Annual Report
Annual Report 2019 Avenue du Japon N° 12 - Montplaisir - B.P. 29 - 1073 Tunis - TUNISIE Tél. :+216 71 904 911 - Fax : +216 71 904 930 TUNE-ImSaRil E: tunAisNreN@UtunAisLreR.cEomP.OtnR-Tww20w1.t9unisre.com.tn 1
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+14% Turnover Evolution -28% 53% Claims Charge Evolution Retention Rate 2019 120% 62,8% Coverage Rate Net LR 2019 234% Solvency Margin 6,2% 11,655 MDT ROE Result of 2019 TUNIS RE ANNUAL REPORT 2019 3
PCA Operational B+ PARTNERS GOOD 507 AM BEST +50 AA COUNTRIES STABLE FitchRatings 4 ANNUAL REPORT 2019 TUNIS RE
The Key Figures En MDT 2015 2016 2017 2018 2019 Technical Performance 100.586 113.434 121.672 142.037 162.136 TURNOVER 57.225 68.461 72.263 85.958 85.720 Retention 56.851 64.499 70.784 80.847 87.269 Net Earned Premium 28.454 33.541 44.347 57.674 54.835 Net Loss 50% 63% 62.8% Net LR 184.554 52% 230.278 71% 332.299 Technical Reserves 27.211 204.902 7.627 305.655 30.523 Underwriting Result 6.535 25.512 3.761 -27.913 -1.672 Net Technical Result 91.6% 101.7% 99.6% Net Combined Ratio 6.310 8.659 90.5% 108% Financial Activity Capital 100.000 100.000 100.000 100.000 100.000 Shareholders Equity Before 185.655 191.340 200.496 Appropriation of Profits 312.489 327.595 193.380 200.178 398.376 Investments 165% 160% 120% Coverage Ratio 15.064 18.881 348.308 383.267 26.928 Investment Income 151% 125% ROE 8.4% 9.1% 19.015 24.900 6.2% Net Profit 14.443 15.905 6.8% 9.3% 11.655 12.286 17.103 Social Reporting No. of Employees 81 82 91 87 91 Supervision Rate 91% 92% 93% 93% 93% 1.242 1.383 1.337 1.633 1.782 Turnover/ Staff TUNIS RE ANNUAL REPORT 2019 5
Mrs Lamia Ben Mahmoud Chairman and General Manager Ladies and Gentlemen, dear Shareholders; It is my honor to submit the 38th annual report of the Tunisian Reinsurance Company. This report displays the financial statements and analyzes the evolution of the company’s technical and financial activities as at 31.12. 2019. During this year, Tunis Re continued its underwriting strategy based on caution, selection and profitability, in an environment characterized in 2019 by : Growth under pressure at the international insurance and reinsurance level : At the international level, reinsurance turnover, over the past 5 years, has grown at a slower pace than that observed over the past decade as at 2% on an average annual basis. Reinsurance premiums, which were 245 billion USD at the end of 2017, rose to 257 billion USD in 2018, an overall increase of 5%. This development is the result of the increased demand for reinsurance and rather than a tariff increase. The average of the combined ratios was improved in 2019 to be between 98% and 100%. A continuous progress of the insurance sector at the national level : Despite the uncertain climate generated by the geopolitical situation affecting economic and financial dynamics, the insurance sector in Tunisia generated an overall turnover of 2,436 MTD, up to 8.2% compared to the same period last year, with a continuous remarkable evolution of the life branch of 13, 5%. Regarding claims, 2019 show an improvement compared to 2018, both in terms of frequency and in terms of severity, 6 ANNUAL REPORT 2019 TUNIS RE
A strong adaptation for Tunis Re : This result is impacted by several elements namely, The downward readjustment of turnover of 2 MTND following COVID-19, the strengthening of technical provisions for an Amount greater than 2.5 MTD in conformity with the prudential directives of the circular of the Insurance General Committee and finally by the fluctuation of the various foreign currencies against the Tunisian dinar. Furthermore, Tunis Re has reached to : • Increase its technical reserves by 9.5% for outstanding claims; • Improve the coverage level of acceptances by strengthening the retrocession program in order to allow more momentum at the international level, the retention rate is 60%. • Consolidate its equity to reach 200.5 MTD in 2019. • Improve its net technical result by 264%, from 3.610 MTD in 2018 to 13 MTD in 2019. • Increase investment returns by 8%, • End the fiscal year 2019 with an overall pre-tax surplus of 15.284 MTD. • In terms of events and business conferences, Tunis Re co-organized with FTUSA, FANAF in February and the 24th African Reinsurance Forum in October 2019. As a result and despite the difficult context of the country and the region, the rating agency AM-Best reconfirmed in 2019 the technico-financial solvency rating of company B+ (Good) with stable outlook and also reaffirmed the credit rating of the company at bbb-. This rating will enable Tunis Re to guarantee its positioning on the reinsurance markets in a highly competitive environment. In the same context, the company was again certified in accordance with MSI 20000 standards. A Likewise, Tunis Re obtained an excellent national rating (IFS), by the agency Fitch Rating, of AA- very strong with a positive outlook. Tunis Re has passed this year 2019 to the validation of its internal capital model. This model will provide the company with an efficient decision-making tool and thus reinforce its ERM system in tune with a professional reinsurer. Finally, I take this opportunity to address my warm thanks to all the shareholders who, thanks to their support, Tunis Re has been able to consolidate its equity, guarantee its commitments and improve its brand image as a national and regional professional reinsurer. My warm thanks to our ceding companies, our retrocessionaires and all our partners for the confidence they have placed in Tunis Re. I would also like to thank all the staff of the company for their dedication and commitment to work which contributed to the excellent performance recorded in 2019. TUNIS RE ANNUAL REPORT 2019 7
SUMMARY TUNIS RE PRESENTATION ECONOMIC & FINANCIAL ENVIRONMEN TECHNICAL MANAGEMENT TUNIS RETAKAFUL TECHNICAL MANAGEMENT 8 ANNUAL REPORT 2019 TUNIS RE
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Identification and Brief History 2011 2019 2008 2015 -Tunis Re was created -Introduction on the stock market Capital increase Tunis Re carried out on March 25, 1981 - MSI 20000 certification from 45 to 75 MDT a national rating via at the initiative of the public by the PARIS Stock Exchange the Fitch Rating agency authorities with an initial share Institute capital of 2 million Tunisian dinars. Tunis Re started a rating A new window Specialized Capital increase from First BCP process by A.M Best in « Retakaful » 75 to 100 MDT blank operation 1981 2012 2018 2010 Manages Member Participate a Pools in The Capital - MARITIME CORPS - FTUSA - AFRICA RE OF BUSINESS - FAIR - ARAB RE - CORPS AVIATION - OAA - AVENI RE AND LIABILITY - UGAA - COTUNACE - FANAF - AMANA TAKAFUL - DECENNIAL - ATTAKAFULIA LIABILITY 12 ANNUAL REPORT 2019 TUNIS RE
