Anadolu Anonim Türk Sigorta Sirketi (ANSGR) Earnings Call Transcript & Summary

Dear all, thank you for participating in our third quarter financial results webcast. As you know, we have disclosed our results last week, Friday. Hope you have -- you're satisfied -- results you're satisfied with the results, are satisfied. The net profit was TRY 3.4 billion in third quarter. So as usual, we are going to have a webcast presentation with Erdem Bey, our CFO, for third quarter results. Erdem Bey is going to start the presentation, then I'm going to follow with financial figures of our balance sheet and P&L. And then we are going to have a Q&A session. If you have any questions, we are going to be grateful to answer your questions at the end of presentation. So Erdem Bey, the floor is yours.

Thank you, Baris. Welcome to Anadolu Sigorta Financial Presentation '25 Q3, my name is Erdem Esenkaya. Our presentation has 14 slides, and I will present the first nearly 8 slides. And after that, my colleague, Mr. Safak, will present next slides. I think it will take 25 or 30 minutes. If there is any question, we will pleasure to answer it. First of all, I would like to give short notice that last 9 months for only the refreshment of our mind. One important thing that has happened at the beginning of the year, decreasing the discount rate from 35 percentage to 32.5 percentage. This is 250 basis decreasing effect as nearly TRY 740 million on our financial statement negatively. And in third quarter, decrease of discount rate from 32.5 percentage to 30 percentage. Again, 250 basis decreasing effect, was nearly TRY 945 million on our financial statements negatively, I can say. On the other hand, in -- on March 6, especially the Monetary Policy Committee had lowered the interest rate by 250 basis points to 42.5 percentage and Central Bank of Republic of Türkiye announced that it increased the policy rate 46 percentage in April. As you see something happened in March, and they changed our financial and economic situation. Then The Monetary Policy Committee also increased the overnight lending rate from 46 to 49 percentage. And finally, last week, it was announced 35.5 percentage. In this time -- in the while, the company general assembly in March decided to pay TRY 2.1 billion dividend and increased the paid capital TRY 500 million to TRY 2 billion with free stock. We finished all procedures and the Capital Markets Board of Türkiye registered it and now our paid capital TRY 2 billion, and most of them are very important for us, especially in this term. When we look at the highlights in this term about profitability, real growth Anadolu Sigorta in the third quarter premium volume is at strong TRY 68 billion. And if you compare the last year, it depends on the 46 percentage and inflation rate end of September, 33.3 percentage. If you compare them, we are very strong, increasing in this term. When we look at the real profitability, trailing 12-month solo RoAE stands at 36.4 percentage, consolidated 47.8 percentage. And technical outlook discount rate applied, as I said before, the reserve reduced by 2.5 bps, nearly 250 points and now 30 percentage and it affects TRY 944 million gross and TRY 685 million net impact to our financial statement. And cumulative claims ratio increased 1.1 point. And end of the first half, it was 80.6 percentage, discount rate change impact, 2.3 plus. Cumulative combined ratio nearly 110 percentage in this term. Then we look at -- then we talk about assets under management, accelerating assets under management growth and investment income in this term. Assets under management edged up TRY 72.3 billion, and investment income gained momentum quarterly TRY 7.3 billion in this term. Next slide, please. When we look at the non-life insurance companies, Anadolu Sigorta produced nearly TRY 68 billion premium production and increased 46 percentage. Then look at the sector, the sector