Jakarta. 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 Rp 20 trillion ($1.5 billion), more than assets worth Rp 13-14 trillion, 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 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 Rp 6.7 trillion. 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 and South Korea's Hanwha Life Insurance, 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 Evergreen Invesco 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 Rp 30 trillion. It then lifted that to Rp 40 trillion rupiah before cutting it this month to Rp 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. Evergreen did not respond to several requests for comment made by phone and emails.
Additional reporting by Sumeet Chatterjee in Hong Kong, Joyce Lee in Seoul