East meets West in Turkey's insurance sector

By bne IntelliNews January 29, 2007

Nicholas Birch in Istanbul -

Despite the continuing lack of long-overdue legislation, Turkey's insurance sector grew by 22% last year and looks set to grow by barely any less this year, as it gallops to make up for all the years of neglect.

And if the rest of Central & Eastern Europe is any guide, reforming Turkey's insurance laws will lead to an even bigger surge in the number of Western insurers looking for growth opportunities outside of their more mature developed markets.

"Turkey's insurance premium volume was only 1.58% of GDP in 2005, compared with 3% in the Czech Republic and around 8% in the developed world." explains Erhan Tuncay, chairman of Turkey's Union of Insurance and Reassurance Companies (TSRSB). "That alone is proof of this country's future potential."


In recent a report, the brokerage Raymond James wrote that, combined with stable growth, a mere one-percentage-point increase in insurance penetration over 10 years would ensure 10% average annual growth for the sector.

It's a prospect that has already begun to entice a new wave of international companies into Turkey.

Barbarians at the gate

Last year saw six foreign insurers entering the market, with French giant Groupama's February acquisition of a 57% stake in Basak Sigorta ve Emekliklik for $268m - by far the biggest deal.

Basak had TRY317m (€172m) in non-life premiums last year, making it Turkey's eighth largest player, with a 5.5% market share.

This year is expected to see a series of similarly sized deals, as both Garanti Sigorta and Aksigorta look to foreign partners to help them expand.

Garanti Sigorta's deal looks to be the first to be sealed, with the Turkish daily Milliyet reporting last week that the Dutch ING Group was "on the verge of reaching an agreement" on either an equal partnership or taking a 55% share.

American International Group, Aviva and Groupama are also known to be interested in a deal that Garanti Sigorta officials say will be completed in the first quarter of this year.

The number-four insurer Aksigorta, meanwhile, authorised UBS last November to assess the possibility of partnerships and strategic alliances for its pensions arm, Ak Emeklilik. Rumour has it that Aksigorta as a whole might be looking for a minority partner.

Analysts also say that regulations limiting risk introduced in 2006 will increase the likelihood of consolidation in what remains a slightly over-populated sector. It's that an outlook Sadrettin Bagci, banking and insurance analyst with the brokerage Ata Invest, finds exciting. "Banks were the stars from 2004 onwards," he says. "Now it's the insurance companies' turn to grab a bit of the limelight."

Bagci likes market leader Anadolu Sigorta, whose premium generation grew by 28.2% in Turkish lira terms through 2006. Others insurers like Aksigorta, whose aggressive moves in the health insurance sectors helped raise its market share last year to 8.4% in 2006 without any drop in profits.

And then there's Yapi Kredi Sigorta, bought by Koc last year along with Yapi Kredi bank. "We haven't seen full synergy yet," says Duygun Kutucu of Ak Investment. "That will push values up in 2007."


Send comments to Nicholas Birch


Related Articles

Turkey approaches day of reckoning on economic reform

Kivanc Dundar in Istanbul -   The unexpected success of President Recep Tayyip Erdogan’s Justice and Development Party (AKP) in this month’s general election should bring much-desired political ... more

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Turkey and America seen on course for confrontation in Syria war

John Davison of Exaro - Military action by Turkey against Kurdish rebel forces in Syria raises the prospect of a direct clash with the ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss