Income will continue with affordable insurance after stake sale to Allianz: NTUC Enterprise
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Income Insurance said even with Allianz as a majority shareholder, it would continue with ongoing commitments, including social ones.
PHOTO: ST FILE
SINGAPORE – NTUC Enterprise will continue to back Income Insurance and keep it on track to serve its social objectives even after the sale of a large stake to German insurer Allianz,
Income will continue to provide affordable and accessible insurance options to the underserved and lower-income customers through products such as the LUV and SilverCare policies, he said in a statement on July 25.
He added that Income will continue to participate in national insurance programmes in partnership with the Central Provident Fund Board, and Income products will be priced “very competitively”.
“NTUC Enterprise will also continue as an active shareholder of Income Insurance to keep it to its purpose and deliver social commitments to its policyholders,” he said.
He added that Allianz, a global player, was roped in to help Income better compete.
“Income Insurance’s life insurance market share has been less than 10 per cent in the past 10 years. Allianz’s offer to be a majority shareholder will enable Income Insurance to be even more relevant and resilient over the long term, to serve families in Singapore and fulfil its obligations to its policyholders,” Mr Lim said.
The labour movement here has provided Income with capital for its business over the years, he said.
An example would be the capital injection by NTUC Enterprise in 2020 to support Income’s solvency at the peak of the pandemic, when its capital buffers came under pressure.
“Insurance is a capital-intensive business and to grow, there is a need to tap the capital markets. The strength of Allianz’s financial position will provide additional support to Income Insurance where required,” he said.
In a separate statement, Income said that NTUC Enterprise, as a substantial shareholder following the close of the deal, will remain firmly committed to Income and its stakeholders, including policyholders and shareholders.
Income stressed that even with Allianz as a majority shareholder, it would continue with ongoing commitments, including social ones, as stated in the pre-conditional offer announcement on July 17.
What this means is that Allianz will continue to participate in national insurance programmes, invest in the Singapore community, recognise the union and uphold the principles of good labour management relations.
It also means Allianz will carry out the existing pledge of investing $100 million over 10 years from 2021 to promote social mobility among the low-income, support the well-being of seniors and champion environmental causes.
Minority shareholders of Income who accept the Allianz offer will be given priority to tender their shares and receive $40.58 per share.
Shareholders are not required to take any action now as the offer is subject to regulatory approval.
A spokesman for the Monetary Authority of Singapore (MAS) said: “When assessing a potential shareholder of a licensed insurer, MAS’ assessment would include considering the track record, financial soundness, reputation, fitness and propriety of the proposed shareholder, and whether the risk management systems and processes put in place are commensurate with the size and complexity of the business undertaken by the licensed entity.”
When launched, the offer will be open for acceptance for a stipulated period, Income said, adding that the closing of the offer is expected to be in the fourth quarter of 2024 or the first quarter of 2025.
The statements by the insurer and NTUC Enterprise come amid concerns among some Singaporeans about whether the sale of a majority stake in Income would eventually lead to a dilution of its social purpose and result in higher premiums.
In a Facebook post on July 23, Ambassador-at-Large Tommy Koh said: “I don’t think it is a good idea to sell Income. It was founded to serve a social purpose and a social need. They remain valid today. I wish to argue that Income and FairPrice should never be sold.”
FairPrice is the largest supermarket chain in Singapore and a cooperative of NTUC.
Mr Tan Suee Chieh, who served as chief executive officer (CEO) of NTUC Income from 2007 to September 2013, told The Straits Times that Income had aimed to maximise the social impact and value for its policyholders. “We wanted to have as much reach to Singaporeans, not to maximise profits, but to maximise social impact.”
He was referring to Allianz CEO Oliver Baete’s comments in an interview that the German insurer was in Asia to build “a resoundingly profitable business”.
Credit ratings agency Fitch had earlier said Income would benefit from Allianz’s global expertise and the potential synergies, while other industry observers had highlighted how Income would be able to strengthen its position in the insurance space and in the region.
The issue is expected to be discussed when Parliament next sits from Aug 6.
MP Liang Eng Hwa and Non-Constituency MP Leong Mun Wai said they have filed parliamentary questions over the Allianz offer.
Mr Liang, who is chairman of the Government Parliamentary Committee for Finance and Trade and Industry, told ST he is asking whether the stake sale will have an impact on the affordability of essential insurance products to mass consumers, and whether there is social value for NTUC Enterprise to retain its controlling stake in Income.
Mr Leong said in a Facebook post that he will ask how the Government will continue to support the cooperative movement in providing Singaporeans with affordable essential goods and services in the future.
