ASEAN KEY DESTINATIONS
Astra Life seeks to triple business this year
Life insurer PT Astra Aviva Life, popularly known as Astra Life, is seeking to triple its business this year from what it reaped in 2014, according to the firm’s executives.
With the target, the company — which is a joint venture between diversified conglomerate PT Astra International and UK insurer Aviva plc — is expected to book at least Rp 1.95 trillion (US$146.47 million) in gross premium and Rp 1.5 trillion in net premium this year-end.
A similarly positive outlook has been applied to its bottom line, which is predicted to end in the black in 2015, as opposed to last year’s net loss of Rp 157.18 billion.
Astra Life president director Philip Willcock said that the firm was optimistic it would be able to reach the target, even though the country’s economy was slowing.
“It’s all relative when you come from outside Indonesia. The GDP [gross domestic product] growth may not be 6 percent this year. It may be 5 percent, but it’s still 5 percent. If you go everywhere else, there’s nothing like 5 percent,” he said in a recent interview.
Willcock’s conviction was backed by Aviva group CEO Mark Wilson, who said that the subsidiary was looking to capitalize on several factors to boost the business, namely current low insurance penetration, Indonesians’ tendency to prioritize family and the country’s rising middle class.
Recent data from the Financial Services Authority (OJK) show that the life insurance penetration ratio stands at 1.7 percent of GDP in 2014, whereas in neighboring Malaysia and Thailand, the ratios have exceeded 4 percent.
“But there’s more social good here in Indonesia. Young people look after family more. You’ve got a younger population than China, with an emerging middle class of, say, 50 million at the moment. That should be about 140 million by 2020 on. That’s a huge shift in demographic that you don’t see in many markets,” Wilson said.
He added that the presence of Astra International would play to the benefit of Astra Life as well, citing the former’s wide business coverage.
As reported before, Astra International and Aviva decided to partner by launching the new life insurer with equal ownership.
For Astra International, the partnership has helped it expand its network in the financial sector.
Prior to cooperating with Aviva, the conglomerate already operated several financial firms, such as general insurer PT Asuransi Astra Buana, financing company PT Astra Sedaya Finance and lender Bank Permata.
According to Wilson, the partnership agreement marks Aviva’s commitment in Asia, with Indonesia listed alongside China as a major growth market.
Meanwhile, Willcock said that Astra Life now had more than enough capital to support its business expansion plans for the next three to five years, as capital commitment from both parent companies had sent its risk-based capital (RBC) ratio to close to 2,000 percent, much higher than the 120 percent requirement set by the OJK.
Astra Life, he said, was currently developing new products to be launched this year and expanding its distribution channels to include digital channels.
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