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Business in life insurance faces heavy challenge in Indonesia.

Business in life insurance is facing heavy challenges in Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago.  with financial problem and difficulty in attracting investors. The root of the problem is decline in interest rate and business uncertainty amid low purchasing power Purchasing Power

1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase.

 of the people and the fact that insurance is not quite popular in the country.

The rupiah ru·pi·ah  
n. pl. rupiah
See Table at currency.

[Hindi rupay, rupiy
 fall lately against the U.S. dollar worsened the condition. The amount of premium and income from investment decline. Total amount of premium was only around 1.25%-166% of the country' Gross Domestic Product (GDP GDP (guanosine diphosphate): see guanine. ) in the 1997-2001 period. In 2002, premium was Rp 11.3 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time.

(mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed.

In the USA and Canada, 10^12.
 or an increase of 9.7% from the previous year. In 2003, insurance industry grew by an average of 30% as against 70% in 1997.

The collapse of property business and liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts.

A type of proceeding pursuant to federal Bankruptcy
 of many banks contributed to the difficulties faced by insurance companies as the impact was bad for investment in certain sectors. Fortunately income in interest on deposits helped maintain growth.

The rupiah fall against the dollar caused an increase in costs burdening the business sector including insurance. Meanwhile, limited capital makes it difficult for insurance companies to cover large insurance forcing them to seek reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract.  with foreign partners.

Low economic growth and an increase in unemployment rate further weakened the purchasing power of the people in general. Based on official data, only 16% of the country's population of 215 million hold life insurance polish.

Life insurance companies compete not only among themselves but also against banks and mutual funds because of the absence of clear limits of business areas among the financial companies.

For example, the products of link unit and mutual fund are almost the same with market. The different lies in the regulators. Mutual fund is under the Capital Market Supervisory Body (Bapepam) and link unit is under the Insurance Directorate of the Finance Ministry. In other countries the regulators of the two products is one.

Slow growth

The law No. 2 in 1992 said life insurance companies offer service in meeting risk of death. Therefore, life insurance companies could operate in life insurance, health insurance, accident insurance and found and manage pension fund.

Life insurance offers an alternative for the people to invest. Life insurance generally has a longer term than loss insurance. With longer protection of 5 to 30 years its investment has longer term such as in property, direct participation. Bonds and mortgage loan.

Despite the fact that most life insurance companies are facing liquidity problem, there has been no life insurance company declared bankrupt BANKRUPT. A person who has done, or suffered some act to be done, which is by law declared an act of bankruptcy; in such case he may be declared a bankrupt.
     2. It is proper to notice that there is much difference between a bankrupt and an insolvent.

or liquidated as the case with many banks. In addition, despite incentive offered by the government for merger no life insurance companies have comply with the call for merger.

Based on data at the Indonesian Insurance Council (DAI Dai  
n. & adj.
Variant of Tai.
), by the end of 2003, the country had 55 life insurance companies including a state-owned company, 33 Indonesian private companies and 21 foreign joint ventures. The companies had around 80,000 agents altogether. Business in life insurance in the country grew sluggishly slug·gish  
1. Displaying little movement or activity; slow; inactive: a sluggish stream; sluggish growth.

2. Lacking alertness, vigor, or energy; inert or indolent.

. The number of companies did not change much from 53 in 1999 including a state-owned company, 40 Indonesian private companies and 12 joint ventures.

In the past five years, the number of joint venture life insurance companies grew to from 12 to 21 units. On the contrary the number of Indonesian private companies declined from 40 to 33. The decline was likely caused by financial difficulty to resume business. Some of them were taken over by foreign investors.

Performance declines:--Business restriction imposed on some companies

The vulnerability of life insurance industry is indicated by the growing number of companies included in the list of Business Activity Restriction from year to year. The restriction was imposed on companies having a Risk Based Capital (RBC RBC red blood cell.

RBC or rbc
red blood cell

n See red blood cell count.


red blood cells; red blood (cell) count (see blood count).
) of less than 100% as set by the finance ministry in 2003. The minimum RBC was raised to 120 in 2004.

