NTUC screw Income shareholders, went back on its commitment made just 2 years ago

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When it comes to self-interest and money, NTUC forget its commitment made just 2 years ago.
Will you trust the PAP government?

Tan Suee ChiehTan Suee Chieh • 2nd • 2ndPast President at the Institute and Faculty of ActuariesPast President at the Institute and Faculty of Actuaries8h • 8 hours ago
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Last week, I read that Allianz Europe B.V. would be acquiring at least 51% of the shares in Income Insurance Limited (“Income Insurance”) at S$40.58 per share, valuing the entire company at approximately S$4.4 billion.

NTUC Income has not only reversed its 2022 commitment to maintain NTUC Enterprise as the majority shareholder but NTUC Enterprise would also crystallise a significant capital gain through the sale of its shares. This gain, I argued in 2022, should be more fairly distributed to those shareholders who invested before NTUC Enterprise's capital injection in 2015-2020.

I am sharing a memorandum I wrote to the MAS dated February 13, 2022, in which I objected to the basis of the corporatisation of NTUC Income. Extracts of MAS response are also included.

From the documents, two main issues emerge:

1. A clear commitment was made by NTUC Income and NTUC Enterprise in 2022 in writing that NTUC Enterprise would remain a majority shareholder after corporatisation. This commitment was used to alleviate concerns about corporatisation. It is troubling that within two years, this commitment was rescinded.

2. There was a dilution of minority interests due to NTUC Enterprise's injection of capital, 63 million shares at a par value of $10 between 2015 and 2020, when the economic value was multiple times that. Issuing these shares at par value was justifiable at that time because the class of shares issued to NTUC Enterprise could not be redeemed. However, with corporatisation, these shares can now be sold at market value, leading to a substantial capture of value by NTUC Enterprise and the dilution of the economic interests of minority shareholders. Inearly 2022, I engaged with the NTUC Income Board as a private citizen, advocating for a fairer distribution of equity gains for shareholders who invested before NTUC Enterprise's capital injection, but without success. I requested MAS to intervene under Section 117 (3) of the Insurance Act. MAS noted my concerns and shared them with the Registrar of Cooperatives, the regulator of cooperatives. The Registrar of Cooperatives felt it was an issue for NTUC Income to resolve. I left matters as they were until today.

I believe regulatory and corporate transparency are key to sound governance. It is also important that citizens speak up on matters of public interest, as this promotes accountability and democracy.

In my view, NTUC Income minority shareholders have been treated unfairly. Since my background allows me to have a deeper understanding of this complex issue, I feel obliged to speak up on this matter.

It is in this spirit that I share this correspondence. I leave it to readers to judge if our governance systems and culture have served us well. If they have not, I would be interested in your comments.

1. What should have happened?
2. What can be done now?
3. What can we learn from this case to improve our governance systems and culture for the future?

Many thanks for reading.

 

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NTUC Income co-op to convert to a company amid stiffer competition in insurance industry​

NTUC Income said the planned corporatisation will give it more flexibility to raise funds for its expansion here and in the region. ST PHOTO: NG SOR LUAN
Prisca Ang and Sue-Ann Tan

JAN 06, 2022

SINGAPORE - Singapore's second-largest health insurer NTUC Income plans to convert its legal structure from a co-operative to a company governed by the Companies Act, to give it a firmer footing amid increased competition in the industry.
Income said the planned corporatisation will give it more flexibility to raise funds for its expansion here and in the region, and enable it to offer more competitive products to customers.
Current policyholders will continue to have the same coverage, benefits and terms after the proposed exercise, and no action is required from them in the process, the co-op said on Thursday (Jan 6).
National University of Singapore business professor Lawrence Loh said the move will allow Income to enter the fray of the largest players. He noted that the big three in the insurance scene here are Great Eastern, Prudential Singapore and AIA Singapore.
“The bigger size and scope will allow Income to cut its costs even more, thus lowering the premiums – to begin with, there are already pressures on the price levels of each offeror,” he said.
Income chief executive Andrew Yeo said Income will continue to cater to underserved customer segments such as the elderly, people with special needs, and migrant and gig workers.
"Income was initially set up to plug a social need to provide insurance for workers.... We continue to be steadfast on this purpose even as we embark on the corporatisation exercise," he added.

"More significantly, we will be even more responsive to changing customer needs via insurance solutions that speak to today's digital-first lifestyles and customers," he added.
Co-ops are membership-based enterprises that operate on the principles of self-help and mutual assistance. The members are also owners of the co-ops.
Currently, only trade unions and other co-ops can invest in Income as institutional members. The insurer was established in 1970 and is the only insurance co-op in Singapore.

Income has close to 700,000 IncomeShield policyholders, and ranks fourth in new business premiums from its health insurance business. The insurer serves more than two million policyholders in total.
Income will transfer its existing insurance business and assets to the new company, Income Insurance Limited, and the co-op will then be liquidated. The proposed process will not change Income's organisational structure.
Mr Yeo told a media briefing that NTUC Enterprise will remain the majority shareholder of the new company, which will continue to be part of its network of organisations.
Income will organise an extraordinary general meeting to seek members’ approval for the proposed transfer and liquidation of the co-op.
Existing institutional and ordinary members of Income who hold co-op shares will receive an equivalent number of shares in Income Insurance Limited, on a one-for-one basis, and their co-op shares will be cancelled.

Shareholders of the new company will have one vote per share. Under the new company, there will also no longer be a statutory cap on dividends and the new shares will not be capped at par value of $10 per share.
Income’s over 500,000 ordinary members will also receive a personal accident policy with a sum assured of $52,000 for three years.
Income added that employee roles, benefits and contracts will remain the same. Unionised employees will continue to be represented by the Singapore Insurance Employees' Union.
The exercise is expected to be completed in the second half of this year, subject to regulatory approvals and other customary closing conditions.

Income's plan to become a company comes amid significant shifts in its operating environment.
These include a mature domestic market, evolving regulatory expectations, and stiffer competition from insurers and tech players catering to digitally savvy consumers' demand for more diverse and targeted products.
Income chairman Ronald Ong said corporatisation will allow Income to scale its business quicker locally and regionally and invest in growth channels and markets, as well as digital capabilities to better compete with other insurers.

