Financial Health for Insurance Companies in the Form of Joint Legal Entities

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 1 /POJK.05/2018
CONCERNING
FINANCIAL HEALTH FOR INSURANCE COMPANIES
IN THE FORM OF JOINT LEGAL ENTITIES
BY THE GRACE OF GOD THE ALMIGHTY
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to implement the provisions of Article 19 paragraph (4), Article 20 paragraph (5), Article 21 paragraph (4), and Article 22 paragraph (6) of Law Number 40 of 2014 concerning Insurance, the Financial Services Authority Regulation Number 71/POJK.05/2016 concerning the Financial Health of Insurance Companies and Reinsurance Companies has been established; b. that joint legal entities are one of the forms of legal entities organizing insurance business in accordance with the provisions of Article 6 paragraph (1) letter c of Law Number 40 of 2014 concerning Insurance, which have characteristics different from insurance companies in the form of limited liability companies and cooperatives, thus requiring separate regulations regarding financial health;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Financial Health for Insurance Companies in the Form of Joint Legal Entities;

Recalling:

1. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
2. Law Number 40 of 2014 concerning Insurance (State Gazette of the Republic of Indonesia Year 2014 Number 337, Supplement to the State Gazette of the Republic of Indonesia Number 5618);

DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING FINANCIAL HEALTH FOR INSURANCE COMPANIES IN THE FORM OF JOINT LEGAL ENTITIES.

CHAPTER I
GENERAL PROVISIONS

Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Company means an insurance company in the form of a joint legal entity.
2. Party means a person or business entity, whether in the form of a legal entity or not, as referred to in Law Number 40 of 2014 concerning Insurance.
3. Investment-Linked Insurance Products, hereinafter referred to as PAYDI, are insurance products that provide at least death risk protection and provide benefits that refer to the investment results of a fund pool specifically formed for the insurance product, whether stated in unit form or not.
4. Liability means obligations as referred to in legislation in the field of insurance.
5. Permitted Assets are assets that are calculated in the solvency ratio calculation.
6. Risk-Based Minimum Funds, hereinafter abbreviated as DMBR, is the amount of funds needed to anticipate potential losses arising from deviations in asset and liability management.
7. Solvency Ratio is the difference between the amount of Permitted Assets minus the amount of Liabilities.
8. Liquidity Ratio is the ratio of current assets to current liabilities.
9. Medium Term Notes, hereinafter abbreviated as MTN, are debt securities issued by the company with a maturity period of one to five years.
10. Guarantee Fund is the Company's assets that serve as the last resort to protect the interests of policyholders, insured parties, or participants, in the event of Company liquidation.
11. Investment Manager means an investment manager as referred to in Law Number 8 of 1995 concerning the Capital Market.
12. Bank means a general bank as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998 and a sharia bank as referred to in Law Number 21 of 2008.
13. Rural Credit Bank, hereinafter abbreviated as BPR, means a rural credit bank as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998.
14. Sharia People's Financing Bank, hereinafter abbreviated as BPRS, means a sharia people's financing bank as referred to in Law Number 21 of 2008 concerning Sharia Banking.
15. Custodian Bank means a general bank that has received approval from the Financial Services Authority as a custodian.

CHAPTER II
FINANCIAL HEALTH

First Section
Scope of Financial Health

Article 2
(1) The Company is required at all times to meet financial health level requirements.
(2) The measurement of the Company's financial health level as referred to in paragraph (1) includes:
a. Solvency Ratio; b. technical reserves;
c. investment adequacy;
d. Liquidity Ratio; e. Guarantee Fund; and f. other provisions related to financial health.

Second Section
Solvency Ratio

Article 3
(1) The Company is required at all times to meet a Solvency Ratio of at least 100% (one hundred percent) of DMBR.
(2) The Company is required annually to set an internal Solvency Ratio target.
(3) The internal Solvency Ratio target as referred to in paragraph (2) is set at a minimum of 120% (one hundred twenty percent) of DMBR by considering the risk profile of each Company and considering the results of scenario simulation (stress test). (4) The Financial Services Authority may order the Company to increase and meet the internal Solvency Ratio target as referred to in paragraph (3) by considering the Company's risk profile and considering the results of scenario simulation (stress test). (5) The Company must at all times meet the internal Solvency Ratio target as referred to in paragraph (3) and paragraph (4). (6) The Company is prohibited from distributing profits in any form to members if such action would cause the required internal Solvency Ratio target as referred to in paragraph (3) and paragraph (4) to not be achieved.

Article 4
(1) The calculation of DMBR as referred to in Article 3 paragraph (1) must take into account risks consisting of at least:
a. credit risk; b. liquidity risk;
c. market risk;
d. insurance risk; and e. operational risk.
(2) In the event the Company markets PAYDI, the DMBR as referred to in paragraph (1) must be increased by a certain percentage of investment funds sourced from PAYDI.
(3) Further provisions regarding the calculation of the DMBR amount as referred to in paragraph (1) and paragraph (2) are regulated in a Financial Services Authority Circular.

Third Section
Permitted Assets in the Form of Investment

Article 5
(1) The Company is required to apply the principle of prudence in investment placement.
(2) Permitted Assets in the form of investment must be placed in the following types:
a. time deposits at Banks, BPRs, and BPRSs, including deposit on call and time deposits with a term of less than or equal to 1 (one) month; b. deposit certificates at Banks;
c. shares listed on the stock exchange;
d. corporate bonds listed on the stock exchange; e. MTNs; f. securities issued by the Republic of Indonesia; g. securities issued by countries other than the Republic of Indonesia; h. securities issued by Bank Indonesia;
i. securities issued by multinational institutions of which the Republic of Indonesia is a member or shareholder;
j. mutual funds; k. asset-backed securities;
l. real estate investment funds in the form of collective investment contracts;
m. securities transactions through repurchase agreement (REPO); n. direct participation in limited liability companies whose shares are not listed on the stock exchange; o. land, buildings with strata rights (strata title), or land with buildings, for investment; p. financing through cooperation mechanisms with other Parties in the form of credit provision cooperation (executing); q. pure gold; r. loans secured by mortgage rights; and/or s. policy loans. (3) Permitted Assets in the form of investment as referred to in paragraph (2) that can be placed abroad must be in the following types:
a. shares listed on the stock exchange; b. corporate bonds listed on the stock exchange;
c. securities issued by countries other than the Republic of Indonesia;
d. securities issued by multinational institutions of which the Republic of Indonesia is a member or shareholder; e. mutual funds; and/or f. direct participation in companies whose shares are not listed on the stock exchange. (4) The types of investment as referred to in paragraph (2) and paragraph (3) also include types of investment using sharia principles. (5) Provisions regarding the valuation basis for each type of investment as referred to in paragraph (2) through paragraph (4) are regulated in a Financial Services Authority Circular.

