AM Best Upgrades Credit Ratings of Millî Reasürans Türk Anonim Şirketi

LONDON--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating (FSR) to B- (Fair) from C++ (Marginal) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb-” (Fair) from “b” (Marginal) of Millî Reasürans Türk Anonim Şirketi (Milli Re) (Türkiye). 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 (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 (BCAR). This development stemmed from good earnings retention and the stabilising economic conditions in Türkiye, 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.

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). The company’s ROE should be viewed in the context of its main operating environment of Türkiye, which has experienced extremely high inflation since 2021. Overall returns are driven by solid investment income, supported by Türkiye’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.

Milli Re has a strong market position in Türkiye as the only domestically capitalised, privately owned reinsurer. In addition, the company’s profile benefits from its ownership of Anadolu Anonim Türk Sigorta Şirketi, which is among the top five largest insurance companies in Türkiye.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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