Sufficient amount of capital is needed to cover risks of losses as a result of deviation in the management of assets and obligations. Therefore, financially powerful, companies will survive amid the situation such as prevailing at present in the country, but small companies will most likely collapse without additional capital.

Legal uncertainty is also a factor slowing the growth of life insurance companies in the country. For example, the finance ministry allows companies failing to meet the minimum RBC to continue operation. After three years there has been no firm measure taken against them.

Limited capital has always been a problem. Expansion of business means more risks to be faced. Large capital, therefore, is needed to cover the risks. As a result more and more companies are included in the list of Business Activity Restriction because of low RBC.

By the end of 2003, there were still five companies having RBC below 100%. They were Asuransi Republik (minus 156%), Asuransi Tugu Indo (minus 93%), Asuransi Raya (minus 71%), Pasaraya General Insurance (14%) and Asuransi Dharma dharma (där`mə). In Hinduism, dharma is the doctrine of the religious and moral rights and duties of each individual; it generally refers to religious duty, but may also mean social order, right conduct, or simply virtue.  Bangsa (41.60%).

Based on the RBC requirement of 120% a number of insurance companies should not be allowed to operate. At least there are six life insurance companies having RBC between 100% and 120%.

Companies facing difficulty to meet the RBC requirement are recommended to seek merger with financially powerful companies. However, it is not easy to find such partner when there is no legal and business certainty.

As long as there is no legal certainty A test in Civil Procedure designed to establish that a complaint has met the minimum amount in controversy required for a court to have jurisdiction to hear the case. Under this test, if it is apparent from the face of the pleadings, to a "legal certainty" that the  that will guarantee business certainty it is difficult to expect foreign investors to venture in insurance business in the country. Most possible is acquisition by companies operating in the country such as the takeover by Prudential Life Assurance of business of Asuransi Paja, whose license has been revoked merging of AJ Principal Egalita Indonesia into AJ Manulife Indonesia and ING Life Indonesia takeover of the business portfolio of ING Aetna Aetna, volcano: see Etna, Italy.  Life Indonesia. The trend, therefore, is large companies getting bigger and small companies are sidelined.

There are 12 companies include din DIN - Deutsche Institut fuer Normung. The German standardisation body, a member of ISO.  the List of Business Activity Restriction consisting of 8 life insurance companies and 5 general insurance companies. See the following table.

Once they are included in the restriction, very little chance they will survive. Most likel they will die slowly.

Investment concentrated more in shares and bonds

Previously funds of life insurance companies were deposited in banks and in Bank Indonesia Bank Indonesia is the central bank of Indonesia. Its current governor is Burhanuddin Abdullah. History
Bank Indonesia was founded on July 1, 1953, in the Sukarno era - from the nationalization of De Javasche Bank, a Dutch bank dating from colonial times.
 Certificate (SBI SBI Special Background Investigation
SBI Subsidiary Body for Implementation
SBI State Bank of India
SBI Secure Border Initiative
SBI Small Business Institute
SBI Stockholm Brain Institute
SBI Serious Bacterial Infection
SBI Society of Breast Imaging
) when the interest rate was still attractive and the risk was smaller. High interest rate on deposits prompted many insurance companies to convert their foreign exchange into rupiah.

Now, however, with interest rate declining deposits are no longer attractive. Now investment in bonds and shares are considered more profitable. Shares and bonds now account for 30% of investment by life insurance companies. Securities issued or guaranteed by the government account for 27% as against deposits accounting for only 21%.

The requirement set by the government for insurance companies to put at least 5% of their investment in deposits is seen as an additional burden for them as the deposit may not be withdrawn while they have to maintain liquidity. Meanwhile deposit interest now averages 6%. Insurance companies, therefore, put most of their money in bonds, mutual funds and shares.

Meanwhile life insurance companies are facing the possibility of negative spread. Though not yet visible, that tendency is there with the shrinking interest rate. Negative spread already caused problem for life insurance companies in a number of other countries. Income from investment is not enough to cover compensation for policy holders.

The declining interest on SBI and deposits requires greater prudence in the management of insurance business. They should maintain their liquidity and cope with growing costs and low increase in premium as the real sector has remained in the doldrums doldrums (dŏl`drəmz) or equatorial belt of calms, area around the earth centered slightly north of the equator between the two belts of trade winds.  and has not fully recovered.

