Prudential to fight bankruptcy decision

The Jakarta Post, Jakarta

PT Prudential Life Insurance, the Indonesian unit of British Prudential Plc, vowed that it would appeal the Jakarta Commercial Court's decision to accept the bankruptcy petition against the Insurance giant.

The court will hear the case based on a petition filed by one of Prudential's former agents.

In a press statement on Friday, Prudential president Charlie E. Oropeza said the company would appeal to the Supreme Court over the court's decision, and that it wanted to reassure its customers that they would in no way be affected.

"We are surprised by the court's decision ... The petition, which is from a disgruntled former consultant, is wholly without merit," said Oropeza.

Former Prudential agent Lee Boo Siong filed a bankruptcy suit with the Commercial Court in Central Jakarta against the company on April 7 accusing the company of failure to pay him bonuses amounting to some Rp 10 billion (US$1.17 million).

However, despite the company's strong performance, and its ability to pay off its claims, the court has surprisingly decided to go ahead with bankruptcy hearings based on Lee's petition.

Prudential's total premium income grew by 114 percent to Rp 1 trillion in 2003 compared to Rp 477 billion in 2002. Its profit before tax in 2003 was Rp 71 billion, which marked its third consecutive year that it had made a net profit.

Prudential had a 255 percent Risk Based Capital (RBC) rate last year (compared to the minimum requirement of 100 percent), and a 110 percent liquidity rate. Both RBC and liquidity rate are indices used by the Ministry of Finance to determine the fiscal health of an insurance company. The higher the rate, the better.