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AM Best, a credit rating agency focused on the insurance industry, has upgraded the credit ratings of Millî Reasürans Türk Anonim Şirketi (Milli Re), a Türkiye-based reinsurance company.
The Financial Strength Rating (FSR) has been raised from C+ (Marginal) to C++ (Marginal), and the Long-Term Issuer Credit Rating (Long-Term ICR) has been upgraded from “b-” (Marginal) to “b” (Marginal).
In addition, AM Best has revised the outlook for the Long-Term ICR to positive. The outlook for the FSR remains stable.
According to AM Best, these actions reflect changes in Milli Re’s financial profile, including its balance sheet strength—assessed as weak—as well as its adequate operating performance, neutral business profile, and marginal enterprise risk management.
AM Best stated that the rating upgrades are driven by improvements in Milli Re’s consolidated balance sheet fundamentals, particularly an increase in risk-adjusted capitalisation.
This was measured using Best’s Capital Adequacy Ratio (BCAR) and supported by strong earnings retention. AM Best also noted that improved macroeconomic stability in Türkiye, where Milli Re is headquartered and conducts most of its business, contributed to the decision.
The revised positive outlook for the Long-Term ICR reflects what AM Best described as a favourable trend in capital-related metrics, including better capital quality and higher risk-adjusted capital levels.
AM Best also acknowledged Milli Re’s consistent profitability over the past five years (2020–2024), citing average return on equity (ROE) above 35% on both a consolidated and unconsolidated basis.
This performance, according to AM Best, has been supported by investment income and foreign exchange gains, particularly in the context of Türkiye’s high interest rate environment.
Despite these strengths, AM Best highlighted continued pressure on the company’s underwriting results. The agency reported that the five-year weighted average combined ratio stood at 120% on a consolidated basis and 157% on an unconsolidated basis.
AM Best attributed this underperformance to the effects of high inflation and the depreciation of the Turkish lira. The impact has been more pronounced in unconsolidated figures due to the large proportion of business—over two-thirds—written in foreign currencies.
Milli Re remains a significant player in the Turkish reinsurance market, noted AM Best. It is the only privately owned reinsurer in the country with local capital. Its market profile is further supported by its ownership of Anadolu Anonim Türk Sigorta Şirketi, one of the top three insurance companies in Türkiye.
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