2021 USD 120 billion level. 53% of all economic losses and 74% of all insured losses stemmed from claims originating in the United States. The 2022 Atlantic hurricane season caused economic losses amounting to USD 110 billion, USD 65 billion worth of which is thought to have been insured. Hurricane Ian, which caused extensive destruction in Cuba and the southeastern United States, was by far the year’s costliest natural disaster. Ian resulted in economic losses estimated to be over USD 100 billion. Insured losses are put at USD 60 billion, which is to say about half of all insured catastrophe claims incurred by the insurance industry globally in 2022. As of end-September 2022, total reinsurance capitalization decreased by 17% and went down to USD 560 billion in value. This serious contraction in the supply of retrocession capacity was caused by natural disasters– Hurricane Ian being the chief culprit– and the result was that retrocession catastrophe excess-of-loss rates rose by as much as 50% upon renewal. The worldwide contraction in capacity available for 2022 renewals was attributable to a steadily increasing reluctance among insurers to provide coverage for natural disaster risks. For the Turkish insurance industry, this contraction manifested itself much more in insurers’ 2023 renewals owing to the increasing occurrence and frequency of secondary natural disaster losses and to increases in costs and catastrophe liabilities fueled by exchange rate movements and inflation. In the eventual–and much- belated–2023 renewals, insurers who had filed claims were confronted by serious renewal surcharges while minimum limits were increased across the board, even for those who had not. Collateral requirements were also made much more stringent. Milli Re performed successfully in 2022. Corporate competencies and experience, a healthy balance sheet, and robust liquidity and equity resources made it possible for us to perform successfully in 2022 despite the year’s quite extraordinary conditions. Liquid assets make up 44% of Milli Re’s total assets and its shareholders’ equity now tops TL 5 billion. Our premium production was up by 94% year-on and reached about TL 4.8 billion in value. 76.7% of it was secured on home-market business and the remaining 23.3% from cross-border policies. The adverse impact of claims made costlier by inflation and the erosion of the Turkish lira against other currencies was very much in evidence last year. Our company paid out a total of about TL 2.4 billion in claims in 2022. Successfully productive and balanced investment of our assets boosted our revenues in 2022 and we closed the year with both a financial and a technical profit. Owing to the growth in premium receipts and to transfers from non-technical part we booked a technical profit of TL 323.6 million and a net profit of TL 889 million. Most Turkish insurance companies last year continued protecting their 2023 risk portfolios by means of surplus proportional “bouquet” treaties. Providing capacity to 25 companies making use of proportional reinsurance after their 2023 renewals and as the leading provider in the reinsurance treaties of 21 companies, Milli Re secured a 30% market share of overall premium production. Our company also participated in the programs of nine of the twelve insurers that make use of excess-of-loss contracts to cover their risk protections. Despite some loss of business due to newly adopted minimum rating requirements and to restrictions and sanctions imposed on Russia after the outbreak of hostilities, Milli Re’s success in maintaining long-term, solidly grounded business relationships and to its ability to respond quickly to changing market conditions continued to make it a preferred business partner. In 2022 the company provided reinsurance capacity to companies based in 27 emerging/developing market countries. Tapping the huge potential that exists in Far Eastern markets, Milli Re’s branch in Singapore plays an important role in the company’s international operations by actively supporting the company’s portfolio diversity and profitability by taking on new business. Digitalization is one of the most important mainstays of economic sustainability. The remote-work procedures to which we quickly became accustomed during the pandemic, and which evolved into a hybrid-remote scenario adopted in 2022 have become a permanent feature of worklife nowadays. All of the hardware and software resources needed to make remote working practical, effective, and secure were provided to all of Milli Re’s personnel. The automation of the company’s business processes continued apace in 2022. All the information contained in systems involved in the conduct of Milli Re’s reinsurance business has been General Manager’s Message ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES GENERAL INFORMATION FINANCIAL RIGHTS PROVIDED TO THE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES RESEARCH & DEVELOPMENT ACTIVITIES 18 MİLLİ RE 2022 ANNUAL REPORT