Reinsuring the growing Turkish mortgage market is a matter of local knowledge
FAF International, the international arm of of Fortune-500 company First American, is close to signing deals with banks and insurers in Turkey. Three or four deals are expected to be signed in Turkey over the “next month or so”, said Phillip Oldcorn, Senior Vice President at FAF International, in an exclusive interview with Global Reinsurance. “We are almost there,” he said.
Under the expected deals, FAF International will provide reinsurance to Turkish insurers for mortgage security and legal ownership risk. This form of insurance, which is more common in the United States than Europe, covers a mortgage lender against defects in the ownership of the property, including cover for planning and building control violations, which affect as many as 70% of all Turkish properties, and against similar legal problems which could render the mortgage invalid.
As well as reinsurance capacity, FAF International will provide know-how to the Turkish insurers. Some of the new contracts could be fronting deals. “In the early days we will be covering most of the risk,” he said.
Mortgages are new in Turkey. The country’s first mortgage was in 2007. But in 2009 Turkey saw 200,000 new mortgages arranged, and a further 250,000 are anticipated in 2010. Oldcorn, who visits Turkey once every month, and who is learning the Turkish language, believes this market will continue to grow, and points to the young demographic of Turkey’s 70m-strong population
In late 2008 First American bought 40% of FU, the largest mortgage processor in Turkey. .