The Ministry of State Owned Enterprises (BUMN) Ministry will finalise an insurance holding company for government owned insurers by the end of this month, deputy BUMN minister Mr Kartika Wirjoatmodjo told lawmakers earlier this week.
One goal is for the holding company to provide financial assistance to the nation’s oldest life insurer, Asuransi Jiwasraya, which is in financial straits and has a deficit of $2bn due to mismanagement and bad investments. Securities firm Bahana Business Development Indonesia has been picked to be the parent company. Bahana is seen to have expertise in fields such as mergers, acquisitions, and issuance of debt securities.
Bahana could issue bonds or medium term notes to rescue Asuransi Jiwasraya, reported Bisnis.In addition, the government is considering the sale of stakes in Jiwasraya Putra, which was formed to take over the operations of Asuransi Jiwasraya.The government expects that in early March, the BIMN Ministry will begin to make payments in instalments to customers to whom Asuransi Jiwasraya owes compensation. It is estimated that there will be IDR3tn ($219m) in initial funding in March.
Other state owned insurers expected to fall under the umbrella of Bahana include Jamkrindo, Askrindo, Jasindo and Jasa Raharja.