Download - Investor Presentation - Aksigorta
InvestorPresentation
Email Address [email protected]
Zeynep Eroktem
Contact No 00902162809761
June 2021
IR Officer
Introduction
Company overview
Business overview
Growth drivers
Financial overview
Appendix
• Company overview
• Investment case
Table of contents
Company overview
(*): https://brandirectory.com/download-report/brand-finance-turkey-100-2020-full-report.pdf
Has 673 employees and ranks #1 in Aon Hewitt / Kincentric «Best Place to Work» in 2019 and 2018
Aksigorta brand ranks #73 among top 100 brands of Turkey in 2020,in Brand Finance «Turkey 100 2020» research*
• #4 player in the non-life insurance market with 8.2% share as of Jun.21
• Joint stock company of Turkish conglomerate Sabancı Holding and Belgian Insurance Group «Ageas»
• 60+ years experience in insurance industry
• Has more than 3,300 agencies; 105 brokers and an exclusive agency agreement with Akbank, reaching 714 branches
• 28% of shares are listed with «AKGRT» ticker name on Istanbul Stock Market
• As of June 30, 2021, Aksigorta MCap is 2.4bn TL (270m USD)
3
Well-established company with strong partners and customer base
• Successful Sabancı Holding – Ageas JV (50:50) since 2011• 3.7 Mn customers• Strong capital adequacy
Superior distribution power
• Wide distribution network ~3,300 independent agencies, ~105 brokers• Exclusive partnership with Akbank (~ 714 branches, expert call center, #1 in mobile banking)• 10 regional offices with a strong, advisory sales team
Strong trackrecord
• Strong top-line and net profit growth• High dividend yield• Market share growth
High-performance focused leadership team
• CEO Uğur Gülen with 12 years in the company, 18 years in the sector• Agile and cross-functional teamwork across the company
World-classuse of technology
• Robust core system improved by value added technologies• Investments in CRM, APIs, analytics capabilities• Robot Transformation a first of its kind in the industry and Turkey, automating business processes• Automated claims management enhanced with intelligent capabilities; studies launched for end-to-end digital servicing• Technical operations center established for underwriting• Strong reinsurance treaty led by leading global players
Investment case
4
Table of contents
Introduction
Company overview
Business overview
Growth drivers
Financial overview
Appendix
• Milestones• Board of directors• Management team• Shareholder structure and
commitment to minority shareholders
• Dividend, capital raising, buybacks, and M&A history
Milestones
2000’s80’s
Beginning of bancassurance
60’s
The first insurance
agency
The first insurance
policy
90’s
Public offering of Aksigorta in1994
Opening of the Fire and Earthquake Training Center
First website
First online policy inTurkey’s
bancassurance business
Awarded the certificate of authorization
in the health branch
Opening of the Aksigorta Service Center
Transition to regional management
“Most Reliable Insurance Company" - in a research study conducted by AC
Nielsen in 2009
Merger between Sabancı Holding and Ageas in 2011
6
Haluk Dinçer
Emmanuel Van GrimbergenLütfiye Yeşim Uçtum
Antonio Cano
Kıvanç Zaimler Hüseyin Gürer
Bülent Oğuz Uğur Gülen
Chairman of the Board (since 2011)
Member of the Board (since 2019)Independent Member of the Board (since 2018)
Vice Chairman of the Board (since 2021)
Member of the Board (since 2020) Independent Member of the Board (since 2021)
Member of the Board (since 2020) Member of the Board and General Manager (since 2009)
• President of Sabancı Holding’s Financial Services Group• Served as Sabancı Holding Retail and Insurance Group President from 2011 to 2016• Held important leadership positions within the group since 1995• Mr. Dinçer served as the President of Turkish Industry & Business Association (TÜSİAD) and Chairman of the Foreign
Economic Relations Board (DEİK) Turkish-American Business Council between 2008-2014• Member of the Brookings International Advisory Council, Executive Committee Member of B20 Turkey
• Board member of Cardiff Lux Vie, East West Ageas Life (Philippines) and Intreas• Group Risk Officer of Ageas SA/NV, member of the Ageas Management Committee and former Chairman of
the CRO Forum• Worked for ING for 18 years in the Risk/Actuarial departments and held various senior management positions at
ING Insurance Belgium and ING Central Europe• Became Chief Actuary of ING South West Europe and, in 2004, was appointed Chief Insurance Risk Officer of ING
Insurance Retail Banking. In 2007, he moved to Amsterdam as Chief Risk Officer of ING Central and Rest of Europe
• Started her career at Ernst & Young in 1986 and worked for the company’s Turkey and USA offices for 11 years• Assumed different executive positions throughout her career, as the GM at Strateji Menkul Değerler, Assistant
GM at Yapı Kredi Yatırım Menkul Değerler, Assistant GM at Koçbank, and Financial Coordinator at Koç Holding;respectively
• Since 2012, she has been performing different duties as both Independent Member of the Board of Directors and Board of Control at Burçelik, Aviva Sigorta, Marshall Boya and HSBC Bank; respectively
• CEO of AG Insurance (2009-2015)
• COO of Ageas since 2015
• General Manager of Europe Region of Ageas
• Started his career in 1992 and held various executive positions in Türk Elektrik Endüstrisi, RAM Dış Ticaret and Aygaz companies respectively (1992-2008)
• Previously served as Trade Director, GM of Distribution Companies, GM of Sales Companies and CEO of Enerjisa. Currently, President of Sabancı Holding’s Energy Group
• Takes an active role in non-governmental organizations• Board member of many companies within the Sabancı Group
• Started his career in 1986 at Deloitte. In 1989-1990, he worked as independent auditor in London.
