Guidelines for Preparing Interim Liquidation Balance Sheets for Insurance, Sharia Insurance, Reinsurance, and Sharia Reinsurance Companies

To:

1. Board of Directors of Insurance Companies;
2. Board of Directors of Sharia Insurance Companies;
3. Board of Directors of Reinsurance Companies;
4. Board of Directors of Sharia Reinsurance Companies; and
5. Liquidation Teams of Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies,
   At their respective locations.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 16 /SEOJK.05/2018 CONCERNING GUIDELINES FOR PREPARING INTERIM LIQUIDATION BALANCE SHEETS OF INSURANCE COMPANIES, SHARIA INSURANCE COMPANIES, REINSURANCE COMPANIES, AND SHARIA REINSURANCE COMPANIES

In relation to the mandate of Article 32 paragraph (6) of Financial Services Authority Regulation Number 28/POJK.05/2015 concerning the Dissolution, Liquidation, and Bankruptcy of Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies (State Gazette of the Republic of Indonesia Year 2015 Number 294, Supplement to the State Gazette of the Republic of Indonesia Number 5776), it is necessary to regulate implementation provisions regarding the guidelines for preparing interim liquidation balance sheets of insurance companies, Sharia insurance companies, reinsurance companies, and Sharia reinsurance companies in this Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

1. Company means insurance companies, Sharia insurance companies, reinsurance companies, and Sharia reinsurance companies.

2. Company Liquidation, hereinafter referred to as Liquidation, is the action of settling all assets and obligations of the Company as a result of the revocation of the Company's business license and dissolution.

3. General Meeting of Shareholders, hereinafter abbreviated as GMS, is the GMS as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Companies in the form of a limited liability company legal entity or equivalent to the GMS in cooperative legal entities.

4. Liquidation Team is a team tasked with conducting Liquidation formed by the GMS or the Financial Services Authority.

5. Interim Liquidation Balance Sheet, hereinafter abbreviated as ILBS, is the Company's balance sheet as of the date of revocation of the Company's business license prepared by the Liquidation Team based on the audited closing balance sheet, taking into account:
   a. asset positions based on estimated realizable values; and b. obligation positions after the expiration of the period for submission of claims or receivables by creditors.

II. GUIDELINES FOR PREPARING ILBS

1. In the implementation of Liquidation, the Liquidation Team prepares the ILBS.

2. The preparation of the ILBS as referred to in item 1 must refer to the ILBS preparation guidelines as contained in the Appendix which is an inseparable part of this Financial Services Authority Circular Letter.

3. The ILBS preparation guidelines as referred to in item 2 do not apply to ILBSs that have already been submitted by the Liquidation Team to the Financial Services Authority before this Financial Services Authority Circular Letter was established.

4. The ILBS must be signed by all members of the Liquidation Team.

5. The ILBS is submitted to the Financial Services Authority along with supporting documents detailing the types of assets and obligations/liabilities in the ILBS.

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

III. CLOSING

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

Established in Jakarta on 29 November 2018
EXECUTIVE HEAD OF SUPERVISOR
OF INSURANCE, PENSION FUNDS,
LENDING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI

APPENDIX
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 16 /SEOJK.05/2018 CONCERNING GUIDELINES FOR PREPARING INTERIM LIQUIDATION BALANCE SHEETS OF INSURANCE COMPANIES, SHARIA INSURANCE COMPANIES, REINSURANCE COMPANIES, AND SHARIA REINSURANCE COMPANIES

GUIDELINES FOR PREPARING
INTERIM LIQUIDATION BALANCE SHEET (ILBS)

PART ONE
BASIC CONCEPTS OF ILBS PREPARATION

A. Purpose and Users of ILBS

1. The ILBS is initial financial information made by the Liquidation Team based on the audited closing balance sheet, which is one of the references in the implementation of Liquidation.

2. The purpose of the ILBS is to provide information regarding asset positions based on estimated net realizable values and obligation/liability positions after the expiration of the period for submission of claims or receivables by creditors, which must be settled as of the date of revocation of the Company's business license.

3. Users of the ILBS include among others:
   a. The Financial Services Authority, in accordance with its function as the party conducting supervision of Company Liquidation. b. The Liquidation Team, which has an interest in information regarding the estimated value of assets to be liquidated and obligations/liabilities to be settled from the proceeds of asset liquidation.
   c. The government, which has an interest in information including regarding tax obligations to be settled by the Company in Liquidation.
   d. Debtors, who have an interest in information regarding the amount of obligations/liabilities to be settled to the Company in Liquidation. e. Creditors, who have an interest in information regarding the potential settlement of obligations/liabilities from the Company in Liquidation.

