SINGAPORE: Some of the fears that Income Insurance will stop prioritising the needs of Singapore workers are warranted because the goals of German insurer Allianz may not fully align with the original mission of the Singaporean company, observers said.
Mr Tan Suee Chieh, former CEO of NTUC Income Co-operative, spoke up against the deal on Facebook.
In response to questions from CNA, he said: "I also feel like this is a breach of good faith, as the assurance from NTUC Enterprise to remain as majority shareholder was used to alleviate concerns about the corporatisation in 2022."
He said he engaged the NTUC Income board as a private citizen two years ago, and was assured that NTUC Enterprise was committed to the insurance company.
"This was what I had hoped would not happen. I did not expect the sale of majority shareholding to a very commercial European insurer to happen," he said.
"My concern about the fair treatment of minority shareholders when the corporatisation happened remains."
Professor Lawrence Loh of the National University of Singapore's Business School said he understood why Singaporeans were upset about the deal.
"The sentiments are of course valid ... most people will still want kind of a social enterprise to offer (life insurance, general insurance) products," he said.
People still think of Income Insurance as a co-operative of NTUC rather than a corporate entity, he added.
Previously known as NTUC Income Insurance Co-operative, Insurance Income was founded in 1970 to provide essential, affordable insurance to underserved workers.
A co-operative is a membership-based enterprise that operate on the principles of self-help and mutual assistance.
It started with S$1.2 million, but grew to become a leading composite insurer. At the end of 2008, it had assets of about S$20 billion.
According to its website, it has 2 million policyholders.
In 2022, NTUC Income co-op became a corporate entity, citing increasing challenges in the insurance sector. It said the move would allow it to achieve more flexibility and gain access to growth options to compete with other companies.
As a co-operative, it could only tap on capital from institutional members – all of which had to be co-operatives and trade unions. After becoming a corporate entity, it can receive capital from other types of institutional investors, such as Allianz.
Collapse Expand
“Over time, the new entity’s focus might shift from social good to profit maximisation,” said Associate Professor Shinichi Kamiya, a deputy director at Nanyang Technological University's (NTU) Insurance Risk and Finance Research Centre.
But on the flip side, the proposed acquisition could also help Income Insurance stay competitive and expand coverage, they said.
"Contrary to public concerns about higher premiums and reduced access to policies, Allianz is likely to preserve Income’s value proposition of providing accessible, comprehensive, and affordable insurance solutions to maintain its prominent position in Singapore," said Dr Kamiya.
The analysts' comments came after ambassador-at-large Tommy Koh and Mr Tan spoke up publicly about Allianz's plan to acquire a majority stake in Income Insurance.
Last week, Allianz announced that it would offer S$40.58 per share for 51 per cent of shares in Income Insurance. The total transaction value would be S$2.2 billion.
The deal is pending regulatory approval.
On Tuesday, Professor Koh posted on Facebook that Income Insurance should not be sold.
"(Income Insurance) started life as a co-operative of NTUC like FairPrice. The idea was to offer insurance to the people at affordable rates," he said, noting that it became a corporate entity a few years ago.
"Now we are told that it may be sold to a German insurance company. I don’t think it’s a good idea to sell (Income Insurance).
"It was founded to serve a social purpose and a social need. They remain valid today. I wish to argue that (Income Insurance) and FairPrice should never be sold," he said.
Mr Tan, who is also former group CEO of NTUC Enterprise, referred to a comment by Allianz CEO Oliver Bate, who said that the company is "worried about things that look great from a volume perspective and not so great from a value perspective."
He said NTUC Income's values used to be "diametrically opposite".
"We wanted to have as much reach to Singaporeans (the top line), not to maximise profits but to maximise social impact," he said.
In a press release last week, Allianz said it intends for Income Insurance to continue participating in national insurance programmes and continue its social commitment to promote social mobility.
Member of Parliament Liang Eng Hwa (PAP-Bukit Panjang), chairperson of the Government Parliamentary Committee for Finance and Trade and Industry, told CNA that he has filed a parliamentary question on Allianz's plan.
He said he would ask about Income Insurance being sold to a foreign company and his main concern is the affordability and accessibility of insurance, especially to the mass consumer market.