• Served as CEO of Deloitte Turkey from 2007 to 2016
• Member of Board of Eczacıbaşı Holding
• Joined Akbank in March 2003 and served as Vice President and Senior Vice President of SME and Consumer Banking; respectively
• Appointed as Executive Vice President in charge of SME Banking in July 2013 and he has overseen Retail Banking since November 2018
• Vice Chairman of AkÖde and Board Member of Ak Asset Management• Held various managerial positions at Corporate Banking and Loans divisions at different private sector banks
• Began his career in 1991 and worked at various positions at Interbank, Denizbank, Ak Internet and MNG Bank• During 2004-2009, he served at AK Emeklilik A.Ş. ve Avivasa Emeklilik ve Hayat A.Ş. as the Assistant General
Manager
Board of directors
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Uğur Gülen Tolga Okan Tezbaşaran
Fahri Altıngöz Soner Akkaya
Metin Demirel Ayşegül Gürkale
Osman Akkoca Esra Öge
High-performance focused leadership team
General Manager (since 2009)
Assistant GM – Corporate Lines Underwriting, Corporate Sales, Legal and Reassurance (since 2005)
Assistant GM – Claims Customer Experience (since 2017)
Assistant GM – IT, Digital and Fast Flow Underwriting (since 2015) Assistant GM – Human Resources (since 2017)
Assistant GM – Finance (since 2017) Assistant GM – Strategy Transformation (since 2018)
• Began his career in 1991 and worked at various positions at Interbank, Denizbank, Ak Internet and MNG Bank• During 2004-2009, he served at AK Emeklilik A.Ş. ve Avivasa Emeklilik ve Hayat A.Ş. as the Assistant General
Manager
• Served as Regional Manager in Yapı Kredi Pension and Halk Yaşam Insurance before working as Regional Manager and Group Head at Yapı Kredi Insurance
• Joined Zurich Insurance in 2011 and has served as Executive VP of the Individual and Small Business Segment Group and has been a Member of the Board
• Served at various executive positions in several companies before joining Aksigorta in 2005 as the Assistant General Manager responsible for claims
• Served as an auditor at Interbank between 1998-2002 and as Assistant Manager at Tekfenbank between 2003-2005
• Audit manager at Sabancı Holding between 2005-2011• Served for 6 years (2011-2017) as the Head of Internal Audit at Aksigorta
• Started his career at Akbank in 1992 before working as a Senior System Analyst at Sulzer Medica Intermedics and then serving as a consultant for Oracle
• Managed his own company called Midsoft Inc. between 2004 and 2006• Served as Manager of Financial and Commercial Applications at Tofaş and Information Technologies
Management Director at Zurich Insurance
• Started her career as a Management Trainee in Commercial Bancassurance Marketing Unit at Pamukbank • Joined Garanti Emeklilik ve Hayat A.Ş in 2003 and worked as a Product Development Specialist, Regional
Performance Monitoring Manager, Planning Manager, and Regional Manager (2003-2013)• Carried out Human Resources, Organization, Purchasing and Administrative Affairs Directorate position
between 2013-2017 at Garanti Emeklilik ve Hayat A.Ş.
• Began his career as an Assistant Inspector at Sumerbank in 1999• Served as Inspector at Avivasa between 2005-2007• Joined Aksigorta in 2007 and served for 3 years as Internal Control and Compliance Assistant Manager. Then, he
worked as Risk Manager (2010-2011) and Financial Control Manager (2011-2017)
• Started working as a Risk Management Specialist at Sabancı Holding in 2006 and joined Aksigorta in 2010• Served at various positions in Strategic Planning, Bancassurance and Marketing Departments of Aksigorta• Actively participated in strategic business model planning and implementation processes with Ageas
Aksigorta leadership team’s ultimate target and responsibility is to prepare for the future while succeeding today
Management team
Assistant GM – Bancassurance, Health and Agencies (since 2016)
8
Shareholder Structure
Commitment to minority shareholders
We are committed to creating value for minority shareholders and acting in their best interests through:
• Transparency• Easy access to data• Quick response
We keep continuous communication with minority shareholders and investors via:
• Earnings calls at each quarter end• www.aksigorta.com.tr• Querries to [email protected]• Investor roadshows• 1-1 meetings• Announcements through public disclosure platform
Shareholder structure and commitment to minority shareholders
Major shareholders (as of 31 March 2021) No. of shares %
Hacı Ömer Sabancı Holding 110,160,000 36
Ageas Insurance International N.V 110,160,000 36
Public float 85,680,000 28
Total 306,000,000 100.0
36%
28%
36% Sabancı
Public float
Ageas
9
(*): Total dividend payment in 2021 is 306m TL; to be paid in two installments 202m TL in Mar.21 and 104m TL in Sep.21.
(**): MCap calculated as of June 30, 2021.