B. Responsibilities

1. The Liquidation Team is responsible for the preparation and content of the ILBS.

2. The ILBS must receive approval from the Financial Services Authority. The approval of the Financial Services Authority is limited only to the conformity of the ILBS prepared by the Liquidation Team with these ILBS preparation guidelines.

C. Basic Assumptions

1. The ILBS is prepared on an accrual basis referring to applicable financial accounting standards in Indonesia.

2. The ILBS is prepared on a liquidation basis. Assets are valued at net realizable value and obligations/liabilities are valued at the amount to be settled as of the date of revocation of the Company's business license. The application of the liquidation basis is based on the condition that the Company's business license has been revoked and is in the process of Liquidation, so that the use of the historical cost principle used by the Company with the assumption of going concern becomes irrelevant.

D. Measurement Basis

1. Asset valuation based on estimated net realizable value is done using a fair value approach.

2. The ILBS balance is an estimate of net realizable value and obligation/liability positions after the expiration of the period for submission of claims or receivables by creditors.

E. ILBS Elements

1. The ILBS consists of:
   a. assets, which include assets booked in the Company's closing balance sheet and/or assets not yet booked in the Company's closing balance sheet that are expected to be liquidated in cash form during the Liquidation period; b. obligations/liabilities, which include obligations/liabilities recognized or should be recognized in the Company's closing balance sheet, the settlement of which is done through cash payments during the Liquidation period; and
   c. estimated surplus (deficit), which is the difference between the asset value as referred to in letter a and the obligation/liability value as referred to in letter b.

2. Assets are presented by type as follows:
   a. assets in the form of investments; and b. assets in the form of non-investments.

3. Obligations are presented as follows:
   a. estimated Liquidation costs; and b. obligations/liabilities to creditors.

4. Estimated Liquidation costs are estimates of all costs to be incurred during the implementation of Liquidation as listed in the Liquidation cost list, including remuneration of the Liquidation Team and supporting teams, office operational costs, court case costs, and auction costs. The amount of estimated Liquidation costs is based on the work plan and cost budget prepared by the Liquidation Team and approved by the Financial Services Authority.

5. Obligations/liabilities to creditors are debts owned by the Company in Liquidation that must be paid to creditors.

PART TWO
ILBS PREPARATION PROCEDURES

A. Data/Information Required

To prepare the ILBS, the following data/information is required:

1. The audited closing balance sheet.

2. A list of assets in the form of investments and assets in the form of non-investments containing at least information on asset type, year of acquisition, acquisition price, book value as of the revocation date, estimated asset value, asset status, asset condition, and asset valuation basis.

3. Asset valuation reports from appraisers (if any).

4. Notarized statements accompanied by asset guarantees from the party responsible for the use of the Company's assets (if any).

5. A nominative list of creditors whose receivables are eligible for payment, considering at least the completeness of submitted documents.

6. A work plan and cost budget containing information regarding the Liquidation cost budget until the estimated end of the Liquidation process.

B. Asset and Obligation/Liability Valuation Procedures

The procedures for valuing assets and obligations/liabilities are as follows:

1. Inventory all assets of the Company recorded in the closing balance sheet. Inventory includes among others ownership documents, asset status, and asset condition.

2. For asset types, they are grouped as follows:
   a. assets in the form of investments; and b. assets in the form of non-investments.
   These assets are recorded in the Financial Accounting Standards (SAK) column and the Liquidation Value column. Assets recorded in the Liquidation Value column are grouped into problematic assets or non-problematic assets.

3. Assets in the form of investments and assets in the form of non-investments are declared as problematic groups if the assets have legal obstacles in their liquidation caused by:
   a. incomplete documents; b. complete documents but the physical existence of the asset is unknown;
   c. imperfect encumbrance;
   d. assets and/or collateral are not marketable; and/or e. becoming objects of disputes outside or inside the court.

