Indonesia will appoint state financial firm Bahana Pembinaan Usaha Indonesia as a holding company for state insurers to improve their finances, a deputy minister said yesterday, as the government puts together a rescue plan for a second troubled insurer, reported Reuters.
The holding company will help pool cash flows among state insurers and may potentially help raise funds by seeking strategic partners, the Cabinet Secretariat said in a statement on its website.
The move comes as the government plans to restructure life insurer Asuransi Jiwasraya after customers, who claim to be owed IDR16.42tn ($1.20bn) for maturing bancassurances savings, pressed authorities for an urgent solution.
Jiwasraya is the second major Indonesian life insurer to run into financial trouble after mutual insurance company Bumiputera, which has been in a restructuring process since 2013 following mounting claim liabilities. A third insurer, the state owned Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Asabri) is mired in heavy investment losses.
The government has also pushed for a number of measures, including a large-scale audit of every state-owned insurance and pension firm in the country, to map out a more feasible investment scheme and prevent liquidity issues.
Separately, the House of Representatives is set to establish working panels in three of the legislative body’s commissions to investigate issues surrounding state-owned insurance companies Jiwasraya and Asabri.
According to a report in The Jakarta Post, the commissions are:
House commission overseeing legal affairs, with the working panel overseeing the Attorney General’s Office (AGO) in handling the cases;
House commission overseeing trade, industry and investment, with the panel in charge of supervising the State-Owned Enterprises Ministry in damage control; and
House commission overseeing financial affairs, with the panel monitoring the government’s disbursement of public funds, a task previously handled by the state owned insurers.
House deputy speaker Sufmi Dasco Ahmad said it was more feasible to establish working committees than a special committee since the latter would take longer to set up. He said that the working panels could be formed immediately.
Asabri’s liquidity unaffected, says minister
Separately, State-Owned Enterprises Minister Erick Thohir has said that Asabri’s IDR10tn ($732m) investment mismanagement is not affecting the company’s liquidity.
“I assure you that Asabri is fine. Its cash flow and assets are all good, unlike Jiwasraya,” he said. Asabri’s stock portfolio plunged by more than 95% last year. Some of the stocks in the insurer’s portfolio were similar to those of the ailing Jiwasraya that were deemed “low-quality stocks” by the Supreme Audit Board.
Mr Erick said Asabri would still be able to pay claims to its policyholders, who consist of National Police officers, the Indonesian military and employees of the Defence Ministry. The insurer is guaranteed by the Finance Ministry, he added.