10 February 2023
1045
1045
News
President Director of Indonesia Re Benny Waworuntu explained that the company has prepared strategic actions to continue improving the company's performance. The initiatives will be implemented in several areas to support the success of the Company's strategic actions, including operational, technical and infrastructure.
One of the strategies is that Indonesia Re will continue to make improvements in the quality of its business portfolio. He explained that Indonesia Re will continue to develop acceptance and selection of business risks with a good loss ratio and performance, while still paying attention to measurable risk management.
Additionally, portfolio improvement will be carried out by limiting the acceptance of financial business lines and credit sectors in a strict and selective manner.
Due to the hardening market that led to an increase in pricing at the retrocessing level, in the non-life treaty business which is one of the main sources of the Company's revenue, Indonesia Re made adjustments and improvements to the business that was terminate. The Company has launched a portfolio improvement along with a business strategy that will be carried out during the treaty renewal period in January 2023.
As information, hardening market or hard market is a terminology commonly used in the insurance and reinsurance industry to describe a situation where it is difficult to obtain cover or backup. This situation occurs when the three indicators, namely prices or premiums increase, terms and conditions are tightened and capacity shrinks or decreases.
Benny said that Indonesia Re has made intensive communication regarding portfolio improvement and hardening market conditions to cedants since the third quarter of 2022. This effort has affected the renewal of the ceding treaty program which commenced in January 2023.
The hardening market has made Indonesia Re focus on several areas of concern, including premium price adjustments, treaty balance by restructuring insurance company treaties, hidden accumulation and risk concentration, as well as restrictions on terms and conditions.
"A number of initiatives in the areas of concern should support increased net underwriting results or HUB in the future and eventually lead to an increase in RBC."
Indonesia Re has taken several initiatives to improve its portfolio since 2017, particularly on products that have negative yield results. In 2022, Indonesia Re specifically carried out massive portfolio improvements for products affected by the pandemic such as Credit Life Insurance (AJK), Credit Insurance (Askred) and individual health insurance products.
Currently, Indonesia Re's portfolio improvement program is well on track and the results have been experienced at the end of 2022, where the profitability level of Indonesia Re's life reinsurance has increased significantly compared to the profitability level in 2021.
2022 Performance
Based on unaudited financial statements as of the fourth quarter of 2022, Indonesia Re recorded a loss of Rp 261.62 billion. This was a 50.52% improvement compared to the previous year, with a loss of Rp 517.86 billion. In the meantime, the company's solvency or risk-based capital (RBC) ratio was recorded at 129.09%.
Benny explained that the company's business performance was influenced by a number of factors. One of them is the life reinsurance business portfolio which was greatly affected by the surge in claims from health insurance and AJK products caused by the Covid-19 Delta variant outbreak in the fourth quarter of 2021.
The life reinsurance business line, he explained, was still affected by Covid-19 claims that occurred in 2021 as the claims were received in the first quarter of 2022 or experienced a claim delay. In addition, there are still Covid-19 claims that occurred in 2022, which predominantly came from health insurance products.
Nevertheless, by December 2022, the total Covid-19 claims had decreased significantly compared to 2021. The total 2021 Covid-19 claims amounted to Rp 325 billion and the total Covid-19 claims by December 2022 amounted to Rp 98 billion.
The impact of Covid-19 also affects the underwriting performance of the general reinsurance sector. Indirectly, various lines of business, particularly the financial line which includes suretyship and credit insurance, recorded a total claim value of around Rp 200 billion in 2021. As of December 2022, the underwriting result of the credit insurance sector was minus IDR123 billion.
New Business Exploration
Along with portfolio improvement, Indonesia Re will also explore new business in 2023 to further recover its performance. This is carried out through cooperation with cedants and other stakeholders, such as by preparing insurance for electric cars, construction of the National Capital, development of reinsurance for BUMN assets, and renewable energy.
Benny explained that property insurance is still promising in 2023, therefore Indonesia Re will explore the closure of BUMN assets. The company will also explore other businesses that support government programs, such as the electric vehicles trend, and other new business areas.
For the life reinsurance business line, Indonesia Re will actively increase the business portion of individual life insurance products as this business line consistently provides positive results in Indonesia Re's portfolio.
In 2019, the portion of individual life insurance in the company's business portfolio reached 26%, while by September 2022 the portion increased to 38%.
Another strategy that Indonesia Re will pursue is to improve asset management or investment portfolio. This is achieved through strengthening governance, liability-driven investment policies, and prioritizing solvency and risk management strategies.
