Allianz Life reports first annual profit, but premiums down

The Jakarta Post, Jakarta

Allianz Life Indonesia -- a leading provider of life and health insurance -- has reported its first ever profit in its eight years of operation, despite a 9.9 percent drop in its premiums collected in 2004.

"We have a profit of Rp 3.6 billion (US$378,000) for 2004," the company's chief financial officer, Rianto Djojosugito, told The Jakarta Post on Tuesday.

He said this nominal profit, a reversal from last year's loss of Rp 42 billion, represented a significant turning point for the insurer, which has been in operation since 1996.

"It's the nature of insurance companies to be in the red for a few years," said Rianto.

"The profits will now only continue to grow."

The profit for 2004 occurred despite a drop in gross weighted premiums from Rp 719 billion in 2003 to Rp 648 billion, which Rianto attributed to a combination of factors.

He said that one of the most significant factors, felt by the industry as a whole, was the scaring off of potential customers due to the case affecting a local unit of the UK-based Prudential Life Insurance.

Prudential was declared bankrupt by the Commercial Court in April 2004 because of an alleged debt to one of its agents. The court decision was later reversed by the Supreme Court.

Rianto said the drop-off in premiums was also due to some clients, chasing short-term gains, by not renewing their life insurance policies.

He added that a significant amount of the company's record premiums generated in 2003, 72 percent higher than in 2002, came from "investment-oriented" individuals who were seeking quick returns by purchasing single, one-time premium policies.

However, despite these factors, the company, which boasts a 216 percent risk based capital, well above the government- mandated level of 120 percent, expects profit of between Rp 20 billion and 30 billion this year, according to Rianto.

He also said that the company's first quarter results were "strong" and in line with its target of increasing its gross weighted premiums by 56 percent to Rp 1 trillion.

He said that Indonesia's low penetration of insurance policy holders, where only 2 percent of its 230 million population had life insurance, continued to present a remarkable opportunity for the company.

Allianz Life Indonesia is one of the top 10 life insurance companies in the country.

With assets under its management of more than Rp 1.17 trillion, the company insures more than 300,000 people. (002)