( Recasts with remarks from Jiwasraya CEO)
JAKARTA, July 8 (Reuters) – Indonesia prepares to close down embattled state life insurance provider Asuransi Jiwasraya and produce a brand-new business to settle impressive claims, a relocation requiring state financial investment, the company’s president stated on Wednesday.
” The concept is to conserve policyholders,” Hexana Tri Sasongko stated in a text message.
” Policies are reorganized then transferred to the new company that will be formed under the state insurance coverage holding business using a capital injection.”
Such a strategy might further strain the state budget plan, with costs to help the economy rebound from the impact of the coronavirus pandemic seen keeping the financial deficit large in the next couple of years.
This year’s deficit is seen at 6.34%of GDP, more than 3 times the initial plan.
Sasongko stated the state financial investment would likely take place in2021
The reserve bank is expected to finance some of the deficit by taking up bonds without getting interest and helping the federal government pay some interest expenditures, under a $40 billion bond scheme.
The strategy to shut down of Jiwasraya was introduced for parliamentary dispute on Tuesday by deputy minister of state-owned business (SOEs) Kartika Wirjoatmodjo, according to media reports, which did not specify the size of the required financial investment.
Wirjoatmodjo was estimated by news website Kompas.com as stating Jiwasraya had 35.9 trillion rupiah ($ 2.5 billion) in unfavorable equity. News portal Tempo.co reported Jiwasraya’s overdue claims as of completion of May amounted to 18 trillion rupiah
A spokesperson for the SOEs ministry did not immediately react to a request for comment.
The Attorney General’s Office is investigating alleged fraud related to the insurance company’s investment in cent stocks.
The federal government had considered topping up Jiwasraya’s capital by some $1 billion in 2015, however the strategy was shelved.
$ 1=14,3850000 rupiah.
Reporting by Gayatri Suroyo and Tabita Diela
Editing by Ed Davies and Martin Petty
Reuters.