The Development Strategy Develop partnership Customer Trust exchanges Skills development Sustainable and stable growth Strengthening Risk Management of the financial base Consolidation A solid and well-established position without legal cession Diversification A good knowledge of the Tunisian risks Excellent relationship with ceding companies Expertise Control A regional presence in Africa and in the MENA, zone strengthened Profitability by strong commercial relations with our clients as part of a long-lasting Equity Development partnership A diversified portfolio spread, by ceding company, by risk and by geographic area Expertise and know-how developed over more than 38 years a rational risk appetite within the framework of an underwriting Strategy Adequate risk transfer within a solid retrocession program Management oriented by the profitability and optimization of all operational process for the allocation resources within Tunis Re Development of The Structure's Turnover 200.178 200.496 1981 2019 29% 42% 191.341 194.61 71% 52% 185.655 2015 2016 2017 2018 2019 TUNISIA OVERSEAS TUNIS RE ANNUAL REPORT 2019 13
CORPORATE GOVERNANCE & INTERNAL MANAGEMENT Mrs Lamia Ben Mahmoud Chairman of Board of Directors TUNISIAN STATE Mr.Saber Boumaiza Banque Nationale Agricole Mr.Borhane Bouallegue Assurances STAR Assurances COMAR Mr.Hassen Feki CTAMA - M.G.A Mr.Hakim Ben Yedder Assurances SALIM Mr.Lamajed Boukhris SIMPAR Mr.Sami Banaoues Mutuelle Assurances Mrs.Souad Mensi De L’enseignement Small shareholders Chikaoui independent Mr.Lassaad Zarrouk Mr.Skander Naija Mr.Salah Kanoun 14 ANNUAL REPORT 2019 TUNIS RE
THE PERMANENT AUDIT THE BOARD OF DIRECTORS EXTERNAL AUDIT COMMITTEE • The external auditor • Accounting mission • The Shari’a Supervisor for • Internal control missions the takaful business • The information system is periodically scrutinized by an outside firm. INTERNAL COMMITTEES GOVERNANCE COMMITTEES OF THE BOARD OF DIRECTORS •The Management Committee ERM & PCA •The Recovery Committee • The Risk Committee •The IT Committee • The Investment Committee •The Underwriting committee • The Remuneration and •The Major Losses Committee. •The Information System Appointment Committee Security Committee In order to establish an efficient and effective Tunis Re continues progressively to develop its internal control system, the company has set up geographic diversification, opening up increasingly control structures, namely the Management Control, to the international market. Internal Audit and Risk Management departments, whose role is to implement permanent and ex- The latest ratings show that Tunis Re’s perseverance post controls and subsequently, to restrain the risks in remaining at an adequate level of financial incurred by the company. Through their periodic and technical performance, despite the upheavals missions, the internal auditors of the company as experienced by Tunisia, knowing that the rating well as the auditor are the guarantors of the proper of the country influences significantly that of the application of the internal control rules. company. Concerned with bringing the maximum guarantee It was within this framework that Tunis Re Tunis Re to its partners and shareholders, Tunis Re is rated proceeded with a national rating through the Rating annually since 2008 by one of the largest rating Agency Fitch Rating and was assigned on 25th agencies specialized in insurance, which is the AM Julary 2020 a National Insurer Financial Strength Best. Despite the difficult context of the country and (IFS) Rating of ‘AA(tun)’ (Very Strong) with Stable the region, AM Best reconfirmed in July 2020 the Outlook. company’s rating of B + (Good) with stable outlook and a credit rating bbb-. This rating further supports the positioning of Tunis Re as a leading national reinsurer in the domestic Tunis Re’s risk-adjusted capitalization remains market and allows it to be confirmed in the regional solid, with a sufficient financial base to support the market as well. company’s risk profile. Confirming the quality of its financial activity, Tunis Re Tunis Re has availed itself of a good operating remained certified in compliance with the financial performance in recent years, with an improved standard MSI 20000 during the year 2018. underwriting profitability. This certification was officially attributed to Tunis Re While it has managed to evolve in a difficult by the Paris Stock Exchange Institute, represented operating environment over the last few years, by Maghreb Corporate. TUNIS RE ANNUAL REPORT 2019 15
RISK MANAGEMENT Tunis Re proceeded to the identification of its A risk matrix has been developed and a Capital risks within the framework of an ERM approach. Model is under process. CAPITAL MODEL INTERNALLY DEVELOPED Tunis Re has chosen to equip itself with an This review concluded that the model and the internal risk capital model in order to improve technicality internalized by Tunis Re in the the control of risks to which the company is exercise of developing this model fully meet exposed, by identifying and quantifying the the objective of increasing the control and origin of these risks on their need for capital; knowledge of the risks to which the company is and equip itself with a decision-making support subject and considered that the methodologies tool, in particular with the aim of refining the used in risk assessment are generally in strategic risk retention decisions. conformity with the market practices observed in the Solvency II regulated countries. Tunis Re called on an internationally renowned firm to carry out an external and independent The review also concluded that the data used review of its capital model. meet the prerequisites for modeling the various risks. This model aims to : Improve the control of risks to which Tunis Re is exposed, by identifying and quantifying the sources of these risks on the need for capital. Develop a decision support tool, including to refine strategic risk retention decisions. Prepare for the arrival of a possible regulatory framework in Tunisia, by equipping oneself internally with the necessary skills, tools and experiencee. 16 ANNUAL REPORT 2019 TUNIS RE
Capital Model : Dynamic Process Complete the implementation of the Certifier's recommendations as part of an action plan. Validate the version at 31/12/2019 during production Analyse and reporter the model results. Improve control of the risks to which the company is exposed by identifying and quantifying the sources of these risks on the need of capital. Acquire a decision-making support tool to refine strategic risk retention decisions. Prepare a draft risk appetite framework in line with the company's strategy. Regulatory compliance and monitoring of the AML/CFT A regulatory monitoring system has been set put in place, allowing the compliance unit to up to identify any new applicable national, monitor all the partners in the portfolio, so any regional or international regulations and to addition of a new partner can only be made verify compliance with regulatory requirements. after validation of the compliance unit. To this end, a structure responsible for verifying compliance has been set up to ensure legal During 2019, the compliance unit has filtered monitoring and to prepare an action plan in the and scanned all Tunis Re partners over the past event of non-compliance with new regulations. 3 years. This operation allowed us to detect companies sanctioned either by embargo or In addition, an AML/CFT process has been by other sanctions. AML / CFT Risk Management System 1 3 Risk profile 4 6 Customer and Assessment Alert processing Knowledge of the business Diligence & enhanced Device relationship measures control (classification) 2 5 Risk mapping Parameterization of the tool for monitoring the business relationship and detection of the abnormalities 7 Reporting of suspicious TUNIS RE ANNUAL REPORT 2019 17
