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

Investors and dear analysts, welcome to Anadolu Sigorta 2026 Second Quarter Financial Results Webcast. As usual, we'll be hosting this event, this presentation with our CFO, Erdem Bey. And again, as usual, we are going to have a brief presentation regarding second quarter results. And after presentation, we are going to have a Q&A session at the end of the presentation. [Operator Instructions] So we can begin, I think, Erdem Bey, the floor is yours.

Thank you, Baris. Again, welcome to Anadolu Sigorta financial presentation '26 Q2. Our presentation has 16 slides. Half of them I'll present to you. And after that, my colleague, Mr. Safak, will present the next slides. I think that it will take 30 minutes. After that, if you have any questions, we will pleasure to answer it. First of all, I would like to give you a short notice what's happened in the first half. I can say the global economic outlook for the second quarter of '26 has shaped by escalating geopolitical tensions in the Middle East, as you see, concerns about energy supply security and expectations regarding the Central Bank monetary policy. As with the volatility in global markets and Turkish economy has maintained its financial stability, tighten monetary policy and macro prudential measures implemented in the second quarter, the capital market for continued the existing measures targeting equity markets while the Central Bank of Republic of Turkey, CBRT,let's say, continue to effectively utilize the liquidity management tools according to data released in June. The Turkish economy grew 2.5 percentage year-on-year in the first quarter with national income exceeding the USD 1.6 trillion and per capita income surpassing USD 19,000 in this term. When we look at the inflation outlook remained volatile, but to the second quarter. The consumer price index CPI increased 4.18 percentage monthly in April. 1.71 percentage in May and 0.99 nearly 1 point in June, while annual inflation reached 32.1% as of June. Price rigidity in the services sector and the energy cost continued to changed factors determining the inflation outlook in the term, especially. When look at our company after the general assembly in March, we decided to pay the dividend TRY 2.750 billion and we finished it in the April actually. And many insurance companies were sized by SEDDK, I mean the insurance regulation and supervision Agency. And in the term, again, we have got a new -- 2 new deputy general managers in our company. It was an important achievement in the term. One more thing as a result of the rating conducted by the international credit rating agency Fitch Ratings on April 29 in '26. Our company's international financial strength ratings was confirmed BB stable and our national financial strength ratings was confirmed AA+ stable in the term. And after that, we can go to our presentation, the first slide. Yes. Profitability is important for us, especially for our company in the term. Premium volume increased TRY 24.6 billion in the first quarter to TRY 26 billion. Real profitability solo ROI stands at 38.4%. And when we look at the technical outlook, strong premium production, increasing market share in the health branch together with a healthy portfolio in the term and strong growth in bancassurance channel supporting profitability in the term again. And our assets under management growing portfolio size amid the Iran and U.S. Israel war. Of course, it affects our financial situation. But anyway, TRY 6.1 billion quarterly basis, reaching TRY 89 billion of assets under management. Next slide, please. When we look at the non-life insurance market in our country, more than 60 insurance companies in this term, the sector premium production, TRY 629 billion. And when we look at the first top 5 companies, 300 -- nearly TRY 308 billion and top 10 companies, TRY 425 billion. And Anadolu Sigorta produced TRY 54.2 billion in this term. And if you compare the last year, it was -- it has the 21.9 percentage increase in premium production. After this kind of premium production, Anadolu Sigorta reached 4 degree in the company non-life market shares, 8.6 percentage market shares in the market. Next slide, please. When we look at the premium volume and composition. Anadolu Sigorta non-life sector, if you compare it, as I said before, our premium production, TRY 54.2 billion. If you compare the last year, it is -- it was nearly 22 percentage increases. When we look at the sector, 26.2% increasing and TRY 629 billion. When we look at branches, for example, first of all, the MOD. MOD is very important and first agri production side is -- side for us. But anyway, in this term, market other non-life sector insurance companies in production could be higher than the Anadolu Sigorta. So MOD side in the sector, 24.6%, but in our company, 16.5%. On the other hand, the health side and the fire and natural disaster side, year-to-year premium production increasing higher than the non-life sector. I mean the health side in the 42.4% in sector, 34.8%. Fire and natural disasters our production increasing 24.6%, but sector 23%. Health side and the fire side premium production more than important before years, especially when we compare the last year. When we look at the quarterly side, this quarterly side is better than the sector in some branches. But anyway, especially the first quarter of this year is better than the second quarter, I can say. Next slide, please. When we look at the market share, our company which attaches importance to balance growth in every branches has succeeded in winning 3 first places and 3 second places and again, 3 third places. And in 10 branches, overall our company ranked fourth with 8.6 percentage market share. If you compare to last year, it was 8.9% last year, nearly 0.3% decreasing if you compare to last year, but this is a small changeable thing. So next term, I think it will be better than this market share, and it will be more than 9%. Next slide, please. When we look at the sales channels and premium production Anadolu Sigorta, as I said before, Anadolu Sigorta is the agency tendency premium production. But in this term, if we compare to last year or premium production agency side, 58.9%, but last year, 62.5%, nearly 2.5 point decrease in the last year. But if you compare the sector compare the sector agency premium production lesser than the Anadolu Sigorta. If you look at the bancassurance side higher than the sector, I can say because the bancassurance side is very important for us for the -- especially the profitability and premium production. Next slide, please. When we look at the branches, especially the total portfolio, MOD, MTPL, fire and disaster and health side. If you look at the total portfolio, next year in the same term, it was 109.6 this term, 112.5, nearly 3 points increasing this term. But on the other hand, if you look at the MTPL side, second quarter, it was 176.3 from to 140, nearly 36 point decreasing in this term. It is a good improvement and achievement for us. On the other hand, the fire and disaster side is good for us because it was 122 , but now 116. It was good improving in this term. Of course, a little bit changing MOD side, it is not good for us. But in the next term, we will control this combined ratio in this term. Next slide, please. When we look at the financial status and activity results of our company are example. It is seen that our assets exceeded TRY 151.3 billion and with an increase of nearly 13 percentage compared to the previous year. And the premium production reached TRY 54.2 billion with an increase of 22 percentage compared to the previous year. Our market share, 8.6 percentage, as I said before, our company realized TRY 7.4 billion in unconsolidated net profit, and it's mean 41.3 percentage increase and the consolidated same increasing in the term. In this action, when we look at the claims ratio, it's similar with compared to last year. I mean, last year, it was 79.5%. This year, 79.2%. It's a good improving for us. But on the other hand, the combined ratio is higher than the last year, nearly 3 points. It depends on the net commission ratio and expense ratio increased 1 point in the term. So nearly 3 points increased. But end of the year, we are targeting to get in 105% to 110%, which we would like to keep it in combined ratio. Next slide, please. Okay. Now I would like to give my sentence my colleague, Mr. Safak. Thank you.

