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NI Life, a life insurance joint venture between state lender Bank Negara Indonesia (BNI) and Japan’s Sumitomo Life Insurance Company, is projecting a rebound in its premium income this year after a slight drop in 2018.

BNI Life finance director Eben Eser Nainggolan said the premium income was projected to double to Rp 12.9 trillion (US$922 million) this year from about Rp 5.6 trillion in 2018 because of an expected increase in new policyholders from new insurance programs.

Financially, the company did not perform as expected in 2018 because of a decline in premium income and investment returns. During the year, net profit plunged to Rp 154 billion from Rp 335 billion as posted in its 2018 unaudited financial report.

Eben said in a recent statement that, with the expected increase in new premium income, net profits were also projected to increase sharply to Rp 767 billion this year after falling about 55 percent in 2018.

The company’s return from investment declined to about Rp 480 billion in 2018 from around Rp 1.26 trillion in the previous year because of the poor performance of the financial assets the company invested in, especially in the stock market.

Eben said in order to meet the premium income target, the company would introduce either traditional insurance products or investment-linked insurance packages or unit links.

He expressed optimism that the latter would perform better this year following the return of foreign investors into Indonesia’s stock market, citing the improving performance of the Jakarta Composite Index, which is currently in a golden cross pattern.

In addition to the diversification of the insurance programs, BNI Life head of financial controller Dian Wicaksono said the company would also focus on regular premium insurance, which allows policy holders to pay premiums in intervals unlike single premium insurance, in which payment for the policy is done once with a lump sum of money at the start.

He said that, with the change in strategy, the company hoped the regular policy would ensure sustainable premium income.

BNI Life will also focus on its captive market by developing its bancassurance business with its parent company BNI. The insurance company’s president director, Shadiq Akaysa, previously said as quoted by kontan.co.id that the bancassurance business contributed more than 50 percent to its premium income and would continue to play a crucial role in the company’s marketing program.

The deputy president director of BNI, Herry Sidharta, said in a recent press briefing that BNI was planning to acquire a general insurance company to strengthen its insurance subsidiary, alongside the acquisition of several small banks to boost its business, which could require up to Rp 4 trillion in capital.

Despite the underwhelming performance, data from the Indonesian Life Insurance Association show that BNI Life managed to place third on the association’s 2018 list of insurers with the best investment performance. There are 58 other registered companies on the list. (ars)