Allianz will consider revisions to the proposed income arrangement; says it respects the position of the Singapore government

GERMAN insurer Allianz will consider reviewing the proposed transaction structure to acquire a majority stake in Singapore’s Income Insurance.

In a statement on Monday evening (October 14), Allianz said: “We respect the government’s position and will assess the situation with Income Insurance and NTUC Enterprise Co-operative.”

“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,” he added.

The statement comes after the Singapore government rejected the agreement and assessed that it was “not in the public interest” for the proposed transaction to proceed in its current form.

Minister Edwin Tong stated in Parliament on Monday that the Ministry of Culture, Community and Youth (MCCY) has received new information about the proposed deal, raising concerns about Income’s ability to maintain its social mission if the deal goes ahead.

While the government will not allow the current agreement to proceed, he added, it is “open to any new agreement that Income may seek, whether with Allianz or other partners”, as long as its concerns are adequately addressed.

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Separately, Income also said Monday in a statement that it “respects the need to amend the Insurance Law to provide a clear legal basis for its review and approval involving such applications.”

It noted that it will review and take into consideration changes to the law, as well as cooperate with relevant stakeholders to decide on the next course of action.

NTUC Enterprise (NE), for its part, emphasized that it has “consistently acted in good faith to safeguard the interests of shareholders, policyholders and employees” of Income.

In July, Allianz announced that it planned to acquire 51 percent of Income at $40.58 per share, in a deal worth 1.5 billion euros ($2.1 billion). NE was expected to hold a 49 percent stake after the acquisition.

MCCY initially accepted that the rationale behind the move was to strengthen Income with a strategic partner who was a reputable player in the sector.

But after questions about the proposed transaction were raised by Members of Parliament during the August parliamentary session, the Monetary Authority of Singapore provided more details to MCCY.

Tong noted that Allianz planned to implement several initiatives to improve Income’s insurance business after the acquisition, targeting more efficient operations with reduced capital requirements.

Allianz proposed that Income reduce its existing share capital and return it to shareholders, projecting a cash distribution of approximately S$1.85 billion within three years of completion of the transaction.

MCCY was not confident that these proposals would not affect the ability of the cooperative movement as a whole, or of Income itself, to fulfill its social mission.