Life insurance companies have to put more their investment in areas more profitable or sector with greater return. They could also change agreement on the insurance compensation with their policy holders, but it is not easy as the generally the contract is long term from 5 to 10 years.

Currently, 20 life insurance companies dominate 93.75% of premium market and 20 general insurance companies dominate 75.97% of the market. There are different views about what the country needs with the present condition. One opinion said the country needs few insurance companies with large coverage and another said few large companies could not possibly cover the market demand, therefore small insurance companies should be protected.

Ratio of investment to technical reserve growing

Technical reserve is an accumulation of premium income and interest received to pay claims. Therefore, a decline in premium income will cause a decline in technical reserve, meaning a decline in the capacity to cover claims.

Failure to cover claim is caused mainly by the fact that life insurance companies invest too much in time deposit and property at the expense of technical reserve. As a result there is imbalance imbalance /im·bal·ance/ (im-bal´ans)
1. lack of balance, such as between two opposing muscles or between electrolytes in the body.

2. dysequilibrium (2).
 in growth with investment exceeding technical reserve or the ratio of investment is too high. A decision of the finance minister No 224/1993 said among other things that investment is at least the same as technical reserve or in other word investment is allowed to exceed technical reserve.

Until 1997, the total amount of technical reserves of life insurance companies exceeded total investment or the investment ratio was below 100%. However, since 1998, the ratio was more than 100% because of a decline in insurance as a result of the monetary crisis.

In 2003, among the 55 life insurance companies 10 had investment larger than technical reserve. Among them is Rama Life, which by the end of 2003 has technical reserve of Rp 1,873 million as against investment of Rp 4,884 million and Prudential Life Assurance and Panin Panin (Russian: Панин), or Panina (feminine; Панина) is a Russian last name.  Life, which have investment ratios of 180% and 174.26% respectively in the past two years.

Government Policies not Favorable fa·vor·a·ble  
1. Advantageous; helpful: favorable winds.

2. Encouraging; propitious: a favorable diagnosis.


As long as the Bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most  Law No.4/1998 has not been revised insurance industry will continue to face a threat of being liquidated. Life insurance companies are more vulnerable to bankruptcy suit than general insurance companies. Therefore, the association of general insurance companies (AAUI) and the association of life insurance companies (AAJI) strongly demand revision of the law.

The government has no solution yet to problem over dispute with policy holder in the event of liquidation of insurance companies. The existence of an institution to guarantee policy, therefore, is necessary like the saving underwriters in the banking sector. The absence of such institution may have made the government look hesitant hes·i·tant  
Inclined or tending to hesitate.

hesi·tant·ly adv.
 to liquidate bad performing insurance companies.

Insurance Director Firdaus Firdaus or فردوس (Arabic) is an Arabic name come from words firdaws, a name for the highest paradise during hereafter. It's a loanword from middle Persian just like paradise which has Persian root.  Djaelani at the finance ministry said the companies now included in the Business Activity Restriction showed no improvement. They are Asuransi Buana Putera, Asuransi Jiwa Pura PURA PACOM Utilization & Redistribution Agency
PURA Public Utility Regulatory Act
 Nusantara, Namura Life and Nabasa Life Insurance. Based on the RBC regulation, they have been long liquidated.

Case of Prudential Life Assurance

In April 2004, the Central Jakarta Central Jakarta (Indonesian:Jakarta Pusat) is a city of Jakarta, Indonesia. It has an area of 48.17 km², the smallest among five cities of Jakarta. The current city's mayor is Muhayat.  Commercial Court gave a bankruptcy verdict for Prudential Life Assurance, favoring favoring

an animal is said to be favoring a leg when it avoids putting all of its weight on the limb. A part of being lame in a limb.
 bankruptcy demand filed by Lee Boon Boon

A general term that refers to a benefit or improvement for investors. This can include such things as increased dividends, a stock market rally and stock buybacks.

