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

 

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Allianz-Income deal off in its current form, but Govt open to new arrangement: Edwin Tong​

Allianz on July 17 made an offer to buy a controlling stake of at least 51 per cent in Income, in a deal that was valued at $2.2 billion. ST PHOTO: SHINTARO TAY

Angela Tan
Senior Business Correspondent

Oct 14, 2024

SINGAPORE – The much-debated deal between German insurer Allianz and Income Insurance has been called off by the Singapore Government on concerns over the deal structure and the ability of the local insurer to continue its social mission.
The scrapping of the deal was announced in Parliament on Oct 14 by Mr Edwin Tong, who is Minister for Culture, Community and Youth and Second Minister for Law.
“The Government has assessed the proposed transaction and has decided that it would not be in the public interest for the transaction, in its current form, to proceed,” he said.
The Insurance Act will be amended on an urgent basis to allow the approval of the deal to be withheld. This will pave the way for the Monetary Authority of Singapore (MAS) to consider the views of the Ministry of Culture, Community and Youth (MCCY) in future applications related to insurers that are cooperatives or are linked to cooperatives.
Mr Tong said the Government does not have concerns over Allianz’s standing or suitability to acquire a majority stake in Income.
The concerns lie in the terms and structure of this specific transaction, particularly in the context of Income’s corporatisation exercise.
Mr Tong added that the Government is open to future new proposals, if the concerns are addressed.

The latest move comes three months after Allianz on July 17 made an offer to buy a controlling stake of at least 51 per cent in Income, in a deal that was valued at $2.2 billion.
The issue was then debated at a Parliament sitting on Aug 6.
After the sitting, MAS provided MCCY with new information submitted by Allianz, Income and Income’s parent NTUC Enterprise about optimising the capital of Income after the deal is completed.

The plan was for Income to run its insurance business more efficiently, without the need to hold as much capital as it currently does. Allianz thus projected that Income could return some $1.85 billion in cash to its shareholders within the first three years after completion of the transaction.
Mr Tong said MCCY had not seen this information earlier. These projections were submitted to MAS around the time the proposed transaction was announced in mid-July.
Mr Tong said MAS had reviewed the information based on “prudential grounds”, focusing on whether Allianz was a fit and proper institution, its financial strength and track record, so that the interests of Income’s policyholders would be safeguarded.
“Based on the plans submitted, MAS did not have reason for concern as Income was projected to continue to meet regulatory capital requirements with a healthy margin even with the capital reduction,” Mr Tong said.

