Halk Sigorta Outperform

Owned by Yapi Kredi Bank, Halk Sigorta is one of the largest
insurance companies in Turkey. With premium generation of USD 120 mn
(non-life), Halk Sigorta ranked seventh among 65 insurers in Turkey.
Halk Sigorta carries out its life insurance operations through its
wholly owned subsidiary Halk Yasam. With 17% market share, Halk Yasam is
the second largest life insurance company in Turkey. We believe Halk`s
unlisted life subsidiary is more valuable than itself. This hidden value
will become more visible with the pension reform and through a future
flotation of Halk Yasam.
Halk Sigorta and Halk Yasam will be renamed as Yapi Kredi Sigorta
and Yapi Kredi Yasam respectively. This will have a positive impact on the
Company since the current name Halk is associated with state owned Halk
Bank.
Although we anticipate premium generation to increase by 25% in
2000, earnings will more than double to USD 54 mn because of increased
profitability of insurance operations and hefty dividend income from Halk
Yasam.
Halk Sigorta trades at a 47% discount compared to its NAV of USD 362
mn (non-life USD 146 mn and life USD 186 mn). We initiate our coverage for
Halk Sigorta with an OUTPERFORM rating due to strong upside potential
and soaring net earnings.