Fitch Upgrades Turk P&I's IFS Rating to 'B+'; Outlook Positive

Tue 19 Mar, 2024 - 5:51 AM ET


Fitch Ratings - Madrid - 19 Mar 2024: Fitch Ratings has upgraded Turk P ve I Sigorta A.S.'s (Turk P&I) Insurer Financial Strength (IFS) Rating to 'B+' from 'B'. The Outlook is Positive.

The upgrade follows a recent similar action of Turkiye's sovereign ratings and Country Ceiling. The sovereign ratings and Outlook are a factor in our assessment of the insurer's industry profile and operating environment, company profile and investment risks. The Positive Outlook reflects that on the sovereign rating.

The IFS Rating reflects Turk P&I's 'Moderate' company profile compared with other Turkish insurers', investment risks skewed towards the Turkish banking sector, and exposure to the Turkish economy, in line with the rest of the market. The rating also reflects Turk P&I's strong earnings and weakened capitalisation.

Given that the majority of Turk P&I's liabilities are in foreign currencies, its IFS Rating is capped by Turkiye's 'B+' Country Ceiling to account for transfer and convertibility risk.



Country Ceiling Caps Rating: Turk P&I's IFS Rating is capped at Turkiye's Country Ceiling of 'B+' because the company predominantly settles its liabilities in foreign currencies. This results in transfer and convertibility risk that the Turkish government may place restrictions on the ability of Turk P&I to obtain foreign currencies.

Turkish Marine Specialist: Fitch assesses Turk P&I based on the insurer's Standalone Credit Profile, but also considers its ownership structure, which is equally divided between public and private interests. We believe the company's ownership and its strategic role in the Turkish economy are supportive of its credit profile. Turk P&I, Turkiye's first protection and indemnity (P&I) insurance provider, also underwrites hull and machinery (H&M) insurance, which accounted for around 70% of net premiums in 2023.

'Moderate' Business Profile Turk P&I's 'Moderate' business profile, despite its small size, limited history and less established business lines, is underpinned by increasing international diversification, in addition to its ownership and strategic role in Turkiye. Turk P&I's business volumes grew strongly in 2023, supported by local laws as well as strong development of its international business.

Weakened Capitalisation: Turk P&I's regulatory solvency ratio weakened to 65% at end-2023 from 90% at end-2022. This was driven by large claims due to storms in Marmara and Black Sea regions, which significantly reduced current year profit and equity, as well as a strong increase in net premiums. Turk P&I implemented a planned increase in paid-in capital in 2H23 and expects to receive a further capital injection from shareholders in 1H24, which would restore the regulatory solvency ratio to over 100%.

High Exposure to Banking System: Turk P&I's balance sheet comprises deposits in Turkish banks, with some concentration on a single state-owned bank as well as bonds issued by the government and domestic banks. This indicates a high exposure to the banking sector in Turkiye, in line with the rest of the Turkish insurance market.

Large Claim Erodes Strong Earnings: Turk P&I's earnings have been strong over the past five years and Fitch views its financial performance and earnings as a rating strength. However, in 2H23 earnings were reduced by large claims as a result of storms in Marmara and Black Sea regions.

For 2023, Turk P&I reported a net income of TRY62 million (2022: TRY42 million), equivalent to a net income return on equity of 37% (2022: 35%). Its profitability was highly influenced by higher investment income due to sharply higher interest rates in 2H23 and foreign-exchange (FX) gains. Turk P&I receives most of its premium income and pays most of its claims in foreign currencies.


Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

--A downgrade of Turkiye's Country Ceiling

--Business-risk profile deterioration due to, for example, a sharp deterioration in the maritime trade environment

Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

--An upgrade of Turkiye's Country Ceiling


The principal sources of information used in the analysis are described in the Applicable Criteria.



The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit

Rating Actions




Turk P ve I Sigorta A.S.

LT IFS B+ Rating Outlook Positive Upgrade

B Rating Outlook Stable