Manulife takes over ING-Aetna
Manulife takes over ING-Aetna
Rendi A. Witular, The Jakarta Post, Jakarta
Life insurance firm PT Asuransi Jiwa Manulife Indonesia
(AJMI), a local unit of Canadian-based giant Manulife Financial
Corp., clinched its second acquisition deal this year in a bid to
strengthen its existence in the country's insurance business.
AJMI entered into an acquisition agreement on Tuesday with PT
ING-Aetna Life Insurance Indonesia, a local unit of the
Netherlands-based financial service company ING Groupe NV.
Vice president of AJMI Adhi Purnomo told The Jakarta Post that
the acquisition was aimed at fortifying AJMI's business in the
country, especially in the life, health and bank insurance
sector, and to help protect ING-Aetna policyholders.
"ING-Aetna has decided to pull out of Indonesia. The company
has chosen AJMI to help protect and manage their policyholders,"
said Adhi refusing to disclose the value of the deal.
He explained that the acquisition was positive for the
country's life insurance industry as it demonstrated Manulife's
commitment to the country and at the same time provided security
for of ING-Aetna's policyholders.
He said that with the deal, AJMI expected to increase its
assets by 25 percent. As of last year, AJMI's assets reached Rp 2
trillion (US$240 trillion).
With the acquisition, AJMI also expects to increase its market
share to 11 percent this year from around 6 percent last year,
and its revenue from insurance premiums to around Rp 1 trillion
from Rp 700 billion, he said.
After the acquisition, which is still subject to regulatory
procedures, AJMI policyholders will increase to around 700,000
from 550,000. ING-Aetna has around 150,000 policyholders.
Earlier in September, AJMI clinched a deal with Swiss
insurance group Zurich Financial Group for the acquisition of the
latter's Indonesian unit PT Zurich Life Insurance Indonesia, as
the latter was not satisfied with its performance in the
Indonesian market. Before the deal, Zurich Indonesia had 110,000
policyholders and generated $7.5 million in premiums.
The Zurich Financial Group itself has been selling its non-
core businesses, including insurance, as part of a change in
strategy following a record loss of $3.4 billion in 2002.
Next year, according to Adhi, AJMI will also take over PT
Asuransi Jiwa John Hancock Indonesia, a local unit of U.S.-based
John Hancock, as part of the global acquisition already planned
by their parent companies.
Meanwhile, insurance expert Hotbonar Sinaga said that many
foreign-based insurance firms were pulling out of the country
because they failed to make profits here after several years in
operation, or because their parent companies were having
financial difficulties.
"It is not easy to engage in life insurance business because
you need at least five years to get to the break-event point, and
Manulife is among the few foreign-based firms in the country that
has been able to survive and gain profits," Hotbonar said.
He explained that most of the companies taken over by Manulife
were those that failed to reach the break-event point as planned
by their parent companies.
The companies decided to merge with Manulife because they need
to protect and honor the contracts they have made with
policyholders, he said.
"The number of foreign-based insurance firms operating in
Indonesia will decrease in line with stiff competition here. I
guess there will only be few companies that survive," he said.
Top 5 life insurance firms in 2002
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Assets Premium Market
Share
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AJB Bumiputera 1912 Rp 5.5 t Rp 2.1 t 18.4%
AIG Lippo Life Rp 3.5 t Rp 1.7 t 15.3%
As. Jiwasraya Rp 2.5 t Rp 0.9 t 8.5%
Indolife Pensiontama Rp 1.0 t Rp 0.8 t 7.1%
Manulife Indonesia Rp 2.0 t Rp 0.7 t 6.0%
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Ministry of Finance