Besides PMN, Indonesia Re Will Bring Strategic Investors to Strengthen Capital
6/10/2022
The option to bring in strategic investors was chosen by PT Reasuransi Umum Indonesia (Persero) or Indonesia Re to strengthen capital, either through support or without state equity participation (PMN). However, PMN is urgently needed so that the company's financial condition will be better in front of potential investors.
President Director of Indonesia Re Benny Waworuntu conveyed that in fact several corporate actions had been prepared to strengthen the company's capital. As attached in Indonesia Re's Long-Term Corporate Plan (RJPP), PMN is not a single option, but also seeks to bring in strategic investors .
"We still do this with or without PMN. It just takes time and effort. It means, if we want to attract other people, we also have to improve ourselves, we have to be clean, we have to look good," said Benny at the Indonesia Re Media Gathering. , Thursday (9/6/2022).
Of course, support for strengthening capital from external sources, both PMN and the presence of strategic investors is expected to be realized. In line with these efforts, Benny ensured that the company's internals were also improving from all aspects, from business processes, financial management, risk management, to information technology aspects.
"So PMN is not the only way to strengthen capital, even though PMN is the fastest way. Because if we don't, we will lose the moment. It's like, while the economy is currently slowing down . People say it's time for a break, where do we go? we have to really prepare ourselves again. Now this is our way, including looking for strategic investors, improving business processes, strengthening human resources, IT, and others," he explained.
Previously, Indonesia Re was proposed to receive PMN worth IDR 3 trillion in 2023, in order to increase capital or equity as a condition for achieving international ranking. The PMN proposal from the Ministry of SOEs before Commission VI of the Indonesian House of Representatives is intended to encourage companies to enter the global market, as well as to overcome the current account deficit in the national insurance sector.
The PMN amount of Rp. 3 trillion did not appear at random. Indonesia Re's current equity position is IDR 2.6 trillion, it is predicted to be at least IDR 5.6 trillion if the PMN is approved and accepted. This value will also boost the company's solvency level ( risk based capital / RBC) from the current level of 145% to 250-300%.
Furthermore, Benny said, the presence of local reinsurance companies is important in Indonesia's financial ecosystem. This includes participating in capturing insurance premiums that have been going out by increasing reinsurance capacity and capability.
"Our study, of course, is that the ultimate goal of reinsurance is the backbone of the financial services industry. If we talk at the very end it is the user community, they get (services) from banks, then banks secure their business through insurance. But behind insurance companies there is reinsurance, this is last bastion," said Benny.
Performance Recovery Acceleration
On the other hand, Benny said, this year the company believes it can make a profit. Although he is still reluctant to reveal the profit target, he emphasized that the company is currently accelerating performance recovery by maintaining optimal risk management.
One way is to create claim scenarios throughout the year by utilizing historical data for 2020-2021, such as oil and gas industry fires, credit restructuring, Covid-19 claims, and the possibility of natural disasters. This approach is then linked with the underwriter so that the claim can be in accordance with the scenario.
If it exceeds the scenario, then the underwriting in business acceptance. This is the basis to ensure that the claims recorded at the end of the year do not exceed or even lower than the scenario.
“The underwriting is the key in choosing a business. Indonesia Re always keeps the underwriting process , prudent detailed and in accordance with the underwriting guidelines. So, Indonesia Re can continue to provide reinsurance capacity services to ceding companies and simultaneously maintain portfolios and ensure the business can grow profitably," he said.