 Siong, a Malaysian, who was agent of the British life insurance company. The court ruled Prudential to pay a compensation of Rp 366.7 billion to the claimant CLAIMANT. In the courts of admiralty, when the suit is in rem, the cause is entitled in the Dame of the libellant against the thing libelled, as A B v. Ten cases of calico and it preserves that title through the whole progress of the suit. . Based on the verdict Prudential was to stop operation starting April. The company has shown good financial performance and was quite solvent solvent, constituent of a solution that acts as a dissolving agent. In solutions of solids or gases in a liquid, the liquid is the solvent. In all other solutions (i.e. . Therefore, the bankruptcy of Prudential was merely on a legal case not because of financial failure.

Prudential Life Assurance is 94.5% owned by Prudential Assurance Company Ltd. Of Britain Britain (brĭt`ən), alternate term for Great Britain, comprised of England, Scotland, and Wales. Often used synonymously with the United Kingdom, the name Britain is derived from Britannia,  and 5.5% by PT. Sasana Śāsana (Sanskrit), (Pali: sāsana) is a term used by Buddhists to refer to their religion or non-religion. It has a range of possible translations, including teaching, practice, doctrine and Buddha Śãsana  Dwi Paramitra. It started operation in the country in 1995 and now it has 6 marketing offices, 61 agency offices, 14 financial advice centers. It has 230 employees and 8,000 marketing officers.

Based on its financial report in 2003 it financially very healthy with assets at Rp 1.5 trillion, premium values at Rp 1 trillion including Rp 927 billion in link unit premium. In the link unit segment, Prudential is a leader with its PRUlink. It has an RBC of 255% meaning a capability to cover 2.5 times its minimum obligation.

The bankruptcy verdict in April, 2004 triggered controversy. It weighed hard on the already low confidence of the public in insurance. Worse still it further damaged international confidence especially foreign confidence in the country. Investors saw absence of legal certainty in the country. Fortunately the Supreme Court reversed the decision of the commercial court in June, 2004. Prudential is allowed to resume operation in the country. While under the bankruptcy verdict before the Supreme Court annulled the verdict, Prudential succeeded in listing 3,000 new policy holders.

10 Largest Life Insurance Companies

In term of financial strength, there are 10 life insurance companies categorized cat·e·go·rize  
tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es
To put into a category or categories; classify.

 as healthy. With assets valued at Rp 4,284,541 million, PT. AIG AIG addressee indicator group (US DoD)
AIG American International Group, Inc
AiG Answers in Genesis (religious group in defense of Scripture)
AIG Artificial Intelligence Group
AIG Australian Industry Group
 Lippo Life is the largest life insurance company in the country, followed by state-owned Asuransi Jiwasraya with assets valued at Rp 2,752,501 million, Indolife Pensiontama, an Indoensian private company with assets at Rp 1,668,308 million. The smallest among the ten is Asuransi Jiwa Eka Life with assets valued at Rp 684,545 million.

In term of gross premium income, Asuransi AIG Lippo Life also leads with gross premium of Rp 1,920,260 million, followed by. Asuransi Jiwasraya with gross premium of Rp 1,090,294 million. The smallest among the ten is Asuransi Eka Life with gross premium income of Rp 181,996 million.

With investment valued at Rp 3,793,361 million, Asuransi AIG Lippo Life, leads over other companies in investment value, followed by Asuransi Jiwasraya with investment at Rp 2,426,961 million. See the following table.

Local versus Foreign

The number of 55 life insurance companies in the country is considered too many. The number considered ideal is between 25 and 30 companies. Foreign investors said domestic insurance companies have capacity exceeding the market demand. As a result foreign investors have little room for penetration.

The largest among the life insurance company is Asuransi AIG Lippo Life. The Indonesian-American joint venture has 3,600 agents and it hopes to increase the number soon to 4,400 agents. It is superior in experience, human resource, finance and information technology and technology compared with Asuransi Jiwasraya, the second largest in the country.

Asuransi AIG Lippo Life is owned by the Lippo Group The Lippo Group (力宝集团) is a major Indonesian conglomerate founded by Mochtar Riady. The Lippo Group began with Bank Lippo, later using this as a platform for regional property development projects.  and AIG (American Internatioal Group Inc from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Currently AIG Lippo Life is a pioneer and at the same time a player in bancassurance Bancassurance

A French term referring to the selling of insurance through a bank's established distribution channels.

