Insurance is Not Solely Dependent on Term Deposits or High Interest Rates

SELÇUK ALTUN

Mahmut Erdemoğlu is a member of one of the most influential industrialist families that have left a mark on Turkish industry in recent years. In 2015, without having a clear plan for his next venture, he left the family business with the determination to "chart his own path." With his entrepreneurial spirit and 30 years of business experience, he is now writing a new success story.

In 2017, Erdemoğlu took his first step into his new business by founding Quick Sigorta. In less than a decade, he has expanded beyond insurance into finance, IT, real estate, car rental, and education, establishing a holding company with 12 subsidiaries under its umbrella.

We met with Maher Holding Founder and Chairman Mahmut Erdemoğlu at Quick Tower, the group's headquarters in Istanbul’s Kozyatağı, which was acquired from Anadolu Group in 2021. Our discussion focused on the holding and its subsidiaries, Quick Sigorta’s IPO process, and new investment plans. Erdemoğlu also shared insights on the insurance sector and the broader economic outlook.

"Insurance is Not Solely Dependent on High Interest Rates"

Erdemoğlu noted that 2024 was an exceptionally profitable year for the insurance sector due to financial revenues. When asked how the Central Bank’s interest rate cuts would impact the industry, he emphasized that Maher Holding operates three insurance companies—Quick Sigorta, Corpus Sigorta, and Quick Hayat. He explained:

"Economies always experience ups and downs. If you manage insurance with the logic of Turkey or other developing and underdeveloped countries, you will be vulnerable to such fluctuations. However, this is not the case in developed countries. In Europe and the United States, insurance companies do not rely on high-interest rates. So, how do they sustain themselves? Through insurance operations and diverse investments. Since these companies have been growing and thriving for years, it means they have found ways to allocate their resources effectively. We follow the same approach—reinvesting profits from insurance into other sectors, allowing us to grow. Therefore, the only source of income for insurance is not term deposits or high interest rates."

"We Diversify Our Investments"

As a prime example of this strategy, Erdemoğlu cited Quick Tower:
"The establishment of MHR Real Estate Investment Trust (REIT) and the acquisition of this building is a testament to our approach. We purchased it in March 2021, and its value has since doubled in dollar terms. This confirms that it was a sound investment. Moreover, this is not our only investment. Our funds are not solely allocated to term deposits or interest-bearing instruments. We also invest in foreign currencies, gold, and stocks. Within the legal framework, we diversify our investments across all market instruments, distributing them strategically. The decline in Turkish lira interest rates this year will not significantly affect our income. We will redirect our investments to other areas and strengthen our position there."

"We Are Looking for Acquisition Opportunities"

Despite being a young group, Mahmut Erdemoğlu emphasized that Maher Holding maintains a strong financial structure and is actively seeking new investment opportunities:
"Our finance companies, insurance firms, and real estate investment trusts are financially robust. Unfortunately, unlike us, many companies have been struggling in the past two years due to tight monetary policies, forcing them to borrow at high interest rates. As a result, we are looking for opportunities. We are waiting for the right acquisition. Our main focus areas are energy and real estate. Currently, we have a small presence in energy, which we plan to expand. We already have a strong real estate portfolio, which we aim to develop further. With three established insurance companies and a finance company, our next step will be to grow our energy and real estate businesses. However, if an attractive opportunity arises in a promising sector, we will evaluate it."

"Quick Sigorta to Go Public This Year"

Regarding Quick Sigorta's IPO, Erdemoğlu assessed the performance of Maher Holding’s publicly traded MHR Real Estate Investment Trust (REIT), acknowledging that 2024 has not been a favorable year for stock market investors, particularly due to high-interest rates affecting REITs' performance. He noted:

*"The performance of publicly traded companies is not a reflection of their intrinsic value but rather a consequence of high-interest rates. Despite this, unlike many REITs that have fallen below their IPO prices, MHRGYO has consistently traded 10-15% above its listing price throughout the year. Even now, it remains around 10% higher than its initial value. However, we believe that our stock is at least 50% undervalued.

2025-2026 will be strong years for MHRGYO, driven by ongoing real estate projects, including:

• A 350-400 unit residential project in Kurtköy (excavation work has started).
• A large-scale urban renewal project in Ataşehir, where agreements have been signed with 85% of property owners.
• A 45-50 unit villa project in Çekmeköy.

As these projects progress, their impact on stock value will be more apparent. Additionally, falling interest rates will accelerate construction activity.

For Quick Sigorta, we initially applied for an IPO in Q3 2023, but due to a backlog at the Capital Markets Board (SPK), it was delayed. We are now resubmitting with full-year financials, and if there are no further delays, we expect to go public in April or May 2025. The proceeds will be retained to strengthen the company’s capital structure."*

"A Legacy of Prioritizing Production and Education"

Regarding corporate social responsibility, Erdemoğlu emphasized that philanthropy has been guided by the values of his late father, Mehmet Erdemoğlu:
*"Our father built schools, mosques, health centers, and dormitories in Besni, where we were born, and in Gaziantep. After his passing, our family has continued these initiatives. His belief was that wealth should be shared, and we have witnessed that generosity leads to growth. His main focus was on education and production, and we uphold these priorities.

We recently built a school in Alanya, and our next project is a school in Nurdağı, Gaziantep, in the earthquake-affected region. This will be named the Mahmut Erdemoğlu Agricultural Vocational and Technical High School, alongside the Quick Sigorta Mine Erdemoğlu Student Dormitory."*

"I Entered Insurance When Everyone Was Exiting, and Bought a Plaza When Everyone Left"

Reflecting on his entry into the insurance sector, Erdemoğlu recounted:
*"Seven to eight years ago, I had no idea I would reach this point. When I left my family business, I had no plan, except that I did not want to be in manufacturing. The idea of insurance came from our CEO, Levent Uluçeçen. I had no prior knowledge of the industry.

At that time, the insurance sector was in crisis—companies were struggling, foreign investors were exiting, and it was perceived as a dying industry. But I saw it differently. Having experienced market cycles for 30 years, I knew that every downturn is followed by an upturn. That’s why I decided to enter the industry.

Similarly, while companies were abandoning office buildings during the pandemic, we purchased Quick Tower. It was a calculated risk—and it paid off."*

"A Word of Caution for Companies Borrowing in Foreign Currency"

Erdemoğlu warned businesses about the rising risks of foreign currency debt, stating:
"The total foreign currency debt in Turkey has risen from $125 billion to $175 billion. Many companies are betting that the exchange rate will remain stable—but geopolitical risks could prove them wrong. Businesses must be cautious."