However, after the August sitting, MAS saw that Income’s planned capital optimisation could be relevant to MCCY’s views on the proposed deal and shared the information with the ministry.
“It was at this point, after MCCY reviewed the information on the proposed transaction, that we became concerned,” Mr Tong said.
“We decided that there was sufficient basis for the Government to intervene in the proposed transaction, to protect the public interest, notwithstanding that the financial prudential requirements had been satisfied,” he said.
MCCY is not confident that the proposed transaction would not affect the ability of the co-op movement as a whole, or of Income itself, to carry out its social mission, the minister said.
When Income embarked on a corporatisation exercise in 2022 to change its legal form from a cooperative to a company, it told MCCY that it was aiming to build up capital resources and enhance its financial strength.
Income also sought and obtained an exemption to allow it to carry over a surplus of $2 billion to the new corporate entity.
If not for the exemption, the $2 billion sum would have gone to the Co-operative Societies Liquidation Account to benefit the co-op movement in Singapore as a whole. This is a requirement under the legal framework for the winding up of a cooperative.
More On This Topic
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Allianz-Income deal: A stronger Income is more relevant to society, says Lim Boon Heng
The proposed capital reduction runs counter to the premise on which the exemption was given, Mr Tong pointed out.
“MCCY has not seen any arrangement within the present transaction to account for the estimated $2 billion surplus that was carried over to the new corporate entity... There is no clarity on how this sum will be directed towards advancing Income’s social mission,” he said.
Second, MCCY is not convinced that Income can continue fulfilling its social mission after the deal.
There are no clear binding provisions or structural protections in the deal to ensure Income’s social mission will be discharged, said Mr Tong.
It is also not clear what Income might do after the capital reduction, be it adjusting or trimming its insurance portfolio, and what impact this could have on policyholders.
The above two factors, when taken together with the fact that Income’s parent company NTUC Enterprise will be a minority shareholder after the deal, cumulatively posed a risk that MCCY deemed “not to be acceptable”.
In response to several MPs’ concerns about how the Government plans to exercise its oversight going forward, as well as the mechanisms to protect Income’s social mission and capital surpluses, Mr Tong said MCCY may consider future legislative amendments to give the Government stronger levers over co-ops that may wish to be corporatised.
In response to Workers’ Party MP Jamus Lim’s (Sengkang GRC) concerns over the regulator’s reputation, Second Minister for Finance Chee Hong Tat said MAS takes its reputation very seriously, which is “why we want to handle this in an open and transparent manner”.
Mr Chee, who tabled an amendment to the Insurance Act after Mr Tong’s statement, explained that current legal provisions do not provide explicitly for the minister in charge of MAS, or MAS itself, to assess an application on non-prudential considerations.
In a Facebook post, Prime Minister Lawrence Wong said the Government supports having a strong partner for Income to strengthen its capital base and market position.
“We have no concerns over Allianz’s standing or suitability to acquire a majority stake in Income. Allianz is a major global insurance company and asset manager that can bring financial strength and expertise to Income.
“Our concerns are over the structure and terms of this specific transaction, particularly in the context of assurances which Income had given to MCCY when the former was corporatised in 2022. Though this transaction will not proceed, we remain open to a new deal that Income may pursue with Allianz or other partners, so long as our concerns are fully addressed.”


Former Income chief executive Tan Suee Chieh told The Straits Times that he had not expected the deal to be halted, and welcomed the decision to change the law to reject the proposal in its current state.
Professor Lawrence Loh, director of NUS Business School’s Centre for Governance and Sustainability, said: “I am very encouraged that the Government has the courage to reverse anything they see is not right.”
He added: “The merits of the deal are there, given what we knew since July, but with the new information on the capital reduction, that is contrary to the original intent and spirit of the acquisition. It is unacceptable, given that when Income was corporatised, it was exempted from returning the $2 billion surplus, which in my mind is public money.”
The second reading and third reading of the Bill will take place on Oct 16.

 

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ST Explains: What scuppered the Allianz-Income deal?​

Allianz had made an offer on July 17 to acquire a 51 per cent stake in Income for $40.58 a share, valuing a deal at $2.2 billion. PHOTO: ST FILE

Kang Wan Chern
Deputy Business Editor

Oct 14, 2024

SINGAPORE - An offer to take a majority stake in Singapore’s Income Insurance by German insurer Allianz has been called off, after a government assessment concluded that a deal in its current form would not be in the public’s interest.
That decision was announced in Parliament on Oct 14 by Mr Edwin Tong, who is Minister for Culture, Community and Youth, and also Second Minister for Law.
Allianz had made an offer on July 17 to acquire a 51 per cent stake in Income for $40.58 a share, valuing the deal at $2.2 billion. The terms of the offer were being reviewed by the Monetary Authority of Singapore (MAS) and pending its approval.
Had the deal been approved, it would have seen NTUC Enterprise’s (NE) current 72.8 per cent controlling stake in Income potentially whittled down to 49 per cent.

Why was the deal called off?​

After reviewing the information provided by MAS in August, the Ministry of Culture, Community and Youth (MCCY) concluded that there was sufficient basis for it to intervene to protect the public’s interest, despite financial prudential requirements having been satisfied.
Mr Tong shared three reasons for MCCY’s decision.
First, the information provided by MAS revealed that Income was planning to return around $1.85 billion in cash to its shareholders within the first three years of completing the transaction, while still continuing with its social mission of providing affordable insurance to the public.

