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

Welcome to Anadolu Sigorta's 2025 fourth quarter or in other words, 2025 all year financial results. As you know, we have disclosed our financial results yesterday. So now we are going to have a presentation related with our fourth quarter financial and also whole year as well. As usual, Erdem Bey, our CFO, and I will be making the presentation. Erdem Bey is going to start the presentation, then I'm going to follow with some slides. And at the end of our presentation, we are going to have a Q&A session as usual. So again, thank you all for participating in our webcast. Erdem Bey, the floor is yours.

Thank you, Baris. Welcome to Anadolu Sigorta financial presentation, '23 (sic) [ '25 ] quarter 4. My name is Erdem Esenkaya. Our presentation has 16 slides. I will present first 8 slides. And after that, until investment portfolio. After that, my colleague, Mr. Safak will present next slides. I think that will take nearly 30 minutes. If there is any question, we will pleasure to answer it in the end of our presentation. First of all, I would like to give short notice about last year on the refreshment of our mind. I think it's important that the Central Bank of Turkey implemented a total reduction of 950 basis in the policy interest rate between January '25 and December '25. It was very important. At the beginning of the year, it was very important because the 2029 was our anniversary, 100 years old for our company. So we are the full motivation at the beginning. On the other hand, we began very good. But in March term, there is something changed and there is some volatility in March term. And of course, this term affected the second quarter and third quarter too. In this time, one important thing that was happened at the beginning of the year, decreasing of discount rate from 35 percentage to 32.5 percentage, nearly a 250 basis decreasing effect was nearly TRY 750 million or financial statements negatively in this term. And the third quarter, the decrease of discount rate again from 32.5% to 30 percentage is 250 basis again decreasing and effect nearly TRY 950 million. And fourth quarter in addition, an addition decreased and discount rates changed from 30 percentage to 29 percentage and 100 basis in this term, and it affects our financial statement TRY 310 million negatively in this term. On the other hand, minimum wage regulated in this term and in December, public authority decided to minimum wage is 27 percentage increase in this term and this affected our financial statement gross TRY 200 million and net TRY 140 million. And when we look at all year totally, the expense effect on all '25 results TRY 2.3 billion approximately gross and the net effect after deducting tax is TRY 1.7 billion in this term. And when we look at our financial statement, it is important to take this attention. And first of all, when we talk about the highlights and profitability is very important for us. And in this term, we have got real growth. I mean, in '29 (sic) [ '25 ] premium volume is at least strong TRY 97.9 billion, nearly TRY 98 billion on production and if we compare to last year, 141 percentage increase and real profitability was in this term, 12-month solo stands at 35.4 percentage and consolidated 45.3 percentage. And when we look at the technical outlook, discount rate, as I said before, applied [ reserve reduct ] 1.29% in this term and effect of TRY 310 million net impact in this term. Quarterly combined ratio decreased by 4 basis to if we compare the third quarter '25 to 107.8 percentage. Assets under management, when we talk about assets under management, accelerating the growth and investment income. Assets under management edged up to TRY 78.3 billion in this term, if you compare to last year, the 41 percentage increased and investment income sustained momentum quarterly TRY 7.4 billion. Next slide, please. Then we look at the non-life insurance market and market share in the slide. We have got a third degree in this term production and the market share in this term. Last year, we produced nearly TRY 70 billion, but this term we produced TRY 98 billion, 41 percentage increase if you compare to last year. Especially when we look at the sector, the sector increasing 41.3% or production increased percentage is similar to sector, a little bit under the sector, but near the sector, I can say. And our market share third degree, 9.4 percentage in this term, again last year. Next slide, please. When we look at volume and composition, MOD and MTPL site is very strong [ old ] company, anyway in this term, especially the MTPL site, healthy site and the fire and natural disaster site is higher than the sector. And MOD site especially is very important for us because as I see, after that old slide, you'll see the one marked in this level. Next slide, please. Yes, I'm talking about this market share, and when we look at the market share and rank, MOD watercraft and transportation side, we are all ranked #1. And aircraft, aircraft liability and accident side, we are the #2 and general liability fire financial loses and in the third rank. I can say, in the 13 branches, we have got in 5 when we look at ranks. And totally, we are the 9.4 percentage market share with third degree. Next slide, please. When we look at sales channel, we are going on the adjusted tendency premium production. If you compare to last year, we are above the last year's agency premium production site. But if you compare the sector nearly 3 points more than the sector in the agency side. On the other hand, the bank insurance side is very important for us. And in this side, we are above the sector again. But on the other hand, the broker side and other side in the digital and direct premium production side sector is higher than the company premium production. Next slide, please. When we look at the branch outlook. As I said before, all discount rate effect or loss ratio and the combined ratio together. Here, you can see the combined ratio of 5 points increase if we compare to last year. But of course, in our portfolio, about 1 point discount rate effect or 1.7 loss ratio or the combined ratio increased in this term the real effect. So when we calculated it, nearly 4.5 or 5 points depends on the discount rate changing and the minimum wage changing effect over financial statement in this term. Next slide, please. When we look at the technical profitability side, as you see the combined ratio has increase of 5 points. But as I said before, especially discount rate effect 4.5 points nearly on a 0.5 site is a little bit differences from the last year. When we look at the financial status and activity results for all company are [ exempt ], it is seen that our assets [ exited ] to TRY 134 billion, with an increase nearly 40 percentage increase compared to previous year. And the premium production reached TRY 7.9 billion with an increase of 41.7 percentage compared to the previous year. And our market share, as I said before, 9.3 percentage. Our company realized TRY 12.7 billion unconsolidated net profit and net profit value in our consolidated financial statement is TRY 13.4 billion. Now I would like to give sentence to my colleague, Mr. Safak. Thank you.

