BNI Life reports 12-fold increase in profits

JAKARTA. After years of sagging profits, PT BNI Life insurance company booked a 12-fold increase in unaudited profits, rocketing to Rp 60 billion (US$6.18 million) last year from about Rp 5 billion in the previous year, on the back of a change in the insurance product portfolio and the increase in bancasurrance outlets, the insurance company’s top executive said.

In addition to the increase in the bancassurance outlets, the sharp increase in profits was also due to a 91.9 percent profit growth from its sharia sector that contributed Rp 24.86 billion to the profit, as well as a fundamental change in the product portfolio, BNI Life president A. Junaedy Ganie said in Jakarta on Thursday.

A cut in operating costs also made an important contribution to the sharp increase in profits, he added.

Junaedy said the insurance company booked premium income of Rp 1.25 trillion, a 13.6 percent increase from Rp 1.1 trillion in 2011 and a 27.7 percent increase in investment returns to Rp 141.7 trillion.

The subsidiary of state-owned bank PT Bank Negara Indonesia saw its 2011 profits plunge by 56.52 percent from the previous year, falling to Rp 5 billion from Rp. 11.5 billion, due to a 20.7 percent drop in premium income from Rp 1.3 trillion and the 51.7 percent fall in investment returns from Rp 223 billion in the previous year.

“The declining profit in 2011 was inevitable because we had stopped traditional services such as a single premium service that fetched us income every 10 years, because we want to focus more on products with sustainable growth, such as products that people pay monthly premiums. Our sharia service grew significantly last year because we focused on developing health and life insurance,” Junaedy explained.

BNI Life stopped selling at least 20 insurance products, including the Optima Saving single premium-based product, in 2011, which Junaedy said was behind “the temporary profit drop before reaping more returns from sustainable products the next year.”

Junaedy said the company doubled its bancassurance outlets to 547 and specialists to 544 last year. He said that bancassurance services contributed 50 percent of the company’s premium income, compared to 48 percent in 2011. For 2013, Junaedy said that BNI Life targeted Rp 72 billion in profits, or a 20 percent increase compared to 2012, and Rp 1.5 trillion in premium income or a 26.67 percent increase from last year. About 50 percent of the premium income is expected to come from bancassurance services. (aml/The Jakarta Post)