Maskapai Reinsurance Indonesia, one of only four local reinsurance companies in the country, plans to sell 130 million new shares in a right issue by June next year in order to beef up its capital. (ID Photo/David Gita Roza)
Marein Plans $41m Rights Issue in 2017
DECEMBER 10, 2016
Jakarta. Maskapai Reinsurance Indonesia, one of only four local reinsurance companies in the country, plans to sell 130 million new shares in a right issue by June next year in order to beef up its capital.
Reinsurers provide insurance for other insurance companies. Local firms often lacks capital compared to foreign reinsurance peers.
This forces Indonesian insurance firms to seek coverage for big insurance policies abroad. When local insurer pays premium overseas, it complicates government efforts to balance the country's current account.
So, Financial Services Authority (OJK) asked Marein and its rivals, including Reasuransi Indonesia Utama, Reasuransi Nasional Indonesia and Tugu Reasuransi Indonesia, to increase their capacity so that they can cover more clients.
"In order to increase the capacity, we have to raise capital," Robby Loho, Marein president director, said early this week.
Marein has yet to set price for its rights issue, but based on its the company's share closing price on Friday, it could rise up to Rp 546 billion ($41 million), according to the Jakarta Globe's calculation.s Marein's capital stood at Rp 695 billion at the end of September.
The company expect to reap Rp 1.5 trillion in premium income this year, up 40 percent from last year's Rp 1.07 trillion, said Yanto J. Wibisono, Marein's finance director.
Premium income at Marein has reached Rp 907 billion in the first nine months this year, up 29 percent from the same period the previous year, driven by double digit growth in life and general reinsurance segments.