Income chief executive Andrew Yeo (left) and Income chairman Ronald Ong. PHOTO: NTUC INCOME
The home-grown insurer also recently ventured into Indonesia, Malaysia and Vietnam through partnerships with other insurers, brokers and insurtech players.
The partnerships are built on the insurance-as-a-service model, in which insurers deliver personalised insurance products to the customer in a simplified way while taking into account when and how they require them.
Mr Yeo added that the process will create more options for Income through the likes of mergers and acquisitions, joint ventures and initial public offerings.
Income on Thursday also pledged $100 million over 10 years to support causes that champion the low-income, including education for youth and children in need, the elderly and the environment.

 

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askST: What is a co-operative?​

NTUC Income will be changing from a co-operative, or co-op, to a corporate company. PHOTO: SCREENGRAB FROM GOOGLE MAPS

Sue-Ann Tan
Business Correspondent

JAN 06, 2022

SINGAPORE - NTUC Income announced on Thursday (Jan 6) that it will be changing from a co-operative, or co-op, to a corporate company.
But what is a co-operative and how is it different from a corporate firm? The Straits Times answers some of these common questions.

What is a co-operative?​

A: Co-operative societies, or co-ops, are membership-based enterprises that operate on the principles of self-help and mutual assistance, according to the Ministry of Culture, Community and Youth (MCCY).
Most co-ops have social missions to benefit the greater society in which they operate.
Some well-known co-ops in Singapore are NTUC Fairprice, NTUC First Campus and NTUC Foodfare.
Co-ops are still business-driven, but they are also anchored in their social mission to help Singaporeans and residents by moderating the cost of living.

How many co-ops are there in Singapore?​

A: According to the MCCY website, there are 85 co-ops in Singapore, of which 63 are in the consumer and service sectors.


The remaining 22 are credit co-ops, which provide financial services, such as taking in deposits or granting loans, to associated members or those in a particular community.
The co-ops in Singapore range from stores selling affordable goods on university campuses to those providing services or support to specific groups of people, such as the Methodist Co-operative Society and the Employment for Persons with Intellectual Disability Co-operative.

What is the difference between a co-op and a corporate firm?​

A: A co-op's main purpose is to serve the interest of its members in terms of promoting some sort of social, economic or cultural benefit. A corporate firm's main purpose is to make profit for its shareholders and investors.

In Singapore, companies are governed by the Companies Act, which regulates aspects such as company structure, shareholder rights and duties of directors and officers.

What other types of companies exist in Singapore?​

A: There is a variety of business entities in Singapore registered under the Accounting and Corporate Regulatory Authority.
For instance, a sole proprietorship is a business owned by one person.
An association of two or more persons carrying on business with a view to profit together is a partnership. When there is a partnership that consists of two or more people, with at least one general partner and one limited partner, the business is a limited partnership.
Furthermore, a limited liability partnership is a partnership where the individual partner's own liability is generally limited.
Finally, a company is a business form that is a legal entity separate and distinct from its shareholders and directors.

Which other companies in Singapore have gone from being co-ops to corporations?​

A: Land transport company ComfortDelGro is one such example. It was formed in 2003 through the merger of two firms - Comfort Group and DelGro Corporation.
Comfort Group was a co-op under NTUC and became the first co-op to corporatise in 1993.
At the time of merger, it was Singapore's biggest taxi operator, with a fleet of 11,340 vehicles under its Comfort and Yellow-Top brands. It also had 401 buses plying unscheduled routes.
DelGro was the parent of SBS Transit, Singapore's foremost bus operator then and also ran a fleet of 5,116 CityCab taxis.
The merger and corporatisation meant the firm could achieve economies of scale and compete on the global stage.
Similarly, NTUC Income said it is proposing its corporatisation exercise for long-term competitiveness and to support its growth locally and overseas.
The proposed corporatisation exercise is expected to be completed in the second half of the year, subject to regulatory approvals and other conditions.

 

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So were the "experts" right? Did NTUC Income increase its range of offerings at competitive prices?

Wider range of offerings for customers if NTUC Income goes corporate: Experts​

NTUC Income stressed that current policyholders will continue to have the same insurance coverage, benefits and terms. ST PHOTO: LIM YAOHUI
Sue-Ann Tan and Prisca Ang

JAN 07, 2022

SINGAPORE - Consumers could be seeing a more diverse range of products from insurer NTUC Income in the future, with its plans to convert its legal structure from a cooperative to a company governed by the Companies Act.
Singapore's second-largest health insurer said on Thursday (Jan 6) that the planned corporatisation will give it more flexibility to raise funds for its expansion, both locally and regionally, and enable it to offer more competitive products to customers.
The insurer also stressed that current policyholders will continue to have the same insurance coverage, benefits and terms, and no action is required from them during this process.
National University of Singapore business professor Lawrence Loh said: "The corporatisation initiative will enable Income to stay viable, especially since new entrants are becoming more innovative by combining finance with technology.
"Income cannot afford to stay static in the face of fluid, competitive dynamics. The restructuring will, in particular, provide much flexibility for financing and resourcing new growth."
He added that the upshot of this move is that it can help Income provide better packages and services, including higher and broader insurance benefits.
"The existing clientele base, particularly the underserved segments, will continue to be the staple for Income. Yet, there are new segments that it can cater to, for it to scale up and also enlarge its scope of products," he said.


Singapore Management University assistant professor of finance Aurobindo Ghosh agreed that the move to corporatisation will give Income access to public markets for raising funds, rather than being restricted to co-operative, trade unions or public and government sources.
"The main concern for corporatisation from a consumer's point of view is probably that corporations have to make decisions keeping stakeholder value or profitability in mind," he said.
A co-operative typically has a social mission to benefit the greater society in which it operates.