TUNIS RE’S SHAREHOLDING A QUALITY SHAREHOLDER Shareholding Structure of Tunis Re is the capital structure of Tunis Re and mainly the characterized by a predominant share for National Agricultural Bank «BNA» with a share insurance and reinsurance companies (53%), of 18.9%. where COMAR holds 15.3%, followed by STAR 14.9%. The strategic nature of the reinsurance activity encouraged the Tunisian government to maintain The banking sector is strongly represented in its share of 5.3% LEGAL PHYSICAL TUNISIAN ENTITIES PERSONS STATE 4% 7% 5% INVESTMENT TUNISIAN INSURANCE COMPANY & 6% REINSURANCE CO TUNISIAN 53% BANKS 25% Shareholders Number Share TUNISIAN STATE 1 067 720 5,3% Banque National Agricole (B.N.A) 3 789 670 18,9% ASSURANCES STAR 2 982 579 14,9% ASSURANCES COMAR 3 064 226 15,3% INSURANCE & REINSURANCE COMPANIES 4 510 545 22,6% BANKING INSTITUTIONS 1 229 257 6,1% INVESTMENT COMPANIES 1 136 255 5,7% LEGAL ENTITIES 807 020 4,0% PHYSICAL PERSONS 1 097 952 5,5% OTHERS 1,6% 314 776 100% TOTAL 20 000 000 18 ANNUAL REPORT 2019 TUNIS RE
EVOLUTION OF TUNIS RE’S SHARE PRICE IN 2019 The stock market activity was marked in During the year 2019, the overall volume of 2019 by a very difficult national conjuncture trade recorded a decline of 12.2% to reach for the investor disoriented by the lack of 3,367 billion Dinars against 3,837 billion visibility and the climate of wait-and-see, Dinars in 2018. The volumes traded on the favored by the electoral deadlines, as well Stock Exchange took up 47.2% the overall as by the upward movement of the rates and volume of transactions, consequently a investor arbitration in favor of monetary investments. 8,5 35000 30000 8 25000 7,5 20000 7 15000 10000 6,5 5000 60 Quantity Share Price Tunis Re’s share – TRE, which is considered as a share with good dividend yield, remained stable and closed the year 2019 with an average stock price of 7.6 dinars. TUNIS RE ANNUAL REPORT 2019 19
SOCIAL REPORT Preparing for future challenges by anticipating the rapid change of the rein- surance environment : 91 Employees UNDERWRITING 51% 49% & RETRO 15% 52% FUNCTIONAL 6% SUPPORT 25% INFORMATION SYSTEM INTENAL AUDIT & RISK MANAGEMENT Tunis Re, with an extensive experience of of the reinsurance environment, from a 39 years, stage of maturity, has an average perspective of business expertise development number of years of service for employees of and company’s performance improvement. 24 years. Regarding the recruitment strategy, Tunis Oriented toward the future, Tunis Re’s strategy Re chooses the candidates according to in terms of work organization, promotes well-targeted profiles, fostering actuarial, stronger multi-faceted relationships between statistical and industrial specialties, through executives, for successfully achieving the sponsorship system (Paris Dauphine and their projects by attracting new skills and IFID). knowledge available to the company. Several training activities were carried out Indeed, Tunis Re has implemented a human during the year 2019, involving almost all resources strategy based on the creation of a employees, covering technical aspects such responsible internal dynamic, to meet future as insurance and reinsurance as well as challenges in the light of the rapid evolution financial and human resource management. 20 ANNUAL REPORT 2019 TUNIS RE
THE COMMERCIAL ACTIONS FOR THE YEAR 2019 The marketing Campaign In order to achieve the objectives set out in our rigorous underwriting policy, which allows development plan, TUNIS RE seeks to develop us to generate an underwriting surplus and a mainly in markets with similar structures to the return on capital. Tunisian market, such as the African, Maghreb and Arab markets. Marketing actions were carried out during the year 2019 to prepare the renewal campaign The achievement of these objectives must for the months April and July 2019 as well as be in line with the company’s selective and January 2020. Marketing Actions Aiming To : • Writing new profitable • Developing direct relationships business with our ceding companies, whenever possible • Preserving the existing portfolio while trying to increase our shares of balanced • Withdrawing any business or beneficial business. suffering from a chronic deficit The Objectives Of This Commercial Program Are : • Confirming the presence of TUNIS RE on • Exchanging expertise through the Arab, Maghreb and African markets and contacts with existing leaders and particularly the African and Gulf markets, skilled professionals which continue to offer significant growth opportunities • Prospecting new markets and developing • Collecting important data our portfolio, and consequently increasing on the target markets the annual turnover • Promoting our underwriting policy • Monitoring the development during the treaty renewals of our portfolio of business TUNIS RE ANNUAL REPORT 2019 21
PARTICIPATIONS IN EVENTS The market visits and participations in regional For this purpose, commercial visits to the target and international events bring us closer to our markets and participations in a number of traditional partners and allow us to get in touch regional events with new companies, especially those that we cannot visit. RReeggiioonnaall EEvveennttss Tunis Casablanca 43rd Annual Conference 6th Casablanca and General Assembly FANAF Insurance Meeting January February March April SMTWT F S SMTWT F S SM TWT F S SMTWT F S 12345 12 12 1 02 33-044 5 6 6 7 8 9 10 11 12 34 56789 13 14 15 16 17 18 19 3456789 10 11 12 13 14 15 16 7 8 9 10 11 12 13 20 21 22 23 24 25 26 17 18 19 20 21 22 23 14 15 16 17 18 19 20 27 28 29 30 31 1711-07 211181 12 13 14 15 16 24 25 26 27 28 29 30 21 22 23 24 25 26 27 19 20 21 22 23 31 28 29 30 24 25 26 27 28 July August Rwanda May June SM TWT F S SMTWT F S 42nd OESAI Annual conference SMTWT F S SMTWT F S 1 23456 123 Marocco 7 8 9 10 11 12 13 4 5 6 7 8 9 10 1234 1 14 15 16 17 18 19 20 11 12 13 14 15 16 17 26th FAIR 5 6 7 8 9 10 11 21 22 23 24 25 26 27 18 19 20 21 22 23 24 Reinsurance Forum 12 13 14 15 16 17 18 2909130-11412 5 6 7 8 28 29 30 31 19 20 21 22 23 24 25 12 13 14 15 252256-227828 29 30 31 26 27 28 29 30 31 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 September October November December Egypt SMTWT F S SMTWT F S SM TWT F S SMTWT F S 2nd Sharm rendez-vous 1234567 12345 12 1234567 8 9 10 11 12 13 14 8 9 10 11 12 13 14 06 67-088 9 10 11 12 3 1411 11-5211463 7 8 9 15 16 17 18 19 20 21 10 14 15 16 22 23 24 25 26 27 28 15 221633-1247252185 19 20 21 13 14 15 16 17 18 19 29 30 31 22 26 27 28 20 21 22 23 24 25 26 17 18 19 20 21 22 23 27 28 29 30 31 29 30 24 25 26 27 28 29 30 South Africa Tunis 46th Conference and Annual 24th African General Assembly of AIO Reinsurance Forum 22 ANNUAL REPORT 2019 TUNIS RE