37%
Dividend history
Buybacks and M&A History
Stock Price CAGR (‘17-’21)
Dividend, buybacks and M&A history
0
110
202 202
306
1,49
2,162,61
5,07
8,70
7,70
0
50
100
150
200
250
300
350
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
10,00
2016 2017 2018 2019 2020 2021
Dividends Paid (m TL)
Stock Price (Year-end)
TL m 2016 2017 2018 2019 2020 2021**
MCap 456 661 799 1,551 2,662 2,356
P/E 7.98 5.20 3.51 4.23 6.16 6.87
P/B 1.13 1.05 1.11 1.73 2.37 2.44
DPS 0.00 0.00 0.36 0.66 0.66 1.00
• 30.99% of Aksigorta shares were acquired byAgeas from Sabancı Holding in 2011 for 220m USD
• Sabancı Holding and Ageas jointly buyed back 5.00% each from the stock market in Nov.11-Nov.12
10
*
Introduction
Company overview
Business overview
Growth drivers
Financial overview
Appendix
• Business model and growth strategy• Product portfolio• Sustainability and ESG• Risk management policy• COVID-19 impact
Table of contents
Reshaping the insurance industry
Empowered people
Technology Business model
Aksigorta Trend
Framework
Challenges
Personalization, connected & mobile citizens, living services, healthy
living and social responsibility
Artificial intelligence, blockchain, augmented reality, 3D printing, internet of things, autonomous
vehicles anddata analytics
Ecosystems orchestration, partnerships, sharing,
aggregators, subscriptioneconomy, on-demand and
peer-to-peer
• Economy and employment
• Global warming and climate change• Increasing inequality• Global tension• Security risks• Tight regulations• Changing demographics• Change management
Insurance industry trends
Business model and growth strategy
12
Business model and growth strategy
Pivoting to the “New World”
Product-based business model, leveraging existing
technologiesto improve efficiency
Meeting today’s requirements and
transformingto the new
Technology and analytics-based business model, offering high-value propositions for customers
Meeting today’s requirements and
transformingto the new
Customer preferences are changing
Today
Transition New World
Transition
Customer centricity”Do what people like to be preferred”
Use technologyAdapt business
to developing technology
Product centricity“Make people buy what we like to sell more”
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Business model and growth strategy
Priorities
Way of Working Values
Mission
Vision
Targets
Strategic Choices
• Listen our customers and understand their needs• Design relevant products and services• Interact in a simple and meaningful way• Build deep and long term relationships
• Provide insurance advisory across all channels• Bring physical and digital experience together• Be at everywhere our customers are, supporting our
partners
• Achieve excellence in technical practices• Scale our business with digital• Keep our core systems robust and secure• Become faster and flexible with new intelligent tech
• Support self-managed teams working in a agile way• Invest on our employee’s capabilities• Raise, retain and attract talent as their choice
Strategy house
30%+ 1.0 Bn USD 10%
Self Development – Driving Results – Collaboration
Customer Centricity – Innovation – Analytics – Digital – New Technologies
Make insurance experience easy, lean and accessible by leveraging data and
technology
Support continuity and ease of life by providing unique insurance experience creating value for all stakeholders (customers, employees, distributors, business partners, shareholders, society)
Return on Equity Market Cap Market Share
We arecustomer-centric
We are accessible
We grow by leveraging data and technology
We are engaged and execution driven
14
Business model and growth strategy
Focus on sustainable profitable growth through human resources and technology
High performance deliver results today
•Profitable growth•Technical excellence•Sales productivity•Financial asset
management•Efficiency for scale
Transformation adapt capabilities for future
•Profitable growth•Technical excellence•Sales productivity•Financial asset
management•Efficiency for scale
To decide with data instead of deciding with instincts, beliefs and past experiences
Develop and scale our business in digital
To transform Aksigorta from a supplier perspective into a customer perspective
Agile work with cooperation
Make well-defined works with machines and robots and unidentified works withemployees
Run the company in a two-sided way, with a sustainability approach
15
Customer Journey Program
Analytics Program
Employee Way of Working Program
Customer Centric and Innovation Programs
Execution of Analytics Use Case
Realizing the best practices in the sector and continuing preparations with the next step
With high delivery on capability building and results by leveraging digital and analytics
Internal Digitalization Program
Technology Foundation Program
Business model and growth strategy
Mobile Application of Field Administration Aksiyon
Execution of Internal Process Digital Mirror
Customer/Channel Journey and Competence Design
Execution ofArtificial Intelligence and Robot Automatisation – ADA
16
Product portfolio
Motor Third Party Liability (MTPL):The Traffic Insurance covers damages caused by the insured car to another vehicle and to third parties in that vehicle, within specified limits. It is a compulsory insurance type.
Motor Own Damage (MoD):It is an optional insurance which covers the damages incurred on the insured vehicle. Also known under the name CASCO, this insurance can include a lot of different perils: fire, natural disaster, theft of the vehicle, personal belongings, professional belongings, and hail etc.
Fire: Property insurance that covers damage and losses caused by fire.
Engineering: Provides economic safeguard to the risks faced by the ongoing construction project, and machines and equipment.
Liability: Covers risks of liabilities imposed by lawsuits and similar claims and protects the insured if the purchaser is sued for claims that come within the coverage of the insurance policy.
Marine: Transportation insurance is a policy that offers coverage on the insured’s property while it is in transit from one location to another on any necessary mode of transport.
General Losses: Covers risks of routine life.
Aksağlık Insurance: Offers privileges according to your needs with more than 4000 contracted institutional options and different policy plans to get to the health care solutions “just for you.”
Critical Illness Insurance: Should any of the 13 dangerous conditions and illnesses covered under the scope of “Hayata Devam!” Insurance occur, indemnities starting from TL 30,000 are available.
Health Insurance for Foreigners: In accordance with the law, Health Insurance for Foreigners,a must for non-citizens who come to Turkey to obtain a residency permit, is available at Aksigorta.
Motor Non-Motor Health
17
ESG & Sustainability
We act with the awareness of our responsibilities to ensure that future generations have a green world.We started to protect nature with completely different innovations, first from our own office.
We have been working in cooperation with the World Wildlife Foundation (WWF)since 2015 to reduce our carbon footprint for a sustainable green future.
We started to invest in green funds in 2020, we plan to increase ESG investments in 2021.
Each year 5% of PBT is donated to Sabancı Foundation. This policy reflects the life philosophy of the late Haci Ömer Sabanci "sharing what we have obtained from this land with its people"
• We have located informative labels to reduce water, electricity and paper consumption
• We use air conditioning automation system forefficiency
• We have recycling boxes for batteries, plastics and glasses at our office
• We dissociate the wastewater to special tanks and prevent the nature pollution by 4 tons of domestic waste oil
18
UN Sustainable Development Goals (SDGs)
19
Gender equality is not only a fundamental human right, but a necessary foundation fora peaceful, prosperous and sustainable world. We have equal number of employees in both gender.
Clean, accessible water for all is an essential part of the world we want to live in. We dissociate the wasting water to special tanks and prevent the nature pollution by 4 tons of domestic waste oil.
Sustainable consumption and production is about doing more and better with less.It is also about decoupling economic growth from environmental degradation, increasing resource efficiency and promoting sustainable lifestyles. We have recycling boxes for batteries, plastics and glasses at our office.
