The long-awaited consolidation of state-owned insurance companies under the Sovereign Wealth Fund has finally been completed. Starting in September, the insurance operations will continue under the name Türkiye Sigorta Anonim Şirketi, while life and pension operations will operate as Türkiye Hayat ve Emeklilik Anonim Şirketi.
Bringing Them Under One Roof
One of the less publicized but consequential moves of 2019 was the decision to merge insurance companies owned by public banks under the Türkiye Varlık Fonu (Turkish Wealth Fund). As part of this plan, Güneş Sigorta, Halk Sigorta, Ziraat Sigorta and Vakıf Emeklilik, Halk Hayat and Ziraat Hayat ve Emeklilik were consolidated under the Fund. In April of the previous year, the Fund completed the acquisition of six state-owned companies for a total of 6.54 billion Turkish lira.
Initially, Ziraat Sigorta and Halk Sigorta were merged under the Güneş Sigorta name, and Güneş Sigorta’s corporate name was later updated to Türkiye Sigorta Anonim Şirketi. Subsequently, the consolidation of state-owned life and pension companies was implemented: as of August 24, 2020, Halk Hayat ve Emeklilik, Ziraat Hayat ve Emeklilik and Vakıf Emeklilik ve Hayat joined together as Türkiye Hayat ve Emeklilik Anonim Şirketi. With this step, the merger of state insurance and pension firms was completed. Under the Wealth Fund, there are now two separate entities: Türkiye Sigorta Anonim Şirketi for non-life insurance and Türkiye Hayat ve Emeklilik Anonim Şirketi for life and pension products. The merger is expected to bring significant changes to the individual pension and life insurance market, and the public insurers have emerged as the strongest players in the market.
Rising to a Leading Position
The newly formed Türkiye Sigorta Anonim Şirketi quickly became the market leader and shifted competitive balances in the sector. According to data from the Turkish Insurance Association covering the period up to July 2020, before the merger Güneş Sigorta produced 2.2 billion lira in premiums with a 5.77% market share, ranking fifth among 62 companies. Ziraat Sigorta had 1.9 billion lira in premium production and a 5.14% share, ranking sixth, while Halk Sigorta produced 1 billion lira in premiums with a 2.18% share, ranking twelfth. After combining these three businesses, Türkiye Sigorta produced 5.2 billion lira in premiums based on July figures and captured a 13.72% market share, placing it at the top of the non-life insurance market. The consolidation created a substantial lead over competitors and established the merged company as the sector’s dominant force.
Leading in Pension Funds Too
Türkiye Hayat ve Emeklilik has also altered market shares in the private pension (BES) and life insurance segments. According to the Pension Monitoring Center’s data through August 2020, there were 18 active pension companies in the market. Prior to the merger, Vakıf Emeklilik ranked fifth by fund size, Ziraat Emeklilik sixth, and Halk Emeklilik seventh. After the merger, Türkiye Hayat ve Emeklilik reached 1.8 million participants and accumulated 22.8 billion lira in fund assets, securing the leading position in the market. This means about 28% of private pension participants now belong to this single entity. In automatic enrollment schemes the company holds 56.70% of the fund volume. Whether competitors will narrow this gap through promotions, better terms or other incentives remains to be seen over time.