Article 6
(1) Placement of Permitted Assets in the form of investment in the form of corporate bonds as referred to in Article 5 paragraph (2) letter d must be done on corporate bonds that have an investment grade rating from a recognized securities rating company by the Financial Services Authority. (2) Placement of Permitted Assets in the form of investment in the form of MTNs as referred to in Article 5 paragraph (2) letter e must meet the following provisions:
a. MTNs are registered at the Indonesia Central Securities Depository; b. MTNs have a monitoring agent that has received a license as a trustee from the Financial Services Authority; and
c. MTNs have an investment grade rating issued by a securities rating company recognized by the Financial Services Authority.
(3) Placement of Permitted Assets in the form of investment in the form of securities issued by multinational institutions of which the Republic of Indonesia is a member or shareholder as referred to in Article 5 paragraph (2) letter i must meet the following provisions:
a. have an investment grade rating from a securities rating company recognized internationally; b. are sold through a public offering; and
c. information regarding the transaction can be accessed in Indonesia.
(4) Placement of Permitted Assets in the form of investment in the form of mutual funds as referred to in Article 5 paragraph (2) letter j must meet the following provisions:
a. for mutual funds conducted through a public offering, have received an effectiveness statement from the Financial Services Authority; and b. for limited participation mutual funds, have been registered with the Financial Services Authority. (5) Placement of Permitted Assets in the form of investment in the form of asset-backed securities and real estate investment funds in the form of collective investment contracts as referred to in Article 5 paragraph (2) letters k and l must meet the following provisions:
a. have received an effectiveness statement from the Financial Services Authority; b. have an investment grade rating from a securities rating company recognized by the Financial Services Authority; and
c. are conducted through a public offering as regulated in capital market legislation.
(6) Placement of Permitted Assets in the form of investment in the form of REPO as referred to in Article 5 paragraph (2) letter m must meet the following provisions:
a. the Company's risk level based on assessment by the Financial Services Authority is low to medium or low; b. use standardized agreements by the Financial Services Authority;
c. transactions in the form of buying securities with a promise to sell back at a specified time and price;
d. collateral types are limited to securities issued by the Republic of Indonesia and/or securities issued by Bank Indonesia; e. maturity does not exceed 90 (ninety) days; f. REPO value is at most 80% (eighty percent) of the market value of the pledged securities; and g. REPO transactions are registered at the Indonesia Central Securities Depository or Bank Indonesia Scriptless Securities Settlement System (BI-S4). (7) Placement of Permitted Assets in the form of investment in the form of land, buildings with strata rights (strata title), or land with buildings, for investment, as referred to in Article 5 paragraph (2) letter o must meet the following provisions:
a. are owned and controlled by the Company, proven by land and/or building ownership certificates in the Company's name; and b. are not placed on land, buildings, or land with buildings that are currently pledged, in dispute, or blocked by other Parties. (8) Placement of Permitted Assets in the form of investment in the form of financing through cooperation mechanisms with other Parties in the form of credit provision cooperation (executing) as referred to in Article 5 paragraph (2) letter p must meet the following provisions:
a. is a financing company that has received a business license from the Financial Services Authority; b. the financing company is not currently subject to administrative sanctions in the form of business activity restrictions or business activity suspension by the Financial Services Authority at the start of the cooperation;
c. the financing company's risk level based on assessment by the Financial Services Authority is low to medium or low; and
d. meets financial health level requirements based on financing legislation at the start of the cooperation.
(9) Placement of Permitted Assets in the form of investment in the form of pure gold as referred to in Article 5 paragraph (2) letter q must meet the following provisions:
a. meet specification requirements established by a commodity exchange that has received a license from the competent authority; and b. are stored at a Custodian Bank or other Party that has received a license or approval from the competent authority to provide custody services. (10) Placement of Permitted Assets in the form of investment in the form of loans secured by mortgage rights as referred to in Article 5 paragraph (2) letter r must meet the following provisions:
a. the loan is granted to individuals; b. the loan is secured by a first mortgage right;
c. the loan is conducted in accordance with legislation;
d. land ownership certificates with mortgage burden notes are stored by the Company; and e. the amount of each loan is at most 75% (seventy-five percent) of the smallest collateral value between the value set by a registered appraisal institution at the competent authority and the Taxable Object Value (NJOP).

Article 7
In the event that corporate bonds and/or MTNs issued by financing companies do not have an investment grade level as referred to in Article 6 paragraph (1) and/or paragraph (2) letter c, placement may be done as long as:
a. they have a rating 1 (one) level below investment grade; and b. the financing company issuing the corporate bonds and/or MTNs meets financial health level requirements based on financing legislation at the time of placement.

Article 8
(1) Placement of Permitted Assets in the form of investment abroad in the form of shares listed on the stock exchange as referred to in Article 5 paragraph (3) letter a must meet the following provisions:
a. are included in the category of actively traded shares on the stock exchange where the shares are listed based on criteria established by the said stock exchange; and b. information regarding the issuer and share transactions can be accessed in Indonesia. (2) Placement of Permitted Assets in the form of investment abroad in the form of corporate bonds listed on the stock exchange, securities issued by countries other than the Republic of Indonesia, and securities issued by multinational institutions of which the Republic of Indonesia is a member or shareholder as referred to in Article 5 paragraph (3) letters b through d must meet the following provisions:
a. have an investment grade rating from a securities rating company recognized internationally; b. are sold through a public offering; and
c. information regarding the transaction can be accessed in Indonesia.
(3) Placement of Permitted Assets in the form of investment abroad in the form of mutual funds as referred to in Article 5 paragraph (3) letter e must meet the following provisions:
a. are managed by an Investment Manager abroad that has received a license from the capital market authority in the country where the Investment Manager is domiciled; b. have received license/approval/registration from the capital market authority in the country where the said Investment Manager is domiciled and are conducted through a public offering;
c. are managed by an Investment Manager abroad that is not currently subject to administrative sanctions in the form of business activity restrictions or business activity suspension by the authority in the country where the said Investment Manager is domiciled; and
d. information regarding the mutual fund can be accessed in Indonesia.

