Income will still provide affordable insurance for lower-income customers after Allianz deal: NTUC Enterprise chairman
SINGAPORE: Income Insurance will continue to provide affordable insurance for lower-income customers after the deal with Allianz, said NTUC Enterprise chairman Lim Boon Heng on Thursday (Jul 25) amid concerns about the German company buying a majority stake in the Singapore co-operative.
"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," added Mr Lim.
Germany's Allianz announced on Jul 17 that it was planning to buy a majority stake in Income Insurance for about US$1.6 billion.
It said it would offer S$40.58 per share for a transaction value of S$2.2 billion (US$1.64 billion), for 51 per cent of the shares in Income Insurance.
NTUC Enterprise currently has a 72.8 per cent stake in Income. It will remain a substantial shareholder if the sale goes through.
In his clarification on Thursday, Mr Lim said Income will continue to "price its products very competitively".
He reiterated that it would continue to take part in national insurance programmes in partnership with the CPF Board.
Bringing in a "global player with proven insurance and asset management capabilities" would help Income "compete more effectively", Mr Lim said.
"Income Insurance’s life insurance market share has been less than 10 per cent in the past 10 years," he added.
"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.
"Given that insurance has a long tail – people buy policies when they are young, and depend on them when they are old – a strong, thriving and growing insurance company will ensure their expectations are met."
Income Insurance was established in 1970 - the first co-operative society to be set up by Singapore's labour movement, with a social mission to provide affordable insurance to workers and families.
Previously known as NTUC Income Insurance Co-operative, it remains the only insurance co-operative in Singapore. It has about 2 million customers and offers life, health and general insurance, as well as investment-linked products.
There have been concerns about the possible sale, with former CEO of NTUC Income Co-operative Tan Suee Chieh and Ambassador-at-large Professor Tommy Koh among the detractors.
In a Facebook post, Mr Tan cited a quote from Allianz's Group CEO Oliver Baete about the company looking to build "a resoundingly profitable business" and said a co-operative was "diametrically opposite" to what Mr Baete described.
"We wanted to have as much reach to Singaporeans (the top line), not to maximise profits but to maximise social impact," Mr Tan said, urging people to speak up against the deal.
Professor Koh noted Income Insurance's roots in fulfilling a social mission.
"I don’t think it’s 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," he said, referring to the co-operative that runs Singapore's largest supermarket chain.
A CAPITAL-INTENSIVE BUSINESS
Over the years, the Singapore labour movement has provided Income with capital for its business.Â
Mr Lim cited an injection of funds by NTUC Enterprise in 2020 to support the co-op's solvency at the peak of the COVID-19 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," said Mr Lim.
"The strength of Allianz’s financial position will provide additional support to Income Insurance where required."
He added that since Income became a public non-listed company in 2022, minority shareholders have been asking for share liquidity.
"As announced on Jul 17, when the offer is launched, minority shareholders will be given the opportunity to tender their shares ahead of NTUC Enterprise, and can choose to tender all, any or none of their shares at any time during the period in which the offer is open for acceptance," said Mr Lim.
The launch of the offer is subject to regulatory approval. When launched, it will be open for a "stipulated period", said Income in a separate statement.
The closing of the offer is expected to be in the fourth quarter of this year or the first quarter of next.