But the competitive insurance landscape means that Income has to remain aligned to market standards, both experts said.
"While Income's future offerings will become more market-sensitive, it can still retain its core social mission… Consumers do have choices, if Income deviates from market standards," Prof Loh said.
Prof Ghosh added that Singaporean consumers might see a wider suite of products available, probably at a reasonable price.
"With larger access to the public market to raise capital, Income might be able to provide non-traditional products - like micro-insurance - or more customised insurance products at competitive prices to appeal to younger demographics," he said.
Income recently launched SNACK, a micro-insurance scheme that allows people to build up insurance coverage by adding tiny premiums of as little as 30 cents each time they undertake everyday activities such as buying snacks and taking public transport.

Besides offering more products for younger consumers, corporatisation might also help Income provide products that might be appealing to more discerning, high-net-worth clients, who might have more personalised needs, Prof Ghosh said.
NTUC Income policyholders also said the move is not expected to have a huge impact on them, and that they hoped it would help Income enhance its offerings in the future.
Mr Joseph Lim, 29, a quality assurance specialist, said: "I'm not sure how (the move) will affect my current plan with Income, but I hope it will be favourable to consumers.
"I'm also interested to see what types of new products they offer in the future, such as micro-insurance plans that cover niche areas - like certain types of diseases or illnesses - which might be relevant to people who are more predisposed to them but have not been diagnosed."

 

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On the Ground​

NTUC Income's corporatisation may raise questions over its social mission​

Toh Yong Chuan
Assistant News Editor

NTUC Income on Thursday announced it is planning to corporatise to seek long-term growth and competitiveness. ST PHOTO: NG SOR LUAN

JAN 07, 2022

SINGAPORE - In May 2013, NTUC Enterprise - the union entity that holds the controlling stake in 12 National Trades Union Congress social enterprises - declared: "We do not plan to corporatise or list any of these social enterprises."
Its then group chief executive-designate Tan Suee Chieh said in a letter to The Business Times that NTUC social enterprises exist to meet the needs of Singaporeans for affordable and quality products and services, and corporatisation or listing would change their fundamental character and objective of putting people before profits.
Mr Tan, who was NTUC Income's CEO from 2007 to 2013, was responding to a suggestion that the labour movement consider listing NTUC FairPrice and NTUC Income - its two most visible cooperatives - to grow them further.
In an unexpected turn, Income on Thursday (Jan 6) announced it is planning to corporatise to seek long-term growth and competitiveness. Under the move expected to be completed in the second half of this year, NTUC Income will become Income Insurance Limited, dropping "NTUC" from its identity as it ceases to be a cooperative. While an eventual public listing is not in the works, it is not completely ruled out.
Income's move is not without precedent. In 1993, the labour movement corporatised its taxi cooperative NTUC Comfort. The company dropped "NTUC" from its name to become Comfort Group and a public listing followed a year later. In 2003, Comfort Group merged with DelGro Corporation to become ComfortDelGro today.
Income's plan can be examined based on its impact at five levels: the cooperative, its shareholders, policyholders, union members and ordinary Singaporeans.
For the cooperative, the business case for corporatisation is compelling. While Income is a household name offering life, health and general insurance, it is not the largest insurer in Singapore. It is largely a home-grown player, expanding regionally to Vietnam, Indonesia and Malaysia for the first time only three months ago - in October - by inking partnerships with insurers in these countries.

As a cooperative, Income is hamstrung in expansion as only trade unions and other co-ops can invest in the insurer.
Corporatisation will allow the insurer "to scale its business quicker locally and regionally, invest in growth channels and markets, as well as digital capabilities to effectively compete more equitably with other insurers", said its chairman, Mr Ronald Ong, on Thursday.
Shareholders will likely welcome the proposed move. Income has stopped accepting new share applications from its life policyholders since December 2004. Existing shareholders will receive one-for-one shares in the new company, allowing them to preserve their interests and enjoy the fruits of future growth. They include the 15,941 ordinary shareholders collectively holding a 26 per cent stake in the cooperative. The remaining shares are held by NTUC as its founding member, and 24 institutional members which are cooperatives.

After corporatisation, if Income can better meet customer needs by introducing products and services at affordable premiums, policyholders will benefit from the move too.
But for the one million union members in Singapore, what can be disconcerting is Income seemingly severing its union links, raising the question of whether the benefits has given to union members for the past 52 years in the form of discounts and rebates will continue.
And for ordinary Singaporeans who are not union members, the bigger question is whether the new entity will remain as devoted to Income's social mission. Besides an annual report, Income also publishes an annual social impact report detailing its social mission to help ordinary Singaporeans. Its latest report shows that it disbursed $1.1 million in bursaries and refunded more than $1 million in travel insurance premiums to customers affected by the Covid-19 pandemic border closures in 2020.
To this end, Income has pledged $100 million over 10 years to support causes to uplift low-income families, the elderly and the environment.

Income CEO Andrew Yeo said on Thursday that the insurer will continue to cater to underserved customer segments such as the elderly, people with special needs, and migrant and gig workers. It is important that the new Income continues to serve these segments that a pure for-profit, non-home-grown insurer will likely overlook for commercial reasons.
Income's corporatisation move is almost a certainty. It is unthinkable that the insurer would have made the announcement on Thursday without the support of its biggest shareholder, NTUC Enterprise, which holds about 70 per cent of its shares.
But while it may be too early to speculate how the new entity will take shape, it is reasonable for union members and the public to expect the new Income not to abandon its social mission, even as the insurer and its shareholders decide not to continue with the social enterprise business model.
After all, for nearly half a century, Income has been defined as much by its social mission as its insurance role. This foundation cannot be easily eroded, even as the new Income evolves.

