Troubled Indonesian insurer Bumiputera in uphill battle to find white knight

Hanwha Life Insurance

22/12/2016 06:00

* Regulator keen for private sector solution but little 
progress 
    * FWD, Prudential, Hanwha approached for investment 
-officials 
    * Backdoor listing marred by much confusion, delayed till 
2017 
    * Govt keen to avoid state aid after Bank Century bailout 
furore 
 
    By Eveline Danubrata and Cindy Silviana 
    JAKARTA, Dec 22 (Reuters) - Indonesian authorities seeking 
to shore up troubled life insurer Bumiputera have had little 
luck in finding a strategic investor and engineering a backdoor 
listing, increasing the likelihood that some form of state aid 
may have to be considered. 
    Despite restructuring under the stewardship of Indonesia's 
Financial Services Authority (OJK) since 2013, the century-old 
firm still has liabilities of around 20 trillion rupiah ($1.5 
billion), more than assets worth 13-14 trillion rupiah, 
according to its statutory manager. 
    Pressure on Bumiputera, formally known as Asuransi Jiwa 
Bersama Bumiputera 1912, has begun to mount with plans for its 
backdoor listing marred by confusion while there has been no 
sign that approaches to foreign insurers are paying off. 
    Failure to resolve problems for a firm with 6.7 million 
policyholders - many of them civil servants - could also pour 
cold water on growth prospects for Indonesia's underdeveloped 
life insurance sector, where foreign companies have bought 
stakes in domestic firms in the last few years. 
    "A potential government bailout, maybe in part if there 
should be some other solutions, might have to be seriously 
considered," said Peter Meyer, services committee chair at the 
American Chamber of Commerce in Indonesia and who has around 30 
years of experience in Indonesia's insurance industry.  
    Financial authorities stress they are doing their utmost to 
make sure Bumiputera's woes are resolved without government 
funds, scarred in part by the public furore that erupted over a 
taxpayer bailout of lender Bank Century in 2008. 
    "We are trying our best such that not a single cent has to 
come from the government to overcome this," Adhie Massardi, 
Bumiputera's OJK-appointed statutory manager, told Reuters. 
    But he also said state-owned enterprises including insurer 
PT Taspen have been sounded out about subscribing to a rights 
issue that will be part of the planned backdoor listing.  
    Taspen is analysing Bumiputera's financial condition and 
business prospects but has not made a decision yet, investment 
director Iman Firmansyah told Reuters. 
    Lucky Bayu Purnomo, an analyst at Danareksa Sekuritas, said 
he felt a government bailout may be a last resort. 
    "The government had a bitter experience when it bailed out 
Bank Century for 6.7 trillion rupiah. It has to look for other 
ways of restructuring." 
     
    FAILED APPROACH, CONFUSING PLANS  
    Foreign companies approached by Bumiputera in the last few 
months include Hong Kong's FWD Group, the UK's Prudential Plc 
 PRU.L  and South Korea's Hanwha Life Insurance Co Ltd 
 088350.KS , Massardi and Dumoly Pardede, an official at the 
regulator, told Reuters. 
    FWD walked away from talks with Bumiputera mainly due to 
concerns about its liabilities, a person with direct knowledge 
of the matter said. A FWD spokesman declined to comment while 
Massardi said he had no knowledge of FWD walking away. 
    Prudential declined to comment, while a spokesman for Hanwha 
said there had been no contact from Indonesia about an 
investment and it was not considering any such investment. 
    Bumiputera's muddled backdoor listing through Jakarta-listed 
textile materials trader PT Evergreen Invesco Tbk  GREN.JK  has 
also done little to bring investors on side. 
    Evergreen, which plans to conduct a rights issue to acquire 
a holding company set up by Bumiputera, said in September it was 
seeking 30 trillion rupiah. It then lifted that to 40 trillion 
rupiah before cutting it this month to 10.3 trillion. 
    Adding to the confusion, Evergreen said in its prospectus 
that the stand-by buyer for the offering was Bumiputera itself. 
Indonesia's capital market supervisor has since said new 
documents about the rights issue do not make mention of this. 
    Originally slated for end-2016, the rights issue has been 
delayed until next year. urn:newsml:reuters.com:*:nL3N1BP1X5 
    Evergreen did not respond to several requests for comment 
made by phone and emails. 
    ($1 = 13,465.00 rupiah) 
 
 (Reporting by Eveline Danubrata and Cindy Silviana in JAKARTA; 
Additional reporting by Sumeet Chatterjee in HONG KONG and Joyce 
Lee in SEOUL; Editing by Edwina Gibbs) 
 ((eveline.danubrata@thomsonreuters.com; +62-21-29927603; 
Reuters Messaging: 
eveline.danubrata.thomsonreuters.com@reuters.net)) 
 
Keywords: INDONESIA INSURANCE/BUMIPUTERA