Article 9
(1) In the event that Permitted Assets in the form of investment in the form of shares and/or corporate bonds as referred to in Article 5 paragraph (2) letters c and d that are listed on domestic and/or foreign stock exchanges and whose issuers are foreign legal entities, they are categorized as foreign investment. (2) In the event that Permitted Assets in the form of investment in the form of shares and/or corporate bonds as referred to in Article 5 paragraph (2) letters c and d that are listed on domestic and/or foreign stock exchanges and whose issuers are Indonesian legal entities, they are categorized as domestic investment. (3) In the event that Permitted Assets in the form of investment in the form of corporate bonds listed on the stock exchange as referred to in Article 5 paragraph (2) letter d issued by a foreign legal entity where more than 50% (fifty percent) of its shares are owned by an Indonesian legal entity, they are categorized as domestic investment. (4) Permitted Assets in the form of investment in the form of corporate bonds as referred to in paragraphs (1) through (3) must meet the following provisions:
a. have an investment grade rating from a securities rating company recognized by the Financial Services Authority or have an investment grade rating from a securities rating company recognized internationally; and b. are sold through a public offering. (5) In the event that Permitted Assets in the form of investment in the form of securities issued by multinational institutions of which the Republic of Indonesia is a member or shareholder as referred to in Article 5 paragraph (2) letter i and paragraph (3) letter d are denominated in rupiah, they are categorized as domestic investment.

Article 10
(1) The Company is prohibited from having foreign investment, except in the types of investment as referred to in Article 5 paragraph (3).
(2) The Company is prohibited from placing foreign investment exceeding 20% (twenty percent) of the total investment amount.
(3) In the event that the amount of foreign investment exceeds the limit as referred to in paragraph (2) due to an increase in the value of the investment, the Company is required to adjust the investment amount in accordance with the provisions as referred to in paragraph (2) within a maximum period of 3 (three) months from the time the increase in investment value is known.

Article 11
(1) Restrictions on Permitted Assets in the form of investment as referred to in Article 5 paragraph (2) are as follows:
a. investment in time deposits at Banks, including deposit on call and time deposits with a term of less than or equal to 1 (one) month, for each Bank is at most 20% (twenty percent) of the total investment; b. investment in time deposits, for each BPR and BPRS is at most 1% (one percent) of the total investment and in total is at most 5% (five percent) of the total investment;
c. investment in deposit certificates for each Bank is at most 50% (fifty percent) of the total investment in time deposits at Banks as referred to in letter a;
d. investment in shares listed on the stock exchange, for each issuer is at most 10% (ten percent) of the total investment and in total is at most 40% (forty percent) of the total investment; e. investment in corporate bonds listed on the stock exchange, for each issuer is at most 20% (twenty percent) of the total investment and in total is at most 50% (fifty percent) of the total investment; f. investment in MTNs and securities issued by multinational institutions of which the Republic of Indonesia is a member or shareholder, for each issuer is at most 20% (twenty percent) of the total investment and in total is at most 40% (forty percent) of the total investment; g. investment in securities issued by countries other than the Republic of Indonesia, for each issuer is at most 10% (ten percent) of the total investment; h. investment in mutual funds, for each Investment Manager is at most 20% (twenty percent) of the total investment and in total is at most 50% (fifty percent) of the total investment;
i. investment in asset-backed securities for each Investment Manager is at most 10% (ten percent) of the total investment and in total is at most 20% (twenty percent) of the total investment;
j. investment in real estate investment funds in the form of collective investment contracts, for each Investment Manager is at most 10% (ten percent) of the total investment and in total is at most 20% (twenty percent) of the total investment; k. investment in REPO, for each counterparty is at most 2% (two percent) of the total investment and in total is at most 10% (ten percent) of the total investment;
l. investment in direct participation (shares that

not listed on the stock exchange), in total at most 10% (ten percent) of the investment amount;

m. investment in the form of land, buildings with strata title (strata title), or land with buildings, for investment purposes, in total at most 20% (twenty percent) of the investment amount;

n. investment in the form of land for investment purposes, in total at most 1/3 (one third) of the investment amount as referred to in letter m;

o. investment in the form of financing through cooperation mechanisms with other Parties in the form of credit granting cooperation (executing), for each Party at most 10% (ten percent) of the investment amount and in total at most 20% (twenty percent) of the investment amount;

p. investment in the form of pure gold, in total at most 10% (ten percent) of the investment amount;

q. investment in the form of loans guaranteed by mortgage rights, in total at most 10% (ten percent) of the investment amount; and/or

r. investment in the form of policy loans, with the policy loan amount at most 80% (eighty percent) of the cash value of the relevant policy.

(2) Placements of Permitted Assets in the form of investment in mutual funds as referred to in Article 5 paragraph (2) letter j, whose underlying assets are entirely investments in securities issued by the State of the Republic of Indonesia, are exempt from the provisions as referred to in paragraph (1) letter h.

(3) Placements of Permitted Assets in the form of investment in mutual funds as referred to in Article 5 paragraph (2) letter j in the form of collective investment contracts for limited participation for each Investment Manager are at most 10% (ten percent) of the investment amount and in total at most 20% (twenty percent) of the investment amount.

(4) Placements of Permitted Assets in the form of investments as referred to in paragraph (1) letters d through k, in total amount to at most 80% (eighty percent) of the investment amount.

Article 12

(1) Placements of Permitted Assets in the form of investment in Parties affiliated with the Company are at most 25% (twenty-five percent) of the investment amount.

(2) Placements of Permitted Assets in the form of investment in one Party or several Parties that are affiliated but such Parties are not affiliated with the Company are at most 25% (twenty-five percent) of the investment amount.

(3) In the event the Company will conduct investment placements exceeding the limits as referred to in paragraph (1) and paragraph (2) as well as as referred to in Article 11 paragraph (1) letter l, the Company must obtain approval from the Financial Services Authority (Otoritas Jasa Keuangan).

(4) In the event the Company will conduct investment placements exceeding the limits as referred to in Article 11 paragraph (1) letter l, the approval from the Financial Services Authority as referred to in paragraph (3) may only be given for direct participation in financial service institutions that have received a license from the Financial Services Authority.

(5) Further provisions regarding investment placements exceeding the limits as referred to in paragraph (3) and paragraph (4) are regulated in a Circular Letter of the Financial Services Authority.

Article 13

(1) Affiliated Parties as referred to in Article 12 paragraph (1) and paragraph (2) are Parties that have a relationship with one or more other Parties, such that one Party can influence the management or policies of the other Party or vice versa.

