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Jakarta Post

Government short on detail about 'other options' for rescuing Jiwasraya

  • Marchio Irfan Gorbiano

    The Jakarta Post

Balikpapan, East Kalimantan   /   Wed, December 18, 2019   /   04:35 pm
Government short on detail about 'other options' for rescuing Jiwasraya The logo of state-owned insurance company PT Asuransi Jiwasraya is displayed on the frontispiece of one of its offices in Jakarta. ( A Muchlis)

The government is exploring a number of options to save state-owned insurer Asuransi Jiwasraya, which has been facing a liquidity problem since it failed to meet  Rp 802 billion (US$54.14 million) in maturity payments

"Insya Allah [God willing], we will prepare solutions [for Jiwasraya] in the next six months. One of these is to establish a state-owned insurance holding company to provide a cash flow for [Jiwasraya's] customers," State-Owned Enterprises (SOEs) Minister Erick Thohir told reporters on Wednesday in Balikpapan, East Kalimantan. 

The government announced earlier that it did not intend to bail out Jiwasraya, which recorded Rp 15.89 trillion in losses last year and losses of Rp 13.74 trillion in the first nine months of 2019, due to the insurer failing to fulfill its payment obligations for policies that had matured.

The unitlink policies were marketed through a bancassurance scheme with various banks and the policies should have been paid in October 2018.

Jiwasraya, which has been under the close scrutiny of the Financial Services Authority (OJK), needed a capital injection of Rp 32.9 trillion to raise its risk-based capital ratio to the required minimum of 120 percent, Reuters reported, citing company documents.

President Joko "Jokowi" Widodo reiterated during Wednesday's press briefing that the government was committed to solving the state-owned  insurer's financial woes.

However, he also stressed that law enforcement authorities would investigate Jiwasraya if the company was found to have engaged in any operational irregularities. He added that its financial problems had "already entered the legal domain and we are considering a number of alternative solutions".

"We hope to [solve] it soon," said Jokowi. 

Finance Minister Sri Mulyani Indrawati said earlier in the week that the government was considering legal action against Jiwasraya's executives if they were found to have committed any wrongdoing. 

"If [Jiwasraya's operations] involved any criminal activities, we will ask law enforcement to handle the case in accordance with the law," Sri Mulyani said on Monday, speaking to reporters in Jakarta after a meeting with the House of Representatives.

"The government and the House will [work] together to [expose] those who have committed corporate crimes and to provide certainty to investors," she said.