400,000 policyholders of Manulife face uncertainty

400,000 policyholders of Manulife face uncertainty

Rendi A. Witular, The Jakarta Post, Jakarta

Around 400,000 policyholders of PT Asuransi Jiwa Manulife
Indonesia (AJMI), the local unit of Canada's giant insurer
Manulife Financial Corp., have been put in a quandary following
the Central Jakarta Commercial Court's controversial verdict to
declare the firm bankrupt.

AJMI spokesperson Nelly Husnayati said that the company for
the time being could not pay any maturing claims until a final
and binding ruling had been issued by the Supreme Court.

She acknowledged that the firm had received some 2,880 phone
calls from policyholders asking about the position regarding
their claims.

There are also fears that policyholders might not be able to
fully recoup their claims as their value might exceed AJMI's
assets.

AJMI has temporarily shut down its offices throughout
Indonesia following the court ruling.

AJMI is Indonesia's fourth largest life insurance firm with
total assets worth Rp 3.1 trillion. As of December 2001, the
company collected premiums of around Rp 570 billion.

The Central Jakarta Commercial Court declared AJMI bankrupt on
Thursday after the receiver of the now defunct company, the
former partner of Canada's Manulife in AJMI, brought a bankruptcy
petition over an unpaid dividend in 1999. AJMI had argued that it
did not declare a dividend during that year. Many have questioned
the court's ruling.

AJMI is 71 percent owned by Manulife, with the remaining
shares held by International Finance Corporation and local firm
PT Tirta Dana Nugraha.

AJMI president Philip Hampden Smith, however, said during a
press conference that the company was fully committed to
protecting the interests of policyholders.

"Despite this unbelievable ruling, I would like to assure all
policyholders that their policies remain protected by AJMI, and
that we are fully dedicated to doing everything we can to ensure
our employees and customers are not negatively affected by these
criminals acts," he said.

AJMI operates its business through a network of 72 branches in
33 cities throughout Indonesia, with the support of 4000 members
of staff.

Meanwhile, insurance expert and chairman of the Indonesian
Insurance Council Hotbonar Sinaga said that the current situation
was unfair to policyholders because they could not realize
maturing claims.

He said, however, that although AJMI's assets might not be
able to fully cover the claims of policyholders, the company's
parent, Manulife, would likely step in to maintain its reputation
as a world-class insurer.

On Friday, Manulife said that it was fully committed to
staying in business in Indonesia.

AJMI has appealed to the Supreme Court over Thursday's ruling.

Until a final verdict is issued by the Supreme Court, AJMI
will be run by a receiver, who will freeze the company's assets
temporarily.

The ruling means, in effect, that the company's management
will be under the authority and the supervision of the receiver
and a supervising judge, both of whom act as caretakers of the
company.

If the Supreme Court upholds the bankruptcy ruling, AJMI will
be liquidated and its assets distributed to AJMI's creditors, who
include policyholders.

However, policyholders whose policies have yet to mature will
not receive their premiums back in full.

Manulife has faced a series of legal challenges here since it
acquired its 40 percent stake in DSS in October 2000 at a
government-held auction after DSS was declared bankrupt. The
legal moves are believed to have been orchestrated by the
Gondokusumo family, the owner of DSS and founder of the Dharmala
Group, who has been trying to defraud Manulife since it acquired
DSS stake in AJMI.

Manulife vows to fight back

Things in AJMI will be tense over the next 48 days as the
Supreme Court decides on the insurer's fate.

AJMI's lawyer, Sheila A. Salomo of Hotma Sitompoel and
Associates, said after the commercial court's odd verdict on
Thursday that AJMI was disappointed, but was determined to appeal
to the Supreme Court.

Moreover, Sheila added that AJMI would sue the plaintiff.

AJMI has eight days to register its appeal with the Supreme
Court. A failure to do so would remove the company's last chance
to seek justice.

After filing its appeal, AJMI will have to wait for another 10
days for the plaintiff, Paul Sungkar, the liquidator of the
defunct PT Dharmala Sakti Sejahtera (DSS), to submit his counter-
statement.

When the above prerequisites have been completed, the case
file is delivered to the Supreme Court.

The Supreme Court will then sit to consider its decision 30
days after the case file has been received.

The current case is the fourth time DSS has tried to bankrupt
AJMI since 2000, when it first lost control of the insurer.