Many foreign investors are competing to enter into the insurance
industry in Indonesia. Some local-foreign joint venture insurance companies
have proven that the insurance market in the country is very promising. Joint
venture insurance companies on the average achieved considerable growth in
premium.
Foreign insurers dominate the Indonesia insurance market due to strong
capital backing that makes joint venture insurance companies expand freely for
the sake of enlarging its market share. Foreign insurers are increasingly
grabbing the local insurance industry. Look at the Asian giant, namely Japanese
investors. They continued expansion. For example, Tokio Marine Group who bough
89% stakes in MAA Life Insurance Indonesia worth Rp275 billion.
On Tuesday (6/4), another Japanese insurer, Dai-ichi life insurance Co,
Ltd, agreed to buy 40% stake in PT Panin Life, Tbk. The transaction value
reached Rp3.3 trillion, equivalent to USD 336.5 million. Under the terms of the
agreement, the Japanese insurance company will own 5% stake in Panin Life by acquiring
newly issued shares.
Dai-ichi also buys 36.8% stakes in the parent company that will have a
residual effect of Panin Life. “Currently, the transaction is still in progress
and just waiting for approval from the regulator”, said Simon Imanto, Vice
President Director of Panin Life on Tuesday (6/4).
The acquisition is part of Dai-ichi expansion to many countries in pursuit
of growth when the Japanese domestic market provides limited growth for the
company. Besides Indonesia, Dai-ichi has also made a bid to become the owner of
a controlling stake in life insurance units of Malaysia. The acquisition of the
stakes in Panin Life by Dai-ichiis expected to be an entry of the Japanese
company into Indonesia with a potential market of 240 million Indonesian
populations at this time.
Dai-ichi is supported by more than 44,000 agents and solid financial
strength, with total assets of more than JPY 35,694.411 million (or equivalent
to USD 379 million) as of March 31, 2013. Dai-ichi life is one of the leading
Life Insurance Group in Jakarta and has operational network across Asia
Pacific, Europe, America and Australia. Dai-ichi Life is a public listed
company in Japan and has a track record of experience of more than 100 years in
the life insurance industry.
Strategic Partners
Simon Imanto said that the strategic partnership is a major milestone
for Panin Life, and opens up new opportunities in business growth,
collaboration with Dai-ichi life will strengthen the business position of Panin
Life in Indonesia. In the future, Simon added, Dai-ichi Life will contribute to
the extensive experience and expertise, particularly in the areas of actuary,
risk management, distribution and training.
Mr. Hideto Masaki, Representative Director, Deputy President, Group
Management Headquarters, added that Indonesia, as the fourth most populous
nation in the world, is one of the fastest growing economies in the insurance
market with total life insurance premium of less than 2% of GDP.
Entering into the Indonesia insurance market is an important part of our
international growth strategy and will reinforce our presence in the emerging
markets. We will apply different strategies through the products, distribution
and consumer service. By combining our strength, we are confident that we will
build a company with a strong competitive advantage.
According to Nikkei report, the action was done by buying new shares to
be issued by the company’s insurance unit, Panin Life. Panin Life is a
medium-size insurance company whose assets reached approximately 40 billion
yen. Later, Dai-ichi life will turn Panin Life into an affiliate of Japanese
firms to increase the company’s overall profit.
Some financial institutions that partner with Panin Life will sell
Japanese insurance products in Indonesia. Total life insurance sales in
Indonesia reached 760 billion Yen by the end of 2010. This sector has been
growing rapidly to 20% per year.
Dai-ichi Life will expand its overseas earnings. Beside Indonesia, the
company also offers its products in India, Thailand and Australia the company
plans to spen 300 billion yen for company buyout, especially in foreign
countries in the 2015 fiscal year. The target is to increase the ratio of overseas
earnings to 30% from the current rate of 20%.
As of December 31, 2012, Panin Life has total assets of Rp3.9 trillion
with total equity and gross premium income at Rp420 billion and Rp2.3 trillion.
This initiative will be the foundation for a quantum leap growth of Panin Life
to strengthen its presence in the life insurance industry in Indonesia. Bank of
America Merrill Lynch is the sole financial advisor of Panin Financial and
Panin Life in this transaction. (E)
Business News - June 07,2013
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