The result is a bank that can offer banking, insurance, lending, and investment products to a customer.
. Its financial performance is excellent with RBC of 210% in 2003 well above the minimum limit of 120%. Currently it has market share of 29% with gross premium of Rp 1,929,260 million in 2003. It has clients in 65 cities in the country with 3,600 agents.

Asuransi Jiwasraya, the only state company operating in life insurance industry, has expanded rapidly from year to year with 17 regional offices, 70 branch offices and 286 area offices. Asuransi Jiwasraya expands operation through investment in capital participation and subsidiaries operating in various business areas including real estate, apartment, golf courses, office building. The subsidiaries include PT. Stania Bhineka Jasa, which is wholly owned, Pondok Indah Pondok Indah is the most expensive area in South Jakarta, Indonesia. This is a much sought-after suburb by expatriates due to the proximity to the Jakarta International School.  Padang Padang (pädäng`), city (1990 pop. 631,263), capital of Sumatra Barat prov., on W Sumatra, Indonesia, on the Indian Ocean at the mouth of the small Padang River.  Golf (0.23%), PT. Arthaloka Indonesia (2.88%), PT. Langen Krida Pratyangga (0.40%). It has joint venture with PT. Asuransi Jasindo and PT. Adhi Karya to establish PT. Mitrasraya Adhijasa in which it is a 55% shareholder. Jiwasraya, however, plans to sell its assets in the joint venture company as it is no longer profitable. And has ceased operation since 2001.

The suggestion that foreign companies have always been superior is not entirely correct. Asuransi Bringin Life, a local company, reported the best financial performance in among the medium life insurance companies despite domination domination

the relationship between animals and humans in which little consideration is given to the rights of the animals. The prevailing sentiment is one of proprietary domination.
 by joint venture companies.

Total investment of Bringin Life was Rp 414 billion in 2003 or an increase of 20% from the previous year of Rp 329 billion. Its premium income rose to Rp 466 billion in 2003 from Rp 393 billion in 2002.

Astra CMG CMG Coastal & Marine Geology (USGS)
CMG Chipotle Mexican Grill, Inc. (stock symbol)
CMG Companion (of the Order Of) St Michael and St George
CMG Computer Measurement Group
 Life was second among the medium life insurance companies . In the past five years it recorded an annual growth of 27%. Now it has assets valued at Rp 579 billion with 1,200 agents.

Marketing and Business Strategy

Generally all life insurance companies adopt a more or less the same marketing and business strategy.

1. First they adopt a low cost strategy facing competition from banks.

2. Second, by increasing distribution channels such as through bancassurance that is by promoting sales of products through banks.

3. The third is through market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market
penetration - the act of entering into or through something; "the penetration of upper management by women"
. Some client refuse to meet agents, but some markets need agents especially outside Jakarta.

4. The fourth is by improving the quality of human resource especially agents who deal directly with policy holders or prospective policy holders. Training, therefore is necessary. Hijacking hijacking

Crime of seizing possession or control of a vehicle from another by force or threat of force. Although by the late 20th century hijacking most frequently involved the seizure of an airplane and its forcible diversion to destinations chosen by the air pirates, when
 of skilled agents by more powerful insurance companies is now faced by Indonesian insurance companies. The 80,000 insurance agents in the country have different levels of skills. To cope with the problem, the Life Insurance Association (AAJI) has named Singapore College of Insurance to handle certification of life insurance agents.

5. The fifth is customer retention. Now policy holders are offered to buy more than one product. Agents are required to be able to persuade policy holders to buy more than just one products.

In addition to the strategies mentioned above life insurance companies need to follow the standard and general strategies as follows:

* Providing good service to customers

* Providing integrated service, easy and fast.

* Maintaining the confidence of the customers

* Maintaining loyal customers

* Identifying market

* Expanding market by opening more branch and representative offices to be close to customers

* Paying claims as scheduled

* Offering good quality and competitive products which are high in demand in market.

Level of Competition

The competition among life insurance companies it tight at present. The market is dominated by financially powerful companies either foreign and domestic companies. The opportunity, however, is still open for medium scale insurance companies which have own market segment not yet entered by large companies.