SustainabilityGender equality Avoid wasting water
COVID-19 impact
The Covid-19 is a systematic risk that is unavoidable
Cash flows
Asset devaluations
Business continuity
Economic slowdown
Decline in claim frequency
We don’t see any risk in our business since:
• 62% of our receivables have a credit card collateral,
• 4% of our receivables are collected via bank accounts,
• 12% of our receivables has other collaterals (such as letter of credit, cash etc.) provided by agency,
• Our bad debt ratio is less than 0,01%.
Health
Due to slowing down in mobility, trade and economic activities we foresee that the cash flows will be the biggest challenge in the coming periods.
Equity markets decreased by 30-40% all over the world.Weight of equities in our investmentportfolio at that time was limited at 6%.
is also another risk we all face today. Thanks to our last 10 years of invesment in IT; 100% of our teams work home office veryefficiently.
New business salesget hurt but we donot foresee a majordecline in our renewals.
Underwriting result inhealth business is notaffected by Covid-19 dueto full reinsurance.
Slowdown in mobility (curfews, lockdowns) leads to lower claim frequency in Motor.
20
Introduction
Company overview
Business overview
Growth drivers
Financial overview
Appendix
• Macroeconomic outlook• Industry drivers• Competitive advantages• Business outlook
Table of contents
Macroeconomic outlook
Real GDP growth (%) 2020 population (83,6 million)Long-term TR government bond yields (%)
A break in growth trend; rebound is expected in 2021
Government bond yields (%)Yield returns are representative as of 30 June 2021
Source: IMF, Bloomberg, Turkish Statistical Institute
Turkey’s real GDP growth has been 4% in the last 5 years, which is higher than that of the world and the advanced economies. Growth is expected to be back on track starting from 2021.
68% of total population is in working age
(15-64 ages)
22
6,1%
3,3%
7,5%
3,0%
0,9%1,8%
6,0%
2,4%1,8%
2,5% 2,3%1,6%
-4,7%
5,1%3,5% 3,3%3,8% 3,6%
2,8%
-3,3%
6,0%
2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1
Turkey Advanced Economies World
18,79% 18,75%
18,35%
18,02%18,11%
18,27% 18,33%
17,69%
17,63%
17,48%
17,37%
17,00%
18,00%
19,00%
Government bonds with 10-year maturity has ~17,5% yields offering high yield return in 2021.
22,8%
67,7%
9,5%
0-14
15-64
65+
Macroeconomic outlook
Government gross debt (% of GDP) Budget balance (% of GDP)
Budget discipline is maintained despite volatility in macroeconomic conditions
Turkey’s government debt as percentage of GDP is significantly low compared to that of emerging markets and advanced economies.
Budget deficit as % of GDP is expected to be back on track startingfrom 2020; at a rate lower than that of comparable countries inemerging markets
(*): includes India, Mexico, South Africa, Russia, Indonesia, Ukraine
Source: IMF, Bloomberg
23
*
27% 28% 28% 30% 33%37% 37%
104% 107% 104% 104% 105%
120% 123%
44% 46% 48% 50% 53%
64% 65%
2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1
Turkey Advanced Economies Emerging Markets and Middle-Income Economies
-1,0% -1,1%-1,5%
-1,9%
-2,9%
-5,3%
-3,8%
-3,6% -3,5% -3,5% -3,3%-3,9%
-7,6%
-3,9%
2015 2016 2017 2018 2019 2020 2021
Turkey Emerging Markets *
(*): includes India, Mexico, South Africa, Russia, Indonesia,Ukraine
Source: Swiss Re Sigma No3/2021 World insurance report, Insurance Information and Monitoring Center (2021)
Industry drivers
Non-life GWP production / GDP in Europe (%, 2020)
GWP per capita (USD, 2020)
Low penetration levels signal growth potential
Strong growth potential in non-life insurance sector
Turkish non-life insurance market is underpenetrated
in millions# of
insurable# of
insuredPenetration
MTPL 24,7 20,0 81%
MOD 24,7 6,9 28%
TCIP* 17,7 10,2 58%
HEALTH 83,6 4,0 5%
(*): Compulsory earthquake insurance.
24
0,9
1,0
1,2
1,3
1,3
1,4
1,4
1,5
1,6
1,8
1,8
1,8
1,8
2,0
2,0
2,0
2,0
2,2
2,3
2,3
2,4
2,4
2,7
2,7
3,0
3,2
3,4
3,5
3,5
4,0
4,1
8,1
Romania
Russia
Turkey
Slovakia
Ukraine
Greece
Hungary
Malta
Serbia
Luxembourg
Ireland
Sweden
Finland
Norway
Czech Republic
Bulgaria
Poland
Croatia
Italy
United Kingdom
Cyprus
Europe Average
Portugal
Belgium
Denmark
Spain
Austria
France
Slovenia
Germany
Switzerland
Netherlands
47
105
111
116
120
212
237
241
295
314
314
407
469
602
639
721
871
899
945
949
969
1.011
1.187
1.328
1.359
1.495
1.619
1.774
1.827
2.060
3.557
4.223
Ukraine
Russia
Turkey
Romania
Serbia
Bulgaria
Greece
Hungary
Slovakia
Croatia
Poland
Malta
Czech Republic
Portugal
Cyprus
Italy
Spain
Finland
Sweden
United Kingdom
Europe Average
Slovenia
Belgium
Norway
France
Ireland
Austria
Denmark
Germany
Luxembourg
Switzerland
Netherlands
Industry drivers
Factors driving insurance penetration in Turkey
Premium production by segment and factors driving penetration
Premium production is affected by socio-economic status of cities and per capita income
Top 15 cities generate 75% of total premium production.Higher per capita income leads to higher premium generation. Top 15 cities in premium production have higher per capital income levels compared to the rest.
