PT Marein forecasts 20 percent profit rise

JAKARTA (JP): Publicly listed reinsurance firm PT Maskapai Reasuransi Indonesia (Marein) expects a 20 percent growth in net profit to more than Rp 3 billion (US$1.23 million) this year from Rp 2.54 billion last year.

Last year's net profit was up 23.19 percent from 1995's 2.06 billion.

Marein's president, R.A. Wuwungan, said yesterday the company would realize the profit rise by shifting its business orientation from fire reinsurance to life insurance.

"We will concentrate on life reinsurance because it is more stable, the loss ratio does not fluctuate much, and we can project the outcome," Wuwungan said after the company's annual shareholder meeting and extraordinary meeting.

The tight competition in the fire insurance business had caused a price war and a decline in premium income from this sector, he said.

Although the Insurance Council of Indonesia reduced the fire insurance premium rate by over 50 percent last year, it was still 40 percent higher than premium rates in other insurance sectors.

Fire insurance premiums will be cut by another 40 percent next month, he said.

Wuwungan said fire reinsurance premiums contributed 48.8 percent of Marein's gross premium income last year, life insurance 30.7 percent, marine hull and miscellaneous 11.1 percent and cargo 9.4 percent.

"This year we expect to raise our life reinsurance business income to 40 percent," he said.

He said he hoped life reinsurance would contribute about 50 percent of its total premium income by next year.

The company's gross premium income rose 7 percent from Rp 53.60 billion in 1995 to Rp 57.39 billion last year.

Wuwungan said last year's premium income was slightly lower than initial projections because of growing competition from foreign companies.

The company's underwriting income rose from Rp 3.66 billion to Rp 5.07 billion and its investment income increased from Rp 2.58 billion to Rp 3.04 billion.

At yesterday meeting shareholders approved a Rp 98 dividend for 1996.

Shareholders also approved raising the company's paid-up capital from Rp 30 billion to Rp 70 billion and cutting each share's nominal value from Rp 1,000 to Rp 500.

Marein shares were steady at Rp 1,800. (das)