State-owned life insurer Jiwasraya is currently preparing an initial public offering (IPO) although fellow state firm Bank Rakyat Indonesia (BRI) has openly indicated it has a keen interest in acquiring the insurance firm.
Jiwasraya president director Hendrisman Rahim said in Jakarta on Friday the company planned to issue part of the company’s shares to the public to support the government’s privatization program.
He said that State-Owned Enterprises Minister Dahlan Iskan had expressed his hope that Jiwasraya along with state-owned plantation firm PTPN, would be able to launch their IPOs in 2015.
“We’ve seen that Pak Dahlan already has an idea that we think we need to execute. So, if I am asked what our plan is, we would rather choose an IPO than to be acquired by another [company],” he said at the Indonesian Life Insurance Association (AAJI) headquarters in Jakarta on Friday.
However, Hendrisman declined to provide further details of the plan because “it was a fresh idea that should be studied closely in order to prepare anything needed for the process.”
BRI has previously indicated its interest in acquiring Jiwasraya to expand into the country’s life insurance industry. Unlike fellow state lenders Bank Mandiri and Bank Negara Indonesia (BNI), BRI does not have its own life insurance subsidiary.
According to sources, initial talks have already begun on the planned acquisition, which is also part of the consolidation program of the State-Owned Enterprises Ministry.
Under the blueprint, various state-owned enterprises in similar businesses will be merged or joined together in one holding to boost competitiveness and efficiency.
Meanwhile minister Dahlan has confirmed that his ministry was currently formulating a new plan for Jiwasraya.
He also lauded the firm for its latest financial achievements, after it managed to pay off Rp 7.6 trillion of debt without government help.
Jiwasraya was entangled in debt to its policy holders dating back to the Indonesian financial crisis of 1997-1998. As improvements were made, Jiwasraya was able to post Rp 17 trillion in total assets in 2013 and booked Rp 5.77 trillion in premiums throughout the year.
On Friday, Hendrisman said his company had joined a reinsurance scheme with overseas insurers in order to reduce risk, while at the same time it had created product innovations and maintained good governance to maintain the company’s financial health.
“We always maintain our liquidity and liabilities, while also increasing efficiency in every sector. So we have been able to put on our best performance,” he said.
Contacted separately, Airlangga Hartarto, chairman of the House of Representatives’ Commission VI, which oversees state companies, said that planned IPOs proposed by state-owned enterprises should first win the approval of the commissioners, who represented the government’s stake in the companies.
If the companies had solid financial performances, the commissioners would certainly approve their IPO proposals, he said.
Airlangga acknowledged that Jiwasraya had improved its performance through its ranking as one of the 10 best life insurers in the country, even though he hoped the company could improve further because its assets under management were still small in comparison to multi-national insurance firms. (gda)