The government blocked Income Insurance’s proposed S$1.85 billion capital extraction over three years, a key component of its deal with Allianz, citing misalignment with commitments made during its corporatisation and regulatory concerns.
This decision was revealed in a parliamentary reply addressing questions on Income’s financial adviser and capital reduction exercise.
Deputy Prime Minister Gan Kim Yong explained that the proposed extraction was vastly different in both scale and nature from NTUC Income’s regular annual dividend payouts prior to corporatisation.
Following its corporatisation in 2022, NTUC Income’s retained earnings were converted into share capital as part of the transfer to the new entity, Income Insurance Ltd.
Gan noted that in 2023, a one-off capital reduction of approximately S$43 million was approved by the Monetary Authority of Singapore (MAS) to allow Income to continue payouts aligned with its historical practices.
However, the S$1.85 billion proposal was deemed excessive and inconsistent with representations made to the Ministry of Culture, Community, and Youth (MCCY) when NTUC Income sought an exemption under the Co-operative Societies Act.
This prompted the government to amend the Insurance Act during the October parliamentary sitting to strengthen oversight of large-scale financial restructurings.
While the amendment was broadly supported, Workers’ Party MPs abstained.
Gan highlighted the importance of upholding regulatory commitments and transparency in such transactions.
He also addressed the role of Income’s financial adviser, Morgan Stanley, engaged to assist in structuring and negotiating the deal.
Gan clarified that this role differs from that of an independent financial adviser (IFA), which adheres to stricter standards set by the Securities Industry Council.
An IFA would typically evaluate the fairness of transaction terms during a voluntary general offer (VGO) and provide recommendations to shareholders.
Since the Allianz-Income transaction is still at the pre-conditional VGO stage, these steps have not yet been triggered.
The government’s decision to block the deal in its current form is part of its commitment to regulatory safeguards and ensuring corporate obligations are met.
Any future revisions to the deal must address these concerns before moving forward.
Featured image credit: Edited from Freepik