4. Asset valuation at estimated realizable value (net realizable value) uses references as follows:
   a. current assets of the Company in the form of cash or cash equivalents are calculated based on nominal value; b. direct investments are valued based on estimated net realizable value using a fair value approach;
   c. securities, including those issued by the Central Bank and/or the government, are valued based on estimated net realizable value using a fair value approach;
   d. securities transactions through repurchase agreements (REPO) are valued based on the amortized cost of the acquired effect with the effective interest rate; e. fixed assets are valued at estimated realizable value, namely:

1. market value, determined by a public appraiser or from the best available information if valuation by a public appraiser is not possible; or
2. Last Taxable Object Sale Value (NJOP) if market value is not available.
   The value recorded in the ILBS is the estimated realizable value (net realizable value) after deducting the costs of liquidating those assets.

5. Obligations/liabilities are valued at the amount stated in the audited closing balance sheet and taking into account obligations/liabilities as of the date of revocation of the business license for which information is known after the date of revocation of the business license.

6. Details of the types of assets and obligations/liabilities in the ILBS are submitted as supporting documents which are an inseparable part of the ILBS. The details must explain among others the type, value, and information regarding the validity of assets and obligations/liabilities, such as ownership documents or supporting agreements for assets and obligations/liabilities.

PART THREE
ILBS FORMAT

A. ILBS Format for Insurance Companies and Reinsurance Companies

The ILBS is prepared with the following format:

PT ...... (DL)/COOPERATIVE ...... (DP)
INTERIM LIQUIDATION BALANCE SHEET (ILBS)
For .... (date of revocation of Company's business license) (in millions of rupiah)

Account Type	SAK	Liquidation Value	Explanation
Insurance Fund*
Company Fund
PAYDI Problematic
Non-Problematic
ASSETS
Investments*
Time Deposits and Certificates of Deposit	XXX
Shares	XXX
Corporate Bonds	XXX
MTN	XXX
Securities Issued by the Republic of Indonesia	XXX
Securities Issued by Countries Other than the Republic of Indonesia	XXX
Securities Issued by Bank Indonesia	XXX
Securities Issued by Multinational Institutions	-
Mutual Funds	XXX
Asset-Backed Securities	XXX
Real Estate Investment Funds	XXX
-	XXX	XXX
Securities Transactions through Repurchase Agreement (REPO)	XXX
Direct Investments	XXX
-	XXX	XXX
Land, Buildings with Strata Rights or Land with Buildings for Investment	XXX	XXX	-
-	XXX	XXX
Financing through Cooperation with Other Parties	XXX
-	XXX	XXX
Pure Gold	XXX
Loans Secured by Mortgage Rights	XXX
-	XXX	XXX
Policy Loans	XXX
-	XXX	XXX
Other Investments	XXX
-	XXX	XXX
Total Investments	XXX
Non-Investments
Cash and Banks	XXX
Direct Premium Receivables	XXX	XXX	-
-	XXX
Reinsurance Premium Receivables	XXX	XXX	-
-	XXX	XXX
Reinsurance Assets	XXX
-	XXX	XXX
Co-insurance Claim Receivables	XXX	XXX	-
-	XXX	XXX
Reinsurance Claim Receivables	XXX	XXX	-
-	XXX	XXX
-	XXX
Investment Receivables	XXX
-	XXX	XXX
Investment Income Receivables	XXX
Buildings with Strata Rights or Land with Buildings for Own Use	XXX
-	XXX
Other Fixed Assets	XXX
-	XXX
Other Assets	XXX
-	XXX
Total Non-Investments	XXX
TOTAL ASSETS	XXX
OBLIGATIONS / LIABILITIES
Estimated Liquidation Costs	XXX
-	XXX	-
-	XXX	XXX
Obligations/Liabilities to Policyholders
a. Claim Payables	XXX	XXX	-
-	XXX
b. Claim Reserves	XXX	XXX	-
-	XXX	XXX
c. Premium Reserves	XXX	XXX	-
-	XXX
d. Reserves for Premiums Not Yet Earned Income	XXX	XXX	-
-	XXX	XXX
Total Obligations/Liabilities to Policyholders
Obligations/Liabilities to Employees	XXX	-
-	XXX	XXX
Obligations/Liabilities to Other Parties	XXX	-
-	XXX	XXX
Accrued Expenses	XXX	-
-	XXX	XXX
Other Payables	XXX
Subordinated Loans	XXX	-
-	XXX	XXX
TOTAL OBLIGATIONS/LIABILITIES	XXX
ESTIMATED SURPLUS/(DEFICIT)	XXX

Notes:

• : Investment types also include investment types using Sharia principles.
• : SAK is filled with the asset and obligation/liability values existing in the audited closing balance sheet.
• : The total Insurance Fund assets must be at least equal to the sum of technical reserves, claim payables, co-insurance payables, reinsurance payables, and other obligations/liabilities to policyholders or insured parties.
• : Explanation is filled with the amount of problematic and non-problematic assets. Filling for problematic assets must be detailed with the name of each asset.