The domestic market is 90% dominated by 15 large insurance companies. Small companies have only a market share of 10%. The condition is lopsided lop·sid·ed  
1. Heavier, larger, or higher on one side than on the other.

2. Sagging or leaning to one side.

 with small companies having to struggle hard for survival.

Bancassurance could serve as an alternative amid the slump Slump

A temporary fall in performance, often describing consistently falling security prices for several weeks or months.
 in investment but bancassurance has not grown well. Only a few have made good progress in bancassurance such as AIG Lippo Life. Bancassurance contribute 60% to its premium income with agents accounting for only 30%. The contribution of bancassurance for Allianz Life Indonesia, is only 20%.

Budisuharto, Deputy President Director & Chief Marketing AIG Lippo Life, said the chance of success is greater by marketing of insurance products via banks than through agents.

From the interest of consumers, the present condition with the tight competition is good but in the long run the condition could lead to unhealthy competition. In fact indications of unhealthy competition could be seen with the hijacking of skilled agents and tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic  war with one undercutting each other in price.

Market Potential of Syariah Insurance

Lately, apart from conventional insurance industry, there is new business in syariah insurance. Basically syariah insurance and conventional insurance operate in the same system. The difference is that syariah insurance companies manage insurance fund on Islamic rule or syariah principles. Syariah insurance is no serious competitor to conventional insurance as it seeks only to meet demand from some of the people to have insurance based on Islam.

Currently syariah insurance has succeeded only in grabbing a 1% share of the conventional insurance market, which was valued at around Rp 30 trillion in premium income in the country in 2003. The association of syariah insurance (AASI) has 18 members in 2003. In the next five years syariah insurance industry is expected to chalk up chalk  
1. A soft compact calcite, CaCO3, with varying amounts of silica, quartz, feldspar, or other mineral impurities, generally gray-white or yellow-white and derived chiefly from fossil seashells.

 Rp 7 trillion in premium income of the total market of Rp 74 trillion.

AASI said the bottleneck in the development of syariah insurance is the low authorized capital of only Rp 2 billion for a syariah branch. It said the government should increase the required limited capital to Rp 5 billion to meet growing demand for syariah insurance especially in the region. Svariah insurance provides more alternative for the people.

Conclusion and Prospects

The decline in the performance of insurance industry especially life insurance is caused by four factors namely: First is macro economic condition with low interest rate and fluctuation Fluctuation

A price or interest rate change.
 of currencies resulting of a decline in yield of insurance investment especially in deposits and SBI.

Second is imbalance in competition among small and big insurance companies. Third is limited capital among many insurance companies. Fourth is legal uncertainty and unfavorable condition such as in the case of Prudential Life reducing investors' confidence in the country. The government needs to produce effective regulations favorable to the market as the prospects for life insurance are still encouraging. Until now only 16% of the market potential in the country of 215 million. 's population has been exploited. The percentage could still be increased in the coming years. The people need only to be convince about the important of insurance protection especially when the economy has improved.

Number of life insurance companies in Indonesia

Year    State co.    Indonesia      Joint      Total
                     private co.    venture

1999            1             40         12       53
2003            1             33         21       55


