We Are Ready to Pay Out
Robertus Bilitea, chief executive officer, Indonesian Financial Group
INDONESIAN Financial Group (IFG), the new face of state-owned Bahana Pembinaan Usaha Indonesia, is pressed for time as a monumental task awaits: to keep the crisis-hit Asuransi Jiwasraya in business and catch up with the arrears the state insurer owes to thousands of policyholders.
With nine state-owned enterprises under its wing and a total asset of Rp76.2 trillion, IFG applied for the insurance license and approval for IFG Life’s products from the Financial Services Authority (OJK) last October. The license will also cover the transfer of Jiwasraya’s client portfolios. “(The application) is being reviewed. We keep our communication with the OJK,” said IFG’s CEO Robertus Bilitea on Tuesday, December 22. Former legal director of the Deposit Insurance Corporation explained to Tempo’s Retno Sulistyowati, Aisha Shaidra and Khairul Anam about IFG’s restructuring plan.
How is the Jiwasraya restructuring discussion progressing? How many portfolios will be transferred to IFG Life?
Jiwasraya is the one actively involved in the discussion. We are only there to provide the funding. If the policies transferred are worth Rp26 trillion then we should prepare that amount of fund.
When will the company start paying off the arrears?
It will begin after the portfolio migration is completed. We will look at the payment schedule spelled out in the restructuring program and follow that schedule, perhaps at the end of 2021 or the beginning of 2022, we are prepared. IFG Life will pay out in line with the restructuring schedule agreed upon between Jiwasraya and the policyholders.
Where will the funding come from?
The estimated fund needed is around Rp26,7 trillion (equivalent to the projected policy value to be transferred), of which Rp22 trillion is expected to come from the shareholder (the finance ministry). That includes the risk-based capital, funds to set up IFG Life and arrange new ventures. New businesses will be another source of funding. The existing businesses of Jiwasraya are not new businesses.
Only Rp12 trillion is available from the 2021 State Budget and the rest is to be included in the 2022 budget. Reports say that IFG is borrowing from Taspen?
Yes, as one of the funding options, Taspen is hoped to provide around Rp10 trillion. The discussions are underway.
If you calculate, which is better: to stay with Jiwasraya and claim lump sums or migrate to IFG and receive payouts based on the restructuring schedule?
I think it’s better if clients are willing to shift to IFG. IFG is capable of settling the obligations as agreed in the restructuring program. If they choose to remain with Jiwasraya, there is a risk that they may not receive benefits as initially agreed upon as we all know Jiwasraya is in a very poor financial health.
What will be the difference between the statuses of those who stay with Jiwasraya and those who move to IFG Life?
We will prepare an agreement between Jiwasraya and those who agree to the restructuring program and be transferred to IFG. There will be a legally binding document between the clients and us. For those who decline to move will not have any agreement. They will continue to hold their existing contracts with Jiwasraya.
Does that mean they carry their own risks?
We don’t want to put it that way. For sure, if they don’t follow the restructuring program, they will still be with Jiwasraya under the current financial condition.
Is there any progress with IFG Life’s license process?
After receiving the approval from the House of Representatives, we immediately set up IFG Life in October. We also prepared all the documents needed for the licensing process at the OJK, such as organizational structure, business plan and system. We’ve already forwarded the application and it is currently being reviewed.
Will the company be operational in January as targeted?
If we get the license quick, we are confident we can. We’ve already begun preparing ourselves with other operational tools. IFG Life is ready to hit the ground running with its new businesses.
What is the new business scheme like?
IFG will continue to develop the sectors that Jiwasraya previously was active in, namely the health insurance and pension fund sectors. The market is still open wide and the life insurance sector is growing three times faster than the general insurance sector. Profitability is still good. The same goes for the large pension fund market. Third, we have been delegated to formulate new portfolios after the transfer of Jiwasraya clients’ portfolios under the restructuring program. From these, we are confident IFG will grow well into the future and be profitable over the long term.
Focusing on the Jiwasraya’s market? Aren’t you all be fighting as Jiwasraya still exists?
No, we won’t because Jiwasraya’s operation will be limited. And it looks like it will not be engaged in business anymore after the portfolio transfer. IFG will be the one to operate actively.
Jiwasraya will only be undertaking the remaining obligations?
Fulfilling the existing obligations with the remaining assets.
Everything will be diverted to IFG Life and it will become the only state-owned insurance company?
Yes. The one and only insurance company owned by the state.