Indonesia’s BRI Life sale could fetch US$500m

March 30 2020 by Yvonne Lau

A stake in Asuransi BRI Life, the life unit of Indonesia’s Bank Rakyat Indonesia (Persero), will be up for sale again in a deal that could yield US$500 million, according to a report by Bloomberg.

This is at least the third time Persero has endeavoured to sell a stake in BRI Life. Under the terms of the deal, a bancassurance partnership may also be included.

It is understood that Persero has called on interested parties to put forth a binding bid by April, and potential purchasers are already lining up – including Hong Kong-based FWD Group, Prudential, Samsung Life and banking group BNP Paribas.

A spokesperson for Prudential told InsuranceAsia News (IAN) that they could not speak on unconfirmed market information; and FWD declined to comment.

In 2016, the state-controlled Indonesia bank attempted to sell a 40% stake in its life business unit, but eventually scrapped its plans and opted to utilise resources to boost its value. The second attempt came in June 2018. Previous stake sales generated interest from FWD, BNP Parbias and Korea’s Hanhwa Life.

For Richard Li’s FWD, the group has been vocal about its plans to become an Asia-wide insurer. FWD’s chief executive Huynh Thanh Phong told IAN in 2019 about its appetite for acquisitions, saying: “Following on from [our] recent details in Hong Kong and Thailand — we see opportunities for bolt-on acquisitions in South-East Asia. We need more scale and want to be a true pan-Asia insurer. We are very disciplined in our approach.”

A stake in Indonesia’s BRI Life would diversify FWD’s South-East Asia portfolio, and add to its regional businesses. Most recently in the region, FWD acquired Thai general insurer Siam City Insurance and Vietcombank-Cardif Life Insurance.  

Meanwhile, Prudential focused on “growth opportunities in Asia,” says group chief executive Mike Wells. Operating profit from Asia in FY 2019 grew 14% to US$2.99 billion, with Hong Kong’s contribution up by 24% to US$734 million. The UK insurer is currently negotiating how to proceed with its US business Jackson Hole, which has been complicated by Covid-19 worries.

The potential stake sale in BRI Life is still under discussions with details yet to be confirmed. The global virus outbreak and associated economic impact could lead to delays.