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

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Income says chairman recused himself in Morgan Stanley’s appointment as adviser in Allianz deal​

Allianz announced on July 17 a pre-conditional general offer for 51 per cent of Income Insurance at $40.58 per share in a deal valued at $2.2 billion. PHOTO: ST FILE
Yong Jun Yuan

Jul 28, 2024

SINGAPORE – Income Insurance chairman Ronald Ong had recused himself when Morgan Stanley was appointed as the financial adviser as part of its recent deal with Allianz, the insurer said.
In a statement on July 27, the insurer said that of its 12 directors, 10 are independent.
“The full board, including all the independent directors, unanimously approved the transaction document entered into by Income Insurance in relation to the offer,” the insurer added.
The statement comes as questions were raised about the appointment of the financial adviser.
Mr Ong was appointed as Income’s chairman in December 2018, and had been working at Morgan Stanley for 20 years at the time. In February 2023, he was appointed chairman of the bank’s South-east Asia business.
Allianz announced on July 17 a pre-conditional general offer for 51 per cent of Income Insurance at $40.58 per share in a deal valued at $2.2 billion.
Allianz will need to acquire 54.7 million shares to reach 51 per cent. NTUC Enterprise Co-operative currently holds 77.98 million shares, or 72.8 per cent of 107.2 million shares. Minority shareholders account for 27.2 per cent.

The insurer reiterated that the board’s steering committee for the transaction has set out certain safeguards to protect the interests of policyholders and minority shareholders.
For instance, it noted that Allianz will continue to honour the terms of existing policies underwritten by Income Insurance, resulting in no impact on customers.
In addition, minority shareholders will be given priority to tender their shares.
“As such, NTUC Enterprise will only tender its shares on the last day of the offer, and only to the extent that will result in the offeror holding at least 51 per cent of the shares of Income Insurance,” the insurer said.
It added that NTUC Enterprise will not be able to tender all of its shares in acceptance of the offer and has committed to remaining a substantial shareholder of Income

 

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Allianz to pay $6 bln in U.S. fraud case, fund managers charged​

By Tom Sims , Alexander Hübner and Jonathan Stempel
May 18, 20225:38 AM

NEW YORK/MUNICH, May 17 (Reuters) - Germany's Allianz SE (ALVG.DE), opens new tab agreed to pay more than $6 billion and its U.S. asset management unit pleaded guilty to criminal securities fraud over the collapse of a group of investment funds early in the COVID-19 pandemic.
Allianz's settlements with the U.S. Department of Justice and U.S. Securities and Exchange Commission are among the largest in corporate history, and dwarf earlier settlements obtained under President Joe Biden's administration.

Gregoire Tournant, the former chief investment officer who created and oversaw the now-defunct Structured Alpha funds, was also indicted for fraud, conspiracy and obstruction, while two other former portfolio managers entered related guilty pleas.
Once with more than $11 billion of assets under management, the Structured Alpha funds lost more than $7 billion as COVID-19 roiled markets in February and March 2020.

Allianz Global Investors US LLC was accused of misleading pension funds for teachers, bus drivers, engineers, religious groups and others by understating the funds' risks, and having "significant gaps" in its oversight. read more
Investors were told the funds employed options that included hedges to protect against market crashes, but prosecutors said the fund managers repeatedly failed to buy those hedges.

Prosecutors said the managers also inflated fund results to boost their pay through performance fees, with Tournant, 55, collecting $13 million in 2019 and becoming his unit's highest or second-highest-paid employee from 2015 to 2019.
Investigators said the misrepresentations began in 2014, and helped Allianz generate more than $400 million of net profit.
At a news conference, U.S. Attorney Damian Williams in Manhattan said more than 100,000 investors were harmed, and that while American prosecutors rarely bring criminal charges against companies it was "the right thing to do."

Investors "were promised a relatively safe investment with strict risk controls designed to weather a sudden storm, like a massive collapse in the stock market," he said. "Those promises were lies.... Today is the day for accountability."

BLAMING COVID​

Also known for its insurance operations, Allianz is among Germany's most recognizable brands and an Olympic sponsor.
Its namesake arena near its Munich headquarters, meanwhile, houses Bayern Munich, one of world's best-known soccer teams.

