Nexus facilitates first structured MTPL reinsurance deal in Turkey

Specialty managing general agent (MGA) Nexus Group's Labuan, Malaysia-based Nexus Structured Solutions has developed a ten-year structured reinsurance deal for Turkish insurer Koru Sigorta Anonim Şirketi.

The deal covers Koru Sigorta's motor third party liability (MTPL) book of business with capacity provided by an AA- rated global reinsurer.

It combined retrospective adverse development and prospective quota share covers that transfer MTPL historical reserving and future underwriting risks to the reinsurer.

The coverage includes a significant retention of ceded premium domestically, as well as the use of profit and sliding scale ceding commissions aligning the parties' interests.

Colin Thompson, founder and group CEO of Nexus, said: “This is clearly a significant and complex agreement that has been brought to a successful conclusion for all parties concerned, and I am proud that Nexus Structured Solutions has been able to play such an important role which augurs well for similar deals to be struck in the future by Gerard and his team.”

Gerard Pennefather, chairman of Nexus Structured Solutions, added: “Our thanks to the leadership of Koru Sigorta and our reinsurance partners for their foresight in concluding the first Structured MTPL reinsurance deal in Turkey.

"In addition, this deal backed by the ‘AA-‘ rated reinsurer is a testimony to the resilience and opportunities in the Turkish insurance market. What’s particularly pleasing for us is that reinsurance premiums are kept onshore in Turkey whilst risk is transferred abroad. We look forward to continuing to be at the forefront of risk transfer innovation in Turkey and our target markets elsewhere.”

Bülent Bora, chairman of the board of Koru Sigorta, commented: “It is a delight having concluded this deal, particularly considering the Covid-19 pandemic restrictions and the difficulties of attracting international reinsurance capacity for the MTPL book.

"Whilst none of the deal features in isolation represent anything particularly novel, it is their collective use within a comprehensive structure that delivers a highly innovative and exciting solution that has widespread application across the local MTPL marketplace. From a domestic national interest perspective, the combination of accessing highly rated international reinsurance capacity and expertise whilst retaining the vast majority of the premium onshore in Turkish Lira is very compelling.”