Indonesia Re will also push the cost efficiency by optimally utilizing technology, which is expected to provide a positive impact in terms of operational cost savings.
In addition, Indonesia Re plans to strengthen its capital. Benny said the Ministry of State-Owned Enterprises (SOEs/KBUMN) has given a positive signal regarding capital injection support for Indonesia Re in 2023. The company is currently on the verge of receiving an official letter from the Ministry of SOEs in regard to that matter.
Currently, Indonesia Re is also proposing a capital increase to shareholders through PMN [state equity participation] and to improve its capital structure, the company is also proposing to convert RDI liabilities into non-cash PMN.
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About PT Reasuransi Indonesia Utama (Persero)
PT Reasuransi Indonesia Utama (Persero), known as Indonesia Re, is a state-owned enterprise that is engaged in reinsurance services with the mission of: (1) Increasing knowledge, capability and application of innovation in insurance/reinsurance; (2) Providing international standard reinsurance solutions to customers; and (3) Increasing the supply and retention of reinsurance in Indonesia.
Indonesia Re, which the Ministry of State-Owned Enterprises appointed as a National Reinsurance Company, manages the reinsurance risk of its business partners in the insurance sector by targeting control of the domestic reinsurance market share. The types of reinsurance provided by Indonesia Re include Life Reinsurance Business and General Reinsurance Business.
Indonesia Re has two subsidiaries: PT Asuransi Asei Indonesia and PT Reasuransi Syariah Indonesia. Information about Indonesia Re can be found at www.indonesiare.co.id
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[Disclaimer] ”All information regarding data and figures in this release is managed by PT Reasuransi Indonesia Utama (Persero) with good intentions and general information. PT Reasuransi Indonesia Utama (Persero) is not responsible for the completeness and accuracy of the information."
Contact Person:
Aji Irawan
Corporate Secretary
PT Reasuransi Indonesia Utama (Persero)
Jl. Salemba Raya No. 30 Jakarta Pusat 10430
Telp. 021 – 3920101
Email. cosecretary@indonesiare.co.id
Press Release Indonesia Re - To Further Recover Its Performance, Indonesia Re Prepares Strategic Actions for 2023
JAKARTA - PT Reasuransi Indonesia Utama (Persero) or Indonesia Re has prepared a number of strategic actions to further improve business performance in 2023 after successfully accelerating its performance recovery throughout 2022.President Director of Indonesia Re Benny Waworuntu explained that the company has prepared strategic actions to continue improving the company's performance. The initiatives will be implemented in several areas to support the success of the Company's strategic actions, including operational, technical and infrastructure.
One of the strategies is that Indonesia Re will continue to make improvements in the quality of its business portfolio. He explained that Indonesia Re will continue to develop acceptance and selection of business risks with a good loss ratio and performance, while still paying attention to measurable risk management.
Additionally, portfolio improvement will be carried out by limiting the acceptance of financial business lines and credit sectors in a strict and selective manner.
Due to the hardening market that led to an increase in pricing at the retrocessing level, in the non-life treaty business which is one of the main sources of the Company's revenue, Indonesia Re made adjustments and improvements to the business that was terminate. The Company has launched a portfolio improvement along with a business strategy that will be carried out during the treaty renewal period in January 2023.
As information, hardening market or hard market is a terminology commonly used in the insurance and reinsurance industry to describe a situation where it is difficult to obtain cover or backup. This situation occurs when the three indicators, namely prices or premiums increase, terms and conditions are tightened and capacity shrinks or decreases.
Benny said that Indonesia Re has made intensive communication regarding portfolio improvement and hardening market conditions to cedants since the third quarter of 2022. This effort has affected the renewal of the ceding treaty program which commenced in January 2023.
The hardening market has made Indonesia Re focus on several areas of concern, including premium price adjustments, treaty balance by restructuring insurance company treaties, hidden accumulation and risk concentration, as well as restrictions on terms and conditions.
"A number of initiatives in the areas of concern should support increased net underwriting results or HUB in the future and eventually lead to an increase in RBC."
Indonesia Re has taken several initiatives to improve its portfolio since 2017, particularly on products that have negative yield results. In 2022, Indonesia Re specifically carried out massive portfolio improvements for products affected by the pandemic such as Credit Life Insurance (AJK), Credit Insurance (Askred) and individual health insurance products.
