JAKARTA (TheInsiderStories) -In the midst of chaotic disbursement of insurance claims, PT AJB Bumiputera 1912 picked four the new management Sutikno Sjarif, Yusuf Budi Baik, Sri Rahayu and Dena Chaerudin, said the company in the written statement received by TheInsiderStories.
Financial Services Authority (FSA) executive head of Non-Bank Financial Industry Supervisory Riswinandi said, the four new management are appointed by the Member Representative Body and have gone through the fit and proper test by the agency. At the same time the regulator also approved Achmad Jazidie as President Commissioner of insurance firm.
For background Sjarif, the new president director and two other directors previously come from PT Zurich Topas Life and PT Zurich Insurance Indonesia. Both of the company owned by PT Mayapada Prasetya Prakarsa, belong to Dato Sri Tahir. Through the Mayapada Group, Tahir is recorded to have 16.33 percent of Zurich Topas Life shares.
Sjarif has served as EVP and CEO of PT Manulife Indonesia and Chief Strategy and Operating Officer of Zurich Topas Life. He is a senior executive with diverse experiences in various industries including insurance, banking, manufacturing, distribution and agriculture.
His job responsibilities include across disciplines in the fields of operations, finance, strategic planning, and business development. He has a successful track record as Chief Operating Officer, Chief Financial Officer, and Business Development Director.
While Yusuf Budi Baik as the Director of Business and Marketing is an insurance industry executive who has experience in developing marketing, specifically building a partnership and bancassurance business.
Furthermore, Sri Rahayu, who served as the Technical Director is a professional and experienced in managing insurance operational activities, especially in developing business process transformation.
Finally, Dena Chaerudin, who was appointed as Director of Human Resources, has been pursuing a career in AJB Bumiputera 1912 since 34 years ago. He will also bridge the company’s new vision, with the company’s noble values.
Sjarif hopes these changes can make AJB Bumiputera 1912 as a national insurance business entity that is able to provide services and protection optimally.
“Our initial step is to increase Indonesian people’s trust in AJB Bumiputera 1912. Therefore, we emphasize that the company’s commitment in paying claims will be a top priority. The proof is that from January to mid-October 2018, AJB Bumiputera 1912 has paid claims to customers of Rp 3.3 trillion. We will continue the commitment, but we need time to improve,” he said.
Furthermore, Sjarif explained that he would make a number of changes and breakthroughs in AJB Bumiputera 1912, including the application of digital technology to compete with other players.
Still hanging in the balance, the restructuring of Indonesia’s troubled AJB Bumiputera 1912 mutual insurance company has raised hard questions about why successive governments allowed it to continue to hemorrhage cash for nearly two decades.
The FSA has reviewing a new scheme to save the oldest insurance firm in the country, after more than a year of attempting to restructure the insurer’s operations.
AJBB was first set up by a group of teachers in 1912 and has remained the country’s only mutual insurance company. It is Indonesia’s oldest life insurer, with total assets of US$1.1 billion as of 2015. The insurer was placed into restructuring by FSA in 2013 after it became clear its premium revenue could not meet claims payments.
The Board of Commissioners of FSA decided to take over the management of AJBB on Oct. 21, 2016 after restructuring efforts by company management were judged to have made little progress. FSA appointed seven statutory managers to replace the directors and commissioners of the company.
Last year, a rescue plan was proposed. However, the implementation of the restructuring scheme has encountered its own legal and business obstacles.
The existing rescue scheme involved a capital injection by PT Evergreen Invesco, which has since been renamed Bumiputera Investasi Indonesia, including a capital injection from Indonesian tycoon Erick Thohir. However, apart from Rp500 billion injected into the restructuring, another Rp1.5 trillion that had been pledged has yet to be received.
The statutory managers had also been working on a bancassurance contract with a state-owned bank up until mid-2017. However, that deal as well was never realized.
As part of the restructuring, a new entity, Asuransi Jiwa Bumiputera (AJB), was launched in February 2017. Under the revised arrangement, AJB will handle new AJBB business. All assets, such as its brand, regional offices and branch offices, and its workforce, were transferred to the new insurer. High-value properties located in strategic areas, estimated to be worth Rp4.16 trillion, were transferred from AJBB. The value of property left in AJBB was only Rp2.34 trillion.
The transfer of the Rp4.16 trillion of property assets was agreed upon, to be paid with Rp860 billion in cash and the remaining IDR3.3 trillion in the form of promissory notes that mature within three years.
AJB will also disburse 40 per cent of its profits to AJBB for the next 12 years. AJB is controlled by PT Pacific Multi Investama, a subsidiary of publicly-listed investment and textile company PT Evergreen Invesco, brought in to rescue AJBB.
Meanwhile, AJBB is in a run-off position, except for the continued premium contributions of existing policyholders.
Critics argued that the deal did not take into account the goodwill and branding value of AJBB. They also said that the cash settlement of Rp860 billion would have no significant effect on AJBB. In addition, profits of AJB are not assured.
Meanwhile, the inability of AJBB to fulfill its obligations to policyholders numbering around 6.7 million poses a potential structural risk to the financial system. There is also a risk of class action.
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