Govt to assist Jiwasraya using bonds

The government plans to allocate some capital for state assurance company PT Asuransi Jiwasraya after its risk-based capital (RBC) dropped during the 1998 global economic crisis.

In February 2009 Jiwasraya's RBC was reportedly 127 percent compared to 154 percent booked a month earlier. Meanwhile the minimum limit for RBC is 125 percent.

“This is what we inherited. However, it is normal because it also happened to all insurance companies with the 1998 economic downturn. We are trying to resolve Jiwasraya’s problem, including strengthening its capital,” State Minister for State Enterprises Sofyan Djalil said in Jakarta on Monday.

The government, according to Sofyan, would issue zero-coupon bonds, using the 2010 national budget to help Jiwasraya.

However, Sofyan refused to mention how much the bond - used to prop up the company - was worth, because the government was still calculating the budget required.

"Jiwasraya will repay the bonds back to the government using its net profit," he said. (naf)