ASEAN KEY DESTINATIONS
BRI wants BRIngin to be RI’s top life insurer
State-owned lender Bank Rakyat Indonesia (BRI) has set a long-term plan of turning BRIngin Life, its future life insurance unit, into the country’s top life insurer.
The plan was announced on Monday during an extraordinary shareholders meeting that approved the bank’s plan to acquire a 91 percent stake worth Rp 1.6 trillion (US$114.6 million) in BRIngin Life (Asuransi Jiwa Bringin Jiwa Sejahtera). fThe remaining 9 percent will be held by the BRI employee welfare foundation.
The total stake was equal to 1.69 times the book value as of June this year, BRI president director Asmawi Syam said.
“We are optimistic that the company will have the greatest number of policy holders and become the biggest micro insurance provider in Indonesia in the next five years,” Asmawi said during a press conference after the meeting.
As part of the strategy, Asmawi said the bank would consider finding a joint-venture partner to build BRIngin Life after internal improvements to the company’s business process, including distribution channels, IT and products.
BRI vice president Sunarso said the bank, the country’s most profitable lender, would identify aspects lacking from the lender and BRIngin Life that could be covered by the prospective joint-venture partner.
“However, BRI does already have more or less everything we need to grow BRIngin Life, such as a large customer base and enough employees to boost bancassurance channels,” he said.
BRI, Asmawi said, currently partnered with BRIngin Life in micro-credit insurance, but the acquisition would enable both companies to offer more types of insurance products to the micro-segment population.
“We hope that by boosting micro insurance, we can help the country’s financial inclusion program. BRI already has at least 35,000 branchless banking agents,” he said.
In its official letter published on the Indonesia Stock Exchange (IDX) website on Oct. 20, BRI announced that it had signed a conditional sale and purchase agreement with Dapen BRI and that it planned to take over all of the shares owned by the latter in BRIngin Life.
Dapen BRI currently controls 90.17 percent of BRIngin Life, while the remaining 9.56 percent and 0.27 percent are owned by the employee welfare foundation of BRI and the employees’ cooperative of BRIngin Life, respectively.
BRI finance director Haru Koesmahargyo said the acquisition was expected to help trigger the bank’s return on equity (ROE) to above 30 percent from currently about 29 percent, given that BRIngin Life had an ROE of more than 30 percent.
“We can also reap fee-based income worth at least Rp 400 billion per year from the insurance business,” Haru said.
BRIngin Life recorded total assets of Rp 4.5 trillion by the end of the first half this year, with Rp 1.04 trillion in total equity.
Last year, former BRI president director Sofyan Basir said that the bank was interested in taking over state-owned life insurer Jiwasraya in order to merge it with BRIngin Life to create a major life insurance firm. However, the plan never materialized.
BRI expected to obtain permits on the life insurance acquisition from both of the Financial Services Authority’s (OJK) banking and non-banking departments soon.
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