Indonesia may inject around 15 trillion rupiah ($1.09 billion) of capital to the financially embattled life insurer Asuransi Jiwasraya to help the state firm pay off maturing policies, a lawmaker said on Tuesday.
The capital injection was among four options the government has proposed to parliament to help Jiwasraya meet its outstanding obligations to millions of policyholders, said Aria Bima, who chairs parliament’s special committee overseeing issues related to the insurer’s financial troubles.
“We want Jiwasraya to begin to return customers’ money in instalments by the end of March,” Bima told reporters, without explaining the other options the government had presented.
Jiwasraya needed to top up its capital by 32.9 trillion rupiah to stay afloat and it also owed about 16 trillion rupiah to policyholders, according to company documents as of November 2019.
The government had last year ruled out bailing out the insurer, opting to find other ways to improve the firm’s balance sheet.
According to a copy of the government’s proposal document to parliament, the proposed injection would not be labelled as a bailout, but a “bail-in”, which was described as a company’s biggest stakeholder taking up responsibility to clear up its financial woes. Jiwasraya is 100% state owned.
The injection would also complement a separate plan to raise up to 3 trillion rupiah from a stake sale in Jiwasraya’s newly formed subsidiary to a strategic investor, the document showed.
State-Owned Enterprises Minister Erick Thohir told reporters separately that business-to-business approach in Jiwasraya’s rescue plan will be prioritised, but the firm would also need capital injection by the state. He declined to give more details.
Meanwhile, opposition politicians have sent a request to parliament speaker to launch an inquiry into the insurer’s former management.
A separate investigation by the Attorney General’s Office (AGO) into alleged fraud in Jiwasraya is also underway.
The AGO has arrested five people in its investigation into Jiwasraya’s management and its equity investment, including executives of other companies who prosecutors alleged had been involved in stock market manipulation, according to media reports.