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CT Corp to grow premium income highly with Prudential
Local diversified conglomerate CT Corp
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ocal diversified conglomerate CT Corp. has set an ambitious growth target for its insurance business following the recent acquisition of a stake in its insurance unit by global insurance firm Prudential Financial, Inc. (PFI).
On Tuesday, the group announced that the United States-based insurance giant through its subsidiary Pruco Life Insurance Company had bought a 49 percent stake in CT Corp.’s life insurance subsidiary, PT Asuransi Jiwa Mega Indonesia (AJMI), for an undisclosed figure.
The joint venture agreement inked on July 3 still leaves the local firm owned by business tycoon Chairul Tanjung as the controlling shareholder with 51 percent of the shares.
The deal has boosted the confidence of AJMI to increase its premium income significantly by 84 percent year-on-year (yoy) to Rp 650 billion (US$48.84 million) this year.
The firm claimed it already met its premium income target for the first half of this year.
The insurer hopes the surge in premium income will help jack up its net profit by 112.8 percent yoy to Rp 200 billion in 2017.
“Our strategy is to use bancassurance with Bank Mega, which, as we know, is one of the top ten banks with a huge customer base,” AJMI director Liarny said.
The Bancassurance channel accounted for 95 percent of its total premium income in the January to June period.
Unit-linked insurance products dominated the firm’s premium income with 95 percent, while the rest came from traditional life insurance products.
Liarny further said that the firm sought to team up with two more partners by September to expand its bancassurance channel, which had proven effective to distribute its products.
Prudential’s knowledge and experience in the life insurance industry may accelerate AJMI’s business growth on top of the latter’s extensive presence and deep understanding of the local market.
“We have been wanting to come to Indonesia for some time; we believe that Indonesia has such a potential as a country,” said Charles Lowrey, the executive vice president and chief operating officer of PFI’s international business.
“We look for not only a very good business partner, but also [one] who shares the same values,” he further said, adding that Prudential had approached CT Corp. for three years prior to the acquisition.
Prudential sees enourmous potential for the life insurance industry in Indonesia given the country’s sizeable population of more than 260 million and robust economic growth over the last 15 years.
Life insurance premiums are forecasted to increase at a compound annual growth rate of 13 percent between 2015 and 2020, while the current life insurance penetration remains low at 1.3 percent of Indonesia’s gross domestic product (GDP).
With the joint venture with Prudential, AJMI’s name as well as its management composition will be changed.
James McInnes from Prudential Financial will lead the company as the president director and Yongtae Kim will become the new director. Existing directors that will remain in AJMI include Yuliana R. Satyagraha and Liarny.
Chairul of CT Corp., meanwhile, said the joint venture with the prominent global insurance company would pave the way for the group to become a global business player in the future.
“Our plan is to seek [foreign] partnerships for all of the group’s subsidiaries. But we will still control the majority [of the shares],” said Chairul, whose group has bsuinesses in financial services, media, retail, property, lifestyle and entertainment.