 

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Income Insurance shareholders given option to sell shares on private digital exchange Alta​

Under Income’s previous cooperative structure, shareholders had the option to redeem their shares at par value or $10 each. PHOTO: ST FILE

Kang Wan Chern
Deputy Business Editor

JAN 16, 2024

SINGAPORE - Shareholders of local insurance provider Income Insurance (Income) now have an additional option to sell their shares in the company, following a change in its legal structure in September 2022.
The new option, announced on Jan 12, will enable retail and individual shareholders to sell their Income shares through local brokerage Phillip Securities. The shares will subsequently be converted to tokens and traded on private digital securities exchange Alta.
Phillip Securities is a subsidiary of PhillipCapital, which is a shareholder of blockchain-powered Alta. In 2022, the value of orders placed on the platform amounted to US$32 billion (S$42.9 billion), and it hit US$195 billion in 2023, a rise of 500 per cent.
The move is expected to make it much easier for existing shareholders to sell their shares in Income, a public non-listed company, by shortening the process from months to a matter of days.
Alta chief executive Kelvin Lee said: “Trading is made easy due to the simplified transfer, clearing and settlement process, which also results in lower costs.”
Under Income’s previous cooperative structure, shareholders had the option to redeem their shares at par value or $10 each.
After NTUC Income Insurance Cooperative corporatised and transferred its business to Income Insurance in 2022, co-op shareholders received an equivalent number of Income shares on a one-for-one basis, but the option to redeem was no longer available.

“To fulfil this need, Alta partnered Phillip Securities to provide liquidity for Income shareholders,” Mr Lee said.
“Investors can utilise our exchange for price discovery. We expect demand to be healthy following Income’s corporatisation exercise, as investors seek a venue to trade shares,” he added.
Being a public non-listed company means that while the public can own shares in Income, the shares are not available for trading on a stock exchange and are typically traded directly between two parties.

In the absence of a market share price, shareholders can reference its net asset value (NAV) per share to get an indicative value of the shares.
As at Dec 31, 2022, Income’s NAV per share was $29.07, according to information provided by the company.
Based on the calculations presented in an independent report dated Dec 22, 2023, by boutique investment firm KT Capital Group, Income shares could now be worth between $18.60 and $21.70 each.

Mr Lee added that Alta will make the Income shares available to its global network of investors and has already received orders to purchase the shares.
Once the shares are sold, however, retail investors may find it much harder to repurchase them, as Alta is currently permitted to offer tokenised securities to institutional and accredited investors only.
An Income spokesperson said Alta and Phillip Securities are independent third parties and not agents of Income, adding that the company does not endorse or recommend their share liquidity programme.
“Shareholders of Income Insurance should seek independent financial advice and conduct their own due diligence before making their own independent decision on whether to use the services offered by Alta and Phillip Securities.”
The Income spokesperson noted that shareholders can still continue to privately trade their shares on terms that are mutually agreed upon based on a willing seller, willing buyer basis.
The spokesperson added that the 2022 corporatisation exercise was undertaken to better position Income for growth and provide greater operational flexibility to serve its customers.
“Income Insurance remains strong financially, and its capital adequacy ratio maintains well above regulatory requirements. As one of the leading composite insurers, Income now serves over 1.4 million customers in Singapore.”
Income is among the leading composite insurance companies that are permitted to provide both life insurance and non-life insurance premiums in Singapore.
According to research by KT Capital Group, it is the largest property and casualty insurers and among the top five life and health insurers in the Republic.
The spokesperson added: “Shareholders may see potential benefits in the long-term growth and success of the business.”
Income currently has an AA- rating by S&P Global Ratings with a stable outlook post-corporatisation for 2022 and 2023.

 

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Retail shareholders holding 28 million Income shares face complex trading issues​

Based on Income’s latest annual report, 15,835 individual shareholders held 28.1 million Income shares as at Dec 31, 2023. PHOTO: ST FILE

Angela Tan
Senior Business Correspondent

JUL 10, 2024


SINGAPORE - Retail shareholders holding a total of as much as 28 million shares in Income Insurance are facing difficulties in deciding what to do with their holdings as they grapple with the complexity in trading of the public non-listed company’s shares.
Some told The Straits Times that they did not know how to buy or sell the shares in Income, which is a public company but whose shares are not listed or traded on a stock exchange.
One of them, who wanted to be known only as Mr Ang, said it was difficult to make an informed decision to keep or sell the holdings as shareholders are unable to gauge the trading activity.
Unlike securities listed on a stock exchange, investors are unable to see all the related trading information, such as the bid and ask prices as well as the trading volumes.
Based on Income’s latest annual report, 15,835 individual shareholders held 28.1 million Income shares as at Dec 31, 2023. Institutional shareholders held 79 million shares, with NTUC Enterprise Co-operative Limited holding close to 78 million of those shares.
Under Income’s old cooperative structure, shareholders could redeem their shares at par value of $10 each. After NTUC Income Insurance Cooperative corporatised and transferred its business to Income in 2022, co-op shareholders received an equivalent number of Income shares on a one-for-one basis, but the option to redeem was no longer available.
When contacted, a spokesperson for Income, one of Singapore’s largest providers of life and non-life insurance, said shareholders could identify their own willing buyer and willing seller and transact at a price that the parties agree on.

Shareholders said this process could take months, from identifying an interested counterparty in the rarely traded shares to concluding the transaction.
The issue persists even after Income shareholders were given a new avenue in January to sell their shares, following a partnership between digital securities exchange Alta and PhillipCapital.
The Income Insurance Share Liquidity Program under the partnership is aimed at simplifying the process of monetising Income shares by leveraging PhillipCapital’s investor network.

Shares offered for sale will be held in custody by local brokerage Phillip Securities, a unit of PhillipCapital, which is also a shareholder of Alta. They are then listed on Alta Exchange, making them available for trading through its expansive network of global institutional and accredited investors.
But this did not provide better information on Income share activity and price.
When the first window was opened in January for Income shareholders to sell their shares before it was closed in May, they were not privy to the bids available.

