Stricter capital requirements to put pressure on Eka Lloyd: Fitch Ratings

The insurer would need to raise capital to meet the government’s $15m requirement.

PT Asuransi Eka Lloyd Jaya (Eka Lloyd) will experience increased pressure due to stricter capital requirements introduced by Indonesia's Financial Services Authority (OJK), Fitch Ratings said.

The OJK plans to increase the minimum equity requirement for non-life insurers to $15m (IDR250b) by the end of 2026, up from the current $6.1m (IDR100b).

Fitch said that Eka Lloyd will likely need to raise additional capital, as the new requirement exceeds its shareholders' equity of $98m (IDR162b) at the end of 2024. The ratings firms said it considers this a challenge for the company in balancing regulatory capital compliance with its growth plans.

Eka Lloyd's risk-based capital (RBC) ratio declined to 195% by end-2024 from 202% at end-2023, driven by increased reserves due to ongoing business expansion in its primary business, multipurpose credit insurance.

Eka Lloyd's gross premiums written (GPW) rose by 33% in 2024, marking a fourth year of double-digit growth, compared with the non-life industry's growth of 4%. The insurer's business is mainly in multipurpose credit insurance, which accounted for more than 90% of GPW in 2024. Fitch said the product is designed to settle a policyholder's loan payments in the case of default and is mainly tied to loans from rural banks.