Circular of the Financial Services Authority Number 21/SEOJK.05/2016 on the Revocation of Financial Services Authority Circular Number 24/SEOJK.05/2016 on the Valuation of Debt Security Investments and Adjustment of Risk-Based Minimum Capital for Insurance and Reinsurance Companies

To:

1. The Board of Directors of Insurance Companies; and
2. The Board of Directors of Reinsurance Companies,
   At their respective locations.

COPY

CIRCULAR OF THE FINANCIAL SERVICES AUTHORITY
NUMBER 21 /SEOJK.05/2016

CONCERNING

THE REVOCATION OF FINANCIAL SERVICES AUTHORITY CIRCULAR NUMBER 24/SEOJK.05/2015 CONCERNING THE VALUATION OF DEBT SECURITY INVESTMENTS AND ADJUSTMENT OF RISK-BASED MINIMUM CAPITAL FOR INSURANCE COMPANIES AND REINSURANCE COMPANIES

In relation to Article 5 of the Minister of Finance Regulation Number 53/PMK.010/2012 concerning the Financial Health of Insurance Companies and Reinsurance Companies, the Chairman of the Capital Market and Financial Institution Supervisory Board Regulation Number PER-08/BL/2012 concerning Guidelines for the Calculation of Risk-Based Minimum Capital for Insurance Companies and Reinsurance Companies, and Financial Services Authority Circular Number 24/SEOJK.05/2015 dated August 31, 2015 concerning the Valuation of Debt Security Investments and Adjustment of Risk-Based Minimum Capital for Insurance Companies and Reinsurance Companies, hereinafter referred to as Circular Number 24/SEOJK.05/2015, and considering the current economic and market conditions, it is necessary to establish the revocation of Circular Number 24/SEOJK.05/2015 in this Financial Services Authority Circular as follows:

I. GENERAL PROVISIONS

1. Based on Circular Number 24/SEOJK.05/2015, the valuation of debt security investments was established to reflect fair value and the adjustment of risk-based minimum capital taken into account in the solvency ratio calculation as a consequence of global financial conditions that resulted in the market value of debt security investments showing unfair values.

2. The global financial conditions referred to in item 1 have resulted in a decrease in the solvency ratio of insurance companies and reinsurance companies to below the required solvency ratio based on the Minister of Finance Regulation Number 53/PMK.010/2012 concerning the Financial Health of Insurance Companies and Reinsurance Companies.

3. That the global financial conditions and the development of the Indonesian economy currently are experiencing positive growth and development, as reflected in market indicators:

a. The exchange rate of the Indonesian rupiah against the United States dollar has continued to strengthen and stabilize since October 2015.

b. The Bank Indonesia interest rate has continued to decrease and stabilize since December 2015.

c. The Country Rate for Indonesia has continued to strengthen and stabilize since October 2015.

d. The Composite Stock Price Index has increased since October 2015 and continues to show an upward trend.

4. That based on the conditions and developments as referred to in item 3, the global financial conditions have now shown fair values for the debt security investment market.

5. That based on item 4, the establishment of the valuation of debt security investments to reflect fair value and the adjustment of risk-based minimum capital taken into account in the solvency ratio calculation as required in Circular Number 24/SEOJK.05/2015 as the basis for insurance companies and reinsurance companies to perform calculations on their held debt securities and the adjustment of risk-based minimum capital taken into account in the solvency ratio calculation needs to be revoked.

II. DETERMINATION OF REVOCATION OF CIRCULAR NUMBER 24/SEOJK.05/2015

Based on the considerations as referred to in Roman numeral I, Circular Number 24/SEOJK.05/2015 is revoked and declared invalid.

III. CLOSING

This Financial Services Authority Circular takes effect on the date of determination.

Determined in Jakarta on June 27, 2016

EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND
OTHER FINANCIAL INSTITUTION SUPERVISOR
FINANCIAL SERVICES AUTHORITY,

signed

FIRDAUS DJAELANI

Copy matches the original

Director of Law 1
Legal Department

signed

Yuliana