ST understands that the potential bids received on Alta ranged from $15 to $25 a share. Only matching bids and asks were executed, with the last traded price at $19. Also, only registered clients of Alta who are accredited investors and those of its member firm network can view Income share-trading data on the platform.
Under Singapore law, to qualify as an accredited investor, an individual must have a minimum income of $300,000 in the last 12 months; or his net personal assets must exceed $2 million, of which the net value of his primary place of residence can contribute up to only $1 million; or his net financial assets must exceed $1 million.
Income shareholders said it is unlikely that mom-and-pop investors are able to meet such criteria.
Those seeking to buy Income shares on Alta also need to be accredited.
ST understands that shareholders looking for Income’s share price can access alta.exchange which displays it along with other securities on a ticker feed at the top of the site.
Shareholders can also reference Income’s net asset value (NAV) per share to get an indicative value of the shares. NAV is used to evaluate the value of a firm by subtracting its liabilities from its assets.
As at Dec 31, 2023, Income’s NAV per share was $29.55, compared to $29.07 on Dec 31, 2022.
Retail shareholders may also refer to publicly available equity research reports on Phillip Securities’ website. PhillipCapital’s senior research analyst Glenn Tham valued Income at $19.74 a share in January when the shares started trading on Alta, underpinned by the company’s growth plans and digital initiatives.
Zero One Research’s executive director Vincent Fernando valued the company at $23 a share in December on the back of its growth outlook. Boutique investment firm KT Capital Group’s analyst Alec Tseung said in December that Income shares could be worth $18.60 to $21.70 each.
Income was the first social enterprise set up by the National Trades Union Congress of Singapore in 1970. It was founded to answer the need for affordable insurance among workers in Singapore, serving customers across social divides and closing protection gaps.
As at Dec 31, 2023, Income covered close to 1.7 million customers in its ambition to serve one in two Singapore residents by 2025.

For the 18-month period ended Dec 31, 2023, Income’s gross premiums were $4.9 billion. Life and health insurance generated $4.2 billion in gross premiums, which accounted for 87 per cent of the total portfolio. Total assets stood at $43 billion.
Net profit for the period was $60.4 million, dented by unrealised investment losses in the second half of 2022 due to interest rate movements but underpinned by the strong underwriting profitability of its general insurance business. Cash and cash equivalents comprising bank balances and fixed deposits stood at $1.9 billion at the end of 2023.
Its board of directors had proposed an ordinary dividend payment of $0.334 per share for the period ended Dec 31, 2023, and a special dividend of $0.313 a share to commemorate its corporatisation.
Interest in the local insurer picked up after it said in June that it was in talks with European insurer Allianz on a transaction relating to its shares. The news fuelled market speculation that the European insurer could take a stake in the Singapore insurer in a move that would have major implications for the life and general insurance sector here.
GlobalData said Income would benefit from Allianz’s global expertise, while Allianz could leverage Income’s strong local market presence and customer base.
According to its data, Income was Singapore’s third-largest general insurer with a 5.6 per cent market share and sixth-largest life insurer with a 7.2 per cent market share in 2022.
On the other hand, Allianz was ranked 17th in Singapore’s general insurance market and did not feature in the top 20 for life insurance.
Income has said there was no assurance that any transaction would materialise or that any definitive or binding agreement would be reached.

 

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Allianz offers to buy at least 51% of Income Insurance at $40.58 a share in cash​

The offer is conditional on Allianz getting a 51 per cent stake. PHOTO: ST FILE

Angela Tan
Senior Business Correspondent

JUL 17, 2024

SINGAPORE – Allianz has offered to buy a stake of at least 51 per cent in home-grown Income Insurance at $40.58 a share in a $2.2 billion cash deal that will catapult the German insurer from the ninth to the fourth-largest composite insurer in Asia.
“This proposed transaction brings two strong businesses together for the benefit of Singapore’s customers and solidifies Allianz’s leadership position in the region,” said Ms Renate Wagner, an Allianz board member who is responsible for the Asia-Pacific region.
At $40.58 a share, the offer price represents a 37.3 per cent premium over Income’s net asset value per share of $29.55 as at Dec 31, 2023.
The offer is conditional on Allianz getting a 51 per cent stake, representing some 54.6 million Income shares.
NTUC Enterprise Co-operative, which holds close to 78 million Income shares, representing a 72.8 per cent stake, has given an irrevocable undertaking to accept the offer.
This means at the close of the offer, NTUC Enterprise will retain a substantial stake of between 21.8 per cent and 49 per cent in Income, depending on how minority shareholders tender their shares.
The offer also means that the nearly 16,000 minority shareholders holding a 27.2 per cent stake in Income will get a chance to cash out from the illiquid and unlisted public insurer’s shares.

“If shareholders do not accept the offer, there is no guarantee that another opportunity will arise in the future for them to realise the value of their shares,” the offer document said.
An extraordinary general meeting on the offer may be convened.
Allianz plans to undertake a strategic and operational review of Income’s existing businesses after the offer closes to achieve greater capital efficiency and consider possible business model transformation opportunities.

The transaction is expected to generate a double-digit return on investment for Allianz in the mid-term. Closing is expected in the fourth quarter of 2024 or in the first quarter of 2025.
The acquisition would propel Allianz to the top position in the insurance segments of property-casualty, health and life in Singapore, where Income is a trusted household name, serving about two million policyholders with a full range of insurance products distributed through agents, financial advisers, bancassurance and direct channels.
It also leverages Allianz’s capabilities in underwriting, product development and data analytics with Income’s market reach and strengths in distribution, partnerships and people, the European insurer said.
The Asia-Pacific is a strategically important growth region for Allianz, having generated almost €7.7 billion (S$11.3 billion) in total business volume across its property-casualty and life-health businesses in 2023.
Allianz said it has more than 32,000 staff in the region, serving the needs of more than 18 million customers across multiple distribution channels and digital platforms.

The German insurer intends for Income to continue its participation in national insurance programmes.
It also intends for Income to continue its social commitment and existing pledge of $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.
Allianz intends to ensure a seamless transition for policyholders, continuing to honour the terms of the existing policies underwritten by Income.
Allianz also wants Income to continue to recognise the union, and uphold the principles of good labour-management relations as advocated by the tripartite partners in Singapore.
The Securities Industry Council has no objections to the precondition of the offer and shareholder approval condition.
It also confirmed that NTUC Enterprise would not be regarded to be a party acting in concert with Allianz.
GlobalData said Income’s local market presence would benefit from Allianz’s global expertise, resulting in an enhanced range of offerings for customers.
According to its data, Income was Singapore’s third-largest general insurer and sixth-largest life insurer in 2022. Allianz is 17th among the general insurance market players in Singapore and does not feature in the top 20 for life insurance.
The transaction could lead to enhanced offerings and services for Income’s 1.7 million customers across the life, general and health insurance segments, it added.
“Competitors in the market will face increased pressure influenced by this strategic partnership, meaning other insurers may need to rethink their product offerings,” the data analytics firm said.
Allianz has appointed J.P. Morgan Securities Asia as its financial adviser for the offer.

