Unable To Healthy Finance, OJK Revokes Kresna Life's Business License

OJK (photo: dock. Antara)

JAKARTA - The Financial Services Authority (OJK) revoked the business license of PT Asuransi Jiwa Kresna (Kresna Life). This is because it is unable to restore the company's finances and to prevent an increase in new potential consumers who are harmed.

"Before revoking the business license, OJK has provided a long enough improvement opportunity to encourage Kresna Life to immediately improve its financial condition," said Head of the Department of Literacy, Financial Inclusion and Communications at OJK Aman Santosa quoting Antara.

OJK has given enough time to the board of directors and shareholders to improve the company's financial condition. However Kresna Life was unable to fulfill the solvency ratio according to the provisions and was unable to close the financial deficit through a capital deposit by the controlling shareholder (PSP) or invited potential investors. He said that the step of revocation of the business license of PT Asuransi Jiwa Kresna (Kresna Life) as well as the granting of Written Orders to certain parties on June 23, 2023 was based on appropriate surveillance regulations and also aimed at protecting consumers from increasingly large losses as well as to prevent the increasing number of new potential consumer candidates who were harmed.The revocation of Kresna Life's business license has been preceded by a long period of OJK supervision process with direct or indirect inspections, which finds the concentration of Kresna Life insurance funds on shares that are considered to be affiliated with Kresna groups and lower than should have led to lower solvency ratios (risk based capital) than the provisions. OJK also consistently issued sanctions for any kind of violation of the provisions that have occurred gradually. From the results of the examination, PSP Kresna Life did not issue fresh funds to nourish the company. Payments to the claimed policyholders as proof of shareholder responsibility come from the existing Kresna Life assets. Restructuring efforts by offering conversion of policyholder obligations to subordination loans (Subordinated Loans/SOLs) submitted in the Financial Restructuring Plan cannot be implemented because there are a large fraction of policyholders who reject and the absence of a SOL conversion agreement that has been confirmed, in general, is a loan from shareholders to improve the financial health of the company.

If the SOL conversion program offered by Kresna Life is implemented, the legal standing of mature policyholders entitled to the payment of benefits (claims) of insurance will become a fresh provider of funds that should be PSP's responsibility to nourish the company. On the plan for the SOL program offered by Kresna Life, OJK has sought to provide an understanding to policyholder representatives that the position and rights of policyholders with SOL holders over Kresna Life's assets are different, where policyholders have higher priorities, while SOL holders are legally aligned with shareholders, namely as the last party has the right to the company's assets in liquidation. The provision of written orders is the authority of the OJK to order certain parties to compensate for losses to Kresna Life caused by the actions of certain parties. The issuance of written orders is one of the OJK's efforts to protect consumers, because there are indications of actions of certain parties that cause losses to Kresna Life. Regarding the decision of the Jakarta State Administration High Court (PTTUN) on the results of the OJK's appeal against the lawsuit of PT Duta Makmur Sejahtera and Michael Steven, OJK stated that it respects the decision and will pursue further legal remedies by filing an appeal to the Supreme Court.