NTUC Enterprise and Income Insurance have refuted claims made by former NTUC Income CEO Tan Suee Chieh in an open letter to the Monetary Authority of Singapore (MAS), in which he raised corporate governance issues and expressed concern over the potential erosion of NTUC Income’s social mission in light of its sale to Allianz.
Last month, Allianz had announced plans to acquire a 51% stake in Singapore’s Income Insurance in a deal valued at approximately SG$ 2.2 billion (EUR 1.5 billion).
Tan highlighted two key events preceding the sale. First, NTUC Enterprise injected S$630 million into NTUC Income from 2015 to 2020 in return for shares at a par value of S$10 per share.
This was significantly below their true market or economic value. NTUC obtained shares worth far more than the S$630 million it had injected into NTUC Income.
This acquisition was based on assurances that the shares would be held permanently to safeguard NTUC Income’s social mission.
Second, in 2022, NTUC Income’s corporatisation raised concerns about the permanence of NTUC Enterprise’s commitment, despite written assurances.
Tan argued that the recent announcement of NTUC Income’s sale to Allianz contradicts NTUC Enterprise’s previous commitments and could undermine the social mission of NTUC Income.
He urged MAS to scrutinize the sale, highlighting NE’s significant gains from shares acquired at par value.
In response, NTUC Enterprise and Income Insurance issued a joint statement saying his objections has “cast aspersions on the stakeholders in relation to this proposed transaction” and that these aspersions are not “well-founded and, indeed, unfair”.
They stated that cooperative shares were always valued at par, not market value, and that the conversion to permanent shares was to meet regulatory requirements.
They noted that NTUC Income’s corporatisation process actually increased minority shareholders’ rights and voting power.
The statement emphasised that cooperative shares, by nature, are purchased and redeemed at par value and not at market value.
The capital injections made by NTUC Enterprise from 2015 to 2020 were also at par value, in line with this principle.
The corporatisation in 2022, which converted cooperative shares to equity shares on a 1-for-1 basis, allowed minority shareholders to unlock the full value of their shares and increased their voting rights from 0.3% to 26.2%.
NTUC Enterprise and Income Insurance also addressed concerns about NTUC Enterprise’s commitment to holding its shares permanently.
They noted that while NTUC Enterprise had initially committed to holding its shares to support NTUC Income’s social mission, the evolving competitive landscape and regulatory requirements necessitated changes to ensure financial resilience and sustainability.
The statement also highlighted Allianz’s financial strength and capabilities, noting that its involvement would create a highly competitive “insurance powerhouse” in Singapore, ensuring long-term sustainability and support for NTUC Income’s social mission.
Minority shareholders were assured that they would benefit from the sale, with the opportunity to tender their shares at a significant premium, reflecting an annualised return well above the market average.
