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IFC’s post-financial crisis support of Turkish private sector tops $160 million
Istanbul, Turkey, February 6, 2002—
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to provide a US$50 million contingent loan facility to Milli Reasurans T.A.S (Milli Re), Turkey’s leading reinsurance company. The IFC facility will ensure that more reinsurance capacity is available to the local market by supporting Milli Re’s reinsurance program for coverage of earthquake risk.
Khosrow Zamani, Director of IFC’s Southern Europe & Central Asia Department, said: “This flexible and innovative financial instrument will allow Milli Re to increase its retention of earthquake risk, further build its reserves and limit the impact of the volatile international reinsurance cycle on Turkey’s insurance policy holders.”
Turkey experienced two devastating earthquakes in 1999 that led to high casualties and significant material losses, straining the capacity of Turkey’s insurance sector. A strong reinsurance market is critical to help insurance companies provide essential cover for such catastrophic disasters.
IFC’s Financial Markets Manager for Southern Europe & Central Asia, Mark Alloway, noted: “This contingent facility would be the first step towards a strengthened relationship that is intended to result in IFC becoming shareholders in Milli Re. Thereby IFC could assist the company in preparing for future opportunities for expansion in the under-served regional reinsurance market.” Mr. Alloway added: “With Milli Re’s experience and track record, it could become a powerful player to the benefit of insurance policy holders in the region.”
The Chairman of Milli Re, Prof. Dr. Ahmet Kirman, commented that “This contingent loan facility agreement, which has been signed with IFC, is a remarkable event for the Turkish insurance sector, and is an indication that the Turkish economy is on the right track. We are also very pleased that IFC is considering to become a shareholder in Milli Re.”
Cahit Nomer, Director and General Manager of Milli Re said: “After experiencing three tough successive reinsurance renewals in the conventional market, especially with respect to the retrocession programs, this contingent loan facility with IFC will give Milli Re the opportunity to provide increased support to the Turkish insurance market. With IFC’s partnership we intend to establish Milli Re as a major international reinsurer, capable of filling the gap in international reinsurance capacity which has been shrinking significantly in recent years.”
Milli Re, which is majority owned by Turkiye IS Bankasi A.S., was founded in 1929 as Turkey’s first reinsurance company. The Company is represented in all major lines of insurance and has achieved a dominant share of the local reinsurance market.
Turkey, IFC’s fourth largest exposure, accounts for about 4.5 percent of IFC’s global portfolio. IFC’s held portfolio, including amounts mobilized from commercial banks, is close to $1 billion.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