Different premium segments are driven by three different factors. Insurance penetration also depends on economic development.
Individual
Corporate Mandatory49% 25%
26%
Economic growth
Regulation
Insurance awareness
25
28%
34 36 43 5261 68
7891
2016 2017 2018 2019 2020 2021F 2022F 2023F
+16%
+14%
Insurance is the core business in agencies while it is a part of financial services in banks
Market GWP* (TL bn) Key growth assumptions
Channels
(*): Normalized figures by excluding double-count premiums of MTPL, agriculture and medical malpractice pools.
Agency channel is 57% of total market, whereas corporate and bank channels constitute 28% and 15%; respectively.**
78% of Motor products (MTPL and MOD) are sold by Agency channel in the market, portfolio weight of motor products
in Agency channel is 59%.**
Bank slows down due to low credit appetite and shift of customers from branch to digital (esp. in retail segments) as a global trend. Growth in bank channel is expected to shift to commercial/ corporate segments.
Corporate channel outperformed others with accelerated investments (infrastructure, construction etc.) supported by the economical development. Corporate channel will continue to act as a major channel to penetrate in commercial/corporate segments.
Industry drivers
Growth
Channel CAGR ‘16-’20 CAGR ’20-‘23F
Agency 12% 14%
Bank 21% 14%
Corporate 33% 14%
CAGR
CAGR
26(**): As of 30th June, 2021.
(*): Normalized figures by excluding double-count premiums of MTPL, agriculture and medical malpractice pools.
Non-Motor and Health products are leading the market growth
Line of Businesses (LoBs)
Profitability (UW margin) Growth (CAGR)* Key growth assumptions
MTPL: Price increase in line with inflation (price is capped by regulation)
MOD: Growth driven by new car sales and fleets
Non-motor: Major growth driver of the market is commercial businesses
Health: Medical inflation and expansion of complementary health supports growth
Industry drivers
5% to 15%
5% to 15%
0% to 10%
-10% to 0%
Health
Non-Motor
MOD
MTPL
2021E-2023F
LoB CAGR ‘16-’20 CAGR ‘20-‘23F
MTPL 7% 19%
MOD 15% 14%
Non-Motor 21% 14%
Health 24% 14%
27
Industry drivers
Penetration development is correlated with several attributes, quantified with single-factor analysis
Average vehicle age
Vehicle prices
Number of vehicles per person
Fraud
Number of offices and houses
Labor force participation
Total health expenditure
MTPL MOD TCIP Health Insurance
VehiclesVehicles IndividualsHouses
81% 28% 58% 5%
24.7M24.7M 83.6M17.7M
Frequency of claims
GDP per capita
Claims cost per GDP
Number of vehicles
Crime rate
GDP per capita
Public share
GDP per capita
28
Competitive advantages
Aksigorta GWP CAGR (’16 -’20)
Aksigorta GWP and market share development
Aksigorta is the #4 player in the market, with 8.2% market share**
28% (market: 16%)
(*): Normalized figures by excluding double-count premiums of MTPL, agriculture and medical malpractice pools.(**): Source: Insurance Association of Turkey, data as of 30.06.2021, double count premiums of MTPL, med-mal and agriculture pools are excluded.
1.896
2.566
3.305
4.330
5.055
2.157
2.860
5,5%
7,0%
7,7%
8,3% 8,3%
7,4%
8,2%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0
1.000
2.000
3.000
4.000
5.000
6.000
2016 2017 2018 2019 2020 2020 H1 2021 H1
Aksigorta GWP* Market share
Company #1; 14,4%
Company #2; 12,8%
Company #3;12,4%
Aksigorta; 8,2%
Company #5; 6,5%
Other;45,7%
Company #1 Company #2 Company #3 Aksigorta Company #5 Other
29
Aksigorta GWP 1H21 YoY
33% (market: 20%)
196516
10051354 1449
620797
657
706
773
9421157
470
643 824
1086
1250
1643
1977
821
1.175
219
259
277
391
472
247
245
2016 2017 2018 2019 2020 2020 H1 2021 H1
MTPL MoD Non-Motor Health
(*): Normalized figures by excluding double-count premiums of MTPL, agriculture and medical malpractice pools.
Source: Insurance Association of Turkey
Aksigorta GWP (m TL)*
Aksigorta performance
+28%CAGR ‘16-’20
Aksigorta Market Share*
30
1.896
2.566
3.305
4.330
5.055
1,6%
4,6%
7,8%
8,9%9,0%
10,2%9,9%
9,4%9,2%
9,3%
9,9%
9,9%
7,0%
7,8%
7,5%
8,2%7,8%
7,4%
6,3%
6,4%
5,5%
5,9%5,8%
5,0%5,5%
7,0%
7,7%
8,3% 8,3%8,2%
2016 2017 2018 2019 2020 2021
MTPL MoD Non-Motor Health Total
2.157
2.860
+33%YoY Growth
Competitive advantages
Aksigorta is a well-established company with strong partners and customer base
Sabancı Holding
Hacı Ömer Sabancı Holding A.Ş., one of Turkey’s leading industrial and financial conglomerates, is the parent company and manages the Sabancı Group companies with a strategic portfolio approach.
Turkey’s rapidly growing sectors including banking, insurance, energy, cement, retail and industrials are the main business areas of Sabancı Group.
In June 2021, consolidated revenue of Sabancı Holding wasTL 13,0billion with consolidated net income TL 6,2 billion.