TRAINING ACTIONS IN 2019 Fully conscious of its role in supporting to its various partners. Indeed, during the year the Tunisian market, Tunis Re, is constantly 2019, Tunis Re organized several workshops working to offer its assistance and know-how and seminars for the benefit of the market. Workshop on the reference system for fire risks Tunis Re Seminar on the theme of Bonds and Credit Business Risk Management Seminar PUBLICATIONS IN 2019 TUNIS RE ANNUAL REPORT 2019 23
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ECONOMIC & FINANCIAL ENVIRONMENT TUNIS RE ANNUAL REPORT 2019 25
INTERNATIONAL ENVIRONMENT Growth falls to its lowest level since the financial crisis of 2008; In the course of 2019, global growth slowed This weakening has been more pronounced in considerably, with a rate expected to drop emerging countries, more specifically in Brazil, below 3% to 2.9% after 3.6% in 2018. China, India, Mexico and Russia as well as other countries which have experienced and This slowdown has affected developed even remain to have macroeconomic difficulties countries including leading economies such as such as Libya and Yemen. the United States, the Euro Zone and China. 4,3 4,4 3,6 3,7 3,3 2,9 2,3 1,7 1,6 2017 2018 2019 World Economy Advanced Country Emergent Countries and Developing Countries Several reasons could explain this sharp decline This growth is projected at 1.7% in 2019, in the pace of activity growth over the past 12 against 2.3% last year for the economies of months, including : advanced countries. • The slowdown in manufacturing and world Indeed, the increase in tariff barriers between trade, the United States and its trading partners, notably China, has adversely affected the • The increase in customs duties that led to business climate and aggravated the cyclical a drop in trade, a trade war between the and structural slowdowns observed in many two largest economic powers: China and the countries over the past year. Disputes have United States, extended to the tech sector, putting global supply chains at risk. • The uncertainty related to Brexit, For the United States, the growth rate recorded • And rising tensions in Asia and the Middle in 2019 was 2.3% against 2.9% in 2018, East driving to a political and economic which was impacted by trade uncertainty and instability. having negative effects on investment. However, employment and consumption remain solid. 26 ANNUAL REPORT 2019 TUNIS RE
As for the Eurozone, growth was revised to increased trade tensions between China downwards (1.2% after 1.9%) due to a and the United States and the fall in energy weakness in exports, and the uncertainty prices. linked to Brexit, which continues to weigh on growth in the United Kingdom. Hence, the inflation rate in the United States fell to 1.8% from 2.4% in 2018. For emerging and developing countries, a growth rate of 3.7% is expected in 2019. The same goes for the Eurozone, the annual consumer price index fell back to stabilize As regards China, this decline in growth at 1.2% in 2019 against 1.8% the previous (6.1% against 6.6% in 2018), is explained year. not only by the escalation of customs duties, but also by the slowdown in domestic demand Similarly, for Japan, inflation fell from 1% to following the measures that had to be taken to 0.5% in 2019. bring the debt under control. In contrast to these countries, the Chinese Some of the largest downward revisions are Consumer Price Index rose to 2.9% in 2019 in advanced Asian economies, including the compared to 2.1% in 2018. Hong Kong Special Administrative Region, Korea and Singapore, all of which are Growth in the Middle East and North Africa impacted by slower growth in China and the region is expected to be modest at 1.5% in impact of trade tensions between the United 2019, down from 1.6% in 2018; largely as a States and China. result of weaker-than-expected global growth and volatility in global financial markets. In contrast to manufacturing and trade, the Jordan and Lebanon, which still bear the service sector continues to be resilient in most burden of millions of refugees, are preparing parts of the world, allowing labour markets to to undertake major economic reforms. Growth remain buoyant and wage growth to remain in the Gulf Cooperation Council (GCC) healthy in advanced countries. countries is still around 2% and reforms are being carried out in many of these countries, On the subject of inflation, over the past year, particularly Saudi Arabia. there has been a decline in inflation rates due TUNIS RE ANNUAL REPORT 2019 27
NATIONAL ENVIRONMENT A Downturn In Economic Growth During 2019; The year 2019 was marked by the anticipation of However, these results were offset by improvements the presidential and legislative elections, following in other segments, namely : the death of President Beji Gaied Essebsi. The smooth running of these elections confirmed that - Cereal harvests reached a record level of 2.4 Tunisia has made strong progress in the political, million tons. social and economic fields over several years, by embarking on a process of democratization. - The tourism sector, for its part, continues to recover after several years of instability, with With regard to the economic situation, the tourism receipts up by 35.7%, reaching 5,619 growth rate for the year 2019 has been revised MTD. downwards to 1.4% against 2.5% achieved in 2018, reflecting the weakness of economic With regard to inflation, the related rate stood at activity and this, in spite of the improvement of 6.7% in 2019 against 7.3% the year before, thus some indicators relating to the tourism sector, realizing a decrease of 0.6% due to a moderation the exceptional harvest of cereals, in addition in the prices of food products, housing, transport, to the gradual resumption of the production of leisure and culture and education. phosphate and derivatives. The decline is the result of the mitigation of Indeed, this weakness in activity is due to several core inflation from 8.2% in 2018 to 7.2% in factors, in particular the fall in demand from the 2019, which is in turn the result of a tightening Euro Zone, which has had a negative impact on of monetary policy and the appreciation of the manufacturing industries intended for export, in domestic currency against major currencies. addition to internal factors such as the : - Decline in the oil olive harvest and continuing With regard to the exchange rate, the national difficulties in the hydrocarbons sector. currency has experienced an appreciation against the main foreign currencies, that continued till the - Continuation of the downward trends in 2019 beginning of 2020. in respect of the industrial production pace compared to the same period a year earlier In fact, the Tunisian dinar exchange rate recorded (-3.5%), which is mainly explained, by the in 2019, and compared to the end of 2018, contraction of the output of manufacturing an appreciation against the main currencies of industries (- 4%) and the drop of the energy partner countries, in particular the euro (9.1%), sector production (-7.6%). On the other hand, the US dollar (7%) and the Japanese yen (5.6%). the mining sector experienced a significant recovery (14.8%) in connection with the As regards foreign trade, they recorded in 2019 increase in phosphate production (3.7 thousand a trade deficit of 19.4 MTD against 19 billion the tons during the first eleven months. previous year. 28 ANNUAL REPORT 2019 TUNIS RE