(2) Relationships that can influence management or policies as referred to in paragraph (1) are in the form of:

a. one Party has one or more directors or officials at a level below director or commissioners, who also serve as directors or officials at a level below director or commissioners in another Party;

b. one Party has one or more directors, commissioners, or controlling shareholders, who have family relationships due to marriage or descent up to the second degree, both horizontally and vertically, who serve as directors, commissioners, or controlling shareholders in another Party;

c. one Party holds at least 25% (twenty-five percent) of the shares of another Party;

d. one Party is the largest shareholder of another Party;

e. the Parties are controlled by the same controller; or

f. one Party has voting rights in another Party of more than 50% (fifty percent) based on an agreement.

(3) Affiliation relationships and/or other legal relationships with other Parties as referred to in paragraph (1) and paragraph (2) do not include relationships due to ownership or capital participation by the State of the Republic of Indonesia.

Article 14

(1) The Company is prohibited from conducting any form of asset transfer to any Party including members or Parties affiliated with the Company, except through arm's length transactions.

(2) The Company is prohibited from providing loans to members or Parties affiliated with the Company.

(3) The provisions as referred to in paragraph (2) do not apply in the event of loans in the form of investments as referred to in Article 5 paragraph (2).

(4) The provisions as referred to in paragraph (1) do not apply in the event of loans or placements for Permitted Assets in the form of investment and Permitted Assets in the form of non-investment.

Article 15

The investment amount used as the basis for calculating the limits on Permitted Assets in the form of investment as referred to in Article 11 and Article 12 paragraph (1) and paragraph (2) is the value of all forms of investment as referred to in Article 5 as of the date of the financial position report.

Article 16

Provisions regarding limits on Permitted Assets in the form of investment as referred to in Article 11 also apply to placements in investment types using Sharia principles.

Part Four
Permitted Assets in the Form of Non-Investment

Article 17

(1) Permitted Assets in the form of non-investment must be of the following types:

a. cash and bank;

b. direct closing premium receivables, including co-insurance premium receivables that are part of the Company;

c. reinsurance assets;

d. co-insurance claim receivables;

e. reinsurance claim receivables;

f. investment receivables;

g. investment income receivables;

h. buildings with strata title (strata title) or land with buildings, for own use; and/or

i. deferred acquisition cost.

(2) Limits on Permitted Assets in the form of non-investment as referred to in paragraph (1) must be implemented with the following provisions:

a. cash and bank, with the provision that cash and bank abroad are permitted at most 10% (ten percent) of the total cash and bank amount for the current period;

b. direct closing premium receivables including co-insurance premium receivables that are part of the Company, with a receivable age of at most 2 (two) months calculated from the date:

1. coverage begins for policies with single premium payment; or

2. premium payment due date for policies with installment premium payment;

c. reinsurance assets, consisting of:

1. assets sourced from the estimated value of claim recovery for the reinsurance portion; and

2. assets sourced from long-term contract agreements for capital oriented reinsurance programs, with the provisions:

a) only for each new PAYDI where the acquisition cost is paid in advance by the Company (back end loading);

b) Companies that have already recognized assets arising from capital oriented reinsurance program agreements for one PAYDI are not permitted to recognize deferred acquisition cost assets for the same PAYDI; and

c) for each capital oriented reinsurance program agreement, prior approval from the Financial Services Authority must be obtained;

d. co-insurance claim receivables, with a receivable age of at most 2 (two) months calculated from the date of claim payment to the policyholder or insured;

e. reinsurance claim receivables, with a receivable age of at most 2 (two) months calculated from the date of payment due date;

f. investment receivables, with a receivable age of at most 1 (one) month calculated from the date of payment due date;

g. investment income receivables, with a receivable age of at most 1 (one) month calculated from the date of payment due date;

h. buildings with strata title (strata title) or land with buildings, for own use, with a total value at most 25% (twenty-five percent) of the total assets minus current period Liabilities; and/or

i. deferred acquisition cost, with the provisions:

1. can only be conducted for PAYDI where the acquisition cost is paid in advance by the Company (back-end loading);

2. Companies that have already recognized deferred acquisition cost assets for PAYDI are not permitted to recognize assets arising from capital oriented reinsurance program agreements for the same PAYDI product; and

3. each formation of deferred acquisition cost for each PAYDI product must first obtain approval from the Financial Services Authority.

(3) Provisions regarding the valuation basis for each type of non-investment as referred to in paragraph (1) and the procedure for requesting approval from the Financial Services Authority as referred to in paragraph (2) letter c number 2 letter c) and letter i number 3 are regulated in a Circular Letter of the Financial Services Authority.

Part Five
Status of Permitted Assets

Article 18

Permitted Assets in the form of investment as referred to in Article 5 and Permitted Assets in the form of non-investment as referred to in Article 17 must:

a. be owned and controlled by the Company, proven by ownership evidence in the Company's name from the competent agency;

b. not be in dispute;

c. not be used as collateral; and

d. not be blocked by competent Parties.

Part Six
Liabilities

Article 19

(1) Liabilities calculated in the Solvency Ratio calculation must include all Company Liabilities, including technical reserves.

(2) The Company must establish technical reserves as referred to in paragraph (1) according to the type of insurance product.

(3) The establishment of technical reserves as referred to in paragraph (1) is conducted by the Company's actuary.

Article 20

(1) Liabilities in the form of technical reserves as referred to in Article 19 include:

a. premium reserves:

1. for products with a term of more than 1 (one) year whose policy terms and conditions cannot be renewed (non-renewable) at each policy anniversary; and

2. for products with a term of more than 1 (one) year whose policy terms and conditions can be renewed (renewable) and provide other benefits after a certain period;

b. reserves for premiums that are not yet revenue for products with a term of up to 1 (one) year or with a term of more than 1 (one) year whose policy terms and conditions can be renewed (renewable) at each policy anniversary;

c. reserves for PAYDI;

d. claim reserves; and

e. catastrophic risk reserves.

(2) The establishment of premium reserves as referred to in paragraph (1) letter a must take into account incoming and outgoing cash flows that may occur in the future using central estimate assumptions plus a risk margin.

(3) The establishment of reserves for premiums that are not yet revenue as referred to in paragraph (1) letter b must take into account reserves for all unexpired risks (unexpired risk reserve).

(4) Reserves for PAYDI as referred to in paragraph (1) letter c are:

a. accumulation fund reserves for non-guaranteed PAYDI;

b. investment component reserves for guaranteed PAYDI; and

c. protection component reserves for PAYDI and other benefits promised from PAYDI.