Thank you, Erdem Bey. I'm going to continue from now on. On this slide, Agency, our investment portfolio breakdown can be seen on the left-hand side of the slide. Our AUM, which is TRY 78.3 billion at the end of the year is invested in bonds 41%, short-term interest instruments, 47%, which are mainly time deposits, TL time deposits as well as some funds, money funds and also some FX time deposits also. We have 5% equity and commodity and venture capital and other funds, 7% is invested as at the end of the year. In 2025, our quarterly investment income was TRY 7.4 billion, which made 12-month results cumulative investment income reached up to TRY 24.2 billion. Our quarterly portfolio yield was 9.8% and our cumulative yield return was 44% at the end of the year. On the right-hand side at the bottom of the presentation, you can see our breakdown of our investment portfolio in terms of quarters. On the next slide, our income statement can be seen. It is compared to previous last year's fourth quarter and this year's third quarter. And of course, this year's fourth quarter can be seen. On the left-hand side, our unconsolidated P&L figures can be seen. And on the right-hand side, as you see, we consolidate Anadolu Life, which we have 20% stake off and it's an equity pickup method. It's a consolidated and equity pickup method. So our consolidated figures are a bit higher than our unconsolidated figures. At the bottom line, our net profit at the end of this quarter stood at TRY 4 billion, which was 19% higher than this year's third quarter and 36% higher than last year's fourth quarter and our consolidated figures were similar, 20% increase in Q-on-Q figures and 37% increase in year-on-year figures and our consolidated net profit at the end of year at the fourth quarter was TRY 4.5 billion. On the next slide, you can see our income statement, which is 12 months results, which shows a whole year. Our net profit in total increased 17% in solo figures and consolidated figures increase was 16% and our consolidated 12 months net profit was TRY 13.4 billion. On the next slide, you can see some waterfall graphs, which shows are profit drivers. First chart shows our last year's -- this year's third quarter versus this year last quarter breakdown. At end of -- in the third quarter, as you might recall, our net profit stood at TRY 3.4 billion. And you can see how we have reached to TRY 4 billion. Underwriting performance was better compared to third quarter as well as investment income performance was better. Of course, as a result of increasing profit, tax expenses was higher and other expenses like depreciation, rediscount, et cetera, was also higher than third quarter, and we have reached to TRY 4 billion. When we compare our net profit with last year's fourth quarter, again, in the waterfall graph, as you see, our underwriting performance a bit worse than last year's fourth quarter, whereas our investment performance was much higher with TRY 3 billion. Tax was -- dividend was similar, 0. Tax was a bit higher, again, related to the higher profit and other expenses also was TRY 1 billion higher compared to our last year's fourth quarter. On the right-hand side at the bottom of the presentation, you can see full year breakdown waterfall graph. Our last year's net profit, as you might recall, was TRY 10.6 billion. The underwriting performance worsened unfortunately this year with TRY 4 billion, but investment income was much higher with TRY 7 billion. Dividend was higher. Anadolu [indiscernible] was TRY 300 million bigger than the previous year and tax and other expenses was a bit bigger than last year. And as a result, we have reached TRY 12.7 billion. And on the upper side of our presentation, you can see our quarterly investment income. As you can see, we have reached to TRY 7 billion level and we think we are going to be increasing our -- increasing in upcoming quarters in 2026. And on the last -- on the next slide, our balance sheet figures can be seen on the left-hand side, our assets and on the right-hand side our liabilities is placed. Our total assets have increased 40% in 2025, and they reached to TRY 134 billion. Our assets under management increase in TL was similar, 41% increase. We have experienced a 41% increase in 2025. And as I mentioned before, our AUM reached up to TRY 78.3 billion. Right next to that chart, you can see our AUM trend from 2021 to 2025, this time in USD figures, even we look in USD, you can see our AUM has reached up to USD 1.8 billion, which then compound average growth rate is 21%. On the right-hand side, our technical results, which consist of outstanding claim reserves and unearned premium reserves. They have also increased related with a premium increase, of course, 47% and our technical reserves reached to TRY 75.6 billion, and our shareholders' equity was on the green side as well, 34-point increase and our equity was TRY 41.3 billion at the end of the year. So we are coming to our last page, return on average equity charts can be seen on the left-hand side. Again, you can see the trend coming from 2021. The dark blue one shows our consolidated return on average equity and light blue shows are unconsolidated return on average equity, and the line -- red line shows inflation rate. As you see in 2025, our average return on equity stood at 45.3%, and solo ROE again stood at 35.4%, which were both above inflation. And on the -- just below that chart, we have calculated quarterly ROEs, which are analyzed. And at the end of fourth quarter, our quarterly calculated return on average equity was 54% in consolidated figures and 42% in unconsolidated figures. And on the right-hand side, I just mentioned that we have 20% stake of Anadolu Hayat and they are also a listed company. They are also a leader in life sector in Turkey. So when we adjust our ROE and our other ratios like PE ratio and price-to-earnings and price-to-book ratios, you can see that Anadolu Sigorta stake has been trading at really discounted levels. This was our last slide. As I've said, thank you for participating and listening to our presentation.

So we can proceed to Q&A session. [Operator Instructions]. Thanks for listening. Erdem Bey, I think all is crystal clear, so we don't have any raised hands as far as I see, and we don't have any questions in our chatbox.

If there's any question after that, of course, you can ask any time to our department and ask and don't hesitate any question. Thank you very much for joining our -- thank you very much for joining this presentation. See you. Bye.

Have a good weekend. Thank you.

Thank you.