Before revoking the business license, OJK had granted a long opportunity for improvement to encourage Kresna Life to immediately improve its financial situation
Jakarta (MidLand) –
The Financial Services Authority (OJK) has revoked the business license of PT Asuransi Jiwa Kresna (Kresna Life) because it was unable to carry out the financial restructuring of the company and prevent the addition of potentially new damaged consumers.
“Before revoking the business license, OJK had provided a long opportunity for improvement to encourage Kresna Life to immediately improve its financial condition,” said Aman Santosa, head of OJK’s financial literacy, inclusion and communication department, in Jakarta on Friday.
OJK has given the directors and shareholders sufficient time to improve the financial condition of the company. However, Kresna Life has failed to meet the solvency ratio required by the regulations and to cover the financial deficit by capital injections from the controlling shareholders (PSP) or by inviting potential investors.
It said that the measures to revoke the business license of PT Asuransi Jiwa Kresna (Kresna Life) and issue written orders to certain parties on June 23, 2023 were based on appropriate supervisory norms and also aimed to protect consumers from ever-increasing losses and prevent further increments of the community of potentially new disadvantaged consumers.
The revocation of Kresna Life’s commercial license was preceded by a long process of monitoring OJK with direct and indirect checks, which found a concentration of investments in Kresna Life’s insurance funds in shares deemed to be affiliated with the Kresna Group and the recording of liabilities lower than they should have been. causes the solvency ratio (risk-based capital) lower than expected.
OJK also constantly issues sanctions for any kind of violation of the provisions that occurs in multiple stages.
According to the inspection results, PSP Kresna Life has not spent new funds to rehabilitate the company. Payments to policyholders required as evidence of shareholders’ liability come from existing assets of Kresna Life.
The restructuring effort by offering to convert policyholders’ obligations into subordinated loans (SOL) as outlined in the Financial Restructuring Plan cannot be implemented because there are a large number of policyholders who refuse and there is no SOL conversion agreement that has been authenticated, in accordance with applicable regulations.
In addition, the results of the analysis of the SOL conversion program submitted by Kresna Life to OJK show that there is still a deficit that needs to be covered by additional capital from PSP. However, OJK’s request to PSP to cover the estimated residual deficit after the implementation of the SOL conversion program has never been met.
In fact the SOL program offered by the administrators is not a subordinated loan which is generally a loan from shareholders to improve the financial health of a struggling company.
If the SOL conversion program offered by Kresna Life is implemented, the legal position of the expired insured who is entitled to the payment of insurance benefits (claims) will be that of a provider of new incoming funds which should be the responsibility of the PSP to make the company healthy.
With regard to the planned SOL program offered by Kresna Life, OJK attempted to convey to the representatives of the insured that the position and rights of the insured and the SOL holders to the assets of Kresna Life are different, where the insured have a higher priority, while the SOL holders are legally aligned with the shareholders, i.e. as the ultimate holder of rights to the assets of the company in liquidation.
Issuing written orders constitutes the authority of the OJK to order certain parties to compensate Kresna Life for losses caused by the actions of these certain parties. Issuing a written order is one of the efforts of the OJK to protect consumers, because there are indications of actions of certain parties that have caused losses to Kresna Life.
Reporter: Martha Herlinawati Simanjuntak
Editor: Faisal Yunianto
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