(5) Accumulation fund reserves for non-guaranteed PAYDI are not calculated in the Solvency Ratio calculation.

(6) Claim reserves as referred to in paragraph (1) letter d include:

a. claim reserves in the process of settlement;

b. incurred but not reported (IBNR) claim reserves; and

c. claim reserves for claims that have been approved and benefit payments are not made in a lump sum.

(7) Catastrophic risk reserves as referred to in paragraph (1) letter e are calculated based on retained insurance benefits by taking into account the likelihood of catastrophic risks occurring.

Article 21

(1) In the event that unfairness is found in technical reserves or parts of technical reserves established by the Company, the Financial Services Authority may:

a. request the Company to revalue the amount of technical reserves or parts of technical reserves considered unfair; or

b. request a review of technical reserves or parts of technical reserves by an independent Party at the Company's expense.

(2) The Company must appoint an independent Party at the latest 1 (one) month after the request for review as referred to in paragraph (1) letter b.

Article 22

Further provisions regarding technical reserves as referred to in Article 20 are regulated in a Circular Letter of the Financial Services Authority.

Part Seven
Subordinated Loans

Article 23

In the calculation of the Solvency Ratio, subordinated loans are not treated as a Liability element if the loans meet the following provisions:

a. used to meet the Solvency Ratio limit requirements; and

b. stipulated in a notarial agreement containing at least:

1. repayment of the principal of the loan can only be conducted if it does not cause the Company to fail to meet the internal Solvency Ratio target;

2. the loan repayment period is not limited; and

3. the promised interest rate is at most 1/5 (one fifth) of the Bank Indonesia interest rate at the time of signing the agreement.

Article 24

The Company is prohibited from returning subordinated loans if such action would cause the internal Solvency Ratio target as referred to in Article 3 paragraph (3) to not be met.

Part Eight
Investment Adequacy

Article 25

(1) The Company must have Permitted Assets in the form of investment as referred to in Article 5 paragraph (2) plus Permitted Assets in the form of non-investment in the form of cash and bank as referred to in Article 17 paragraph (1) letter a, at least equal to the amount of retained technical reserves, plus retained claim payment Liabilities, and other Liabilities to policyholders or insured parties.

(2) Retained claim payment Liabilities as referred to in paragraph (1) are claim payment Liabilities for claims that have been agreed upon but not yet paid, minus claim burdens that are part of the reinsurer.

Article 26

(1) The Company must have and apply own retention for each risk managed according to the own retention limit.

(2) The application of the own retention limit as referred to in paragraph (1) must be based on a risk and loss profile that is created systematically, regularly, relevantly, and accurately.

(3) The Company may only have own retention for each coverage of accident insurance, health insurance, and death insurance of at least Rp150,000,000.00 (one hundred fifty million rupiah) and at most 0.05‰ (zero point zero five per mille) of the total investment amount for the current period.

CHAPTER III
INSURANCE PRODUCTS LINKED WITH INVESTMENT

Article 27

Companies marketing PAYDI must separate the recording of assets and Liabilities sourced from PAYDI from assets and Liabilities sourced from other insurance products.

Article 28

(1) Assets sourced from PAYDI must be placed in the following types:

a. time deposits at Banks, BPRs, and BPRSs, including deposit on call and deposits with a term of less than or equal to 1 (one) month;

b. deposit certificates at Banks;

c. shares listed on the stock exchange;

d. corporate bonds listed on the stock exchange;

e. MTNs;

f. securities issued by the State of the Republic of Indonesia;

g. securities issued by countries other than the State of the Republic of Indonesia;

h. securities issued by Bank Indonesia;

i. securities issued by multinational institutions of which the State of the Republic of Indonesia is a member or shareholder;

j. mutual funds;

k. asset-backed securities;

l. REPOs; and/or

m. pure gold.

(2) Assets sourced from PAYDI in the form of non-investment must be of the following types:

a. cash and bank;

b. direct closing premium receivables;

c. investment receivables; and/or

d. investment income receivables.

(3) Investment types as referred to in paragraph (1) must be adjusted to the product description reported to the Financial Services Authority and promised to prospective policyholders.

(4) Non-guaranteed assets sourced from PAYDI are not calculated as Permitted Assets.

(5) Provisions regarding the valuation basis for each type of investment and non-investment for assets sourced from PAYDI as referred to in paragraph (1) and paragraph (2) are regulated in a Circular Letter of the Financial Services Authority.

Article 29

Placements of assets sourced from PAYDI as referred to in Article 28 paragraph (1) must meet the provisions as referred to in Article 6 through Article 9.

Article 30

Overseas investment placements for PAYDI are at most 20% (twenty percent) of the total PAYDI investment.

Article 31

(1) The Company must account for all assets sourced from PAYDI at a Custodian Bank.

(2) The Custodian Bank as referred to in paragraph (1) is prohibited from having an affiliation relationship with the Company, except for affiliation relationships arising from ownership or capital participation by the State of the Republic of Indonesia.

CHAPTER IV
DERIVATIVE TRANSACTIONS

Article 32

(1) The Company is prohibited from conducting derivative transactions or holding derivative instruments, except:

a. put option contracts on shares owned that are listed on the stock exchange in Indonesia;

b. derivative instruments obtained by the Company as instruments attached to shares, corporate bonds, or state securities listed on the stock exchange in Indonesia as referred to in Article 5 paragraph (2) letters c, d, and f; or

c. other derivative instruments for hedging purposes against currency and/or interest rate risks.

(2) Transactions of other derivative instruments for hedging purposes as referred to in paragraph (1) letter c are conducted with counterparties that have at least an investment grade rating from a securities rating company recognized by the Financial Services Authority or from an internationally recognized securities rating company.

(3) The Company may sell derivative instruments attached to state securities, shares, or corporate bonds listed on the stock exchange in Indonesia as referred to in paragraph (1) letter b separately from the respective state securities, shares, or corporate bonds.

(4) Derivative transactions or derivative instruments as referred to in paragraph (1) must obtain Board of Directors approval.

Article 33

(1) The Company must report each derivative transaction as referred to in Article 32 paragraph (1) to the Financial Services Authority at the latest 7 (seven) working days from the transaction date.

(2) The derivative transaction report as referred to in paragraph (1) must be attached at least with:

a. study/analysis results regarding the need for hedging;

b. derivative transaction agreement;

c. proof of the other party's (counterparty) rating as referred to in Article 32 paragraph (2); and

d. proof of Board of Directors approval.

CHAPTER V
LIQUIDITY

Article 34

The Company must at all times meet a Liquidity Ratio of at least 100% (one hundred percent).

