Lippo General Insurance to Maintain Stable Profit in ’15

MAY 27, 2015

Jakarta. Lippo General Insurance, an insurer affiliated with Lippo Group, is bracing for flat profit growth this year as consumer sentiment  continues to weaken due to the country’s economic slowdown.

The company expected profit to reach Rp 142 billion ($10.8 million) this year, similar to the insurer’s after-tax profit in 2014, Agus Benjamin, president director of Lippo General Insurance, said at a press conference in Jakarta on Wednesday.

“Our goal this year is to maintain our profit at last year’s level,” Agus said. “Everything is more challenging this year. We’ll have to see where the second quarter will take us.”

The company expects gross premium to grow by 16 percent this year — again similar to last year’s growth — to Rp 1.16 trillion. The company said the slowing economy has created a challenging business market where consumers’ appetite for insurance products had slowed.

In the first quarter of 2015, Indonesia registered its slowest growth pace in the last five years, at 4.7 percent, due to weak export demands, low commodity prices and sluggish government spending. The central bank’s consumer confidence index has been in decline for the first four months of 2015, as consumers expect lower income and fewer jobs available in the next six months.

“We realize that Indonesia’s economy is facing challenges, so our first step is to leverage our strength and that strength lies in our group health insurance business,” Agus said, noting that 50 to 60 percent of the company’s total premium comes from their health insurance business.

The company competes with AXA Mandiri Financial Service, Asuransi Cigna, Prudential Life Assurance to provide healthcare benefits beyond Indonesia’s Social SecurityAgency’s (BPJS) basic insurance coverage.

Lippo Insurance shares dropped 4.6 percent to Rp 5,250 at Indonesia Stock Exchange on Wednesday, compared to a 1.3 percent loss in the benchmark index.

The Jakarta Globe, GlobeAsia and Lippo Insurance are all affiliated with Lippo Group.