As of Jul.21 Sabancı Group companies account for 6,5% ofthe market value of Borsa Istanbul (BIST100)
More than 60k employeesMore than 40 million customers
Sabancı HoldingNet Asset ValueBreakdown Jun.21 (%)
Banking
Energy
Industry
Retail
Cement
Insurance
Social
Other
31
37
7
18
9
16
12
Bank
Financial Services
Industrials
Building Materials
Energy
Retail
Competitive advantages
Ageas Insurance International NV Insurance net results 1H21 total: €407m
Gross inflows Ageas’s Part 1H21 total: €22,2b
Aksigorta is a well-established company with strong partners and customer base
United KingdomNon-life
#2 motorcycle insurer
#6 private car insurer
5.1 million customers
Continental EuropeLife and non-life
in 3 markets
#1 health insurer in Portugal
4,9 million customers
BelgiumLife and non-life
#1 life and #2 non-life
#1 real estate
3 million customers
AsiaLife and non-life
25 million customers in 9 markets
32
Group’s Solvency Ratio
196%
Group’s Combined Ratio
93%
28%
8%
13%
51%
Belgium
UK
Continental Europe
Asia
37%
7%12%
39%
6%
Belgium
UK
Continental Europe
Asia
Interas
Competitive advantages
Cross-functional and agile working organization, empowered people are key for success
Innovation
Customer centricity
Digital
Analytics
New technology
Un
der
wri
tin
g
Sale
s an
d m
arke
tin
g
Cla
ims
Fin
ance
Tech
an
d d
igit
al
Hu
man
res
ou
rces
Strategy and transformation
Business unitsW
ork
ing
pla
tfo
rms
Since 2017, we have established cross functional and agile working “platform” structures within the organization to:
• Gain competitive advantage in the existing markets
• Create new markets and ensuring presence
• Build new capabilities in the organization
Aksigorta Platforms aim to prepare Aksigorta ‘for being leader in the new world’ by taking required actions and managing this transition with a common target and coordination across the company.
All human resource policies (career paths, performance, skill sets, trainings etc.) are being reviewed to fully support our strategy and targets.
33
Competitive advantages
Superior distribution power
Agency
agencies
GWP
as of 30 June 2021 as of 30 June 2021
Broker
GWP
brokers
Aksigorta Akbank
branchescustomers employees
digital customers
ATMs POS machine
in digital banking
net profit total consolidated
assets
capital adequacy
ratio
Agencies’ and brokers’
insuranceknowledge and
expertise
More than 3,300
1.8b 538m
~105
71418 m 12k+
4.8m
~5200
Leader
4.1 b 20.0%537.8b
34
650k+
Competitive advantages
Digitalization by using Next Generation Technologies, RPA, AI, Digital Twin enables to create efficiency andneeds driven insurance experience for all our stakeholders including customers, distribution channels and employees.
Internal Digitalization
Agile Way of WorkingDigital Products & ServicesDigitize the Core
ADA Program Digital MirrorRobotics Transformation Program
World-class use of technology
Provide Aksigorta with
virtual workforce to sustain high growth.
Best in class G&A/GWP ratio in
the market 4% in 2021
Make Aksigorta competitive in the market
minimizing operation cost with RPA and AI
Virtual workforce corresponding to
~135 FTE is in place
External Digitalization
• ADA, Aksigorta Digital Assistant,first digital assistant with AI in sector.
• We embed new human skills to ADA by using next generation technologies.(AI, RPA, Chatbot) step by step.
• Focus on processes touch on customers or agencies with high transaction volume.
• Creating Digital Twins of insurance processes to improve process productivity and efficiency by solving identified pain points of processes
• Solve these pain points by using new Technologies, lean processes or re-organization.
• Using Robotics Process Automation (RPA) technology to automate well defined processes.
• Self managed teams are empowered and trained to work with agile principles.
• ~6 agile teams in place running continuous sprints and delivering with a minimum viable product approach.
• WhatsApp channel is utilized as a communication channel.
• Smart applications developed for customers, agencies and sales force management enabling to scale our business.
• End to end segment-based customer journey designation onboarded for retail products leveraging analytics and digital
Respond to rising expectation of our
customers and agencies especially
regarding speed, easiness and availability
35
Competitive advantages
Strong revenue generation
SFRS Net Profit
IFRS Net Profit
102 148 132251
450110
169350
456
378
2016 2017 2018 2019 2020 2021
UWR Financial Income
48 127 366
71 137 213
228
309
432
374
+10%*
+10%*
(*) Excluding corporate tax rate change impact
36
Aksigorta 2021 actions
Strengthen our finance and
collection structure
Configure our product management
Continue to transform our business and
competencies
Always prioritize investment in our
employees
Constantlytarget andmeasure
Increase our agency efficiency and continue to
expand our network
We willStrengthen our
pricing and claims management
Align on the bank channel and grow
faster
Manage our processes efficiently and controlled
by technology
Maintain our strength on the
corporate channel
Evaluate opportunities in
health
Business outlook
37
Table of contents
Introduction
Company overview
Business overview
Growth drivers
Financial overview
Appendix
• Scorecard• Financial performance• TFRS vs IFRS• Summary financial statements and key
financial ratios• Earnings guidance
2021 Q2 2021 YTD
Scorecard
2021 Q2 financial indicators (TL m) y/y
Gross written premiums 1,422 +38%
Financial income 135 +41%
Net income 93 -45%
Shareholders’ equity 968 +3%
2021 Q2 operational ratios y/y
Combined ratio (net) 101% 22 pp
Loss ratio (net) 78% 23 pp
Commission ratio (net) 15% 0 pp
Expense ratio (net) 8% -1 pp
RoE 33% -17 pp
2021 dividend payment
Dividend paid 306
Payout ratio 71%
2021 financial indicators (TL m) y/y
Gross written premiums 3,000 +32%
Financial income 282 +59%
Net income 169 -35%
Shareholders’ equity 968 +3%
2021 operational ratios y/y
Combined Ratio (net) 103% 17 pp
Loss ratio (net) 80% 18 pp
Commission ratio (net) 14% -1 pp
Expense ratio (net) 9% 0 pp
RoE 33% -17 pp
39
25% 21%
17% 18%
43%
46%
15%
15%
1Q2020 1Q2021
15.230
Market GWP Distribution (%) (m TL)
Market GWP Development
20Q120Q220Q3 20Q4 21Q1
YoY
MTPL MOD Non-motor Health
+12% +25% +32% +21%
Agency Bank Corporate Market
+19% +30% +30% +23%
Portfolio Share
Agency Bank Corporate Market
63% 13% 24% 100%
YoY
MTPL MOD Non-motor Health
+1% +31% +32% +24%
Agency Bank Corporate Market
+16% +24% +35% +23%
Portfolio Share
Agency Bank Corporate Market
54% 17% 29% 100%
+23% +23%
Health Non-motor MOD MTPL
33% 30%
21%21%
34%
37%12%
12%
3Q2019 3Q2020
13.69918.693
11.178
YoY
MTPL MOD Non-motor Health
+0% +23% +31% +21%
Agency Bank Corporate Market
+15% +15% +38% +19%
Portfolio Share
Agency Bank Corporate Market
60% 15% 25% 100%
28% 24%
20% 21%
38%
42%
13%
14%
4Q2019 4Q2020
15.402
18.317
+19%
Note: Retro premiums from pools are excluded.
