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Prudential 2008 profits fall 80%, on tax issues
PT Prudential Life Assurance net profit after tax in 2008 plunged by 80 percent to Rp 120 billion (US$11 million) from Rp 642 billion in 2007, a company official says
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PT Prudential Life Assurance net profit after tax in 2008 plunged by 80 percent to Rp 120 billion (US$11 million) from Rp 642 billion in 2007, a company official says.
“Our 2008 profit before tax is reported at Rp 987 billion, up 54 percent on the previous year,” Prudential finance director William Kuan told a Tuesday press conference.
“The big difference between our operating profit and the after tax profit is the huge tax liability that we have had to pay. The tax liability arises from our unrealized investment losses and the impact of this on other ratios,” he added.
The insurance company financial controller, Kamaria Chan, added that the significant unrealized investment loss in the market led to a 50 percent decrease in equity value.
Prudential revealed the company booked around Rp 3 trillion in investment losses in 2008, compared to a Rp 1.9 trillion investment gain recorded in the previous year. This showed a massive loss in the books under the heading of investments.
“We could not include the unrealized loss in our tax abatement calculations, therefore bringing the tax liabilitties up to a high level,” Kamaria said.
“However,” she added, “This does not mean that Prudential had a poor performance, instead it shows that the company is complying as a significant tax payer,” she added.
Prudential president director Kevin L. Holmgren said that total insurance premium revenue for 2008 was Rp 7 trillion, up almost 28 percent on the previous year, while the company’s 33 percent market share made it number one in the sector.
Holmgren also suggested that the company had a healthy financial status based on the fact that it had a Risk-Based Capital ratio (the ratio of estimated total capital to estimated risk-weighted assets) of 206 percent, far higher than the minimum of 120 percent set by the Finance Ministry.
The RBC ratio is based on regulations establishing the minimum required levels of capital to be held by financial institutions.
“We have also continued to receive very good performance and results from our Shariah unit , which was launched in September 2007. As of today, it [the Shariah unit] accounts for around 25 percent of our income,” Holmgren said.
Prudential booked around Rp 844 billion of Shariah insurance premium earnings in 2008. (hdt)