B. ILBS Format for Sharia Insurance Companies, Sharia Reinsurance Companies, and Sharia Units of Insurance and Reinsurance Companies

The ILBS is prepared with the following format:

PT ...... (DL)/COOPERATIVE ...... (DP)
SHARIA UNIT OF INSURANCE COMPANY / SHARIA UNIT OF REINSURANCE COMPANY TABARRU' FUND For .... (date of revocation of Company's business license) (in millions of rupiah)

Account Type	SAK*	Liquidation Value	Explanation*
Tabarru' Fund
and Tanahud
Company Fund
Participant Investment Fund
Problematic
Non-Problematic
ASSETS
Investments
Time Deposits and Certificates of Deposit	XXX
Sharia Shares	XXX
Sukuk or Sharia Bonds	XXX
Sharia MTN	XXX
Sharia Securities Issued by the Republic of Indonesia	XXX
Sharia Securities Issued by Countries Other than the Republic of Indonesia	XXX
-
Sharia Securities Issued by Bank Indonesia	XXX
Sharia Securities Issued by Multinational Institutions	XXX
Sharia Mutual Funds	XXX
Sharia Asset-Backed Securities	XXX
Sharia Real Estate Investment Funds	XXX
-	XXX	XXX
Securities Transactions through Repurchase Agreement (REPO)	XXX
Financing Through Cooperation with Other Parties	XXX
Sharia Financing with Mortgage Rights	XXX
-	XXX	-
-	XXX	XXX
Direct Investments	XXX
-	XXX	-
-	XXX	XXX
Investment Properties	XXX
-	XXX	-
-	XXX	XXX
Pure Gold	XXX
-	XXX	XXX
Other Investments	XXX
-	XXX	XXX
Total Investments	XXX
Non-Investments	XXX
Cash and Banks	XXX
Tabarru' Contribution Receivables
Direct	XXX	XXX	-
-	XXX
Reinsurance	XXX	XXX	-
-	XXX	XXX
-	-
Reinsurance Assets	XXX
-	XXX	XXX
Co-insurance Claim Receivables	XXX	XXX	-
-	XXX	XXX
Reinsurance Claim Receivables	XXX	XXX	-
-	XXX	XXX
Investment Receivables	XXX
-	XXX	XXX
Investment Income Receivables	XXX
Non-Investment Properties	XXX
-	XXX	-
-	XXX	XXX
Other Assets	XXX
Total Non-Investments	XXX
TOTAL ASSETS	XXX
OBLIGATIONS/LIABILITIES
Estimated Liquidation Costs	XXX
-	XXX	-
-	XXX	XXX
Obligations/Liabilities to Participants
a. Claim Payables	XXX	XXX	-
-	XXX
b. Claim Provisions	XXX	XXX	-
-	XXX	XXX
c. Contribution Provisions	XXX	XXX	-
-	XXX
d. Contribution Provisions Not Yet Income/Rights	XXX	XXX	-
-	XXX	XXX
Total Obligations to Participants
Obligations/Liabilities to Employees	XXX	-
-	XXX	XXX
Obligations/Liabilities to Other Parties	XXX	-
-	XXX	XXX
Accrued Expenses	XXX	-
-	XXX	XXX
Other Payables	XXX
Subordinated Loans	XXX	-
-	XXX	XXX
TOTAL OBLIGATIONS/LIABILITIES	XXX
ESTIMATED SURPLUS/(DEFICIT)	XXX

Notes:

• : SAK is filled with the asset and obligation/liability values existing in the audited closing balance sheet.
• : Company Fund is a collection of funds managed by the Company, other than Tabarru' Fund, Tanahud Fund, and participant investment funds.
• : Explanation is filled with the amount of problematic and non-problematic assets. Filling for problematic assets must be detailed with the name of each asset.

Established in Jakarta on 29 November 2018
EXECUTIVE HEAD OF SUPERVISOR
OF INSURANCE, PENSION FUNDS,
LENDING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI