The Singapore government has blocked NTUC Enterprise’s proposed sale of Income Insurance shares to Allianz, citing concerns over the structure of the deal.
The decision comes despite no objections to Allianz’s suitability as a partner.
The government has tabled an amendment to the Insurance Act in Parliament, enabling the Monetary Authority of Singapore (MAS) to withhold approval of transactions involving current or former cooperative insurers if public interest is at stake.
Minister Edwin Tong explained in a ministerial statement that the government supports a strong partner for Income to strengthen its capital base, but concerns arose from the transaction’s structure, especially in light of assurances made during Income’s corporatisation in 2022.
The government highlighted the lack of clarity on how the deal would affect Income’s social mission, a core principle it committed to uphold during its transition from a cooperative to a corporate entity.
Income Insurance was corporatised in 2022, transitioning from NTUC Income Co-operative Ltd to a company structure.
The move aimed to enable the insurer to better compete in a tightening regulatory environment and attract strategic partners.
During this process, Income carried over S$2 billion in surplus, which was granted an exemption by the Ministry of Culture, Community and Youth (MCCY) to support its business continuity.
However, the government now questions how this surplus would be used under the Allianz deal, as there is no clear plan to ensure the funds would continue to support Income’s social mission.
The proposed sale involved Allianz acquiring a 51% stake in Income for S$2.2 billion, with a plan to streamline operations and optimise capital, including a projected S$1.85 billion capital return to shareholders within three years of the transaction.
This potential capital extraction raised concerns, as it contradicts Income’s earlier representations to MCCY that the corporatisation aimed to build capital strength.
In response to these concerns, the government has decided to intervene, believing that the deal, in its current form, may undermine the social mission of both Income and the cooperative movement in Singapore.
Although the financial prudential requirements have been met, the government’s focus extended beyond regulatory capital adequacy to include the broader impact on Income’s role as a social enterprise.
Income Insurance has acknowledged the government’s decision and committed to take into consideration the proposed amendments to the Insurance Act.
The company affirmed it would work closely with relevant stakeholders to consider the next steps.
NTUC Enterprise echoed this statement saying,
“NTUC Enterprise has consistently acted in good faith to safeguard the interests of shareholders, policyholders and employees of Income Insurance. It believes that Allianz’s offer will enable Income Insurance to be even more relevant and resilient over the long term, to fulfil its social commitments, and meet its obligations to its policyholders.
NTUC Enterprise will study carefully the implications of the Ministerial Statement by Minister Edwin Tong and the amendments to the Insurance Act, and work closely with relevant stakeholders to decide on the next course of action.”
Allianz, one of the world’s largest insurance companies, expressed respect for the government’s position and indicated it will collaborate with Income and NTUC Enterprise to consider revisions to the transaction structure.
“We are convinced that partnering with Income Insurance, a company that shares Allianz’s values
and commitment to customer excellence, will benefit Singapore’s customers and society,”
the insurer said in a statement.
The amendment to the Insurance Act, which was tabled on 14 October 2024, is set to be debated further in Parliament on 16 October 2024.
The changes will allow MAS to consider broader public interest issues when assessing transactions involving cooperative-linked insurers, ensuring that future deals align with both financial prudence and social objectives.
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