Finance Minister Sri Mulyani Indrawati has approved a restructuring proposal submitted to the Financial Services Authority (OJK) by financially stricken state-owned life insurer Asuransi Jiwasraya, reported Bloomberg.
The plan includes a stake sale in a new life insurance unit Jiwasraya Putra and securing financial assistance from a planned holding company for state insurers, according to Riswinandi, commissioner for non-banking financial industry at the OJK.
Indonesian authorities are also weighing the induction of a strategic investor.
“Our requirement is that the investor must also be an insurance company, or is part of a business group that runs an insurance business,” Mr Riswinandi said in an interview. “We want the investor to have competence in this industry. Foreign entities are also welcome to invest.”
Jiwasraya is on the brink of collapse after alleged fund mismanagement left it with negative equity of around $2bn. The crisis, stemming from alleged product mispricing, reckless investment activities, aggressive window dressing and liquidity pressure has hurt more than 7m clients.
The insurer may also get funding from the insurance holding company the government will soon establish through a regulation, Mr Riswinandi said, adding income from new premiums may help ease the cash crunch at Jiwasraya.
Mr Riswinandi said that OJK is also working with Bank Indonesia to raise supervision standards of the non-banking financial industry to the same level as the banking industry.