Life insurance companies and paid up capital, December, 2003

No               Name of companies               Paid up capital (Rp
      Indonesian private companies:
1     Panin Life                                           1,497,118
2     Asuransi Syariah Mubarakah                             135,000
3     Asuransi Jiwa Bringin Sejahtera                         70,000
4     Asuransi Jiwa Adisarana Wanaartha                       70,099
5     Asuransi Jiwa Central Asia Raya                         50,000
6     Asuransi Jiwa BNI Jiwasraya                             20,385
7     Asuransi Jiwa Bakrie                                    17,853
8     Asuransi Takaful Keluarga                               17,000
9     Asuransi Bumi Asih Jaya                                  7,005
10    Asuransi Jiwa Askrida                                    6,887
11    Asuransi Jiwa Miralife                                   6,052
12    Asuransi Rama Life                                       5,000
13    Pasaraya Life Insurance                                  5,000
14    Asuransi Jiwa Austindo                                   5,000
15    Asuransi Jiwa Century Lifindo Perdana                    4,500
16    Asuransi Jiwa Berkah Harda Sentosa                       4,000
17    Asuransi Jiwa Mantari Mulai Sejahtera                    2,500
18    Anugerah Life Insurance                                  2,500
19    Indolife Pensiontama                                     2,000
20    Asuransi Jiwa Bumiarta Reksatama                         2,000
21    Asuransi Jiwa Mukzijat Utama                             2,000
      State company:
1     Asuransi Jiwasraya                                     235,000
      Joint Ventures :
1     Asuransi Allianz Life Indonesia                        480,750
2     Asuransi AIG Lippo Life                                477,711
3     Metlife Sejahtera                                      126,564
4     AXA Life Indonesia                                     124,500
5     Prudential Life Assurance                              111,500
6     Astra CMG Life                                          91,550
7     Sun Life Financial Indonesia                            76,600
8     Asuransi Jiwa John Hancock Indonesia                    61,194
9     AXA Mandiri Financial Services                          59,472
10    Equity Financial Solution                               53,195
11    Asuransi Jiwa Sequis Life                               49,020
12    Credit Suisse Life & Pensions Indonesia                 44,500
13    MAA Life Assurance                                      38,943
14    Asuransi Jiwa Asih Great Eastern                        32,301
15    Heksa Eka Life Insurance                                30,000
16    MLC Life Indonesia                                      29,497
17    Asuransi Cigna Life                                     20,000
18    Asuransi Jiwa Eka Life                                  17,500
19    UOB Life Sun Assurance                                  13,500

Source: DAI


Risk Based Capital of insurance companies by Dec. 2003

Risk Based Capital    Life Insurance    General Insurance

More than 120%                    36                   78
100%-120%                          6                    9
Below 100%                        --                    5
Data not available                 1                   --

Source: DAI


Companies include din the List of Business Activity Restriction

No.   Name of companies                 Type of insurance business

1     Asuransi BHS Life                 Life insurance
2     Asuransi Jiwa Buana Putra         Life insurance
3     Asuransi Jiwa Pura Nusantara      Life insurance
4     Asuransi Inda Tamporok Life       Life insurance
5     Koperasi Asuransi Indonesia       General insurance
6     Nabasa Life Insurance             Life insurance
7     Asuransi Namura Life              Life insurance
8     Asuransi Nugra Pacific            General insurance
9     Asuransi Purwandjasa              General insurance
10    Asuransi Securindo Adhigama       General insurance
11    Asuransi Sakarukma Sinukarta      Life insurance
12    Asuransi Kharisma Persada Raya    General insurance
13    Asuransi Genesha Danamas          Life insurance

Source: DAI


Investment portfolio of life insurance companies in Indonesia, 2003

No               Description                 Earning       Portion (%)
                                           (Rp million)

1     Deposits and deposit certificates       4,530,890          21.97
2     Bank Indonesia certificate (SBI)          307,230           1.49
3     Shares and bonds                        6,263,379          30.37
4     Securities issued/guaranteed by the     5,731,708          27.79
5     Mutual fund                             1,295,647           6.28
6     Direct participation                    1,320,331           6.40
7     Building, Land and buildings              562,574           2.73
8.    Other investments                         515,180           2.50

Source: DAI/Data Consult/data processed


Develolement of life insurance industry, 2002-2003

No.         Description              Value        Growth year-on-
                                  (Rp million)       year (%)

1     Total assets                  23,075,405              24.56
2     Investment                    20,625,977              26.41
3     Non Investment                 2,449,427              10.86
4     Debts                          1,428,661              25.02
5     Technical reserve             16,991,930              26.27
6     Liabilities                   18,420,591              26.17
7     Paid up capital                4,201,696             (4.05)
8     Equity capital                 4,509,310              19.76
9     Gross premium                 10,390,930              22.72
10    Net premium                   10,072,559              22.95
11    Profit (Loss) before tax         494,564              1.800

Source: DAI/Data Consult/processed


Ten life insurance companies n with investment exceeding technical
reserves, 2003

(Rp million)