 

[LITTLEREDDOT]

Trading of Income shares will cease on Alta by Oct 17​

German insurer Allianz has offered to buy at least 51 per cent of Income Insurance at $40.58 a share in cash. PHOTO: ST FILE

Angela Tan
Senior Business Correspondent

JUL 17, 2024

SINGAPORE – Around 16,000 retail investors struggling to cash out their shares in the unlisted Income Insurance will face an even tougher time once trading of the insurer’s stock on Alta’s digital securities platform ceases in October.
The quandary has arisen following German insurer Allianz’s offer on July 17 to buy at least 51 per cent of Income Insurance at $40.58 a share in cash. Allianz said in its offer document that Income would “discontinue the support for the trading of the shares on Alta”.
The Straits Times understands that a termination letter had been sent to Alta Exchange, a digital platform offering Income shareholders an alternative avenue to cash in their shares instead of going through the often tedious task of finding willing buyers themselves.
Alta was told by Income on July 15 that it has three months’ notice to suspend trading of Income shares within 24 hours of the termination date, which means Oct 17.
The move surprised retail shareholders, who hold 27.2 per cent of Income, or 28 million shares. They had been waiting for the second liquidity window to open for them to sell their stock following Allianz’s offer.
“It is as if they are trying to force retail shareholders of Income to take up Allianz’s offer,” said one shareholder. “If not, why shut the Alta avenue when the offer is only pre-conditional?”
Allianz has offered to buy at least 51 per cent of Income at $40.58 a share in a $2.2 billion cash deal. The deal, which is subject to regulatory approval, is expected to be closed in the fourth quarter of 2024 or in the first quarter of 2025.

The offer price is far higher than the $10 a share that some Income investors had reaped when they redeemed their stock under Income’s old cooperative structure.
It is also higher than the $19 a share recorded on Alta when the liquidity window for Income shareholders to sell the stock opened in January.
Allianz’s offer price represents a 37.3 per cent premium over Income’s net asset value per share of $29.55 as at Dec 31, 2023.

In the weeks running up to Allianz’s announcement, buying interest in Income shares had picked up on Alta. There were signs that the July 17 news of the Allianz offer prompted some investors to try their luck in buying shares at $19 a piece, the last traded price.
Still, some shareholders are confused given that the Income Insurance Share Liquidity Program was only launched by Phillip Capital and Alta in January to provide an easier avenue for them to cash out.
Mr Willie Chang, head of Alta Exchange, said: “Income Insurance continues to be listed on Alta Exchange. Buyers and sellers may continue to stay updated on the latest quotes and prices... and reach out to us for more information.”
Income’s retail shareholders want greater transparency when it comes to trading of unlisted public company shares such as Income’s.

Singapore has regulatory measures in place to prevent retail investors from dabbling in sophisticated investment products when they lack the financial means and knowledge to handle the risks.
But these restrictions are preventing ordinary shareholders from accessing market data required to gauge trading interest, investors said.
Unlike securities listed on a stock exchange, Income’s retail investors are unable to see all the related trading information, such as the bid and ask prices as well as the trading volumes.
“Without real-time pricing and trade data, the holders of Income Insurance shares investors would need to make a best-guess estimate on what price to sell,” Mr Kelvin Lee, co-founder and chief executive of Alta Alternative Investments told ST.
Demand for Income shares on Alta during the first liquidity window in January was three times oversubscribed.
However, many Income shareholders were hesitant to sell, citing a lack of transparency and accessibility to information surrounding the demand, and hence the potential selling price.
Potential buyers of Income shares were also unable to view order book data or a list of buy and sell orders for the shares arranged according to price.
These restrictions have impeded trading, said Mr Lee, who believes this conundrum facing holders of non-listed company shares is set to become more pronounced.
This is because a growing number of people in Singapore are employed by private companies and are beneficiaries of employee stock ownership programmes.
“While these stock or stock options appreciate in value, employees are hard-pressed to find ways of monetising them, as the shares of private firms are usually bound by policy measures and the firm’s own controls to manage the sale,” he said.
Even if private companies organise liquidity programmes to help employees cash out their shares, much of the information around the sale or purchase of stock remains inaccessible due to marketing restrictions on private equity.

 

[LITTLEREDDOT]

Allianz offer for Income Insurance sparks concerns among some Singaporeans​

Allianz has given assurances that it intends for Income to continue participation in national insurance programmes, including the IP plans. PHOTO: ST FILE

Angela Tan
Senior Business Correspondent

JUL 22, 2024

SINGAPORE - Allianz’s plans to buy a majority stake in Income Insurance has sparked concerns among some Singaporeans over their health insurance plans tied to Income, even as the German insurer assured there will be no change to national insurance programmes.
They also fear that Income’s original social values and mission to provide coverage for the lower-income groups will no longer apply once Germany-listed Allianz takes a controlling stake, spelling an end to affordable insurance coverage.
“As a listed entity, Allianz is answerable to its shareholders who have elected the board of directors. How will it manage Income’s social mission in Singapore and its business goal of profit maximisation?” asked one Straits Times reader, a Singaporean who is also an Income policyholder.
Mr Lester Lee, 62, is among those worried.
The Singaporean and his entire family have relied on the Integrated Shield Plans (IPs) offered by Income to complement the basic healthcare provided by the MediShield Life health insurance plan.
“The foreign company can say anything now to secure the deal, but once it has a controlling stake, it can do whatever it wants to maximise profits. It’s scary because I rely on Income Insurance,” the retiree told ST on July 22.
This is even as Allianz has given assurances that it intends for Income to continue participation in national insurance programmes, including the IP plans.

