Maskapai Reinsurance Indonesia (Marein) has announced its plan to raise $41 million from a rights offering in 2017. The company said it will sell up to 130 million new shares by June next year to strengthen its capital, according to local media reports.
Merein along with Indonesia’s only other three reinsurance companies – Reasuransi Indonesia Utama, Reasuransi Nasional Indonesia, and Tugu Reasuransi Indonesia – are seeking to increase capacity to cover more clients.
Currently, the four companies can barely compete with large reinsurance firms abroad due to lack of capital.
“In order to increase the capacity, we have to raise capital,” said president director Robby Loho, as quoted by the Jakarta Globe earlier this week.
The company expects to reap Rp 1.5 trillion in premium income this year, up 40 per cent from last year’s Rp 1.07 trillion. Premium income at Marein has reached Rp 907 billion in the first nine months this year, up 29 per cent from the same period the previous year, driven by double digit growth in life and general reinsurance segments.
Fitch Ratings affirmed Marein’s national insurer financial strength of A+, as well as its international IFS rating of BB back in August.
Fitch said that the rating reflects Marein’s high business concentration in catastrophe-prone Indonesia, its modest market position and small asset size compared with some of its local and regional peers, despite its long operating record.