IFG Life will obtain the additional funds through fundraising or fresh capital injections through additional state capital participation (PMN) in 2022. IFG Life president commissioner Pantro Pander Silitonga said the company's main target this year is to complete the migration of Jiwasraya's business portfolio to IFG Life. This task itself requires significant funding.
IDR30tn ($2.1bn) to IDR35tn is required for the portfolio transfer and PMN of IDR22tn, there is still a shortfall of IDR13tn. IFG Life is looking at various sources of funding that include the sale of assets of Jiwasraya that would raise around IDR12tn. The company also plans to conduct additional fundraising of around IDR4-5tn. Additional PMN in 2022 to be around IDR2tn when the migration is complete.
Jiwasraya, which defaulted on payouts to customers, had suffered three fundamental problems.
First, solvency and liquidity problems had been present for a long time but were not resolved. Instead, there was window dressing of financial statements. Liquidity issues arose because the company had sold savings-type insurance products that carried guaranteed high interest rates.
Second, Jiwasraya had weak corporate governance and engaged in risky investment activities. There were no guidelines on curbing investments in high-risk assets.
Second, Jiwasraya had weak corporate governance and engaged in risky investment activities. There were no guidelines on curbing investments in high-risk assets.
Third, customer confidence declined accompanied by increased withdrawals or payouts and lower sales. There were not enough assets to meet liabilities.
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