Indo-Re announces $10.6m in net profit

JAKARTA (JP): State-owned PT Reasuransi Umum Indonesia (Indo- Re) announced yesterday that its net profit of Rp 25 billion (US$10.6 million) for the first six months of this year is due partly to its restructuring program set up last year.

"The profit figure is much higher than the company's expectation of only Rp 12 billion for the whole of this year. It was also attributable to our better product mix," Indo-Re's president, Munir Sjamsoeddin, told journalists yesterday.

Munir said that in the first half of the year, the company generated gross premiums of Rp 84 billion, technical reserves of Rp 160 billion and total investments of Rp 107 billion.

Indo-Re, according to Munir, has improved its performance since new management was installed in November 1994.

The new management, he said, has taken several measures to prevent the company from suffering further losses caused by poor underwriting practices.

Due to a poor underwriting policy and inefficient operations, Indo-Re's profit declined from Rp 5.4 billion in 1991 to Rp 4.3 billion in 1992. "In 1993 and 1994 the company posted a net loss of Rp 926 million and Rp 157 billion, respectively," he said.

He pointed out that Indo-Re's underwriting revenues dropped from Rp 5.6 billion in 1991 to Rp 5.4 billion in 1992 and to only Rp 871 million in 1993. In 1994, the company posted an underwriting net loss of Rp 151 billion.

"But since November 1994 we have restructured the management and improved the efficiency of our operations. In 1995 we managed to gain a profit of Rp 17 billion," he noted.

Indo-Re booked net underwriting revenues of Rp 15 billion and total investments of Rp 9.5 billion last year.

Munir noted that in addition to the management restructuring program, Indo-Re's recovery was partly made possible by the injection of a subordinated loan worth Rp 110 billion early last year.

Munir, a former president of PT Asuransi Bintang, said his company expects to generate a gross premium of Rp 180 billion this year.

Because the loan has boosted the company's net worth to approximately Rp 150 billion, he said that any speculation that Indo-Re's shareholders would liquidate the company is groundless.

"We have proved that we are still able to pay our debts," he said.

He also denied that the company might be setting up a new company to tackle the loss problem. (alo)