Asuransi Asei Indonesia is grappling with financial difficulties in 2024, facing weakened underwriting performance, high reserve volatility, and a decline in premiums, according to Fitch Ratings. The company’s outlook remains challenging as these factors threaten its near- to medium-term stability.
Despite maintaining equity capital of IDR 467 billion by the end of 2024, well above the regulatory requirement of IDR 250 billion set for 2026, Asei’s capital stability is undermined by fluctuations in its reserves. The company’s financial leverage has increased to 51% in 2024, up from 47% in 2023, primarily due to a subordinated loan of IDR 407 billion from its parent company, PT Reasuransi Indonesia Utama (Persero). This loan, which has no specified maturity date, was first acquired by Asei in 2017-2018.
Asei’s underwriting performance has significantly deteriorated, with its combined ratio soaring to 187% in 2024, compared to 102% in 2023. This sharp decline is attributed to an increase in reserves linked to its long-tail credit insurance business, resulting in a net loss of IDR 73 billion in 2024, reversing a net profit of IDR 8 billion the previous year. Return on equity plummeted to -17% in 2024, down from 2% in 2023, marking an average return of -4% over the past three years.
Fitch Ratings forecasts continued financial volatility for Asei due to its exposure to general insurance and the fluctuating reserves within its credit insurance segment. The company’s gross premiums dropped by 21% in 2024, following a 41% decline in 2023, largely due to the loss of multipurpose credit insurance business from its major client in early 2024. As a result, credit insurance’s contribution to total premiums fell dramatically, from 54% in 2023 to just 6% in 2024.
In response to these challenges, Asei has made efforts to expand its general insurance segment, with a particular focus on property insurance. This shift has led to property insurance now accounting for 67% of the company’s total premiums, up from 29% in 2023.
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