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

The reason we are speaking to you that actually, we had a meeting with Turkish investors an hour ago, and this is the second meeting we are having as there is not much foreign investors attending the meeting. So we have just made a meeting with you. It's okay. We can just have another meeting or one-on-one session with you because there's nothing that we haven't spoken in our previous meeting.

Okay. Okay. Yes, that's absolutely fine. I initially thought this is a general investor presentation. I didn't expect it to be as a separate call results. Sorry for my misunderstanding.

No, no, you are right, actually, but we have -- we do 2 separate meetings with investors, one in Turkish, one in English. But lately, there's not much interest for English presentation. That's the reason. Thank you. [indiscernible] phone also there's another one from London who has attended this telephone.

No, that's not me, that's not me, that's not me.

But we couldn't reach. Shall we proceed? Shall we have a small information. Of course, we can present short information about our first quarter results because you have joined and take the time for us. Thank you very much for your interest.

That's very kind of you. Thank you.

Okay. Okay. You are welcome. We can give a short information for you and maybe you can ask more questions after that, okay. All right. Now I can say officially, but I would like to give a short notice, I mean the first quarter of '26 geopolitical developments and result in increased risk to energy [indiscernible] dominated the global economic agenda. The escalating tensions in the Middle East and developments in Iran in the end of February led to a significant rise in risk perception in global markets in the term. During this period, concerns about energy requirement intensified, continue to put upward pressures on the inflation outlook, especially. Despite volatile global market conditions, the Turkish economy has demonstrated relative resilience, thanks to a tight monetary policy and [indiscernible] of the structure in the Capital Markets Boards and Central Bank of Republic of Turkiye decided some decisions and these decisions affect markets positively in this term especially. Then we look at our highlights. Especially in this term, I think it is important. Our company general assembly met in March and decided to pay dividend TRY 2.750 billion paid dividend in this term. And then we look at the sector, 1 insurance company was sized by SEDDK insurance regulation and supervision agency. Name of the company [indiscernible] shortly I can say. Then we look at the highlights, especially first of the profitability. Premium volume increased at TRY 29.6 billion. If you compare to last year, it takes 27.5% increase. And when we look at the real profitability, 12 month solo ROE stands at 36.8%. And when we look at the technical outlook, strong premium production, especially in the health branch. 46.6%. And MTPL side Is getting down. It's good for us, especially, I can say. And a channel for us the bancassurance, strong growth in the bancassurance channel, supporting profitability in this term. Of course, the assets under management is very important for us and despite the negative market impact to Iran, U.S. and Israeli war portfolio size grew TRY 4.5 billion quarterly. And investment income continued to remain strong, TRY 6.9 billion quarterly in this term. Next slide, please. When we look at the non-life insurance market, as you see, we are targeting the 8.7% premium production market share. The first 5 and first 10 companies are important, main market share. I mean if you compare the last year, in the first -- top 5 companies produced 53%, 54% of the total premium. When we look at last year, it was 48%, 46% -- 48%, 49%. It is increasing here. Of course, there is a penetration in these 10 companies production nearly 6% to 8% of the sector premium production. And we have, as I said before, TRY 29.6 billion and 27.5% increase last year and 7 point -- 8.7% market share in that range. When we look at the premium volume and composition. Non-life sector and Anadolu Sigorta. You see the premium production increased similar 27.5% for Anadolu Sigorta and for the non-life sector is the same. Of course, there are differences between the branches MOD, MTPL, health and fire and natural disasters. In this term, health, fire and natural disaster and MOD side is strong. Premium production increased in this term. When we look at the sector and Anadolu Sigorta in the total premium production in the sector 30%, 35% motor, in the old company 26% (sic) [ 28% ]. And fire side 15%, when we look at the old side 18%. And health side 26% but in old company 32%. Got the differences, but health side strong in this first quarter of last year. Next slide, please. When we look at market share and rank. Again the watercraft, we are the first ranking. Again we are the first, second and third ranking in the different Turkish branches. Watercraft in some we are the first. And MOD, transportation, aircraft, aircraft liability and general liability we are the second. Fire, health, and general losses branches we are the third degree in the sector. And totally we have got 8.7% market share and third rank in the sector. Next slide please. When we look at the sales channels, as I said before we are the agency [indiscernible] production and we have 56.4% premium production from agency. If you compare sector higher than the sector. But if you compare last year's of the company, lesser than the last year. But anyway, I think it is very important to [indiscernible] higher than the sector. If you look at bank side, bancassurance side 16.5% -- 16.1%. If you compare the sector last year old company is higher than both of them. And when I look at the broker side, 18.3% is relatively higher than the last year the old company, but higher than the sector market share. When we look at the branch outlook, if we look at last year, the same term. Last year, it was 110.7%. This term 114.8%. There is a 4 point increase -- 400 basis, I mean. But of course, the inflation effect of the rate. But on the other hand, the discount rate is very important because last year this term it was 32.5%. But this term, it is 29 point -- 29%. So 2.5 points, near 2.5 points effect of course, is kind of increasing. Next slide, please. When you look at the technical side, especially I can say, as you see that the old combined ratio is increased 5 points. But as you remember, again, last year in December discount rate 32.5%, but now 29%. When I look at the financial status and activity results on our company it is seen that our assets exceeded TRY 148 billion (sic) [ TRY 148.60 ] billion increased nearly 29% in this term compared to the previous year especially and premium production reached TRY 29.6 billion and increased 27.5% compared to the previous year and old market share 8.7% or company realized TRY 3.8 billion in unconsolidated net profit that has [ 30.3% ] increased. And on the other hand, the net profit value in our consolidated financial statement, TRY 3.5 billion in this term. Then we look at the claims ratio is similar to the last term, same term, 81.4%, 81.4%. But as I said before, the combined ratio 110.7% and 114.8%, that is nearly 4 point basis differences higher than the last year. But as I said before, it depends on the inflation rate and at the same time, the change in discount rate. Now next slide about the investment portfolio, and I would like to give my sentence to my colleague, Mr. Safak. Thank you.

