Life Insurance Investment Returns Plunge on IDX Slump
Returns for Indonesian life insurance companies have significantly decreased following a downturn in the Indonesian Stock Exchange (IDX) Composite index. In January, life insurers recorded returns of Rp 1.6 trillion (US$96.6 million), marking a 56 percent year-on-year (yoy) decrease. This decline contributed to a 16.5 percent drop in their overall revenue, which amounted to Rp 13.97 trillion.
For the entirety of the previous year, investment returns for life insurers fell by 29 percent, reaching Rp 22.2 trillion. This occurred as the IDX Composite index experienced a 2.65 percent decline.
The main benchmark of the Jakarta bourse has lost almost 13 percent of its value since the start of the year. On Monday, the index briefly dipped below 6,000 points, its lowest point this year, before recouping some losses by the end of the trading day. Market volatility led to a 30-minute trading halt on March 18 – the first such halt since the coronavirus pandemic began – after the index dropped over 5 percent.
Stocks represent the second-largest asset class in life insurers’ investment portfolios, succeeding government bonds.
Data released by the Financial Services Authority (OJK) indicates that these companies have decreased their equity holdings from 27 percent of their total investments in January 2024 to 24 percent this year.