Continue reading...
Mr Tan Suee Chieh, former CEO of NTUC Income Co-operative, spoke up against the deal on Facebook.
In response to questions from CNA, he said: "I also feel like this is a breach of good faith, as the assurance from NTUC Enterprise to remain as majority shareholder was used to alleviate concerns about the corporatisation in 2022."
He said he engaged the NTUC Income board as a private citizen two years ago, and was assured that NTUC Enterprise was committed to the insurance company.
"This was what I had hoped would not happen. I did not expect the sale of majority shareholding to a very commercial European insurer to happen," he said.
"My concern about the fair treatment of minority shareholders when the corporatisation happened remains."
VALID CONCERNS
Professor Lawrence Loh of the National University of Singapore's Business School said he understood why Singaporeans were upset about the deal.
"The sentiments are of course valid ... most people will still want kind of a social enterprise to offer (life insurance, general insurance) products," he said.
People still think of Income Insurance as a co-operative of NTUC rather than a corporate entity, he added.
Income Insurance's roots
Previously known as NTUC Income Insurance Co-operative, Insurance Income was founded in 1970 to provide essential, affordable insurance to underserved workers.
A co-operative is a membership-based enterprise that operate on the principles of self-help and mutual assistance.
It started with S$1.2 million, but grew to become a leading composite insurer. At the end of 2008, it had assets of about S$20 billion.
According to its website, it has 2 million policyholders.
In 2022, NTUC Income co-op became a corporate entity, citing increasing challenges in the insurance sector. It said the move would allow it to achieve more flexibility and gain access to growth options to compete with other companies.
As a co-operative, it could only tap on capital from institutional members – all of which had to be co-operatives and trade unions. After becoming a corporate entity, it can receive capital from other types of institutional investors, such as Allianz.
Collapse Expand
“Over time, the new entity’s focus might shift from social good to profit maximisation,” said Associate Professor Shinichi Kamiya, a deputy director at Nanyang Technological University's (NTU) Insurance Risk and Finance Research Centre.
But on the flip side, the proposed acquisition could also help Income Insurance stay competitive and expand coverage, they said.
"Contrary to public concerns about higher premiums and reduced access to policies, Allianz is likely to preserve Income’s value proposition of providing accessible, comprehensive, and affordable insurance solutions to maintain its prominent position in Singapore," said Dr Kamiya.
The analysts' comments came after ambassador-at-large Tommy Koh and Mr Tan spoke up publicly about Allianz's plan to acquire a majority stake in Income Insurance.
Last week, Allianz announced that it would offer S$40.58 per share for 51 per cent of shares in Income Insurance. The total transaction value would be S$2.2 billion.
The deal is pending regulatory approval.
On Tuesday, Professor Koh posted on Facebook that Income Insurance should not be sold.
"(Income Insurance) started life as a co-operative of NTUC like FairPrice. The idea was to offer insurance to the people at affordable rates," he said, noting that it became a corporate entity a few years ago.
"Now we are told that it may be sold to a German insurance company. I don’t think it’s a good idea to sell (Income Insurance).
"It was founded to serve a social purpose and a social need. They remain valid today. I wish to argue that (Income Insurance) and FairPrice should never be sold," he said.
Mr Tan, who is also former group CEO of NTUC Enterprise, referred to a comment by Allianz CEO Oliver Bate, who said that the company is "worried about things that look great from a volume perspective and not so great from a value perspective."
He said NTUC Income's values used to be "diametrically opposite".
"We wanted to have as much reach to Singaporeans (the top line), not to maximise profits but to maximise social impact," he said.
In a press release last week, Allianz said it intends for Income Insurance to continue participating in national insurance programmes and continue its social commitment to promote social mobility.
Member of Parliament Liang Eng Hwa (PAP-Bukit Panjang), chairperson of the Government Parliamentary Committee for Finance and Trade and Industry, told CNA that he has filed a parliamentary question on Allianz's plan.
He said he would ask about Income Insurance being sold to a foreign company and his main concern is the affordability and accessibility of insurance, especially to the mass consumer market.
Continue reading...