This is because Income would be expected to run its insurance business more efficiently with Allianz’s help, and would not need to hold as much capital as it does at present.
But Mr Tong explained that after it was corporatised in 2022 from a cooperative to its present structure as a company, Income had sought and obtained an exemption allowing it to carry over a surplus of $2 billion in capital.
If not for this exemption, that surplus would have gone to the Co-operative Societies Liquidation Account to benefit Singapore’s co-op movement.

MCCY noted that there was no arrangement to account for the $2 billion surplus and no clarity on how the funds would be directed towards advancing Income’s social mission.
Second, Mr Tong said MCCY was unconvinced that Income would still be able to continue fulfilling its social mission after the deal took place.
This is because there were no binding provisions or structural protections in the deal to ensure this remained the case after the acquisition.
“It is also not clear what Income might do after the capital extraction, for example, to adjust or trim its insurance portfolio, and what impact this could have on policyholders.”

Third, MCCY is not confident of NE’s stated intentions and Income’s assurances of maintaining the social mission.
“We had known earlier that the proposed transaction would leave NE as the minority shareholder in the new entity, with a minority of board positions and no ability to nominate the chairman of the new Income entity,” Mr Tong said.
“Taken together with the proposed capital extraction and the lack of structural protections in the deal to ensure the continuation of Income’s social mission, cumulatively, they pose a risk that MCCY judges not to be acceptable.”

The deal was announced in July and debated in Parliament in August. Why was it not called off sooner?​

MCCY said it had no prior knowledge of Allianz’s offer for Income before it was first publicly announced in July.
However, Mr Tong noted that, at the time, MCCY accepted the intent of a deal to strengthen Income, allowing it to be more competitive and financially sustainable over the long term.
Nevertheless, the matter was hotly debated by the industry and addressed in Parliament in August.
Following that Parliament session, MAS saw that Income’s planned capital optimisation could be relevant to MCCY’s views on the proposed deal, and shared the information with MCCY, including the terms of the proposed transaction.
It was at this point that MCCY, which had not seen this information earlier, became concerned and subsequently intervened to call off the deal in its current form.

What does this mean for Income, moving forward?​

Speaking in Parliament on Aug 6, Second Finance Minister and MAS board member Chee Hong Tat said the insurance industry in Singapore has become highly competitive, with more than 50 insurance providers now operating here.
He noted that in both life and general insurance, Income has a market share of less than 10 per cent based on written premiums, and that the best way to protect policyholders is to have a competitive insurance industry and insurers that are well run.
This would provide stability over the longer term and offer choice, options and competitive rates to policyholders.
Mr Tong added that for Income to do good, it must first do well.
For these reasons, a deal may still be on the table for Income.
In a Facebook post on Oct 14, Prime Minister Lawrence Wong noted that the Government’s current concerns are over the structure and terms of the offer in its current form, but that it remains open “to a new deal that Income may pursue with Allianz or other partners, so long as our concerns are fully addressed”.

 

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Allianz to consider revising Income offer after current deal blocked by Singapore Govt​

Income and its parent NTUC Enterprise also said that they will work closely with relevant stakeholders to decide on the next course of action. ST PHOTO: SHINTARO TAY

Angela Tan
Senior Business Correspondent

Oct 15, 2024

SINGAPORE - German insurer Allianz said late on Oct 14 that it will consider revisions to the proposed transaction structure to acquire a majority stake in Singapore’s Income Insurance.
This comes after the Singapore Government blocked the deal on concerns over the deal structure and the ability of the local insurer to continue its social mission.
Allianz, which is listed in Germany, said it respects the Government’s position and will assess the situation with Income and NTUC Enterprise.
“We are convinced that partnering with Income Insurance, a company that shares Allianz’s values and commitment to customer excellence, will benefit Singapore’s customers and society,” it added. “We will now work closely with the relevant stakeholders to consider revisions to the proposed transaction structure,” Allianz said.
Income and its parent NTUC Enterprise also said they will work closely with relevant stakeholders to decide on the next course of action.
Mr Edwin Tong, who is Minister for Culture, Community and Youth and Second Minister for Law, said in Parliament on Oct 14 that the Government has decided that it would not be in the public interest for the transaction to proceed in its current form.
First, there are doubts over Income’s ability to continue to fulfill its social mission. Second, a proposal by Allianz to undertake a capital reduction exercise to return $1.85 billion to shareholders, within the first three years after the deal is completed, do not align with earlier assurances made by Income.

