Indonesia plans to shut down troubled life insurer Jiwasraya

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Indonesia plans to close down embattled state life insurer Asuransi Jiwasraya and set up a new company to settle outstanding claims, a move requiring state investment, media reported on Wednesday, citing a deputy minister.

The plan was introduced for parliamentary debate on Tuesday by deputy minister of state-owned enterprises (SOEs) Kartika Wirjoatmodjo, according to news website Kompas.com.

The reports did not specify the size of the investment that may be required. Wirjoatmodjo was quoted as saying Jiwasraya had 35.9 trillion rupiah ($2.50 billion) in negative equity.

Such a plan may put the state budget under further strain, with spending for the fight against the coronavirus pandemic and falling revenues already expected to widen the fiscal deficit to 6.34% of GDP, more than three times the original plan.

The central bank is expected to finance some of the fiscal deficit by taking up bonds without receiving interest and helping the government pay some interest expenses, under a $40 billion bond scheme.

“We propose forming a new company … that we will call Nusantara Life, which will later on become the company that takes over restructured Jiwasraya policies,” the deputy minister said in a video carried by Kompas.com.

Another news portal, Tempo.co, said Jiwasraya‘s unpaid claims as of the end of May amounted to 18 trillion rupiah.

A spokesman for the SOEs ministry and Jiwasraya‘s chief executive did not immediately respond to a request for comment.

The Attorney General’s Office is currently investigating alleged fraud related to the insurer’s investment in penny stocks.

The government had considered topping up Jiwasraya‘s capital by some $1 billion last year, but the plan was shelved.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.