OJK Circular Number 22/SEOJK.05/2016 on the Revocation of OJK Circular Number 25/SEOJK.05/2015 Concerning Valuation of Sharia Securities Investments and Calculation of Funds to Anticipate Risks of Failure in Managing Assets and/or Obligations of Sharia Insurance and Reinsurance Companies

To:

1. Board of Directors of Sharia Insurance Companies; and
2. Board of Directors of Sharia Reinsurance Companies,
   in their respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 22 /SEOJK.05/2016

CONCERNING
THE REVOCATION OF CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 25/SEOJK.05/2015 CONCERNING VALUATION OF INVESTMENTS IN SHARIA SECURITIES AND CALCULATION OF FUNDS TO ANTICIPATE RISKS OF FAILURE IN MANAGING ASSETS AND/OR OBLIGATIONS OF SHARIA INSURANCE COMPANIES AND SHARIA REINSURANCE COMPANIES

In relation to Article 7 of the Minister of Finance Regulation Number 11/PMK.010/2011 concerning Financial Health of Insurance and Reinsurance Businesses with Sharia Principles, the Chairman of the Capital Market Supervisory Agency and Financial Institutions Regulation Number PER-07/BL/2011 concerning Guidelines for Calculating the Amount of Funds Required to Anticipate Loss Risks from Tabarru’ Fund Management and Calculating the Amount of Funds That Must Be Provided by Companies to Anticipate Potential Loss Risks Arising in the Conduct of Insurance and Reinsurance Businesses with Sharia Principles, and the Financial Services Authority Circular Letter Number 25/SEOJK.05/2015 dated August 31, 2015 concerning Valuation of Investments in Sharia Securities and Calculation of Funds to Anticipate Risks of Failure in Managing Assets and/or Obligations of Sharia Insurance Companies and Sharia Reinsurance Companies, hereinafter referred to as SEOJK Number 25/SEOJK.05/2015, and considering current economic and market conditions, it is necessary to establish the revocation of SEOJK Number 25/SEOJK.05/2015 in this Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

1. Based on SEOJK Number 25/SEOJK.05/2015, the valuation of investments in Sharia securities has been established to reflect fair value, and adjustments to funds to anticipate risks of failure in managing assets and/or obligations have been calculated in the solvency ratio calculation as a result of global financial conditions causing the market value of investments in Sharia securities to show unfair values.

2. Global financial conditions as referred to in item 1 have resulted in a decrease in the solvency ratios of Sharia insurance companies and Sharia reinsurance companies to below the solvency ratios required based on the Minister of Finance Regulation Number 11/PMK.010/2011 concerning Financial Health of Insurance and Reinsurance Businesses with Sharia Principles.

3. That global financial conditions and the development of Indonesia's economy currently experience positive growth and development, reflected in market indicators:
   a. The rupiah exchange rate against the US dollar since October 2015 has continuously strengthened and stabilized. b. Bank Indonesia interest rates since December 2015 have continuously decreased and stabilized.
   c. Country Rate for Indonesia since October 2015 has continuously strengthened and stabilized.
   d. The Composite Stock Price Index since October 2015 has increased and continues to show an upward trend.

4. That based on the conditions and developments as referred to in item 3, global financial conditions have shown fair values for the investments market in Sharia securities.

5. That based on item 4, the establishment of conditions for the valuation of investments in Sharia securities to reflect fair value and adjustments to funds to anticipate risks of failure in managing assets and/or obligations calculated in the solvency ratio requirements specified in SEOJK Number 25/SEOJK.05/2015 as a basis for Sharia insurance companies and Sharia reinsurance companies to perform calculations on held Sharia securities and adjust funds to anticipate risks of failure in managing assets and/or obligations calculated in the solvency ratio calculation needs to be revoked.

II. DETERMINATION OF REVOCATION OF SEOJK NUMBER 25/SEOJK.05/2015

Based on considerations as referred to in Roman numeral I, SEOJK Number 25/SEOJK.05/2015 is revoked and declared invalid.

III. CLOSING

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

Determined in Jakarta on June 27, 2016

EXECUTIVE HEAD OF SUPERVISOR
OF INSURANCE, PENSION FUNDS,
FINANCING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY,

signed
FIRDAUS DJAELANI

Copy consistent with the original
Director of Legal Affairs 1
Legal Department

signed
Yuliana