Some AJMI customers have started terminating contracts

A'an Suryana, The Jakarta Post, Jakarta

Some worried policyholders of insurance company PT Asuransi Jiwa Manulife Indonesia (AJMI) have begun to prematurely terminate their insurance contracts and seek cash withdrawals after the Commercial Court declared the company bankrupt last Thursday.

On Wednesday, one policyholder by the name of Riana, 42 years, told reporters that she would terminate her contract on fears that she could suffer a greater loss if the Supreme Court approves the bankruptcy ruling.

"I know exactly that I would be making losses as I terminate the contract. But, by terminating the contract, at least I could still get a portion of the investment," Riana told reporters at AJMI's headquarters on Jl. Cikini, in Central Jakarta.

Riana had paid a total of Rp 27 million in premiums, but by cashing in the policy prematurely, she would be subject to penalty and would only receive Rp 16 million.

Two other policyholders also admitted that they came to the headquarters to cash in their policies but canceled their plans after being persuaded by AJMI's agents.

The penalty may have also discouraged the policyholders from terminating their insurance contracts.

AJMI declined to say how many customers have terminated their contracts since the bankruptcy ruling.

But company spokeswoman Nelly Husnayati maintained that policyholders were still confident in the company as some have continued making premium installments despite the controversial court ruling.

She pointed out that between Monday and Tuesday, 64 customers made premium installments worth Rp 229 million.

"Those are figures at our headquarters, and not included at our branches. This underlines that the confidence of the customers to the company are still high," she said.

Another customer, Nur Maya MM shared her view, saying that Manulife was too big to be declared bankrupt, therefore she decided to continue her investment at the company.

"The company is solvent. I believe that it would win the case at the Supreme Court," she told The Jakarta Post.

AJMI is the fourth largest life insurance firm in Indonesia with total assets of Rp 3.1 trillion and some 400,000 policyholders.

The finance ministry has said that AJMI was solvent, meaning that its assets were sufficient to cover its liabilities.

The Commercial Court declared AJMI, the local unit of Canada's Manulife Financial Corp., bankrupt after a receiver of the now defunct PT Dharmala Sakti Sejahtera (DSS) filed the bankruptcy petition over a dividend debate in 1999.

AJMI shareholders voted not to distribute dividends for 1999, a common practice in most corporations, but the court apparently ignored that fact.

Manulife has made an appeal to the Supreme Court, which should have its decision ready within 45 days.

As of Wednesday, no significant numbers of customers were seen flocking to AJMI's headquarters.

However, a sense of dismay gripped the headquarters, as the employees wore green bands on their left arms, and banners were seen stretched in several places, declaring that employees rejected the ruling.

AJMI is now in the hands of a court-appointed receiver.

The company had earlier criticized the receiver for publishing an advertisement which essentially told policyholders and other creditors to submit their claims immediately, raising fears that the company's assets could be squandered.