Milli Reasurans T.A.S.

We could lower or raise our Turkey national scale rating on Milli Re if we took a similar action on the parent or the sovereign. We expect the Turkish economy to contract by 0.5% this year, although there are major uncertainties surrounding this forecast. Following extreme currency volatility in 2018, inflation is expected to remain high in 2019, at about 16%. There are limited checks and balances between government bodies, raising questions about Turkey's ability to address the difficult environment in which its financial sector operates, and the broader economy. Incorporated in Istanbul, Milli Re is the only national reinsurer that operates in the Turkish insurance market. Its parent, Türkiye Is Bankasi AS (Isbank), set it up in 1929 to

...S&P Global Ratings expects Milli Re's capital adequacy and its status as the only national reinsurer to remain key rating strengths. Milli Re's '##' risk-based capital adequacy, measured using our model, supports our 'trA+' Turkey national scale rating on the company. Milli Re is also the only national reinsurer in Turkey, and its experienced management team has maintained the company's market position for a long time. Milli Re's exposure to macroeconomic and industry risks in Turkey will continue to weigh on its financial risk profile. The concentration of the company's investments in local financial institutions gives rise to credit risk, and this limits our view of its financial profile. Milli Re also faces foreign exchange risks, given the volatility of the Turkish lira (TRY). Although the proportional MTPL business line is now in runoff, bodily injury claims arising from this line of business continue to affect Milli Re's operating performance. We could lower or raise our Turkey national...

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