In 2019, export revenue was amounted to 43.9 The legislation is in line with the country’s MTD against 41 MTD in 2018. This modest efforts to attract foreign direct investment and improvement is mainly due to the rise in export encourage the development of public-private prices, i.e. a rate of 12.6% against 15% Last partnerships. It also joins other attempts to year. In real terms, exports in 2019 showed a promote entrepreneurship, such as the Start- 5% regression after a 3.5% increase last year. up Act of 2018, which aims to encourage the development of new activities in the As for import expenditures, they exceeded technology sector. the bar of 63 MDT in 2019, an increase of 5.4% compared to the achievements of 2018; Furthermore, Tunisia ranked 78th out of 190 This upward is sustained by the import prices countries assessed by the World Bank in its increase: 15.8% after 18.8% in 2018. Ease of Doing Business 2020 report, up two places from the previous year. Excluding the price effect, imports in volume is contracted by 9% against a 1% increase in For the year 2020, the earlier forecast 2018. before the Covid 19 crisis, was counted an improvement in the growth rate to reach 2.7%. In terms of taxation, ldirect taxes reached MDT 12.65 against MDT 9 a year earlier This development was mainly due to the recording a 39.5% growth. continued improvement in market services, especially tourism, the expansion of the This remarkable increase is mainly due to the agricultural sector in connection with the increase in income taxes, which amounted to record olive oil harvest (350,000 tons against 8.8 billion euros. 140,000 tons the previous campaign) and this, in addition to the gradual return of non- As for indirect taxes, they totaled 16.25 MTD, manufacturing industries following the entry an increase of 5.3% compared to 2018. into operation of the «Nawara» field, which will allow a 50% increase in gas production. With regard to reforms and laws rrelating to the year 2019, the Tunisian government has All these assumptions remain to be updated continued its long-standing efforts to improve according to the progress of the COVID-19 the business climate. pandemic, which has put all economic and financial prospects on standby, given the total In April, the Tunisian parliament adopted the vagueness as to the aftermath of this health Transversal Law which is intended to: crisis that has put everything in quarantine. Introduce more transparency, simplify administrative procedures, improve arbitration procedures for the settlement of investment disputes and strengthen access to finance. TUNIS RE ANNUAL REPORT 2019 29
THE REINSURANCE INDUSTRY IN 2019 The Determination Of The Fair Market Value, Given the current market conditions, the even though the damages are less important profitability of large-scale reinsurers is and less numerous than those recorded in expected to keep on under pressure in 2019, 2017 and 2018, the two most expensive the return on capital remaining below the cost years ever recorded in the global reinsurance of capital, the abundance of alternative capital industry. (cat ‘bonds and other financial instruments) still always competes with reinsurers whose regarding the reinsurers top 20, the estimated have the highest cost of capital. ROE is between [7-9%], while the combined ratio varies between [95-98%]. Reinsurers will generate modest but sufficient margins in 2019. these will be higher for the Mergers and Acquisitions : During 2019, there most diversified reinsurers. are fewer mergers. In fact, driven by market conditions and financing costs, mergers have The damage caused by natural catastrophes multiplied last year before stalling since has particularly affected insurers and reinsurers the beginning of the year .Among the most over the past three years, which should lead to important to take place this year, we note the an accelerated increase in reinsurance rates, acquisition of Aspen Insurance Holdings by this during the renewal period of 1 January Apollo Global Management, the acquisition and 1 April 2020, indicates the AM Best of Tokio Millennium Re by Renaissance Re, rating agency in its latest market analysis. or the takeover by China Re of Chaucer, the reinsurer active via Lloyd’s and weakened in The year 2019 is the third consecutive year in 2017 following natural catastrophes. which losses related to natural catastrophes have a heavy impact on reinsurers’ coffers, THE INSURANCE SECTOR IN TUNISIA IN 2019 The insurance market in 2019, has maintained lines of business accounted for 76% of premiums, dynamic growth, although there was a slowdown with an increase of 6.6% compared to a growth of in economic indicators, which were hardest by 13.5% for the Life branch. poor investment climate. After two years of high loss experience, an In fact, written premiums of the market reached improvement in both the number of notifications 2,436 MTD by the end of the fourth quarter 2019, and the severity of claims was reported in growing by 8.2% compared to 2018, while non-life 2019. 30 ANNUAL REPORT 2019 TUNIS RE
In MDT Marine WRITTEN PREMIUMS +8.2% 3.4% Misc Acc Fire & liabilities 2019 2 436 7.6% 22.7% 2018 2 252 Motor Life 2017 2 087 42.7% 23.6% +7.9% The Major Claims during 2019 are as follows : LOSSES D.O.L LINE OF BUSINESS In MDT COGITEL 29/07/2019 FIRE COGITEL 08/08/2019 FIRE 100% EVAL IBS 16/08/2019 8 446 954 TANIT STABILISATEUR TBD 23/08/2019 THEFT OF MONEY 19 440 000 CARTHAGE 21/07/2019 MARINE HULL 1 310 526 PLASTIPART 10/01/2020 MARINE HULL 1 050 000 FIRE 599 544 7 865 000 TUNIS RE ANNUAL REPORT 2019 31