Thank you, Erdem Bey. I'm going to continue with our portfolio assets under management portfolio. As you see, our portfolio has reached to TRY 89 billion at the end of second quarter, which is USD 1.9 billion. As you see, we have increased our share -- bond share up to 34%. It consists of both TL and USD bonds, but most of them is TL fixed bonds, 27% of our whole portfolio is TL government bonds, especially. They are fixed and their returns yield is around 42%. Short-term interest instruments, which is 52% is mainly time deposits and money market funds and repo as well. We have around 7.4% equity and some commodity gold, silver and some other funds makes around 6% of our whole portfolio. In the second quarter, our quarterly return from our AUM was TRY 6.4 billion, which is around 8.7 -- which makes around 8.7% return. In the second quarter, our AUM increased 7.4% from TRY 82 billion. So we continue with our income statement. As you can see, this is quarterly brief income statement. Both unconsolidated and consolidated figures can be seen on the slide. So talking from unconsolidated solar figures, as you might see, Q-on-Q increase in technical income was 9% and technical expenses was 5%. So as a result, our quarterly results improved quarterly combined ratio results, technical results improved in the second quarter compared to first quarter. And our financial income was a bit weaker compared to first quarter, mainly coming from Anadolu Hayat dividend. And it was stronger with 29% compared to previous year's second quarter. So at the bottom of the page, you can see that our net income was a bit weaker compared to first quarter, 8%, but 19% stronger compared to previous years second quarter, but maybe we should also highlight that excluding Anadolu Life dividend one-off income from the first quarter, we were able to improve our net profit with 13% compared to first quarter solar results. And on the right-hand side, you can see almost similar consolidated figures. So when we continue -- if we continue with cumulative 6 months results, our technical income, again, on the left-hand side, you can see our unconsolidated and the right-hand side, consolidated figures. Our technical income increased 42%, whereas technical expenses increase was a bit higher. It was 46%, which increased our claims ratio and it deteriorated our technical profit compared to previous year's first half. But as net financial income growth was very strong with 50%, our net profit increase was 41% in solo figures and 42% in consolidated figures, and we were able to reach TRY 7.4 billion net profit at the end of first quarter. And you can see the waterfall graphs compared to Q-on-Q waterfall graphs and year-on-year graphs are also can be seen. On the left-hand side, you can see our net profit compared to first Q profit. As you might recall, it was TRY 3.8 billion at the end of first quarter. Underwriting results had positive effect compared to first quarter. Fine investment income was almost the same, a bit -- a little bit negative impact. And you can see we reached TRY 3.5 billion. When we compare our second quarter results with previous year's second quarter results, this time, underwriting performance was weaker compared to previous year, whereas investment income was much stronger so that we can reach TRY 3.5 billion. On the right-hand side, you can see our quarterly investment income. This one shows all of our investment income, which also includes the income that we book in our equity coming from especially some stocks and government bonds, market prices. At the end of first quarter, you might remember that the bond yields had risen. As a result, our market values had come -- came down significantly and first Q income was around TRY 5.6 billion. But in the second quarter, with these bonds again, getting ground with these bonds interest coming down, we were able to increase our total investment income to TRY 7.4 billion. And at the bottom of the slide, the last waterfall graph, you can see our half year results compared to previous half year's results. Again, the same -- our underwriting performance was weaker. It had a negative impact around TRY 2 billion, but our investment effect was TRY 4.7 billion in the second half -- in the first half of 2026. So when we have a look at our balance sheet figures, our asset increase was 13% and our AUM increase was 14%. Technical reserves increase was 12%. It was -- they have reached to TRY 84.8 billion, which consists of mainly outstanding claim reserves and unearned premium reserves and our shareholders' equity increase was 12% at the end of second quarter. On the last slide, we still show that we are -- we were able to stay above inflation in terms of return on average figures, both annualized -- calculated from quarter results, annualized quarter results and cumulative 12-month results we were able to stay above inflation. And on the right-hand side, as we have 20% of Anadolu Hayat and they are also a listed company, we want to show that we have some discount compared to our peers, which are listed. So these are the slides for our today's meeting. Thank you for participating and listening to our presentation. We can continue with questions if you have any. [Operator Instructions] I can't see any written questions, and I can't see any raised hands as well. I think it's all crystal clear. Erdem, for closing, back to you.

Okay. Thank you very much for joining this presentation. We would like to meet you again in the better and the good results in the next term. Thank you very much for joining. See you then. Bye.

Bye.