Turkey’s life and non-life insurance markets are making robust profits that are leading to healthy overall growth in the sector, according to Fitch Ratings’ newly released ‘Turkish Insurance Sector - Non-Life Back to Profit, Life Performance Steady’ report.
Economic growth, favorable demographics, rapid urbanization and an expanding middle class are the key reasons for the strong growth of the Turkish insurance sector, the report states, underlining the Turkish government’s policies that encourage use of insurance through various incentives such as 25 percent state contribution to private pension plans.
The life market has seen its profits go up by 13 percent on average in the 2008-2013 period and made TRY 462 million (approx. USD 214 million) in profits in 2013, while the non-life sector made TRY 768 million (approx. USD 357 million) last year, following 4 years of poor results.
High foreign investor interest
According to the Insurance Association of Turkey (TSB) web site, out of the 59 insurers active in Turkey’s insurance market, 44 are either foreign-owned or partnered, pointing to a highly profitable area of investment for foreign companies looking for new growth markets.
Via its insurance holding company Avicennia Capital, Malaysian sovereign wealth fund Khazanah purchased a 90 percent stake in the Turkish health insurance services provider, Acibadem Sigorta, for USD 252 million in late 2013.
The 2013 sale of Yapi Kredi Sigorta, the insurance branch of the Yapi Kredi bank, to Allianz in March for TRY 1.6 billion (approx. USD 743 million) is one of the most sizeable international transactions in Turkey’s insurance sector in recent years.