Currently, Indonesia Re's portfolio improvement program is well on track and the results have been experienced at the end of 2022, where the profitability level of Indonesia Re's life reinsurance has increased significantly compared to the profitability level in 2021.
2022 Performance
Based on unaudited financial statements as of the fourth quarter of 2022, Indonesia Re recorded a loss of Rp 261.62 billion. This was a 50.52% improvement compared to the previous year, with a loss of Rp 517.86 billion. In the meantime, the company's solvency or risk-based capital (RBC) ratio was recorded at 129.09%.
Benny explained that the company's business performance was influenced by a number of factors. One of them is the life reinsurance business portfolio which was greatly affected by the surge in claims from health insurance and AJK products caused by the Covid-19 Delta variant outbreak in the fourth quarter of 2021.
The life reinsurance business line, he explained, was still affected by Covid-19 claims that occurred in 2021 as the claims were received in the first quarter of 2022 or experienced a claim delay. In addition, there are still Covid-19 claims that occurred in 2022, which predominantly came from health insurance products.
Nevertheless, by December 2022, the total Covid-19 claims had decreased significantly compared to 2021. The total 2021 Covid-19 claims amounted to Rp 325 billion and the total Covid-19 claims by December 2022 amounted to Rp 98 billion.
The impact of Covid-19 also affects the underwriting performance of the general reinsurance sector. Indirectly, various lines of business, particularly the financial line which includes suretyship and credit insurance, recorded a total claim value of around Rp 200 billion in 2021. As of December 2022, the underwriting result of the credit insurance sector was minus IDR123 billion.
New Business Exploration
Along with portfolio improvement, Indonesia Re will also explore new business in 2023 to further recover its performance. This is carried out through cooperation with cedants and other stakeholders, such as by preparing insurance for electric cars, construction of the National Capital, development of reinsurance for BUMN assets, and renewable energy.
Benny explained that property insurance is still promising in 2023, therefore Indonesia Re will explore the closure of BUMN assets. The company will also explore other businesses that support government programs, such as the electric vehicles trend, and other new business areas.
For the life reinsurance business line, Indonesia Re will actively increase the business portion of individual life insurance products as this business line consistently provides positive results in Indonesia Re's portfolio.
In 2019, the portion of individual life insurance in the company's business portfolio reached 26%, while by September 2022 the portion increased to 38%.
Another strategy that Indonesia Re will pursue is to improve asset management or investment portfolio. This is achieved through strengthening governance, liability-driven investment policies, and prioritizing solvency and risk management strategies.
Indonesia Re will also push the cost efficiency by optimally utilizing technology, which is expected to provide a positive impact in terms of operational cost savings.
In addition, Indonesia Re plans to strengthen its capital. Benny said the Ministry of State-Owned Enterprises (SOEs/KBUMN) has given a positive signal regarding capital injection support for Indonesia Re in 2023. The company is currently on the verge of receiving an official letter from the Ministry of SOEs in regard to that matter.
Currently, Indonesia Re is also proposing a capital increase to shareholders through PMN [state equity participation] and to improve its capital structure, the company is also proposing to convert RDI liabilities into non-cash PMN.
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
About PT Reasuransi Indonesia Utama (Persero)
PT Reasuransi Indonesia Utama (Persero), known as Indonesia Re, is a state-owned enterprise that is engaged in reinsurance services with the mission of: (1) Increasing knowledge, capability and application of innovation in insurance/reinsurance; (2) Providing international standard reinsurance solutions to customers; and (3) Increasing the supply and retention of reinsurance in Indonesia.
Indonesia Re, which the Ministry of State-Owned Enterprises appointed as a National Reinsurance Company, manages the reinsurance risk of its business partners in the insurance sector by targeting control of the domestic reinsurance market share. The types of reinsurance provided by Indonesia Re include Life Reinsurance Business and General Reinsurance Business.
Indonesia Re has two subsidiaries: PT Asuransi Asei Indonesia and PT Reasuransi Syariah Indonesia. Information about Indonesia Re can be found at www.indonesiare.co.id
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[Disclaimer] ”All information regarding data and figures in this release is managed by PT Reasuransi Indonesia Utama (Persero) with good intentions and general information. PT Reasuransi Indonesia Utama (Persero) is not responsible for the completeness and accuracy of the information."
Contact Person:
Aji Irawan
Corporate Secretary
PT Reasuransi Indonesia Utama (Persero)
Jl. Salemba Raya No. 30 Jakarta Pusat 10430
Telp. 021 – 3920101
Email. cosecretary@indonesiare.co.id
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