PT Tugu Pratama gained net profit of Rp 137b in 1997
JAKARTA (JP): The monetary crisis has given a windfall profit to PT Tugu Pratama Indonesia, an insurance arm of state oil and gas company Pertamina, the company said yesterday.
Company president director Sonni Dwi Harsono said the company, which is one of the country's leading insurance firms, booked a net profit of Rp 137 billion (US$13.7 million) last year, almost three times as much as its 1996 profit of Rp 50 billion.
"This is because our operation is mostly based in dollars. We capitalized on the sharp appreciation of the dollar against the rupiah," Sonni said, adding that 80 percent of the company's policies were based in dollars.
He said about Rp 150 billion of the company's gross profit of Rp 213 billion last year was due the dollar's appreciation against the rupiah.
The company had projected a net profit of Rp 98.5 billion on the assumption that its foreign exchange earning was based on an exchange rate of Rp 5,000 per dollar.
Tugu Pratama offers indemnity insurance to the country's oil and gas industry as well as other industries like aviation and marine transportation. Seventy percent of its business is from oil and gas firms.
The company insures oil and gas companies against loss during exploration, exploitation, storage and transportation.
The company is 45 percent owned by Pertamina and 20 percent by Pertamina's pension fund. The remaining 35 percent is held by PT Nusantara Ampera Bhakti (Nusamba), controlled by timber tycoon Mohammad Hassan.
It is one of the most profitable subsidiaries of Pertamina.
In terms of dollars, Tugu's profit actually decreased by 20 percent last year due to a worldwide downturn in the oil and gas industry over the past several years, Sonni said.
The downturn caused an overcapacity in the insurance market for the oil and gas industry, forcing insurance firms to cut their rates in the tight competition for customers, he added.
Sonni said Tugu Pratama was trying to lessen its dependency on the country's oil and gas industry by expanding services to other industrial sectors, as well as to overseas oil and gas industries.
"When Tugu Pratama was established in 1981, 90 percent of its operation was in the country's oil and gas industry but we now have lowered the percentage to only 70 percent," he said.
Company finance director A.R. Indrakesuma told The Jakarta Post that Tugu Pratama was going to open an office in the Russian territory of Sakhalin next month to cater to the growing demand for indemnity insurance from the area's oil and gas industry.
The company was also studying the possibility of opening offices in Mongolia, Georgia and Myanmar in the near future, he said.
"We are going at the invitation of the local authorities who want us to provide insurance services to their oil and gas industries," Indrakesuma said, adding that the company was considered the leading oil and gas insurance firm in Southeast Asia.
Currently, the company has offices Hong Kong, London, Singapore and Kuala Lumpur.
Indrakesuma said Tugu Pratama expected its current overseas operation to contribute between 10 percent and 20 percent to the company's revenue and hoped to increase the percentage in the future. (jsk)