Credit rating agency AM Best has raised the financial strength and credit ratings of Milli Re, a Türkiye-based reinsurer, following an improvement in the company’s risk-adjusted capitalisation and broader balance sheet fundamentals.
The ratings agency has upgraded Milli Re’s Financial Strength Rating (FSR) to B- (Fair) from C++ (Marginal), while its Long-Term Issuer Credit Rating (Long-Term ICR) has been increased to “bb-” (Fair) from “b” (Marginal). AM Best has changed the outlook for the FSR to positive from stable, with the outlook for the Long-Term ICR also positive.
AM Best said the ratings reflect its assessment of Milli Re’s balance sheet strength as adequate, alongside adequate operating performance, a neutral business profile and marginal enterprise risk management.
The rating upgrades are primarily linked to stronger fundamentals in Milli Re’s balance sheet, with AM Best pointing to an improvement in risk-adjusted capitalisation as measured by Best’s Capital Adequacy Ratio (BCAR). According to AM Best, the improvement has been supported by earnings retention and greater stability in Türkiye’s economic conditions.
Milli Re is headquartered in Türkiye, which also accounts for the majority of its business and assets. AM Best expects the company’s balance sheet strength to continue improving over the short to medium term, supporting the positive outlooks assigned to both ratings.
AM Best said Milli Re has demonstrated a consistent ability to generate earnings, with consolidated and unconsolidated return on equity (ROE) averaging more than 40% between 2021 and 2025. However, the rating agency noted that these figures need to be considered against the economic backdrop in Türkiye, where inflation has remained very high since 2021.
Investment income has been an important contributor to Milli Re’s returns, with AM Best highlighting the benefit of Türkiye’s high interest-rate environment. Foreign exchange gains have also supported earnings.
At the same time, underwriting has remained a source of pressure on the company’s overall performance. AM Best reported five-year weighted average combined ratios of 117% on a consolidated basis and 149% on an unconsolidated basis. The results have been affected by inflation and the depreciation of the Turkish lira.
The weakness of the Turkish lira has had a particularly notable impact on Milli Re’s unconsolidated underwriting results because approximately half of the company’s business is written in foreign currencies, according to AM Best.
AM Best also pointed to Milli Re’s established position in the Turkish reinsurance market. The company is the only domestically capitalised, privately owned reinsurer in Türkiye, giving it a distinctive position within the local market.