Chief executive of insurance advisory Havend, Mr Eddy Cheong, noted that Income has been known to introduce products that might not be profitable but to achieve a certain social outcome.
“With the recent corporatisation and the impending deal, this may become less of a possibility in the long run,” he said.
Income was corporatised in 2022, and is now a public non-listed company limited by shares.

Mr Lee is among the Singaporeans seeking greater clarity.
“As a Singaporean, I am totally at a loss why we would divest a successful and important part of our social enterprise network. Does this represent a major shift in the role of Income? Will NTUC FairPrice be next on the sell list?” he asked.
FairPrice is the largest supermarket chain in Singapore, and a cooperative of the National Trades Union Congress.
On July 17, Allianz announced plans to buy a stake of at least 51 per cent in Income at $40.58 a share in a $2.2 billion cash deal.
The offer is conditional on Allianz getting at least 51 per cent of Income. It is expected to close in the fourth quarter of 2024 or in the first quarter of 2025, subject to regulatory approvals.

Income said its directors will appoint an independent financial adviser (IFA) to advise them on the offer, and the views of the IFA and the directors will be set up in a document that will be dispatched to shareholders if a formal offer is made.
Boutique investment firm KT Capital Group’s analyst Alec Tseung was surprised by the offer to buy a majority stake, given that expectations had been for a strategic partnership or a minority stake.
Income was set up in November 1970, the first cooperative society to be established by NTUC, and it identifies closely with the values, missions and goals of the labour union.
It was able to distribute special bonuses to policyholders, which observers said was possible as the insurer was spared from the profit maximisation objectives for shareholders.
Before 1970, only 3 per cent of Singapore’s population was insured. Today, Income serves about 1.7 million customers in Singapore.
Income rose to become one of the key players in the life and general insurance businesses in Singapore, leveraging the union network.
For the 18 months ended Dec 31, 2023, Income’s gross premiums stood at $4.9 billion, with life and health insurance generating 87 per cent of the total portfolio. Total assets stood at $43 billion and net profit was $60.4 million.
Industry observers said the potential deal makes business sense, and could help Income become a bigger player in the region, where Allianz is already active in 15 markets from Sri Lanka, China and Indonesia to Malaysia, the Philippines and Thailand.
Mr Kanishka de Silva, senior director of insurance at Fitch Ratings, said Income would benefit from Allianz’s global expertise and the potential synergies, and solidify Income’s No. 1 position in the fragmented non-life insurance space here.
Credit rating agency S&P Global Ratings said its ratings on Income remain on “credit watch with negative implications” as it gathers information on how the potential acquisition will affect Income creditworthiness.
It might lower ratings on Income to reflect “the possibility of a decline in extraordinary support from the Singapore Government to the insurer” through its major shareholder, NTUC Enterprise Co-operative, which owns 72.8 per cent of Income.
Mr Trung Tran, associate director at CreditSights, a research firm owned by credit rating group Fitch, said the stronger capital position, along with the support from Allianz, positions the proposed Allianz-Income entity favourably for acquiring new business.
However, the public perception and history of Income remain critical factors, he said.
Allianz has said Income will continue its social commitment and existing pledge of $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”.
It also intends to honour the terms of the existing polices underwritten by Income resulting in no impact to customers.
NTUC Enterprise will also hold a major stake post-acquisition, which means at the close of the offer, NTUC Enterprise will retain a substantial stake of between 21.8 per cent and 49 per cent in Income, depending on how minority shareholders tender their shares.

 

[red amoeba]

they con / force us to buy that NS insurance the other time so now Allianz can suka suka jack up the premium ?

 

[joemartini]

not happy, scared?? go surrender all your policies tomorrow. lose money too bad, lose your protection..too bad...

 

[LITTLEREDDOT]

Allianz will own at least 51% and NTUC at most 49%. It is the major shareholder who decides on business strategy.
How can a minority shareholder NTUC out-number the board and out-vote the directors representing Allianz?

Income will continue with affordable insurance after stake sale to Allianz: NTUC Enterprise​

Income Insurance said even with Allianz as a majority shareholder, it would continue with ongoing commitments, including social ones. PHOTO: ST FILE
Claire Huang and Angela Tan

JUL 25, 2024

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, said its chairman Lim Boon Heng.
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, 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.

 

[LITTLEREDDOT]

Due to poor leadership and management, Income's market share has dropped from 25-30% level to less than 10%.

Allianz stake acquisition to help Income compete in market ‘dominated by regional, global competitors’: NTUC Enterprise​

NTUC Enterprise says Income will continue to provide affordable and accessible insurance options, and price its products ‘very competitively’

Vivienne Tay​

Published Thu, Jul 25, 2024

NTUC Enterprise has assured Income Insurance’s shareholders and policyholders amid surprise and disquiet over Allianz’s bid to acquire 51 per cent of the Singapore insurer’s shares for some 1.5 billion euros (S$2.2 billion).
To recap, the German insurer mounted a bid of S$40.58 per share to take a majority stake in the Singapore insurer as it looks to bolster its Singapore presence. The proposed deal is expected to cement Allianz’s position as the top general insurer in the Republic and lift it to the top five insurers in the market.
In a statement on Thursday (Jul 25), NTUC Enterprise assured shareholders and policyholders that it “has and will continue to remain committed” to strengthening Income’s long-term competitiveness as it remains a substantial shareholder even after the offer closes.

NTUC Enterprise said Income will continue to provide affordable and accessible insurance options to the underserved and lower-income customers and price its products “very competitively”. Additionally, Income will continue to participate in national insurance programmes in partnership with the Central Provident Fund (CPF) Board.
Said NTUC Enterprise chairman Lim Boon Heng: “The idea of bringing in a global player with proven insurance and asset management capabilities is to help Income Insurance to compete more effectively in a market that is dominated by regional and global competitors.”
Income, a public non-listed company limited by shares, was deemed “systemically important” by the Monetary Authority of Singapore, alongside AIA Singapore, Prudential Assurance and Great Eastern Life Assurance in September 2023.

