Manulife may acquire more local companies

Sari P. Setiogi, The Jakarta Post, Jakarta

PT Asuransi Jiwa Manulife Indonesia (AJMI), a life insurance and investment services provider, which is majority-owned by Canadian-based Manulife Financial, plans to expand its operations by acquiring ailing local competitor companies this year.

"Because many insurance companies failed to increase their risk-based capital (RBC) to the required minimum level of 75 percent by the end of 2002, we see an opportunity to acquire some of them," vice president director Adi Purnomo told a press conference on Wednesday.

RBC is the ratio between capital and investment exposure.

Because many insurance companies in Indonesia are facing operational difficulties, the government has issued a regulation requiring all insurance firms to have a minimum RBC level of 75 percent by the end of 2002, 100 percent by the end of 2003 and 120 percent by the end of 2004. The government is threatening to close down any insurers who fail to meet this requirement.

According to a finance ministry official, nine out of the country's 170 insurance companies may have to be closed down for failing to meet the minimum requirement of RBC by the end of last year.

AJMI acquired two competitor companies, AMP Panin and Ongko Life in 1998, and purchased Principal Indonesia in 2001.

Adi said the planned acquisitions would be part of his company's efforts to expand the business of the company, which currently holds 11 percent of the market share in the country.

Meanwhile, company president John Harrison said the company planned to increase the number of its customers to one million and its total managed assets to Rp 10 trillion by 2005.

Presently, with about 420,000 customers, Manulife Indonesia manages total assets worth Rp 5.7 trillion, which indicates a 128 percent increase from the Rp 2.5 trillion as of the end of 2001, he said.