premium production reached TRY 731.5 in this term and 45.9 percentage, similar to Anadolu Sigorta, similar to sector, increase in this term. And after that, Anadolu Sigorta has the 9.3 percentage market share and the third level category in the non-life insurance market shares. Next slide, please. Premium volume and when we look at the premium volume and composition in this slide. Anadolu Sigorta and non-life sector, if you compare nearly the same increasing percentage in this turn 46 percentage. Quarterly turn Anadolu Sigorta in the third quarter, TRY 23.5 billion. And year-to-year, 56.2 percentage increase. And the quarterly 10.2 percentage in this turn. If you compare the sector and Anadolu Sigorta share in the premium volume, the motor side, this is the -- it was the 41 percentage, and the fire side 19 percentage, and the health side 20 percentage and other side 20 percentage. When we look at the sector, motor side, 44 percentage; and the fire side 18 percentage and the health side 20 percentage and other side 20 percentage. If you compare the Anadolu Sigorta and the sector, there is differences between the motor side and the fire side. Next slide, please. We then look at the market share and rank, especially when we look at last year and this year, we have the same market share, 9.3 percentage, and there are nearly 13 important branches. And 3 of them, we are the first rank. And 3 of them, the second rank. And 4 of them third rank. And we are producing our production all kinds of insurance branches in this term. If you look at the sales channels, all sales channels, of course, the professional agencies at the same time, each bank branches and the total 4,100 branches all of Turkey. And if you look at the premium production shares, 64 percentage agencies at end of the quarter 3 and 13.3 percentage bank insurance side and 14.1 percentage broker side this year. If you compare to last year, Anadolu Sigorta the premium production increased last year. And then we look at the sector -- one slide before. Thank you. And we are the agency tendency companies, and you can see it freely here, especially. And when we look at the sector, 58.8 percentage, but in our company, 64 percentage in the agencies production. And the bancassurance side, if you compare to last year, we decreased just a little bit. But anyway, we are upper than the sector, I mean, the 13.3 percentage and 11.3 percentage. And the brokerage side in the sector is 17.8 percentage and higher than the Anadolu Sigorta in this term. Next slide, please. When we look at the total portfolio and especially the cumulative combined ratio, first quarterly, it was 111 percentage. And after the second quarter, it was a little bit decreased, but the third quarter, it was higher than the second quarter. And now end of the 9 months, it is 110.4 percentage in the total portfolio combined ratio in this term, especially MTPL side and fire and natural disaster side is very important and affect combined ratio in this term. Next slide, please. When we look at the technical profitability in this slide, financial -- we will look at the financial status and activity results of our company, our assets exited TRY 121 billion, with an increase of nearly 43 percentage compared to the previous year. And the premium production reached TRY 68 billion, with an increase of 46 percentage compared to previous year, again. And our market share, 9.3 percentage, our company realized TRY 8.6 billion in its unconsolidated net profit and net profit value in our consolidated financial statement, TRY 9 billion. In the technical profitability, when we look at the different years, I mean, the 2021 to 9 months '25, our combined ratio decreasing until the '24. But in this term, it has increased 110 percentage, especially the effect of the discount rate and inflation, of course. Next slide, please. Now I'd like to give sentence to my colleague, Mr. Safak. Thank you.