Major events that occurred by the Balance Sheet reporting date and that have a significant impact on the 2019 financial state- ments, AT THE INTERNATIONAL LEVEL The world began the year 2020 with the The most affected sectors are trade and epidemic COVID-19, originally appeared in retail services, followed by industry and November 2019 in Wuhan, central China, and construction. causing unexpected cases of pneumopathy that required severe measures of confinement Facing these particular conditions, companies since January 2020. In March 2020, the are looking for solutions to maintain the epidemic was declared as a pandemic by continuity of their activities (part-time work, the World Health Organization (WHO). The remote working...). Unfortunately, many Covid-19 pandemic spreads rapidly to many of them are planning to move to technical other countries, which subsequently adopt unemployment or even to job suspensions. similar measures in March, resulting in border closures, a sharp downturn in the global In response to the deteriorating economic economy and a stock market crash on March situation, the Government has introduced a 12, 2020. series of remedial measures for both individuals and companies that are in difficulty. Growth prospects remain uncertain as a By its extent, the COVID-19 pandemic, which result of the spread of this pandemic, which is likely to affect millions of people and has already caused significant social and cause the collapse of the world economy, economic disruptions. is uninsurable and therefore completely excluded. Insurers’ business model cannot AT THE NATIONAL LEVEL resist to the occurrence of such event. La propagation du coronavirus a impacté The The insurance market must face a double spread of the coronavirus has had a major challenge : to transform the pandemic risk impact on the economic activity in Tunisia, into a financial product with the assistance especially following the confinement, preceded of banks and, in particular, to raise, in by preventive measures. Economic activity has partnership with the State, an important been negatively affected across various supply reinsurance capacity chains, mainly the suspension of production, the closing of points of sale and the interruption of international trade operations. 32 ANNUAL REPORT 2019 TUNIS RE
AT TUNIS RE LEVEL In view of the exceptional circumstances that the Moreover, in accordance to the recommendations country and the whole world are experiencing, of the General Insurance Committee with Tunis Re has set up a comprehensive scheme to regards to prudential measures to prevent fight against the spread of coronavirus based the impact of Covid 19 on the insurance on the recommendations of the Ministry of companies, Tunis Re has decided to decrease its Health. In addition and following the decision turnover, particularly for the aviation lines, and of confinement adopted by the Tunisian State, to constitute additional provisions during the Tunis Re has activated its business continuity preparation of the financial statements for the plan and start working remotely which financial year 2019. In fact, any issue caused guarantees the protection of its employees, by this pandemic that will directly or indirectly its partners and assure the continuity of its impact the company’s portfolio is secured by a services. provision. CHANGE IN THE GOVERNANCE STRUCTURE Tunis Re, proceeded, during its Extraordinary General Assembly dated 18th of March 2020, to change its Governance mode, in application of the new measures of law 2019-47 dated 29th of May 2019 relating to the improvement of the investment climate. The objective is also to comply with «best practices» of good governance. As a consequence, the company’s governance structure is now based on the separation of the Chair and the General Manager’s roles ; During its meeting of April 3, 2020, the Board of Directors appointed : • Mr Slah KANOUN, as Chairman of the Board. • Mme Lamia BEN MAHMOUD, as General Manager. TUNIS RE ANNUAL REPORT 2019 33
34 ANNUAL REPORT 2019 TUNIS RE
TECHNICAL MANAGEMENT TUNIS RE ANNUAL REPORT 2019 35
TECHNICAL MANAGEMENT A- Acceptance 162.136 MDT The Turnover Turnover 2019 The overall activity in 2019, reported an increase of 14% in turnover, to reach +14% 162.136 MTD. In comparison with objectives set for 2019, the turnover has almost reached Turnover Evolution the fixed target,with an achievement rate of 99.6%. By nature of acceptance, the year 2019 reflected a good progress both for the conventional activity, which expanded by 12%, as well as for the Retakaful activity which keeps growing up by +30% to reach 18.631 MTD, which represents 11% of the total turnover in 2019 against 9% in 2018. By nature, the evolution of the activity during the year 2019, was as follows : TURNOVER 2017 2018 2019 In MDT TREATY ACCEPTANCES 66.422 76.390 81.042 34.481 35.555 37.486 ST Evol 19/18 Tunisia 31.940 40.835 43.556 Overseas 44.417 51.326 62.463 56% 6% FACULTATIVE ACCEPTANCES 26.681 26.957 37.465 17.735 24.369 24.998 46% 5% Tunisia 110.838 127.716 143.505 Overseas 10.834 14.321 18.631 54% 7% SUBTOTAL ACCEPTANCES A. RETAKAFUL 44% 22% 60% 39% 40% 3% 89% 12% 11% 30% TOTAL ACCEPTANCES 121.672 142.037 162.136 100% 14% By nature of acceptance, recording a growth of 15% against 6% last year, as a result of a well-targeted commercial treaty acceptances represent 56% compared effort. to 60% in 2017 and 2018. Facultative acceptances represents 44% of total The breakdown of treaty acceptances by conventional turnover, against 40% in 2018, zone is estimated at 46% for Tunisian market( which reflects an increasingly dynamic strategy 37.468 MTD) and 54% for overseas (43.556 of portfolio diversification. MTD) respectively. The treaty acceptances turnover rose from 66.422 MTD in 2018 to 81 MTD in 2019 36 ANNUAL REPORT 2019 TUNIS RE
At the end of 31.12.2019, there was a attributed to the increase in underwriting substantial expansion of the overseas portfolio, capacities as well as to the commercial effort leading to a growth of 7% and an achievement deployed to develop the facultative portfolio. rate of 100% compared to 2019 projections. Facultative acceptances turnover jumped from The breakdown of facultative turnover by zone, 44.417 MTD in 2018 to 62.463 MTD in 2019, confirms the trend towards greater expansion recording an evolution of 16% compared to into foreign- targeted markets,which is reflected 22% the year before. This progress is mainly in an increase in their proportion to reach 40% in 2019. Turnover Structure Turnover Analysis by zone, The turnover breakdown by zone confirms 48% Tunisian a sustained growth over the last years with an average evolution of 7% on the Tunisian 52% Overseas market and 20% on the international market. The turnover in 2019 is divided into 48% for the local market and 52% for the overseas market against 46% and 54% respectively in 2018. The breakdown of turnover by zone is as follows : TUNISIA OVERSEAS +19% 84.268 +10% 77.868 2019 65.310 2018 76.727 63.632 2017 58.041 The Tunisian Market, GDP growth rate is expected to reach 1.4% in 2019, our activity has achieved a growth rate of The turnover is growing at a steady pace. The local 19% on the local market. In fact, performances market is relatively small with strong competition were mainly registered in the fire branch (+11%), and a high proportion of property-casualty lines. Misc Acc branch (+39%), Marine branch (+50%) In recent years, the turnover has developed from and Aviation branch (+36%). 64 MTD in 2018 to 78 MTD in 2019, involving both conventional and facultative acceptances. Compared to the objectives set, we succeeded to achieve 97% of the target on the local market. Despite a difficult national economic situation and a slow recovery of economic activities where the TUNIS RE ANNUAL REPORT 2019 37