Po
rtfo
lio
Sh
are
27% 24%
17%19%
43%
44%
13%
13%
2Q2020 2Q2021
13.849
YoY
MTPL MOD Non-motor Health
+6% +29% +20% +18%
Agency Bank Corporate Market
+30% +38% -7% +17%
+17%16.257
21Q2
26% 22%
17% 19%
43%
45%
14%
14%
1H2020 1H2021
29.079
34.950
YoY
MTPL MOD Non-motor Health
+3% +30% +26% +21%
Agency Bank Corporate Market
+22% +30% +12% +20%
+20%
21H1
Portfolio Share
Agency Bank Corporate Market
57% 15% 28% 100%
Portfolio Share
Agency Bank Corporate Market
60% 14% 26% 100%
40
Aksigorta GWP Development
Aksigorta GWP Distribution (%) (m TL)
20Q3 20Q4 21Q1
YoY
MTPL MOD Non-motor Health
+7% +25% +45% +32%
Agency Bank Corporate Company
+18% +1% +83% +27%
Portfolio Share
Agency Bank Corporate Company
60% 12% 28% %100
YoY
MTPL MOD Non-motor Health
+29% +50% +28% -11%
Agency Bank Corporate Company
+35% +11% +20% +28%
Portfolio Share
Agency Bank Corporate Company
64% 10% 26% 100%
+28%
28%29%
21%
25%
38%
38%13%
9%
1Q2020 1Q2021
1.173
Health Non-motor MOD MTPL
32% 27%
23%22%
36%
41%9%
9%
4Q2019 4Q2020
+27%
1.318
Note: Retro premiums from pools are excluded.
YoY
MTPL MOD Non-motor Health
+8% +26% +66% +19%
Agency Bank Corporate Company
+19% +37% 65% +31%
Portfolio Share
Agency Bank Corporate Company
59% 11% 30% 100%
37% 31%
27%26%
30%
38%6%
5%
3Q2019 3Q2020
+31%
1.221
930
1.677
1.500
Po
rtfo
lio
Sh
are
YoY
MTPL MOD Non-motor Health
+28% +22% +61% +15%
Agency Bank Corporate Company
+30% +36% +55% +38%
Portfolio Share
Agency Bank Corporate Company
58% 10% 32% 100%
+38%
29% 27%
23%
20%
38%
45%9%
8%
2Q2020 2Q2021
984
1.360
YoY
MTPL MOD Non-motor Health
+29% +37% +43% -1%
Agency Bank Corporate Company
+33% +22% +36% +33%
Portfolio Share
Agency Bank Corporate Company
61% 10% 29% 100%
+33%
29% 28%
22%
22%
38%
41%11%
9%
1H2020 1H2021
2.157
2.860
21Q2 21H1
41
14-3
50
12
21
-7
14
20
1Q2020 1Q2021
UWR Development
Decreasing positive impact of lock-down coupled with big claims led to a YoY decline in 21Q2 UW result
UWR Business Mix (TL m)
20Q3 20Q4 21Q1
-78%
UWM
MTPL MOD Non-motor Health
+8% +1% +3% +12%
Agency Bank Corporate Company
+4% +29% -1% +5%
UWM
MTPL MOD Non-motor Health
-1% +4% -1% +18%
Agency Bank Corporate Company
+0% +23% +3% +2%
UWM: UWR / Gross earned premiumsHealth Non-motor MOD MTPL
10
3213
428
11
1313
3Q2019 3Q2020
6460
-7%
110
30
30
34
38
12
17
4Q2019 4Q2020
UWM
MTPL MOD Non-motor Health
+2% +11% +8% +16%
Agency Bank Corporate Company
+6% +27% +7% +8%
77
9995
+23%
22
85
-6
134
27
47
25
29
37
1H2020 1H2021
21H1
-72%
UWM
MTPL MOD Non-motor Health
-1% +4% +2% +17%
Agency Bank Corporate Company
+2% +22% +3% +3%
71
-3
84
15
26
32
15
17
2Q2020 2Q2021
21Q2
-69%
UWM
MTPL MOD Non-motor Health
-1% +5% +6% +16%
Agency Bank Corporate Company
+5% +21% +3% +4%
196295
62 83
42
CoR Development
Decreasing positive impact of lock-down coupled with big claims resulted in increase in loss ratio, thus combined ratio in Q221
20Q3 20Q4 21Q1
Commission Ratio Expense RatiıoLoss Ratio
73% 76%
16%16%
9%9%
3Q2019 3Q2020
97%100%
72% 72%
16% 15%
9% 10%
4Q2019 4Q2020
96%
69%
82%
16%
15%9%
9%
1Q2020 1Q2021
106%
94%96%
21Q2 21H1
55%
78%
15%
15%
9%
8%
2Q2020 2Q2021
79%
62%
80%
15%
14%
9%
9%
1H2020 1H2021
103%
86%
101%
43
Financial Income Development
As of June 2021, AuM has reached TL 3.7b with 24% YoY growth
(*): Yield figures are net of BITT (BSMV), (**): Financial income includes FX gain / loss
AuMm TL 2,970m TL 3,065m TL 3,280m TL 3,250m TL 3,671m TL
Average annualized yield* 13% 11% 14% 16% 16%
Quarterly financial income** 101m TL 121m TL 89m TL 154m TL 141m TL
JUN 20
37%
36%
11%
11%5%
Equity Government Board Eurobond Corporate Band Time Deposit
34%
40%
9%
11%
6%
SEP 20 DEC 20
43%
35%
5%
9%
8%
MAR 21
52%
29%
5%
8%5%
JUN 21
51%
32%
6%
9%3%
44
Discounting of O/S claims is the major difference between two ledgers
TFRS vs. IFRS
as of June 2021 (TL m) Equity YTD P&L adjustment
TFRS result 967,5 169,1
Equalization reserve 105,4 8,9
Unexpired risk reserve 25,6 1,7
Unallocated loss adjustment expenses -23,2 -1,5
Discounting of outstanding claims -367,3 -35,0
Deferred tax 61,4 8,7
IFRS result 769,5 151,9
45
Summary of financial statements and key financial ratios