When Income embarked on a corporatisation exercise in 2022, it had obtained an exemption to allow it to carry over a surplus of $2 billion to the new corporate entity.
If not for the exemption, the $2 billion sum would have gone to the Co-operative Societies Liquidation Account to benefit the co-op movement in Singapore as a whole. This is a requirement under the legal framework for the winding up of a cooperative.
Following the Government’s decision to block the current deal, the Insurance Act will be amended on an urgent basis to allow the approval to be withheld.

This will pave the way for the Monetary Authority of Singapore (MAS) to consider the views of the Ministry of Culture, Community and Youth (MCCY) in future applications related to insurers that are cooperatives or are linked to cooperatives.
NTUC Enterprise, which owns close to 73 per cent of Income, said it will study carefully the implications of Mr Tong’s ministerial statement and the amendments to the Insurance Act.
It will “work closely with relevant stakeholders to decide on the next course of action”.

The organisation also said it has consistently acted in good faith to safeguard the interests of shareholders, policyholders and employees of Income, adding that it “believes Allianz’s offer will enable Income Insurance to be even more relevant and resilient over the long term, to fulfil its social commitments, and meet its obligations to its policyholders”.
In a separate statement, Income also said it will review and take into consideration the forthcoming amendments to the Insurance Act and work closely with relevant stakeholders to study and decide on the next course of action.
The insurer added that it “remains committed to empowering the financial well-being of Singaporeans”.
Governance advocate Professor Mak Yuen Teen of the National University of Singapore said the deal may not sufficiently protect the social objectives of Income after Allianz acquires a majority stake.
A capital reduction may also be in effect a way for Allianz to help finance the deal, and this may in turn affect Income’s ability to deliver on social objectives.
This is probably why Allianz was willing to pay a high price while still expecting a good return on investment, he said.

 

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Platform in talks to relist Income shares as some shareholders express uncertainty over Allianz deal​

Income shares are not available to trade in public markets as the insurer is not listed. ST PHOTO: SHINTARO TAY

Angela Tan
Senior Business Correspondent

Oct 15, 2024

SINGAPORE - Alta Exchange is in early discussions to explore the possibility of relisting Income Insurance shares on its trading platform, a move which could bring relief to close to 16,000 retail shareholders holding 28 million shares of the local insurer.
The digital securities exchange was earlier ordered by Income to cease this service by Oct 17, in the light of German insurer Allianz’s offer to buy a majority stake in Income at $40.58 a share in cash.
But the deal has now been blocked by the Government over concerns about its structure and Income’s ability to continue its social mission.
Some mom-and-pop shareholders – many of whom are seniors – say the latest development has left them uncertain about how to sell their shares.
Income shares are not available to trade in public markets as the insurer is not listed.
Alta’s exchange arm, AltaX, offers an alternative avenue for accredited retail shareholders to sell their Income shares to a network of global institutional and accredited investors.
Otherwise, they have to go through the tedious task of finding willing buyers themselves.

“Alta Exchange is in early discussions to explore the possibility of relisting Income Insurance tokens on AltaX. We will share updates on this in due course,” said a spokesman.
While Alta will delist Income shares from its platform as planned on Oct 17, off-exchange trades can still be facilitated beyond this date, it said.
The exchange is now in talks with Income and local brokerage Phillip Securities, a unit of wealth management firm PhillipCapital, to work towards relisting the shares at a later date.