The breakdown of turnover by zone is as follows : MAGHREB TUNISIA ASIA&EUR 8.413 TND 77.868 TND 9.539 TND 5% 48% 6% AFRICA 18.432 TND 11% ARAB COUNTRIES 47.884 TND 30% The Overseas market, The average growth in this marke was 25% over the last three years compared to 19% in In general, the international market has grown 2018. This improvement reflects the successful at an average rate of 20% over the last three expansion into new regional markets (Jordan, years, with the following breakdown by Egypt, Palestine and the UAE), especially in market : the Fire, Engineering and Transport lines. Compared to the objectives set for 2019, the •Maghreb Market : Despite the turnover of the Arab countries achieved a rate difficulties experienced in this market, due of 104%. to geopolitical instability mainly in Libya, it remains one of the targeted markets, where •African Market : still growing with a Tunis Re maintains good relationships with its very important development potential. The partners. In 2019, our turnover recorded a 2019 turnover recorded a 7% evolution, decline of 8%, which can be attributed to our going from 13 MTD in 2018 to 18.432 MTD gradual withdrawal strategy from companies in 2019. Regarded as a target market, a facing recovery shortfalls. Compared to the strong commercial effort has been deployed 2019 estimates, the achievement rate on the for the consolidation and development of new Maghreb market was 96% relationships on this area. •Arab Market : In 2019, the Arab market • Asian Market : During the last few accounted 30 % of the total market, compared years, the evolution of turnover on this market to 24 % at the end of 2018; Turnover has remains stable reaching 9.539 MTD against increased from year to another in terms of 9.974 MTD in 2018. structure. 38 ANNUAL REPORT 2019 TUNIS RE
The structure by lineis of busniness as follow : 2018 AVIATION MARINE AVIATION 2019 8% LIFE 15% 9% LIFE MARINE 7% 8% FIRE 13% 40% FIRE 43% DECENNAL MISC DECENNAL MISC LIABILITY ACCIDENTS LIABILITY ACCIDENTS 5% 14% 3% 15% ENGINEERING ENGINEERING 11% 10% +7% Turnover Analysis by Line of Business Analysis by line of business shows an increase Fire Turnover Evolution of 7% for Property & Casualty lines, with a combined share of 68% in 2019 compared to +23% 73% a year earlier. While Marine lines report a significant increase of 32%, as a result of Miscellaneous Accident Turnover improved underwriting conditions. Evolution •The Fire Branch recorded a rise by 7% +31% from 60.998 MTD in 2018 to 65.323 MTD in 2019, achieving 99% of the 2019 budget Marines Turnover Evolution projections. • The Miscellaneous Accident Branch showed a progress of 23%, which is explained by the underwriting of new products, mainly in the Motor category. • The Engineering Branch was affected by the stagnation of investment and the slowdown in projects that are struggling to start up. TUNIS RE ANNUAL REPORT 2019 39
• the Marine lines, eturnover has shown previous fiscal years. Furthermore, following growth in all categories: Hull (+67%), Cargo the Covid 19 crisis, the aviation premiums was (+6%) and Energy (+50%). adjusted downwards for an amount of 1.7 MTD after aircraft standstill. • The Aviation Branch arecorded an increase of 35% from 11.051 MTD in 2018 to • The Life Branch, marked an increase 14.877 MTD in 2019. This evolution was due, in turnover by 36% in 2019 to reach 12.821 in particular, that the year 2018 was affected MTD against 9.395 MTD in 2018. by the settlement of discounts booked over The Turnover by lineis of busniness as follow : In MDT TURNOVER 2017 2018 2019 ST Evol 19/18 FIRE 48.540 60.998 65.323 40% 7% MISCELLANEOUS ACCIDENT 16.233 19.54 23.986 15% 23% ENGINEERING 22.608 22.755 21.127 13% -7% MARINE 14.804 18.298 24.002 15% 31% AVIATION 11.335 11.051 14.877 9% 35% LIFE 8.152 9.395 12.821 8% 36% TOTAL 121.67 142.037 162.136 100% 14% -28% Claims Charge Claims Charge Evolution The loss experience in 2019 declined by 28% compared to the same period in 2018. The 57% loss ratio remains relatively moderate at 57% compared to 96% in 2018, which was marked LR 2019 by an exceptional loss experience both in terms of frequency and severity. -52% In fact, the total claims charge amounted to C.C Facultatives Evolution 89.561 MTD at the end of 2019 against 124.553 MTD as of December 31, 2018. Indeed, it should be pointed out that this claims charge includes additional reserves for outstanding claims reflecting both the impact of the depreciation of the Tunisian dinars compared to foreign currencies as well as the aggravation of the loss experience in last recent years. Compared to the objectives set for 2019, the overall claims charge for the whole activity has recorded an achievement rate of 99.5%. 40 ANNUAL REPORT 2019 TUNIS RE
By nature of acceptance, the gross claims charge for 2019 was as follows : In MDT CLAIMS CHARGE 2017 S/P 2018 S/P 2019 S/P Evol 63% 54.225 68% 56.136 19/18 79% 70.327 143% 33.425 TREATY ACCEPTANCES 44.772 63% 4% FACULTATIVE ACCEPTANCES 34.754 50% -52% TOTAL 79.526 69% 124.553 96% 89.561 57% -28% Treaty Acceptances, the claims charge Facultative Acceptances, la the claims charge evolved by 4% compared to 2018 to reach in 2019 was lower than those of 2018 56.136 MTD. This increase mainly affected and 2017. In recent years, the activity has the overseas market (+29%) as well as the experienced an increase in frequency and cost Tunisian market (+11%). of claims, affecting both the local and overseas markets. The loss ratio for treaty acceptances remains within a reasonable level of 63% in 2019, The cost of claims reached an amount of improving by 5 points compared to 2018. 33.425 MTD with a loss ratio of 50% against 143% in 2018 and 79% in 2017. By zone, the claims charge is detailed as follows : TUNISIA OVERSEAS 30.621 TND V/S 73.462 TND 58.940 TND V/S 51.091 TND +15% -58% 42% 71% LR 57% TOTAL 89.561 TND V/S 124.553 TND -28% * V/S 2018 Tunisian Market, persue its efforts of Overseas Market, the claims charge increased consolidation and development of the business by 15% to reach 58.940 MTD against 51 portfolio, some major claims (Cogitel, Tunis Air MTD in 2018, as a result of the occurrence of ...) were incurred in 2019 without, however, some major losses mainly affecting the Arab increasing the total claims charge. The losses and African countries; recorded a decrease of 58% compared to 2018 and represents an overall loss ratio of The Overseas loss ratio reached 71% against 42% against 122% in 2018. 74% in 2018 and 81% in 2017. TUNIS RE ANNUAL REPORT 2019 41
332.299 MDT Technical Reserves Technical Reserves 2019 The technical reserves, constituted of unearned premium reserves and outstanding claims reserves, reached 332.299 MTD in 2019 against 305.655 MTD the year before, recording a rise of 9%. By type of reserves, outstanding claims reserves represent 73% of the total technical reserves and are increasing by 10% compared to 31/12/2018. The evolution of technical reserves was as follows : 305.655 332.299 230.278 243.326 159.378 222.118 70.900 83.537 88.973 2017 2018 2019 UPR OCR In the context of a gradual preparation to the methodology. As a result, the technical IFRS standard combined with the occurrence of reserves have been reinforced during the last some major claims (fire) on the foreign market, three years going from 231 MTD in 2018 to Tunis Re has decided to change the reserving 332.299 MTD in 2019. By nature of acceptance, the technical reserves was as follows : TECHNICAL RESERVES 2017 2018 2019 In MDT TREATY 148.660 170.776 FACULTATIVE 82.426 134.879 Evol TOTAL 231.087 305.655 19/18 182.893 7% 149.406 11% 332.299 9% Treaty Acceptances, Technical reserves Facultative Acceptances, Technical reserves increased by 7% subsequent to an increase increased by 11%, explained by higher in outstanding claims reserves in foreign reserves for claims relating to the Fire, markets. Engineering, Marine and Life lines of business. 42 ANNUAL REPORT 2019 TUNIS RE
