The government plans to introduce a new state reinsurer to manage domestic reinsurance needs that have until now been fulfilled by foreign companies
he government plans to introduce a new state reinsurer to manage domestic reinsurance needs that have until now been fulfilled by foreign companies.
According to Gatot Trihargo, the State-Owned Enterprises (SOE) Ministry's deputy for business services, the ministry has set up four schemes to realize this plan, but it is more inclined to go with the third scheme.
Under the third scheme, Gatot said, PT ASEI Re would become the holding company that manages all other existing reinsurers, namely PT Reasuransi Internasional Indonesia (ReINDO) and PT Reasuransi Nasional Indonesia (Nasre).
ASEI Re was formerly known as ASEI or Asuransi Ekspor Indonesia, the government's export credit agency. 'ASEI Re will become Indonesia Re and the new company will launch in October,' he said.
The scheme also reveals that the integration of ReINDO and Nasre into ASEI Re will occur through share acquisitions. At the moment, ReINDO is wholly owned by PT Reasuransi Umum Indonesia
(RUI), but ASEI Re will take over all of RUI's stakes using its internal funds.
Meanwhile, Nasre is currently controlled by PT Asuransi Kredit Indonesia (Askrindo), but its ownership is slated to change hands from Askrindo to ASEI Re.
Following the establishment, it is estimated that the new state insurer will own up to Rp 4.4 trillion (US$ 371.9 million) in total assets and about Rp 1.5 trillion in equities.
The ministry's assessment report shows that such figures will put ASEI Re in the top four of Asia's reinsurers in terms of assets, after Korean Reinsurance Co., Malaysia's MNRB Holdings Bhd. and Thai Reinsurance Public Co. Ltd.
In terms of equities, ASEI Re will become the third-largest reinsurer behind Korean Reinsurance and MNRB Holdings.
'There will be additional capital injection from other SOEs and we expect to see total equities jump to around Rp 5 trillion,' Gatot said.
Contacted separately, Dumoli Pardede, Financial Services Authority (OJK) deputy commissioner for non-banking industry, said that the regulator had received all available schemes from the government and that it was waiting for a more specific plan once the latter had made an official decision on the design.
He said that the new company could serve up to Rp 50 trillion-worth of premium if its equities actually reached Rp 5 trillion in the future.
'It will have strong enough capital to serve the domestic market, something that we do not see at the moment. That is why local insurance firms have often looked to foreign reinsurers to help bear business risks,' he added.
The ministry's report also reveals that the amount of reinsurance premium booked overseas amounted to a staggering Rp 18.1 trillion in 2012, while Indonesia's own reinsurers only posted Rp 6.47 trillion in premiums during the same year.
Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.
Thank you for sharing your thoughts. We appreciate your feedback.