Article 35

(1) Current Assets and Current Liabilities for the Liquidity Ratio calculation are sourced from all Company activities, including those sourced from PAYDI.

(2) Current Assets as referred to in paragraph (1) include types of Permitted Assets in the form of investment as referred to in Article 5 paragraph (2) and Permitted Assets in the form of non-investment as referred to in Article 17 paragraph (1) that can be liquidated within at most 1 (one) year.

(3) If current assets in the form of non-investment as referred to in paragraph (2) are receivables, then receivables with an age of not more than 3 (three) months from the payment due date can be calculated in the Liquidity Ratio calculation.

Article 36

Current Liabilities as referred to in Article 35 paragraph (1) consist of:

a. technical reserves, including:

1. premium reserves for policies where claims may occur within a period of at most 1 (one) year;

2. reserves for premiums that are not yet revenue for products with a term of up to 1 (one) year; and

3. claim reserves; and

b. other Liabilities that will be paid and may be paid within a period of at most 1 (one) year.

CHAPTER VI
GUARANTEE FUND

Part One
Establishment of Guarantee Fund

Article 37

(1) The Company must establish a Guarantee Fund of at least 2% (two percent) of premium reserves for PAYDI, plus 3% (three percent) of premium reserves for products other than PAYDI and reserves for premiums that are not yet revenue.

(2) The amount of premium reserves including reserves for premiums that are not yet revenue as referred to in paragraph (1) is obtained from the financial report as of the last December 31 that has been audited by a public accountant registered with the Financial Services Authority.

(3) In the event that the Guarantee Fund is less than the amount as referred to in paragraph (1), the Company must increase its Guarantee Fund at the latest 5 (five) working days after April 30 of the current year.

(4) In the event that the existing Guarantee Fund is greater than the amount as referred to in paragraph (1), the Company may reduce the Guarantee Fund that

owned after having obtained approval from the Financial Services Authority.
(5) The Guarantee Fund as referred to in paragraph (1) must be placed in:
a. deposits, with automatic renewal at a Bank that is not an affiliate of the Company; and/or b. securities issued by the State of the Republic of Indonesia, which at the time of placement as the Guarantee Fund have a remaining maturity of at least 1 (one) year until maturity. (6) The Guarantee Fund is prohibited from being pledged or encumbered with any rights.

Second Section
Management of the Guarantee Fund

Article 38
(1) The Company must manage the entire Guarantee Fund at a Custodian Bank.
(2) The Custodian Bank as referred to in paragraph (1) is not an affiliate of the Company, except where the affiliate relationship arises from ownership or state capital participation.

Article 39
The management of the Guarantee Fund at the Custodian Bank as referred to in Article 38 paragraph (1) must be based on an agreement between the Company and the Custodian Bank which contains at least:
a. delegation or authorization by the Company to the Custodian Bank to disburse, transfer, or hand over the Guarantee Fund after obtaining approval from the Financial Services Authority; b. the obligation of the Custodian Bank to place funds obtained from the disbursement of the Guarantee Fund in the form of securities issued by the State of the Republic of Indonesia that have matured into a 1 (one) month time deposit at a Bank in the name of the Company, in the event that the Company has not yet replaced the Guarantee Fund that has matured;
c. provisions that the Custodian Bank cannot execute instructions from the Company or other Parties to disburse, transfer, and hand over deposits or securities issued by the State of the Republic of Indonesia used as the Guarantee Fund unless approval from the Financial Services Authority has been obtained; and
d. provisions that the Custodian Bank must submit a monthly report on the management of the Guarantee Fund owned by the Company to the Financial Services Authority by the 15th of the following month at the latest, which contains at least:

1. the name of the Company owning the Guarantee Fund;
2. the type of Guarantee Fund;
3. the bill number and issuing Bank for deposits;
4. the series of securities issued by the State of the Republic of Indonesia;
5. the nominal value of the Guarantee Fund; and
6. the maturity date.

Third Section
Changes to the Guarantee Fund

Article 40
(1) The Company may make changes to the Guarantee Fund in the form of formation, addition, replacement, transfer, and/or disbursement of the Guarantee Fund.
(2) The formation or addition of the Guarantee Fund may be done with the following provisions:
a. new placement of deposits at a Bank and/or securities issued by the State of the Republic of Indonesia as the Guarantee Fund; b. placement of deposits at a Bank that was originally not the Guarantee Fund becoming the Guarantee Fund; and/or
c. placement of securities issued by the State of the Republic of Indonesia that were originally not the Guarantee Fund becoming the Guarantee Fund.
(3) The Company may transfer or replace the Guarantee Fund with the following provisions:
a. from deposits to securities issued by the State of the Republic of Indonesia or vice versa; b. changing the maturity period of deposits at the Bank;
c. changing the Bank where the deposits are placed; and/or
d. exchanging securities issued by the State of the Republic of Indonesia with other securities issued by the State of the Republic of Indonesia.
(4) In the event that the Company intends to transfer or replace the Guarantee Fund as referred to in paragraph (3), the Company must first place the replacement Guarantee Fund for at least the value of the Guarantee Fund to be transferred or replaced. (5) In the event that there is a Guarantee Fund in the form of securities issued by the State of the Republic of Indonesia that will mature, the Company must first place new Guarantee Fund for at least the value of the securities issued by the State of the Republic of Indonesia that will mature, at the latest 1 (one) day before the maturity date. (6) The Company may disburse the Guarantee Fund in the event that the amount of the Guarantee Fund exceeds the minimum amount required as referred to in Article 37 paragraph (1). (7) The amount of the Guarantee Fund that can be disbursed as referred to in paragraph (6) is the excess over the minimum amount required as referred to in Article 37 paragraph (1). (8) The Company may only transfer or disburse the Guarantee Fund after obtaining approval from the Financial Services Authority. (9) The transfer or disbursement of the Guarantee Fund is carried out by submitting application documents which contain at least:
a. reasons for the transfer or disbursement of the Guarantee Fund; b. board of directors' approval for the transfer or disbursement of the Guarantee Fund; and
c. supporting documents proving the reasons for the transfer or disbursement of the Guarantee Fund.

Article 41
(1) The Financial Services Authority may order the Company to increase the amount of the Guarantee Fund up to the amount of technical reserves, in the event:
a. the Company cannot meet the provisions regarding the Solvency Ratio as referred to in Article 3 paragraph (1); and b. the Company is subject to sanctions restricting business activities. (2) The Company must increase the amount of the Guarantee Fund as referred to in paragraph (1) at the latest 1 (one) month since being ordered to increase the amount of the Guarantee Fund.