       Name of companies            Investment    Technical   Portion %

Asuransi Rama Life                       4,884        1,873     210.30
Prudential Life Assurance            1,450,734    1,205,440     180.00
Panin Life                           1,789,159      532,991     174.26
Asuransi Jiwa Asih Great Eastern        35,751       26,970     132.54
AXA Life Indonesia                     267,638      262,823     131.00
Asuransi AIA Indonesia               1,474,740    1,137,367     127.00
Asuransi Jiwa BNI Jiwasraya            172,310      151,509     126.87
Asuransi Cigna                         158,537      137,617     119.00
Indolife Pensiontama                 1,642,841    1,426,717     115.15
Asuransi AIG Lippo Life              3,793,361    3,063,837     112.00
MLC Life Indonesia                     355,462      324,105     110.00

Source: DAI/Data Consult


Performance of Prudential Life Assurance

Description            2003       2002

Total assets         1,567.66     756.58
Equity capital        202,594    125,213
Premium income       1,018.80     476.77
Link unit remikum     927.619    383.236
Profit                 78,060     18,629
Liquidity ratio          110%       109%
Risk Based Capital       255%       141%

Source: Data Consult/processed


Financial performance of major life insurance companies, 2003

(Rp million)

     Name of            Total      Investment       Non        Debt
    companies           Assets                   Investment

Asuransi AIG           4,284,541    3,793,361      491,180     435,648
Lippo Life
Asuransi Jiwasraya     2,762,501    2,426,961      325,540      49,023
Indolife               1,668,308    1,642,841       25,467       1,776
Asuransi Jiwa          1,651,777    1,562,629       89,148      65,112
Sequis Life
Asuransi AIA           1,590,831    1,474,740      116,091     231,443
Prudential Life        1,567,658    1,490,734      116,924     159,624
Asuransi Allianz         980,780      809,503      171,277      53,350
Life Indonesia
Panin Life             1,836,842    1,789,159       47,683      10,812
Asuransi Jiwa          1,057,155      980,453       76,702      47,316
Central Asia Raya
Asuransi Jiwa            684,545      575,589      108,956      18,451
Eka Life

     Name of          Liabilities   Technical     Paid up      Equity
    companies                        reserve      capital

Asuransi AIG           3,499,485    3,063,837      477,711     785,056
Lippo Life
Asuransi Jiwasraya     2,383,939    2,334,916      235,000     368,563
Indolife               1,428,493    1,426,717        2,000     239,815
Asuransi Jiwa          1,490,174    1,425,062       49,020      90,497
Sequis Life
Asuransi AIA           1,368,810    1,137,367        4,500     222,021
Prudential Life        1,365,064    1,205,440      111,500     202,594
Asuransi Allianz         837,751      784,401      480,750     143,029
Life Indonesia
Panin Life               543,803      532,991    1,497,118   1,293,039
Asuransi Jiwa            928,727      881,411       50,000     128,428
Central Asia Raya
Asuransi Jiwa            555,399      536,949       17,500     129,145
Eka Life

     Name of            Gross         Net       Profit (Loss)
    companies          premium      premium     before tax

Asuransi AIG           1,929,260    1,911,481      153,688
Lippo Life
Asuransi Jiwasraya     1,090,294    1,079,575       59,476
Indolife                 896,811      896,763       12,153
Asuransi Jiwa            526,634      520,847       55,248
Sequis Life
Asuransi AIA             520,063      504,760       62,626
Prudential Life        1,016,801    1,007,784       71,092
Asuransi Allianz         718,881      691,301      (54,169)
Life Indonesia
Panin Life               492,602      484,185      152,315
Asuransi Jiwa            389,571      368,897       20,923
Central Asia Raya
Asuransi Jiwa            181,996      179,125        5,068
Eka Life

Source: DAI


Market potential of syariah insurance in Indonesia

(Rp trillion]

Description               2004     2005     2006     2007     2008

Conventional insurance    38.85    45.47    53.44    63.05    74.67
Loss insurance            20.65    25.62    31.77    39.39    48.85
Life insurance            18.19    19.85    21.67    23.66    25.82
Syariah insurance          0.78     1.82     3.21     5.04     7.47

Source: AASI 2004
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Title Annotation:Industry Profile
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jul 27, 2004
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