“Irrational pricing is the main reason that affects profitability negatively,” Allianz CEO Alexander Ankel said in a written statement Monday.

The Turkish insurance sector began 2010 better than a year earlier, when the negative impacts of the economic crisis first came to light, Ankel said. Still, the sector was not able to recover completely last year, with real growth remaining below the average national 2010 rate.

“Obtaining technical profitability was not possible for the overall sector,” Ankel said.

Extremely low pricing was the most significant problem for the insurance sector, Ankel said. “Technical profit totaled 108.7 million Turkish Liras in elementary branches in 2009. But according to the third quarter results of 2010, the sector lost 66.5 million liras.”

In terms of targets, Allianz experienced a very good year in 2010, Ankel said. “Despite challenging market conditions, we maintained our profitability by balancing our prices and portfolio;” he said. “We obtained a stronger loss ratio, compared to the sector average.”

Noting that the sector posted nearly 5 percent real growth last year, Ankel said Allianz did not expect big growth this year. “Our expectation is that the insurance companies, to implement correct pricing, will consider technical and operational results and increase prices.”

“Allianz has a reserve ratio above the average, a strong financial structure and healthy portfolio,” Ankel said.

Individual pension system 

Allianz is an innovative company, Ankel said. “We will implement new regulations this year to decline operational processes and offer a faster service to our customers.”

The individual pension system is on the rise in Turkey, Ankel said. “Allianz aims to take serious steps in individual pensions.”  

The number of participants entering the sector this year is expected to be roughly 300,000, he said. “We predict the sector will reach 2.6 million participants and funds worth 15 billion liras as of the end of the year.”

“We expect around 17.5 percent real growth in the individual pension system this year, compared to last year. During this time, we will diversify our distribution channels. We will have some different implementations, especially in agent channels,” he said. 

Ankel said the interest shown by foreign actors in the Turkish insurance sector has recently been gradually increasing. “Turkey has a high youth population and has great growth potential. For this reason there is a great interest in Turkey,” he said.

Foreign companies will continue to invest in Turkey, he said. “We forecast that there may be a few big acquisitions in the sector this year. New actors may enter the sector and we believe that this situation will increase the competition.”