CHAPTER VII
SUBMISSION OF PERIODIC REPORTS

First Section
Preparation of Reports

Article 42
(1) The Company must prepare:
a. annual financial reports based on applicable financial accounting standards in Indonesia; b. annual financial reports based on provisions of legislation in the field of insurance;
c. quarterly financial reports based on provisions of legislation in the field of insurance;
d. monthly financial reports based on provisions of legislation in the field of insurance; and e. annual actuarial reports.
(2) The financial reports as referred to in paragraph (1) letters a through d must be accompanied by the calculation of the Liquidity Ratio as referred to in Article 34.
(3) The annual financial report as referred to in paragraph (1) letter a must be audited by a public accountant registered with the Financial Services Authority.
(4) The annual financial report as referred to in paragraph (1) letter b must be reviewed and assessed for compliance with provisions of legislation in the field of financial health of insurance companies by the Company's actuary or a public accountant registered with the Financial Services Authority. (5) The annual actuarial report as referred to in paragraph (1) letter e is a report that describes the Company's estimated ability to meet its future obligations. (6) The annual actuarial report as referred to in paragraph (1) letter e must be signed by the Company's actuary. (7) The annual actuarial report as referred to in paragraph (1) letter e must be reviewed and assessed for the fairness of its presentation by an actuarial consultant registered with the Financial Services Authority at least 1 (one) time in 3 (three) years. (8) The annual financial report as referred to in paragraph (1) letter b and the quarterly financial report as referred to in paragraph (1) letter c must contain at least:
a. Company profile; b. board of directors' statement;
c. financial position report;
d. comprehensive income statement; e. cash flow statement; f. Liquidity Ratio report; g. Solvency Ratio report; h. asset and Liability calculation;
i. PAYDI financial report;
j. consolidated financial report; and k. additional reports.
(9) Provisions regarding the form and structure of reports as referred to in paragraph (1) letters b through e refer to Financial Services Authority regulations regarding periodic reports of insurance companies.

Article 43
In reports as referred to in Article 42 paragraph (1), every asset and Liability in foreign currency units must be presented in rupiah based on the middle exchange rate set by Bank Indonesia on the date of the report.

Second Section
Submission of Reports

Article 44
(1) The Company must submit to the Financial Services Authority:
a. reports as referred to in Article 42 paragraph (1) letters a, b, and e at the latest by April 30 of the following year; b. reports as referred to in Article 42 paragraph (1) letter c at the latest 1 (one) month after the end of the relevant quarter; and
c. reports as referred to in Article 42 paragraph (1) letter d at the latest by the 10th of the following month.
(2) If the final deadline for submission of reports as referred to in paragraph (1) is a holiday, the final submission deadline is the first working day after the final deadline.
(3) Provisions regarding the procedure for submission of reports as referred to in paragraph (1) are regulated in a Circular Letter of the Financial Services Authority.

Third Section
Publication of Reports

Article 45
(1) The Company must publish a summary of the audited annual financial report as referred to in Article 42 paragraph (3) on the Company's website and in a daily newspaper in Indonesian language circulated nationally at the latest 1 (one) month after the submission deadline for the financial report as referred to in Article 44 paragraph (1) letter a. (2) Proof of publication as referred to in paragraph (1) must be submitted to the Financial Services Authority at the latest 2 (two) working days after publication in the newspaper. (3) The Company must publish a summary of the quarterly financial report as referred to in Article 42 paragraph (1) letter c on the Company's website at the latest 1 (one) month after the end of the relevant quarter. (4) Provisions regarding the form and structure of the summary of the annual financial report and the quarterly financial report as referred to in paragraph (1) and paragraph (3) are regulated in a Circular Letter of the Financial Services Authority.

Article 46
In the event that there are parts that need correction in the reports that have been published as referred to in Article 45 paragraph (1) and paragraph (3), the Company must correct the report and republish it on the Company's website.

CHAPTER VIII
FINANCIAL REHABILITATION PLAN

Article 47
A Company that does not meet the internal Solvency Ratio target as referred to in Article 3 paragraph (3) and paragraph (4) and/or the Liquidity Ratio as referred to in Article 34:
a. must submit a financial rehabilitation plan; and b. is prohibited from distributing profits in any form to members.

Article 48
(1) The financial rehabilitation plan as referred to in Article 47 letter a must be submitted to the Financial Services Authority at the latest 1 (one) month since it is known that the internal Solvency Ratio target as referred to in Article 3 paragraph (5) and/or the Liquidity Ratio as referred to in Article 34 has not been met. (2) The financial rehabilitation plan as referred to in paragraph (1) must contain at least financial rehabilitation steps accompanied by a specific time period required to meet the internal Solvency Ratio target as referred to in Article 3 paragraph (5) and/or the Liquidity Ratio as referred to in Article 34. (3) The financial rehabilitation steps as referred to in paragraph (2) contain the following action plans:
a. asset and/or Liability restructuring; b. provision of subordinated loans;
c. increase in premium rates;
d. transfer of part or all of the insurance portfolio; e. demutualization; and/or f. other actions.
(4) The financial rehabilitation plan as referred to in paragraph (1) must be signed by all members of the board of directors and board of commissioners.
(5) The financial rehabilitation plan as referred to in paragraph (1) must first be approved by the member representative body or its equivalent, in the event the rehabilitation plan contains a demutualization action plan. (6) In the event that the financial rehabilitation plan as referred to in paragraph (1) is assessed by the Financial Services Authority as insufficient to overcome the problems, the Company must improve the financial rehabilitation plan at the latest 1 (one) month since notification from the Financial Services Authority. (7) The financial rehabilitation plan as referred to in paragraph (1) and paragraph (6) must obtain a statement of no objection from the Financial Services Authority. (8) The Financial Services Authority provides a statement of no objection to the financial rehabilitation plan submitted by the Company as referred to in paragraph (7) by considering the conditions of the problems faced by the Company at the latest 14 (fourteen) working days calculated from the date of receipt of the complete financial rehabilitation plan. (9) If within the time period as referred to in paragraph (8) the Financial Services Authority does not provide a statement of no objection or response, the Company may implement the financial rehabilitation plan as referred to in paragraph (1) and/or paragraph (6).