Lim noted that Income’s life insurance market share has been less than 10 per cent in the past 10 years. As a majority shareholder, Allianz would allow Income to be “even more relevant and resilient over the long term”.
He noted that over the years, the Singapore labour movement provided Income with the capital for its business, including an injection by NTUC Enterprise in 2020 to support Income’s solvency at the peak of the Covid-19 pandemic, when the insurer’s 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 added.

NTUC Enterprise is the holding entity and single largest shareholder of NTUC’s social enterprises. Income is the corporatised entity that was formerly the insurance cooperative NTUC Income.

 

[LITTLEREDDOT]

To grow Income, or not to grow?​

Claire Huang
Senior Business Correspondent

Income is bound by its social goals, so it offers affordable products to the lower-income or vulnerable folks that other insurers would avoid. PHOTO: ST FILE

Jul 27, 2024

SINGAPORE – In many ways, a union between home-grown Income Insurance and German insurer Allianz is a marriage of convenience and one that benefits the couple.
It gives Income a much-needed reset and capital injection that its shareholders would otherwise struggle to raise, while Allianz gets to enter the Singapore life insurance market and build up its base in the Republic with more ease.
However, Income’s minority shareholders, policyholders and pockets of the community are now worried over this deal. They have good reason to be, as it comes against a backdrop of an ageing population and rising medical costs.
But let’s start from the top.
Market sources told The Straits Times that Income has been looking for a partner for three years. Allianz came along with its July 17 offer to buy a large stake in Income at a premium, and the rest is history.
A reason for the search can perhaps be traced back to Income’s former co-operative structure and the capital needs that are imposed by the Monetary Authority of Singapore (MAS).
Life insurance is a business that requires huge upfront capital injection.

As an industry source puts it, life insurance products incur upfront losses due to initial commissions and capital requirements, but see a strong profit stream later on. Even when new sales decline, the profit will come through in the medium term, he said.
Market players will point out that Income’s share of the new business in Singapore has been sliding in the past years. Its new sales have been going down because the insurer is not competitive.
This means its current profit stream will taper further down the road.

A significant sum is needed to meet not only the capital adequacy ratio MAS sets, but also the capital buffer MAS stipulates under the revised risk-based capital framework (RBC2) which is tougher on insurers.
In general, the amount of capital insurers need to set aside under RBC2 depends on product mix, how aggressive their guarantees and commissions are, and how fast they want to grow.
Income is bound by its social goals, so it offers affordable products to the lower-income or vulnerable folk that other insurers would avoid.

Moves like these are beneficial to policyholders but are less or not profitable.
As the market turns highly competitive, insurers start to undercut one another, be it via a price war or product war.
Unfortunately for Income, it’s a Catch-22. There is very little wiggle room as it balances between having products that cater to the masses and the vulnerable, products that are creative and competitive, as well as a business that is sustainable.
To add on to that pressure, Income was in September 2023 identified by MAS as one of the four insurers here to be systemically important, with requirements being more stringent.
ST was told by a person familiar with the matter that Income is unlikely to be removed from the systemically important list as it continues to play an important role in Singapore.
It also brings us to the question of what the end-game is for Income.
Some argue that Income is still profitable, while Allianz’s management may need to relook how it is run, given that it has not been performing well here.
For Income, if there was truly no issue, why is there a need for its current major shareholder, NTUC Enterprise (NE), to step in and pump hundreds of millions to support the insurer’s solvency?
NE has injected $630 million into Income over three times in the past. The most recent was in 2020, when the insurer’s business was impacted by the Covid-19 pandemic.
So why can’t NE pump in more money like it did in the past?
It can, but the answer is not as straightforward.
Can NE, which has been and now still is the only source of funding for Income, continue to bankroll a firm that is and will be declining, for a long time to come?
Is it wise to expose NE to that risk?
What is the end-game for Income?
Does it need to grow so that it can be sustainable in the years to come?

What the deal can do is to afford Income a chance for a reset without having to scale down on its social objectives, the person familiar with the matter said, adding that the Allianz offer helps buy out the minority shareholders.
It is a reason why the offer is structured such that Allianz will pay $40.58 per share for a 51 per cent stake in Income in a $2.2 billion deal.
At $40.58 a share, the offer price represents a 37.3 per cent premium over Income’s net asset value per share of $29.55 as at Dec 31, 2023.
How and where does NE intend to use this premium?
Must the potential buyer be a foreign entity?
With corporatisation, Income can look for a foreign investor, unlike in the past.
And in the past, there were difficulties.
As an industry veteran puts it, if Income needed funding of $1 billion, NE will likely be able to raise its share of capital. But what about the other shareholders who are union members? In all likelihood, they will find it hard to raise hundreds of millions easily.
There are also concerns about what will happen to Income employees’ job security and salaries, among other things, if MAS approves this deal.
After all, the insurer is linked to Singapore’s labour movement.
ST has learnt that there are safeguards in the proposed deal, including no job cuts in the short term, among other things.
If the union goes through, NE will remain a significant shareholder and will have a board seat. It is worth bearing in mind that all seven members appointed to the new board have to gain MAS approval.
Another concern is that Allianz, being a commercial entity, is not bound by social missions. Therefore, it can and will reprice products to rake in a commercial level of margins that then lead to pricier premiums for consumers, some observers noted.
On this, NE has given the assurance that Income will continue to provide affordable and accessible insurance options to underserved and lower-income customers.
NE chairman Lim Boon Heng promised in a statement issued July 25 that NE will be an “active shareholder”, and that Income “will also continue to price its products very competitively”.
There is no reason to doubt this objective. The question here is how much gravitas NE will have, and how it will use it when it is up against a for-profit global partner like Allianz.

Finally, one wonders if the potential buyer is aware of all the obligations that come with the union.
If Allianz’s background is anything to go by, its familiarity with trade unions, the labour movement and co-determination will come in handy.
What it needs for this to work out is to put the right people in the right places.
With more considerations than options, there needs to be serious thought about whether Income should just chug along or do better.
To do better, Income may have to bite the bullet and go for a reset. Otherwise, it becomes a matter of kicking the can down the road.