In July, Alta was informed by Income that it had three months’ notice to suspend trading of the insurer’s shares by Oct 17.
This came after German insurer Allianz said on July 17 that it planned to buy at least 51 per cent of Income in a $2.2 billion cash deal. The offer was subject to regulatory approval and had been expected to close in the fourth quarter of 2024 or the first quarter of 2025.
The Straits Times understands that investors expressed interest to Alta about buying some $5 million worth of Income shares following Allianz’s planned offer.
More On This Topic
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Allianz to consider revising Income offer after current deal blocked by Singapore Govt
They comprise institutional and individual investors, as well as family offices that manage the wealth of the super rich. These investors were looking to buy the shares at an average of 25 per cent discount to Allianz’s offer.
But on Oct 14, the Singapore Government blocked the proposed Allianz-Income transaction.
Mr Edwin Tong, the Minister for Culture, Community and Youth, told Parliament about the need to safeguard public interest before a deal can be approved.
This led to a new wave of inquiries from investors asking Alta about the availability of Income shares on its platform.

“Private market deals are complex and unpredictable. With the Income Insurance Share Liquidity Program, along with our partners at Phillip Securities, we are honoured to be able to provide a clear and streamlined solution, giving investors a window for liquidity and access to one of Singapore’s leading insurance providers,” said Alta.
Mr Michael Ong, an Income shareholder, was hoping for some capital gains from his investment: “Income shares are not listed on the Singapore Exchange. It is difficult to sell them.
“No choice now (but to) continue to hold. At least the dividends collected over the last 20 years are more than my capital outlay. I will just have to wait and see,” he said.
Mr Eric Tan, a financial service consultant, voiced his concerns over the future of Income now that the deal has been blocked. He fears it will pose challenges for Income as it seeks to gain a firmer foothold in a competitive market.
“The decision not only underscores the intricate balance between financial viability and upholding social missions but also prompts a deeper reflection on the strategic direction and operational resilience of Income,” Mr Tan said on LinkedIn.
“While the road ahead may hold uncertainties and complexities, it also presents opportunities for recalibration, innovation and strategic realignment to ensure sustainable growth and impact in the ever-evolving financial landscape,” he added.
Mr Kanishka de Silva, a director in credit rating firm Fitch Ratings’ Asia-Pacific insurance team, said the Government’s halt on the Allianz-Income deal highlights the importance it places on the continuation of Income’s social mission.
“We believe it will be key for a potential acquirer or acquirers to demonstrate that they will address any concerns that the Government or regulators may have around this. We don’t expect this development to affect the market’s competitive dynamics as the proposed acquisition would have only consolidated existing market positions rather than disrupt them,” he said.
The deal would have further strengthened Income’s market-leading position in the fragmented non-life sector, noted Mr de Silva. However, the life insurance sector will continue to be dominated by the five biggest insurers, including Singapore’s Great Eastern and the subsidiaries of global insurance groups.
Allianz said on Oct 14 that it will consider revisions to the proposed transaction structure and will assess the situation with Income and its parent NTUC Enterprise.
Income and NTUC Enterprise also said they will work closely with relevant stakeholders to decide on the next course of action.

 

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The PAP MPs in NTUC's Central Committee: Ng Chee Meng, Heng Chee How, Desmond Tan,
The PAP MPs, former PAP MPs and ministers on the board of directors of NTUC Enterprise: Lim boon Heng, Lim Swee Say, Ng Chee Meng
are all sleeping!

