JAKARTA () – Indonesia will appoint state financial firm PT Bahana Pembinaan Usaha Indonesia as a holding company for state insurers to improve their finances, a deputy minister said on Thursday, as the government puts together a rescue plan for a second troubled insurer. The holding company will help pool cash flows among state insurers and may potentially help raise funds by seeking strategic partners, the Cabinet Secretariat said in a statement on its website. The move comes as the government plans to restructure life insurer PT Asuransi Jiwasraya after customers, who claim to be owed 16.42 trillion rupiah ($1.20 billion) for maturing bancassurances savings, pressed authorities for an urgent solution. Indonesian President Joko Widodo called for further reform still of the insurance and pensions sector. “Insurance and pension funds need reform,” Widodo said during an industry event in Jakarta. “Improvements, be it on the regulatory side, or supervisory or even in capital requirements, are all important,” he said, noting this was not just because of the Jiwasraya case. Jiwasraya is the second major Indonesian life insurer to run into financial trouble after Bumiputera, which has been in a restructuring process since 2013 following mounting claim liabilities. The two are among the country’s oldest insurers, formed over a century ago under Dutch colonial rule, and together have millions of policyholders. Deputy State-Owned Enterprises Minister Kartika Wirjoatmodjo told reporters that Bahana would be the holding company. “From that holding there will be cashflow of 1.5 trillion to 2 trillion rupiah,” Erick Thohir, State-Owned Enterprise Minister, said in the statement on the Cabinet Secretariat’s website. Jiwasraya, which has been put under watch by the Financial Services Authority’s (OJK), needs a 32.9 trillion rupiah ($2.4 billion) injection to boost its risk-based capital ratio to a minimum requirement of 120%, according to company documents submitted to parliament. The insurer’s short-term cash needs to pay interest, maturing policies and other liabilities until the end of 2020 amount to 16.13 trillion rupiah, while it had only 530 billion rupiah of current assets as of September, according to the documents. Prosecutors said last month that they believed they had found evidence of fraud at Jiwasraya and Attorney General Sanitiar Burhanuddin said prosecutors had found Jiwasraya’s former management had put nearly its entire portfolio in the stock market and mutual funds in assets with poor returns. Jiwasraya President Director Hexana Tri Sasongko said after prosecutors’ disclosures last month: “We respect the legal process and direct all matters related to this (investigation) to shareholders and law enforcement officials.” Reporting by Maikel Jefriando; Writing by Fransiska Nangoy; Editing by Susan FentonOur Standards:The Thomson Trust Principles.