LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Milli Reasurans Turk Anonim Sirketi (Milli Re) (Turkey). The outlook of these Credit Ratings (ratings) remains negative.
The ratings reflect Milli Re’s consolidated balance sheet strength, which A.M. Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The negative outlook reflects A.M. Best’s view that high political and financial system risks in Turkey could adversely impact Milli Re’s prospective earnings and consequently its balance sheet strength, as well as the financial strength of its parent, Türkiye İş Bankası A.S. (Işbank). Milli Re’s consolidiated risk-adjusted capitalisation had been under pressure, but at year-end 2017 stood at a very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR), supporting an overall balance sheet strength assessment of strong.
Milli Re’s operating performance is adequate, demonstrated by a five-year average operating ratio of 95% (2013-2017), with strong investment earnings comfortably offsetting persistent underwriting losses. Over the medium term, the company is expected to report a combined ratio in line with its five-year average of 105%, with results negatively affected by accounts in run-off, as well as intense competition and regulatory changes in the Turkish market.
Milli Re has a strong market position in Turkey as the only locally domiciled reinsurer. In addition, the company’s profile benefits from its association with Anadolu Anonim Turk Sigorta Sirketi, which is the market leader in the country’s direct insurance market.
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