D

espite slow growth in the general insurance industry, PT Malacca Trust Wuwungan Insurance (MTWI) is upbeat in forecasting profits within two years after selling shares through an initial public offering (IPO).

The company, which is linked to the family of Indonesia's third president BJ Habibie, on Wednesday received Rp 31 billion (US$2.29 million) from selling 310 million new shares to the public, or the equivalent of 20.32 percent of total shares.

“The IPO will improve our capital structure, and thus improve our risk-based capital (RBC) reserves. With higher RBC, we can underwrite larger businesses,” Vientje Harijanto, MTWI president director, said.

RBC refers to the requirement of the minimum amount of capital insurance companies must hold to support operations. Up until September, MTWI’s RBC was 300 percent, well above the requirement set by the Financial Services Authority at 120 percent.

“After the IPO, we hope that our RBC can reach 400 percent,” she added. MTWI is in several lines of the general insurance business, with 40 percent of its portfolio in health insurance, followed by 20 percent in property insurance and 20 percent in car insurance.

The financial performance of companies in the general insurance industry has slowed in the past two years primarily because of sluggish growth in the economy. The slowdown has hit the company’s bottom line as it suffered losses for three years straight. Up until September, it suffered Rp 6 billion in losses.

In order to minimize the losses, MTWI is pushing to boost revenue and improve business efficiency. The company hopes to break even, or even book a profit, within one or two years.

This year, the company has targeted to book insurance premiums of Rp 195 billion, lower than last years of Rp 202 billion. It also set a conservative target to book Rp 220 billion next year.

Ilham Akbar Habibie, MTWI commissioner and the son of former president Habibie, said the company would focus on selling simple insurance products through mobile apps. “At present, we are the only insurance company that sell products and simultaneously processes insurance claims through mobile apps,” he said.

It hopes that by 2019 it can add new insurance products to reach out to "millennial" consumers. For example, it may provide insurance products that covers personal accidents for motorcycle riders.

As of Oct. 11, MTWI’s shares are 45.9 percent owned by Batavia Prima Investama, 15.86 percent by Batavia Prosperindo Finance, 5.22 percent by Ilthabi Rekatama and the rest by its top executives and the public.