Thank you, Erdem Bey. I'm going to continue with our investment portfolio. As Erdem told at the beginning of the presentation, our investment portfolio, our assets under management portfolio actually reached TRY 72.3 billion at the end of third quarter. When we check the breakdown of our portfolio, as you see, almost half of our portfolio is invested in short-term interest instruments. Our bond portfolio is 42% up, which is most of -- which is in TL bonds, is invested actually, almost 30% of our [indiscernible] USD and euro bonds. We have 5% equity in our portfolio and our commodity and some venture capital funds invested part is 4%. In the third quarter, our income -- investment income was -- stood at TRY 7.3 billion. And our cumulative 9 months investment income was almost TRY 17 billion at the end of September. Our quarterly return reached 11.4% in the third quarter. And as you see at the bottom of our slide, the increase in the third quarter of our AUM was 13%, which was TRY 64 billion at the end of second quarter reached to TRY 72.3 billion at the end of third quarter. So on the next slide, you can see our income statement, quarterly distributed income statement. As you see on the left-hand side, our income statement in solo unconsolidated form. And on the right-hand side, it's consolidated P&L figures can be seen, and these are quarterly results. And we see, we have beaten both in quarter and year-on-year basis in third quarter. Financial results, in Q-on-Q increase was 16%. And year-on-year increase was 40% in unconsolidated P&L, and consolidated P&L increase was 15% Q-on-Q, and year-on-year was 44% at the end of third quarter. On the next slide, you can see cumulative 9-month P&L results. As we had mentioned, our net profit was TRY 8.6 billion at the end of 9 months EBITDA increase of 10% compared to previous year's, 9 months results in unconsolidated P&L. And consolidated P&L increase -- stood at 8%. It was TRY 8.9 billion at the end of this year's 9 months September. And last year, it was TRY 8.3 billion. On the next slide, you can see our net profit drivers. First of all, at the left-hand side, you can see quarterly net profit waterfall graphic. As you see, last quarter's net profit was TRY 2.9 billion, and this quarter was TRY 3.5 billion. As you see, our underwriting performance was negative around TRY 636 million. Of course, there was a negative effect coming from discount rate, as Erdem Bey mentioned, and our investment income was much stronger than second quarter. It was TRY 1.8 billion bigger compared to second quarter investment income. And after tax deductions, as you see, our net profit was TRY 3.4 billion. When we compare our net profit with previous year's third quarter, as you see this time, our investment income was stronger. It was TRY 2.8 billion bigger than previous year's third quarter. And on the other hand, our underwriting performance was weaker compared to previous years, around TRY 1.5 billion. And on the right-hand side, you see our investment income quarterly. It was TRY 5.8 billion in the second quarter, our investment income. And this quarter, our investment income boosted, and it was TRY 7.3 billion. And last graph shows our cumulative net profit waterfall graph. As you see, last year's net profit was TRY 7.8 billion. Underwriting performance was TRY 4 billion weaker, while investment income was TRY 4 billion stronger. And at the end of the graph, as you see, our net profit was TRY 8.6 billion. So our balance sheet figures can be seen on this slide, a growth performance named. As you see, our assets -- total assets increase in 9 months was 27%, and our AUM increase was stronger in 9 months. It was 30%, at the beginning of the year, our AUM stood at TRY 55 billion. And with an increase of 30%, it is now almost TRY 73 billion. Technical reserves on the liability side of the balance sheet also increased as a result of our growth -- premium growth. And of course, outstanding claim reserves are also increasing due to currency and inflation. So 32% increase made our technical reserves stood at TRY 67 billion. And on last chart, you see our shareholders' equity, 9 months increase was 18%. Just to bear in mind, we had distributed TRY 2.1 billion from our shareholders' equity this year. So coming to last slide, you can see our return on average equity and some adjustment -- adjusted return on equity on the right-hand side as well starting from left-hand side chart. On the left-hand side, you see our trailing 12 months net profit compared to our return on average equity. As you see, we were able to beat inflation starting from 2024. And still, we managed to beat inflation at the end of third quarter. The other chart shows our annualized return on average equity, which is calculated by using our latest quarter results. So going forward, we calculate 52% return on average equity in consolidated form, whereas our solo return on average equity stood at 40%. They were both above CPI rates. And on the right-hand side, we have 20% of Anadolu Hayat in our books, and they kept their booked mark-to-market. But when we exclude Anadolu Hayat from our balance sheet and deduct their MCap as well. You might see that Anadolu Sigorta is trading a bit discounted compared to peers. As you see, Anadolu Sigorta P/E ratio stood -- stands at 3.5 and price-to-book ratio stands at 1.4. It's a bit low compared to our peers, as I have mentioned. So this was our last slide. [Operator Instructions] Thanks for listening to our presentation. Erdem Bey, I think it's all crystal clear. Do we have any questions? Do we have any raising hands? No, I guess.

No questions.

Erdem Bey, back to you for a wrap-up for closing maybe.

Okay. Thank you very much for joining our third quarter presentation, and I hope to see you at the end of the year presentation. Thank you very much. Have a good day. Bye-bye.