Insurers shift to time deposits<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Time deposits have now become increasingly more attractive to
\ninvest in, with commercial banks revising upward their saving and
\ndeposit rates to adjust to the central bank's hiking of its key
\nreference rate, according to insurers.<\/p>\n
In addition to the higher rates, time deposits -- which span a
\nmaximum of one year -- also offer faster yields that those of
\nmutual funds and government bonds, which carry a longer maturity
\nprofile than deposits.<\/p>\n
\"Previously, insurance companies invested their money in
\ngovernment bonds or mutual funds. But now, they prefer to invest
\ntheir money in time deposits, which some banks are now offering
\nup to 10 percent,\" president director of a reinsurance firm PT
\nReindo Hendrisman Rahim recently told The Jakarta Post.<\/p>\n
Currently, there are about Rp 150 trillion (some US$15.1
\nbillion) in funds circulating in the insurance industry, which
\nincludes social security firms and pension funds.<\/p>\n
Echoing Hendrisman was Angger P. Yuwono, a senior advisor at
\nWatson Wyatt Insurance Consulting, who added that many insurers
\nwere now shifting their investments to time deposits to help
\nreduce a negative spread in their cash flows.<\/p>\n
\"They are avoiding mismatching. Right now many companies are
\nprobably facing it because, at present, their dollar-dominated
\nclaims burden them now that the rupiah is weakening.<\/p>\n
\"Investing in time deposits, even though only for the short
\nterm, will help them to prevent more losses,\" Angger told the
\nPost.<\/p>\n
The two were commenting on a recent move by the central bank
\nto raise its reference rate, which now stands at 10 percent,
\nwhich led to many banks to adjust upward their saving and time
\ndeposit interest rates as well.<\/p>\n
The move was intended to help defend the rupiah which has been
\nunder heavy pressure against the resurgent greenback, as it makes
\nthe rupiah, and other rupiah-dominated investments, more
\nattractive.<\/p>\n
However, unlike Angger and Hendrisman, CEO of life insurer PT
\nBumi Putera, a leading local insurer in the country, Maryoso
\nSumaryono said that now was actually the perfect time to invest
\nin government bonds and mutual funds.<\/p>\n
\"I think, it's time to buy, because the bonds and mutual funds
\nare much cheaper now,\" he said. He was quick to add though that
\nto keep the company's investment portfolios in check,
\ndiversifying investments would also be helpful.<\/p>\n
Hendrisman, Maryoso and Angger asserted that the recent
\neconomic situation, exacerbated by the soaring oil prices and
\nweakening of the local currency, would not prevent their
\ncompanies from growing.<\/p>\n
Angger said the insurance industry would keep growing,
\nprobably by more than 20 percent this year, in line with the
\nincreasing awareness among Indonesians that their life and assets
\nwere always prone to risks. (006)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/insurers-shift-to-time-deposits-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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