Balance sheet(m TL)
2Q20 3Q20 4Q20 1Q21 2Q21YoY %
change
Receivables 1,417 1,618 1,885 2,061 1,861 31%
AuM 2,970 3,065 3,280 3,250 3,671 24%
Total assets 4,818 5,044 5,620 5,719 6,049 26%
Reserves 2,730 2,942 3,166 3,466 3,561 30%
Payables 877 807 946 974 968 10%
Equity 942 995 1,123 851 968 3%
Total liabilities 4,818 5,044 5,620 5,719 6,049 26%
RoE 50% 48% 43% 42% 33% -17pp
Profit and loss(m TL)
2Q20 3Q20 4Q20 1Q21 2Q212020 YTD
2021 YTD
YoY % change
GWP 1,032 1,270 1,736 1,578 1,422 2,266 3,000 32%
GEP 1,152 1,186 1,264 1,354 1,466 2,252 2,819 25%
NEP 655 675 692 746 808 1,293 1,554 20%
UWR 196 60 95 22 62 295 83 -72%
Expenses -58 -58 -68 -66 -68 -114 -134 17%
Financial income 96 118 83 147 135 177 282 59%
PBT 222 114 109 89 148 332 237 -29%
Net profit 169 86 88 76 93 259 169 -35%
46
Earnings guidance
Risks and opportunities are factored in our 2021 year-end guidance
15%-25% growth in GWP
Risks
• Downsizing economy limits insurance growth
• Natural disasters due to climate change (e.g.: hail, flood, fire, EQ etc.)• Decreasing UW profit margin due to competition• Uncertainty, high volatility on currency• Decrease in interest rates• Possible churn in individual segments due spending cut offs• Sudden increase in mobility and use of private cars instead of public transportation
with easing of restrictions
Opportunities
• Increase in interest rates
• Increasing new vehicle and mortgage home sales
• Pandemic enabling new products opportunities in health and revealing of interest to health insurance
• Accelerating digital transformation with the pandemic
• Increasing efficiency, quality and innovation with remote working
• Higher premiums and improved UW Margin with the introduction of new products (cyber, credit etc.)
• High focus of industry on technology and analytics to generate value
10%-20% increase in Net Profit
47
Table of contents
Introduction
Company overview
Business overview
Growth drivers
Financial overview
Appendix
Capital adequacy
Capital adequacy Jun ‘20 Sep ‘20 Dec ‘20
Required capital 923 971 964
Asset risk 399 420 388
Reinsurance risk 75 78 94
Reserve risk 104 115 115
UW risk 324 337 350
FX risk 21 21 18
Available capital 1,034 1,094 1,220
Capital adequacy ratio 112% 113% 126%
Main drivers:
by asset size
by re-insurance portfolio
by growth
by growth
by fx exposure
Please note that CARs can differentiate from final version shared with the Treasury49
Technical Result Bridge btw TFRS & Management Reporting
1. Guarantee Fund (premiums ceded to Assurance Account as a % of MTPL production)2. Assistance Premiums3. Subrogation Accrual4. Other Technical Inc. / Exp.5. Bad Debt for Subrogation Receivables6. Commissions vs. General Expense (only commissions are subject to UWR in management reporting)
(*) Claims, net in CMB reporting includes non-life technical expenses, namely incurred claims, bonus and rebates and other reserve provisions
Technical result in
TFRS
Re-classifications UW result in management
reporting1 2 3 4 5 6 7
Net earned premiums 1.604 -10 -40 - - - - - 1.554
Claims, net (*) -1.225 - - 22 -17 -28 - - -1.248
Other technical income and expense
-70 10 40 -22 14 - - - -
Commissions, net - - - - - - -223 - -223
General expenses -339 - - - - - 339 - -
Allocated financial income 295 - - - - - - -295 -
Total 265 - - - -2 - 116 -295 83
50
Glossary
AUM
Ceded Premiums
Combined Ratio
FI
FTE
GEP
GWP
HC
LoB
MOD
MTPL
NEP
Net Written Premiums
Retention Ratio
TCIP
Tech. Margin
Tech. Result
UWM
UWR
Asset Under Management
Premiums transferred to reinsurers
Total of Loss ratio, commission ratio and expense ratio
Financial Income
Full-Time Employee
Groos Earned Premium
Gross Written Premium
Headcount
Line of Business
Motor Own Damage
Motor Third Party Liability
Net Earned Premiums
Premium net of reinsurer share
Net Written Premiums as a share in GWP
Turkish Catastrophic Insurance Pool
Technical Margin, Technical Result as a share in NEP
Technical Result = UWR + Financial Income + Expenses
Underwriting margin , Underwriting Result as a share in GEP
Underwriting Result
51