NTUC central committee not aware of capital reduction plan in Allianz-Income deal: Desmond Tan​

NTUC Enterprise went into the deal to strengthen Income in the longer run as it recognised the challenges that Income had been facing. ST PHOTO: AZMI ATHNI

Goh Yan Han
Political Correspondent

Oct 17, 2024

SINGAPORE – The labour movement’s central committee did not know of the plan to return $1.85 billion to shareholders under the Allianz-Income deal before it was mentioned in Parliament on Oct 14, said NTUC deputy secretary-general Desmond Tan.
Speaking in Parliament on Oct 16, Mr Tan said the central committee had been briefed by Income Insurance and its parent company, NTUC Enterprise, on the strategic imperatives of the deal, but the capital reduction plan was not highlighted to it.
As Income is a non-listed public company, it would have to comply with the legal responsibility of non-disclosure of commercially sensitive information on Allianz’s plans post-acquisition, he said.
Mr Tan made the point in response to questions from Non-Constituency MP Leong Mun Wai and Nominated MP Raj Joshua Thomas during the debate on the Insurance (Amendment) Bill, adding that Income is subject to the Singapore Code on Take-overs and Mergers.
The capital reduction plan is a key factor in the surprising turn of events that saw the Government block the hotly debated $2.2 billion deal between Income and German insurer Allianz that was first made public in July.
Allianz had made an offer to buy a controlling stake of at least 51 per cent in Income.
On Oct 14 in Parliament, Minister for Culture, Community and Youth Edwin Tong said in a ministerial statement that the Government had decided it would not be in the public interest for the transaction to proceed in its current form.

While the Government does not have concerns over Allianz’s standing or suitability to acquire a majority stake in Income, the concerns lie in the terms and structure of this specific transaction, particularly in the context of Income’s corporatisation exercise, he said.
Mr Tong added that before the deal was raised in Parliament in August, his ministry had not seen the plan for Income to return some $1.85 billion in cash to its shareholders within the first three years after completion of the transaction.
During the debate on the Insurance (Amendment) Bill on Oct 16, Mr Tan explained why NTUC had supported the proposed deal.

When NTUC was briefed on the proposal, it was difficult for the unions to learn that Income was planning to sell a majority stake to Allianz, given the company’s history as the labour movement’s first social enterprise, said Mr Tan, who is Senior Minister of State in the Prime Minister’s Office.
But NTUC Enterprise went into the deal to strengthen Income in the longer run as it recognised the challenges that Income had been facing amid a more competitive and tightly regulated insurance landscape, he noted.
“The NTUC central committee agreed with the strategic intent and approached it in good faith,” he said.
He also clarified that NTUC, as a major shareholder of NTUC Enterprise, does not get involved in the day-to-day running of operations.

It delegates to the board of NTUC Enterprise the responsibility of making decisions pertaining to all businesses.
Mr Tan also noted that Second Minister for Finance Chee Hong Tat had acknowledged that NTUC had acted in good faith and in the interest of workers and members.
“If you look at it, the Government and NTUC share the same strategic intent and broader objectives for Income and the co-op movement,” said Mr Tan.
“But as far as the specifics of this transaction are concerned, there is now perhaps a difference in view,” he added, referring to the concerns Mr Tong had raised about the deal.
He added that NTUC has reviewed the matter and accepts the Government’s considerations and decisions on the proposed transaction.
“We note that the Government remains open to any arrangement that Income may wish to pursue, whether with Allianz or any other partners, so long as the concerns highlighted are fully addressed.”
Mr Tan added that Income has committed to study carefully the implications of the ministerial statement by Mr Tong and the amendments of the Insurance Act, and will work closely with the relevant stakeholders to decide on the next course of action.
“The labour movement – which includes NTUC Enterprise and NTUC – is united in (its) purpose and we will continue to do right by our people, and what is necessary for the longer-term interest to serve workers and the people of Singapore,” he said.
In a Facebook post on the evening of Oct 16, labour chief Ng Chee Meng said the decision to halt the Allianz-Income deal and its implications were of key concern to the labour movement and union leaders who had supported the deal.
He added that Deputy Prime Minister Gan Kim Yong, Mr Tong and Mr Chee held an “honest and productive engagement” with NTUC and union leaders to clarify issues after the Parliament sitting.
“NTUC respects and accepts the Government’s decision that the transaction cannot proceed in its current form,” he said.