What to know so far about the Income-Allianz saga

SINGAPORE: A possible deal between German financial services company Allianz and Singapore’s Income Insurance has dominated headlines for the past few weeks.
In mid-July, Allianz announced it was planning to buy a majority stake in Income Insurance for around US$1.6 billion.
It said it would offer S$40.58 per share for a transaction value of S$2.2 billion (US$1.66 billion), for 51 per cent of the shares in Income Insurance.
NTUC Enterprise, meanwhile, currently has a 72.8 per cent stake in the insurance company. It has said it would remain a “substantial” shareholder if the sale goes through.
Though still pending regulatory approval, some public figures have raised objections against the proposed deal.
It’s led to NTUC Enterprise and Income issuing clarifications and most recently, a lengthy statement rebutting claims related to stakeholders and shares.
The crux of the outcry was on how Allianz, as a large multinational, would not be fully aligned with the original mission of the Singapore company – to serve the needs of low-income workers. 
Singapore’s lawmakers have since posed questions on Tuesday (Aug 6), including on the affordability and accessibility of insurance for the mass market.
In its original announcement, Allianz said the majority stake in Income Insurance was expected to elevate its presence in the “fast-growing and attractive Singapore insurance market”.
The German firm’s group CEO Oliver Baete then spoke up in the aftermath of the pushback, saying Allianz was “not in Asia to buy top line; we want to build a resoundingly profitable business”.
He added that the company was “not in the business of selling products that don’t provide what we call minimum value to clients”. 
NTUC Enterprise, meanwhile, has talked about strengthening Income’s long-term competitiveness.
It has revealed that Income lost out on “several key contracts to its global and regional competitors” despite putting in competitive bids, proving that “strong and continuous capital support and resilience” are needed for growth.
The proposed deal with Allianz would thus allow Income to tap the global company’s expertise in asset management and technology and product development.
But it has also reiterated that it intends for Income to continue to be an important, financially profitable and socially responsible business, in line with its purpose of “empowering financial well-being for all”.
Ongoing social commitments, such as participating in national insurance programmes and helping the low-income among others, will continue. 
NTUC Enterprise chairman Lim Boon Heng has said that Income will continue to provide affordable insurance for lower-income customers. 
He added that Income’s life insurance market share has been “less than 10 per cent in the past 10 years”. 
Hence, Allianz’s offer to be a majority shareholder will enable Income 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.
Minister for Culture, Community and Youth Edwin Tong on Monday also posted on Facebook about the matter, noting that NTUC Income Co-op became a corporate entity in 2022, citing increasing challenges in the insurance sector. 
This was raised previously to the Registry of Co-operative Societies (RCS) under the Ministry of Culture, Community and Youth (MCCY).
Mr Tong said the RCS had then advised all parties that this was a matter for NTUC Income and its members to collectively determine and resolve.
NTUC Income had done so and following consultations, members voted overwhelmingly in favour of corporatisation, Mr Tong said, adding that RCS was satisfied from a regulatory perspective that due process was followed. 
On Monday, labour chief Ng Chee Meng weighed in, saying in a statement that NTUC would ensure Income upholds its commitment to keep premiums affordable for two existing low-cost schemes for union members.
Former NTUC Income CEO Tan Kin Lian has also criticised the deal, saying it would not help Income fulfil its social mission, and that Allianz would be in control with a goal to “maximise the return for their shareholders”.
Ambassador-at-large Tommy Koh also publicly objected to the deal in two Facebook posts, saying that Income was “not a loss-making company in need of rescue” and that “nothing is sacred and everything is for sale”. 
But it is Mr Tan Suee Chieh who has been perhaps most publicly vocal, penning two lengthy social media posts and two open letters to date.
He was CEO of NTUC Income from 2007 to 2013, before he became Group CEO of NTUC Enterprise from 2013 to 2017.
Mr Tan called the deal a “breach of good faith” given that the assurance from NTUC Enterprise to remain as majority shareholder was used to alleviate concerns about the corporatisation.
This was among several key concerns he raised in the first open letter dated Aug 2 to the Monetary Authority of Singapore, where he asked government regulators to step in.
On NTUC Enterprise becoming a corporate entity, Mr Tan was concerned that the laws governing corporations would not necessarily bind it to hold its shares in NTUC Income permanently.
He also said NTUC Enterprise and Income did not stay true to commitments allegedly made to him during the corporatisation exercise.
In response, NTUC Enterprise and Income issued a joint statement on Sunday night, noting that Mr Tan had “cast aspersions on the stakeholders in relation to this proposed transaction”.
They said shareholders and policyholders had been engaged to clarify any questions prior to an Extraordinary General Meeting (EGM) on the corporatisation exercise.
Mr Tan “neither attended the information sessions nor the EGM”, and that resolutions were passed with 99.99 per cent of shareholders voting in favour.
Even if NTUC Enterprise’s votes were excluded, minority shareholders voted “overwhelmingly in favour”.
The two entities also pointed to a letter Mr Tan had quoted, which was from NTUC Income to him and dated Feb 10, 2022. 
According to the letter, NTUC Income confirmed that, notwithstanding the corporatisation, NTUC Enterprise would continue to be the majority shareholder of Income Insurance.
But the extract should be set in full, said NTUC Enterprise and Income, emphasising that the former’s role as the major shareholder was also stated as “subject always to the interests of Income, which must remain paramount”.
“Indeed, the interests of Income Insurance must always remain paramount, and it is in that context that NTUC Enterprise has always acted, which ultimately resulted in this proposed transaction with Allianz,” the joint statement said.
In NTUC Enterprise and Income’s latest response to Mr Tan Suee Chieh, where the two entities attempted to lay out the context and full facts, it was noted that co-operative shares are issued and redeemed at their par value, and that they are not equity shares.
To break it down, firstly, in a co-operative with share capital, members may be required to hold shares as part of their membership. 
A co-operative cannot issue shares to a person unless he or she also agrees to become a member. 
These shares are not traded in the open market and do not hold a “market value”. 
Par value represents the minimum amount of money that shareholders must pay to the company for each share they own.
In the case of NTUC Income, this was S$10 per share. 
Redeemable shares, or preference shares, come with a “buy-back” option. This means that a company or in this case, a co-operative, may buy back the shares from the shareholder at a fixed price and date. 
Redeemable co-operative shares did not qualify as capital under new insurance regulatory requirements, said NTUC Enterprise and Income. 
As such, NTUC Enterprise subsequently converted all its shares to permanent shares, which cannot be withdrawn. 
As part of the corporatisation, Income then decided voluntarily – even though there was no mandate nor obligation to do so – to convert all shareholders’ co-operative shares to Income Insurance shares on a one-for-one basis.
That way, minority shareholders now hold equity shares, which provide long-term financing for a corporation, giving them ownership and entitlement to a portion of the profits.