The settlement calls for Allianz to pay a $2.33 billion criminal fine, make $3.24 billion of restitution and forfeit $463 million, court papers show.
Williams said the fine was significantly reduced because of Allianz's compensation to investors.
Even so, the payout is close to twice the $3.3 billion in corporate penalties that the Justice Department collected for all of 2021.
An Allianz lawyer entered the guilty plea at a hearing before U.S. District Judge Loretta Preska in Manhattan.
Allianz also accepted a $675 million civil fine from by the SEC, one of that regulator's largest penalties since Enron Corp and WorldCom Inc imploded two decades ago.
Shares of Allianz closed up 1.7% in Germany, with the payout broadly matching reserves that the company previously set aside.
Tournant, of Basalt, Colorado, surrendered to authorities on Tuesday morning.
The U.S.-French citizen appeared briefly in Denver federal court, and was released after agreeing to post a $20 million bond. An arraignment was set for June 2 in New York.
Tournant's lawyers, Seth Levine and Daniel Alonso, said the investor losses were "regrettable" but did not result from a crime.
"Greg Tournant has been unfairly targeted [in a] meritless and ill-considered attempt by the government to criminalize the impact of the unprecedented, COVID-induced market dislocation," the lawyers said in a joint statement.
The other two portfolio managers - Stephen Bond-Nelson, 51, of Berkeley Heights, New Jersey; and Trevor Taylor, 49, of Miami - agreed to plead guilty to fraud and conspiracy, and cooperate with prosecutors. Their lawyers declined immediate comment.

VOYA PARTNERSHIP​

Allianz's guilty plea carries a 10-year ban on Allianz Global Investors' providing advisory services to U.S.-registered investment funds.
As a result, Allianz plans to move about $120 billion of investor assets to Voya Financial Inc (VOYA.N), opens new tab in exchange for a stake of up to 24% in Voya's investment management unit. It expects a final agreement in the coming weeks.
Regulators said the misconduct included when Tournant and Bond-Nelson altered more than 75 risk reports before sending them to investors.
The SEC said projected losses in one market crash scenario were changed to 4.15% from the actual 42.15%, simply by removing the "2."
Allianz's alleged oversight lapses included a failure to ensure Tournant was hedging, though prosecutors said only people in his group knew of the misconduct before March 2020.
"No compliance system is perfect, but the controls at AGI didn't even stand a chance," Williams said.
Bond-Nelson, at Tournant's direction, also lied to Allianz's in-house lawyers after the company learned about the altered reports and the SEC probe, prosecutors added.
"Unfortunately, we've seen a recent string of cases in which derivatives and complex products have harmed investors across market sectors," SEC Chair Gary Gensler said in a statement.
Investors have also filed more than two dozen lawsuits against Allianz over the Structured Alpha funds.

 

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Forum: Still several unanswered questions on proposed Allianz-Income deal​

Aug 02, 2024

NTUC Enterprise chairman Lim Boon Heng’s interview with The Straits Times (NTUC Enterprise, Income Insurance clarify concerns over Allianz-Income deal, July 30) to justify the proposed sale of a controlling stake of Income Insurance to Allianz raises more questions than it answers.
First, in what way are the social goals for which NTUC Enterprise/Income Insurance were set up comparable with the types of corporate responsibilities all private companies are generally expected to exercise?
Allianz, like any other private profit-driven company, is expected to be a socially responsible corporate citizen, but it is not going to – nor should we expect it to – help Singapore achieve the social goals that prompted the setting up of NTUC Enterprise/Income Insurance.
Surely Allianz’s shareholders will expect a good financial return from its investment in Income Insurance.
Assurances from the board and management of NTUC Enterprise/Income Insurance are not enough. As a minority shareholder, NTUC Enterprise cannot outvote Allianz.
Second, Mr Lim stated that “there should be a cardinal principle that no government should intervene in the commercial decisions of any private body”. Income Insurance is not just “any private body”.
It is one of the core institutions that undergird the social compact between the Government and Singaporeans.

Third, based on various reports, Income Insurance’s market share of Singapore’s life insurance has been declining for many years. Why did it take so long to realise something needed to be done?
Any reasonable Singaporean will agree with Mr Lim that Income Insurance needs to be financially strong and earn a reasonable return on its capital.
The more important question is, if it needs a partner, who should that be? I believe Allianz is not the right partner due to its poor attempts at the life insurance business. What can it teach Income Insurance about the Singapore market? Plus, Singapore is not short of capital.
A partnership with Temasek with its unquestioned commitment to Singapore should be considered.

Ho Swee Huat