Wed, 15 Mar 2000

Lippo e-Net risks losing its business permit: Official

JAKARTA (JP): Listed life insurer PT Lippo e-Net risks losing its insurance business permit if it directly handles its Internet business, a senior insurance official has warned.

Indomen Saragih, the director for insurance companies under the Directorate General of Financial Institutions at the finance ministry said on Tuesday that Lippo e-Net, previously known as Lippo Life, was licensed to provide life insurance, but not Internet services as has been widely reported in the media.

"The company (Lippo e-Net) is therefore considered as breaching the law if it has a direct involvement in the Internet business in the sense that it sells Internet services to customers," Indomen Saragih,

Indomen said as an insurance company, Lippo e-Net was only allowed to invest a portion of its investment funds in the form of equity participation in an Internet business.

He said that based on existing regulations an insurance company was allowed to put a maximum of 10 percent of its total investment portfolio in one or more non-listed companies as equity participation.

According to the law, an insurance company can invest up to 20 percent of its total investment in bank deposits and property assets respectively.

However, the law also states that an insurance company can place all of its investment funds in shares traded on the stock market, but with a requirement to spread the risk by having a maximum of 20 percent of their investment portfolio in one company share.

Indomen asserted that the nature of an insurance company was to sell insurance policies to the public, so it should not deviate from this main activity.

If an insurance company was interested in a certain business it could invest in it indirectly, but not by doing business directly.

Lippo e-Net has been in the spotlight following its name change and the transfer of most of its life insurance portfolios to one of its affiliates to allow it to focus on its new Internet services.

The management of the Jakarta Stock Exchange (JSX) has asked the company to make a public disclosure if there was a change in its core business. The company has denied it has changed its name.

"Our company name is Asuransi Lippo e-Net, while (the shorter version of the name) Lippo e-Net is just the company brand name," Lippo e-Net director Junaedy Ganie said.

He also said that the company remained in the insurance business despite the transfer of most of its insurance portfolio to other companies.

But, Indomen said that the change in the name of the company had not been registered. "Based on the official registration book the name is still PT Lippo Life, not Lippo e-Net" he added.

An economist at state owned Bank Mandiri, Martin Panggabean, said Lippo e-Net as an insurance company should not take on such a risky business as an Internet one.

"An insurance company should be conservative in its investment style," he said.

The Internet business, Martin said, was still unproven as nobody in this industry could really make profits yet.

Junaedy said the company planned to launch an Internet Service Provider (ISP) and start to sell Internet accounts to customers by the second quarter of this year.

"We will do Internet business directly while most of our life insurance business activities will be carried out by our joint- venture subsidiary," Junaedy said. (udi)