Thank you, Erdem Bey. I'm going to continue with investment portfolio as Erdem already mentioned. As you see at the end of first quarter, our assets under management portfolio reached to almost TRY 83 billion. On the left-hand side, you can see the breakdown according to the financial instrument. The biggest portion is invested in short-term interest instruments, which are mainly time deposits, some money market funds and repo we can say are the parts that we invested in short-term interest instruments. We have 28% bonds investment, mainly most of the bonds are TL bonds, government TL bonds, government U.S. Israel bonds, 5% increase we haven't changed our equity shares since the beginning of the year. We think it's still the risk of time in terms of stocks investment, but we also have some other funds mainly commodity and venture capital funds portion is 8%. And you can see our quarterly financial income in the first quarter was TRY 7 billion, which makes the yield, quarterly yield 7.8% and in life 35.5%. You can see at the bottom of the page breakdown of our portfolio throughout quarters. You might also see the increase in short-term interest instruments in the end of 2025. It was 47% at the end of 2025. Now, it's 59%. So as you know the yields in Turkey are relatively high. So Anadolu Sigorta is trying to take advantage from this high yield, relatively higher yields. So on the next slide, you can see our income statement -- summary of our income statement for first Q. Left-hand side shows our own consolidated net profit figures and right-hand side consolidated profit figures. Just a reminder, we do consolidate Anadolu Life, which we had 20% stake of and the method we are consolidated is equity pickup. So it doesn't change much difference -- it doesn't make much difference in our technical side. The only part changing is the financial income, the part in our consolidated P&L. You can see the see that our first Q result was TRY 3.8 billion, while last year first quarter was TRY 2.2 billion and last year's fourth quarter was TRY 4 billion. So the changes were -- Q-on-Q change was negative 6% and year-on-year change was 70%. On the consolidated side, the change Q-on-Q, again it was on the negative side 23% and year-on-year increase was 75% in our consolidated net profit. On the next slide, you can see our profit. Our profit changed throughout quarters. On upper part of our page, you can see our Q-on-Q change compared to previous year's fourth quarter. As you might recall, it was TRY 4 billion, negative effect coming from underwriting technical side was TRY 1.3 billion. Similar negative effect was coming from investment income compared to previous year's fourth quarter, whereas we were able to receive TRY 700 million dividend from Anadolu Hayat which we delivered in the previous quarter as opposed to the fact. So we will be reached TRY 3.8 billion here. At the bottom of the page, you can see this time year-on-year comparison of our quarterly net profit. Last year's net profit was TRY 2.2 billion. Again, underwriting performance was worse than previous year's first quarter. It was TRY 1.5 billion negative effect, but this time investment income was much stronger compared to previous year, TRY 3 billion positive effect was coming from investment side. So we can reach TRY 3.8 billion first quarter net profit. On the right-hand side, you can see our quarterly investment income chart. As you see in last year's first Q investment income was much weaker compared to other quarters. On the next slide, our balance sheet figures are [indiscernible]. Our assets as you see has increased 11%, our AUM increased 6% as we have mentioned before. Technical reserves which consist of premium reserves and [indiscernible] reserves the increase was 10% and our shareholders' equity increase was 3%, it was a bit weaker compared to other figures as a result of dividend payout, which was TRY 2.75 billion. So on the next slide, you can see our average -- return on average equity. The dark blue chart shows our consolidated return on average and light blue shows our solo return on average. And the red dotted line shows inflation. As you see, we were able to stay above inflation rate throughout the last 3 years. And in the first quarter, we are still above inflation rate. And on the right-hand side, as a result of having 20% Anadolu Hayat stake make Anadolu Sigorta stronger in terms of MCap. So we try to show our PE ratio is much more below average after excluding Anadolu Life from our balance sheet which is 3.5 priced over earnings. You know in our regular balance sheet it is around 4 our P/E ratio which makes Anadolu Sigorta share a bit more potential in market actually. So this was our last slide. Thanks for listening and attending our webcast for first Q. Hope to see you in upcoming quarters and Erdem back to you for closure.