30.523 MDT Technical Result Technical Result 2019 The underwriting activity has pursued its development during 2019 despite a difficult economic environment. The underwriting strategy, which is based on a partnership with ceding companies, has shown that Tunis Re has made great efforts to extend its expertise and resources in order to offer them sufficient capacities to be in line with the new risks. This collaboration enables the creation of value for each partner. The technical underwriting result in 2019 showed a profit of 30.523 MTD against a loss of 27.9 MTD in 2018, which was an exceptional year in terms of claims. Evolution of the Technical Result by nature of acceptance was as follows : TECHNICAL RESULT 2017 2018 2019 In MDT TREATY 6.442 5.390 9.122 Evol 19/18 69% FACULTATIVE 1.184 -31.147 21.401 169% TOTAL 7.627 -25.757 30.523 219% Treaty Acceptances, the result recorded a Facultative Acceptances, showed a positive profit of 9.122 MTD upward compared to result of 21.401 MTD, representing a significant 31.12.2018, owing to the improvement of the improvement compared to the year 2018, which loss ratio in 2019. was an exceptional year, affected by some major claims. 2017 2019 7.627 MDT 30.523 MDT 2018 -27.913 MDT TUNIS RE ANNUAL REPORT 2019 43
B- The Retrocession Retroceeded Premium 47% The premium retroceded in 2019 shows an increase of 36% compared to 31/12/2018 Retention Rate in 2019 to stand at 76.416 MTD. This increase is firstly due to the growth of acceptances, Optimal Coverage mainly the Facultative business supported by For The Development the strengthening of our retrocession program Of Our Activity by the purchase of an additional cover endowing our foreign participations with a wider protection. By nature of acceptance, the retroceeded premiums was as follows : RETROCEEDED PREMIUM 2017 2018 2019 In MDT TREATY 35.581 42.572 54.965 FACULTATIVE 13.829 13.507 21.451 Evol TOTAL 49.410 56.079 76.416 19/18 29% 59% 36% 53% The retroceded Premium have recorded over the last three years, an average growth of The Retention Rate 2019 20%, explained by the increase in cost of Retro cover on the international scale, which is becoming increasingly demanding in terms of type of cover. Facultative acceptances have a high retrocession rate, in view of the high cost of Pool risks, which are highly retroceded. As a result, the overall retention level stands at 70% compared to 61% in 2018. Excluding the Pool accounts, the retention rate would be 59.7% Retrocession by line of business, The analysis by line exposes an increase in the retrocession premium for the Fire as well as of the Marine, which suffered the cost of a high loss experience during the last five years. 44 ANNUAL REPORT 2019 TUNIS RE
Retrocession by line of business was as follows : LINE OF BUSINESS 2018 TX RETRO 2019 TX RETRO In MDT FIRE Evol MISC. ACCIDENT 19/18 ENGINEERING DECENNIAL LIABILITY 27.854 46% 38.082 58% 37% MARINE HULL 1.254 6% MARINE CARGO 5.453 1.587 7% 26% ENERGY 5.814 34% 3.318 88% 7.722 49% 42% AVIATION 1.542 59% LIFE 1.131 16% 4.617 88% -21% TOTAL 9.440 42% 0.273 85% 6.123 65% 85% 3% 2.184 21% 42% 1.357 33% 20% 14.479 97% 53% 0.266 2% -2% 56.079 39% 76.416 47% 36% The Retrocession Claims Charge against a more significant improvement in Facultative retrocession -89%, driven by the Claims recovered under the retrocession return of the claims to their ordinary level after reached 34,726 MTD in 2019 compared to two con 66,879 MTD in 2018, a drop of 48%. It is worth noting that the retrocession program secutive years of exceptional losses. supported 39% of claims on a gross basis. The Loss Ratio for retrocession is imporoved to By type of retrocession, the treaty recoverable 50% compared to 2018 and 2017. claims decreased by 3% compared to 2018, The retrocession claims charge was as follows : CLAIMS CHARGE 2017 2018 2019 In MDT TREATY 26.018 31.638 FACULTATIVE 9.161 35.240 Evol 19/18 TOTAL RETROCESSION 35.179 66.879 LR RETROCESSION 80% 138% 30.704 -3% 4.022 -89% 34.726 -48% 50% -64% TUNIS RE ANNUAL REPORT 2019 45
13.145 MDT The Technical Result Net of Retrocession Underwriting Profit 2019 The analysis of the technical activity after retrocession shows at the end of the financial year 2019 a technical result of 13.145 MTD against 3.610 MTD in 2018. After allocation of administrative expenses and the analytical result, the activity showed a loss of -1.672 MTD. 13.145 MDT 2019 3.610 MDT 2018 8.962 MDT 2017 Technical Result Net of Retrocession was as follows : 2017 2018 2019 In MDT 85.958 NET PREMIUM INCOME 72.263 80.847 85.720 Evol NET EARNED PREMIUM 70.784 57.674 87.269 19/18 NET CLAIMS CHARGE 44.347 21.719 54.835 NET ACQUISITION COST 19.575 21.705 0% NET LR 71% 62.8% NET RESULT BEFORE THE ADMINISTRATIVE FEES 63% 3.610 13.145 8% RESULT BEFORE ASSIGNMENT OF A 8.962 CONTROLLING 8.659 -5% 3.761 NET COMBINED RATIO 108% 0% 102% -12% 264% -1.672 -119% 99.6% -8% The technical elements net of retrocession • An improvement in the net loss by 5%. show:: • An improvement in the Net loss ratio of 8 • Stabilization of the premium retained to points to stand at 62.8% compared to 71% reach 85,720 MTD. in 2018. • An 8% increase for the net earned premium. • A Net Combined Ratio from 108% in 2018 to 99.6% in 2019. 46 ANNUAL REPORT 2019 TUNIS RE
Ratios Analysis By Line Of Business exceptional loss experience, having affected practically all lines of business. The breakdown of the main technical ratios in 2019 and 2018 was seriously affected by an Ratios analysis by line was as follows : LINE 2018 2019 EVOLUTION OF BUSINESS Net Acq Net LR Combined Net Acq Net LR Combined Net Acq Net LR Combined FIRE Costs Rate Ratio Costs Rate Ratio Costs Rate Ratio 35.2% 87.3% 122.5% 39.4% 55.5% 94.9% 12% -36% -23% MISC.ACCIDENT 26.5% 49.9% 76.4% 24.2% 70.0% 94.2% -9% 40% 23% ENGINEERING 43.2% 74.4% 117.6% 48.6% 69.1% 117.7% 13% -7% 0% MARINE 46.3% 65.6% 111.9% 43.3% 68.1% 111.5% -6% 4% 0% 55.6% 101.7% 157.4% 155.5% -196.3% -40.8% 180% -293% -126% AVIATION 40.2% 53.2% 93.4% 33.7% 67.4% 101.1% -16% 27% LIFE 8% TOTAL 36.9% 71.3% 108.3% 36.7% 62.8% 99.6% -1% -12% -8% *The management expense ratio includes the acquisition costs and the administrative expenses. 102.4% 108.3% 99.6% 62.7% 71.3% 62.8% 39.8% 36.7% 36.9% 2017 2019 2018 Acq Costs Rate Combined Ratio LR TUNIS RE ANNUAL REPORT 2019 47
48 ANNUAL REPORT 2019 TUNIS RE
TUNIS RETAKAFUL TUNIS RE ANNUAL REPORT 2019 49
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