A.M. Best Affirms Ratings of Milli Re

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating (ICR) of “bbb” of Milli Reasurans Turk Anonim Sirketi (Milli Re) (Turkey). The outlook for the FSR remains stable, while the outlook for the ICR remains positive.

The ratings reflect Milli Re’s strong current and prospective risk-adjusted capitalization and stable business profile partially offset by weak, although marginally improving, profitability of its non-life business. Milli Re’s overall profits are likely to remain reliant on investment returns.

Milli Re’s risk-adjusted capitalisation further improved in 2007 due to a combination of both the decline in underwriting risks (with the pruning of underperforming business) and the improved overall earnings for the year following high investment returns. Over the next two years, A.M. Best expects Milli Re’s risk-adjusted capitalisation to decline slightly, although still remaining at a strong level, given the low business growth and likely more moderate investment returns (including capital gains).

A.M. Best expects Milli Re’s gross premiums written to grow at an approximate rate of 3% on an annual basis over the next two years from TRY 838 million (USD 721 million) in 2007, considering that the domestic market has reached saturation levels and the foreign business is in its infancy.

In 2007, Milli Re’s non-life combined ratio marginally increased to 104.4% due to both the run off of the recently cancelled motor and health portfolios, as well as a hike in loss frequency in other lines of business. A.M. Best believes that Milli Re’s management’s action of pruning the unprofitable motor and health business is likely to improve slightly the profitability on the non-life business in 2008 and 2009, although with a combined ratio just above 100%.

For Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.