[indiscernible] do you want to ask any questions?

Thank you very much. I presume I'm alone on this call, so I'll take the opportunity to ask a couple. But first say thank you very much for your time and effort towards this presentation. I appreciate it. Most of the questions were addressed separately. But maybe 2 clarifications would be helpful for me at this stage. One is it would be helpful if you tell a little bit more about the trend in the MOD claim ratio. I think you already mentioned the main factor was inflation, but was there anything else that boost the claims in the first quarter of 2026, the frequency of the claims or any other trends that might justify such -- the difference between the, for example, first quarter of 2025 and first quarter of 2026.

Especially [indiscernible] is profitable side for us, and we were the leader of the sector, especially last year. But in this term, most of the companies wanted to come with the pricing -- competitive pricing in this area. So we kind of decreased the prices. So it's a little bit not a technical pricing. This is the selling pricing, I mean. So after that, we face this kind of cumulative combined ratio, I can say. This is a kind of competitive pricing effect of the market.

Got it. Thank you very much. And maybe one technical one about the dividends. I think you mentioned TRY 2.75 billion. I don't see this information currently on the website and in discussion of the website. So I just want to double check that it's public information and it's already announced, right?

Repeat it, sorry. Yes, we have already paid. You can see it in the website. Let's check in the English version of the website. But we have disclosed it in the stock exchange market after -- right after our general assembly meeting actually, maybe you have missed our disclosures, but we have paid it out even. 30th of March, end of March, we paid.

Okay. Perfect. Perfect. Thanks for the question. [indiscernible] Thank you very much again. As usual very detailed and comprehensive presentation.

Have a good day for you and have a good -- better results in the next term. Thank you very much. Bye.