In Parliament earlier this week, Mr Edwin Tong, Minister for Culture, Community and Youth (MCCY) and Second Minister for Law said that the Income-Allianz deal has been called off, after a Government assessment that concluded that a deal in its current form would not be in the public’s interest.
Allianz had made an offer earlier this year to acquire a 51 per cent stake in Income, with a deal valued at S$2.2 billion. At the time, the terms of the offer were being reviewed by the Monetary Authority of Singapore (MAS) and pending its approval.
Why was there so much buzz over this deal? After all, it is just another business deal, right?
Income was previously known as NTUC Income Insurance Co-operative and was founded in 1970 to provide essential, affordable insurance to underserved workers.
A co-operative is defined as –
“A membership-based enterprise that operates on the principles of self-help and mutual assistance.”
Given Income’s roots, Singaporeans were worried that Income Insurance will stop prioritising the needs of Singapore workers with this deal.
Despite becoming a corporate entity in 2022, according to Professor Lawrence Loh of the National University of Singapore’s Business School – people still think of Income Insurance as a co-operative of NTUC, rather than a corporate entity.
Why was it important for Income to cease becoming a co-op?
Due to increasing challenges in the insurance sector, the co-op model was not viable anymore as it could only tap on capital from institutional members – all of which had to be co-operatives and trade unions. Only after becoming a corporate entity could, it then receive capital from other types of institutional investors – such as Allianz.
This would allow Income to do well, before it could do good for its policyholders.
So, after all that… why was the deal blocked? Why was MCCY involved?
After a hot parliamentary debate on the matter in August 2024, the Monetary Authority of Singapore (MAS) saw that Income’s planned capital optimisation could be relevant to seek MCCY’s views on the proposed deal, and shared the information with MCCY, including the terms of the proposed transaction.
MCCY then concluded that there was sufficient basis for it to intervene to protect the public’s interest, despite financial prudential requirements having been satisfied.
Prime Minister Lawrence Wong also released a statement on Facebook:
PM Wong reiterated that the Government’s concerns are over the “structure and terms of this specific transaction” and that they will “remain open to a new deal that Income may pursue with Allianz or other partners, so long as our concerns are fully addressed.”
So what lesson does this teach us?
“Ownself check ownself” is not necessarily a bad thing. In this case,
- NTUC Enterprise proposed a sale of Income shares to Allianz to strengthen its position in the market – with the interests of its policyholders in mind
- MAS came in to review and the transaction, but discovered something in the terms that would be relevant to MCCY
- MCCY came in and discovered that the deal was not in the public’s best interest and decided to call it off
Singapore’s system of checks and balances continues to function effectively, with the government proactively identifying and addressing gaps.
