S

tate-owned insurer PT Asuransi Jiwasraya has begun the payment of its policyholders’ claims, which are estimated to reach Rp 16.7 trillion (US$1.01 billion) in total.

However, in the first stage Jiwasraya will pay only claims of the company’s traditional policyholders, which total only about Rp 470 billion, while other policyholders, particularly those who bought its JS Saving Plan, have to wait until it receives funds from the sales of its assets.

Jiwasraya president director Hexana Tri Sasongko said in Jakarta on Tuesday that the insurance company, in the first stage, would pay claims to 15,000 traditional or conventional policyholders before the end of March.

He said that due to limited funds, the insurer was prioritizing payments to conventional life insurance policyholders that had been verified by an independent auditor. “For the first stage of the payment, the company will use the funds raised from the sales of its financial assets such as stocks,” he said during a teleconference with the media.

Hexana also said the company was committed to paying the claims of other policyholders once the claims had been verified. Jiwasraya is also in talks with the State-Owned Enterprises (SOEs) Ministry and the Financial Services Authority (OJK) to determine when the next payment will be made, he said.

In the meantime, the insurer is still negotiating on the sales of its assets to help it pay the claims, which have been in arrears for a long time as a result of the company’s financial problems caused by mismanagement.

Jiwasraya’s investment mismanagement was first revealed in 2018 when it failed to repay trillions of rupiah in policyholders’ claims, primarily those who held the JS Saving Plan product issued back in 2013. As of February, the amount that the ailing insurer had to pay had increased to Rp 16.7 trillion from Rp 12.4 trillion in 2019.

The company has announced its plan to sell its assets including the Cilandak Town Square (Citos) shopping mall in South Jakarta, which is projected to be worth Rp 2.2 trillion. But not all parties could participate in the sale as Hexana said the insurer would only sell the mall to other SOEs.

So far, a consortium consisting of state-owned construction firms consisting of Waskita Karya, PT PP, Hutama Karya, Adhi Karya and Wijaya Karya (Wika) has expressed its interest in buying the shopping mall.

“The consortium will be led by Wika and we will then buy the mall from Jiwasraya,” Waskita Karya finance director Harris Gunawan told The Jakarta Post without going into further detail about the matter.

The troubled insurer also seeks additional funding by inviting strategic partners to operate and manage its subsidiary, PT Jiwasraya Putra.

Hexana said the insurer was currently in the process of signing a conditional sales and purchase agreement (CSPA) with its strategic partner. However, he refused to discuss the matter further as the process was still ongoing.

In January, Jiwasraya was reported to be in talks with four potential investors, both domestic and international to acquire Jiwasraya Putra. Following the sale, the subsidiary would then sell its own life insurance product to employees of four state-owned firms that had committed to help resolve Jiwasraya’s financial problems.

Even though Hexana could not predict when the next payment would be, he asked for policyholders’ patience on the next payment.

“We hope that the policyholders can remain patient and support what we are doing to pay the claims,” he said.