Article 49
(1) The Company must submit to the Financial Services Authority a report on the implementation of the financial rehabilitation plan at the latest by the 15th of the following month.
(2) The report on the implementation of the financial rehabilitation plan as referred to in paragraph (1) must contain at least:
a. monthly financial reports prepared in accordance with the form and structure of quarterly financial reports; b. realization of action plans consisting of:

1. financial rehabilitation plans implemented in accordance with the set time targets;
2. financial rehabilitation plans that could not be implemented in accordance with the set time targets; and
3. reasons for the inability to implement the rehabilitation plan according to the set time targets; and
   c. supporting documents proving that financial rehabilitation actions have been implemented.
   (3) If the 15th is a holiday, the final submission deadline for the report on the implementation of the rehabilitation plan as referred to in paragraph (1) is the first working day after the 15th.

Article 50
(1) In the event that the Company estimates that the Company's Solvency Ratio and/or Liquidity Ratio will not be met within the time period as established in the financial rehabilitation plan, the Company may make changes to the financial rehabilitation plan. (2) Changes to the financial rehabilitation plan as referred to in paragraph (1) must first obtain approval from the Financial Services Authority. (3) The Financial Services Authority provides a statement of no objection to the change of the financial rehabilitation plan submitted by the Company at the latest 14 (fourteen) working days calculated from the date of receipt of the complete change of the financial rehabilitation plan. (4) If within the time period as referred to in paragraph (3) the Financial Services Authority does not provide a statement of no objection or response, the Company may implement the change of the financial rehabilitation plan as referred to in paragraph (1).

Article 51
The Financial Services Authority may order the Company to transfer part or all of the insurance portfolio to another Company, in the event the Company cannot meet the Solvency Ratio as referred to in Article 3 paragraph (1), the Liquidity Ratio as referred to in Article 34, and/or is subject to sanctions restricting business activities.

CHAPTER IX
SANCTIONS

Article 52
(1) A Company that does not meet the provisions in Article 2 paragraph (1), Article 3 paragraph (1), (2), and (6), Article 4 paragraph (2), Article 5 paragraph (1), Article 10, Article 12 paragraph (3), Article 14 paragraph (1) and (2), Article 19 paragraph (1) and (2), Article 20 paragraph (2) and (3), Article 21 paragraph (2), Article 24, Article 25 paragraph (1), Article 26, Article 27, Article 28 paragraph (1) and (3), Article 29, Article 31, Article 32 paragraph (1) and (4), Article 33 paragraph (1), Article 37 paragraph (1), (3), (5), and (6), Article 38 paragraph (1), Article 39, Article 40 paragraph (4), (5), and (8), Article 41 paragraph (2), Article 42 paragraph (1), (2), (3), (4), and (7), Article 43, Article 44 paragraph (1), Article 45 paragraph (1), (2), and (3), Article 46, Article 47, Article 48 paragraph (1), (6), and (7), Article 49 paragraph (1), Article 50 paragraph (2) of this Financial Services Authority Regulation is subject to administrative sanctions in the form of:
a. written warning; b. restriction of business activities, for part or all of the business activities; and/or
c. revocation of business license.
(2) Administrative sanctions as referred to in paragraph (1) are carried out progressively.
(3) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority may add additional sanctions in the form of:
a. prohibition to market insurance products for specific business lines; b. re-evaluation of competence and propriety for controllers, directors, or board of commissioners of the Company;
c. prohibition for the Company to become a shareholder or equivalent to a shareholder, and/or controller in a legal entity in the form of a cooperative, in insurance companies; and/or
d. prohibition for directors, and/or board of commissioners, to become shareholders, controllers, directors, and/or board of commissioners, in insurance companies.

Article 53
The Financial Services Authority may impose sanctions of revocation of business license:
a. without prior imposition of other administrative sanctions; or b. without prior imposition of progressive administrative sanctions as referred to in Article 52 paragraph (2), in the event the Company has a Solvency Ratio of less than 40% (forty percent) and based on the results of supervision by the Financial Services Authority is assessed to endanger policyholders or insured parties.

Article 54
(1) A Company that violates the provisions of Article 44 paragraph (1) letter a or letter b is subject to additional sanctions in the form of an administrative fine of Rp1,000,000.00 (one million rupiah) per day of delay and at most Rp360,000,000.00 (three hundred sixty million rupiah) for each report. (2) A Company that violates the provisions of Article 45 paragraph (1) is subject to additional sanctions in the form of an administrative fine of Rp2,500,000.00 (two million five hundred thousand rupiah) per day and at most Rp50,000,000.00 (fifty million rupiah).

CHAPTER X
TRANSITIONAL PROVISIONS

Article 55
(1) Every administrative sanction that has been imposed on the Company based on the Regulation of the Minister of Finance of the Republic of Indonesia Number 53/PMK.010/2012 concerning Financial Health of Insurance and Reinsurance Companies and based on Financial Services Authority Regulation Number 71/POJK.05/2016 concerning Financial Health of Insurance and Reinsurance Companies, is declared valid and in force. (2) Companies that have not been able to overcome the causes of the imposition of administrative sanctions as referred to in paragraph (1) are subject to further sanctions in accordance with this Financial Services Authority Regulation.

CHAPTER XI
CLOSING PROVISIONS

Article 56
At the time this Financial Services Authority Regulation comes into force:
a. Financial Services Authority Regulation Number 71/POJK.05/2016 concerning Financial Health of Insurance and Reinsurance Companies (State Gazette of the Republic of Indonesia Year 2016 Number 304, Supplement to the State Gazette of the Republic of Indonesia Number 5994), is declared not in force for Companies; b. Article 2 paragraph (1) and (2), Article 3 of Financial Services Authority Regulation Number 14/POJK.05/2015 concerning Self-Retention and Domestic Reinsurance Support (State Gazette of the Republic of Indonesia Year 2015 Number 265, Supplement to the State Gazette of the Republic of Indonesia Number 5754), is declared not in force for Companies; and
c. all implementing regulations of Financial Services Authority Regulation Number 71/POJK.05/2016 concerning Financial Health of Insurance and Reinsurance Companies (State Gazette of the Republic of Indonesia Year 2016 Number 304, Supplement to the State Gazette of the Republic of Indonesia Number 5994), are declared still in force for Companies as long as they do not contradict the provisions in this Financial Services Authority Regulation.

Article 57
This Financial Services Authority Regulation comes into force on the date of its promulgation.

This copy is in accordance with the original
Director of Law 1
Legal Department signed
Yuliana

To ensure everyone knows, orders the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on February 27, 2018
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY, signed
WIMBOH SANTOSO

Promulgated in Jakarta on February 28, 2018
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2018 NUMBER 15