In a significant move, the Singapore government has decided to block Allianz SE’s proposed S$2.2 billion ($1.7 billion) acquisition of a majority stake in local insurance firm Income Insurance Ltd. The decision follows a wave of public backlash that raised concerns about the deal’s implications for the company’s commitment to its social mission.
Minister of Culture, Community and Youth Edwin Tong announced the government’s stance in parliament on Monday, stating that allowing the deal to proceed in its current form would not be “in the public interest.” He emphasized the need for Income to maintain its co-operative ethos, which aims to support middle and lower-income Singaporeans.
This rare intervention comes as Prime Minister Lawrence Wong prepares for an election due by November 2025. Wong noted on Facebook that the deal raised significant concerns regarding the assurances Income had provided to the government when it was corporatized in 2022.
Room for Revision
Despite blocking the current deal, Tong mentioned that the government remains open to revising arrangements, whether with Allianz or other potential partners, as long as the highlighted concerns are adequately addressed. Any new proposal will need the approval of Singapore’s financial regulator, which will consider Tong’s ministry’s views after a forthcoming law amendment is debated in parliament.
Allianz’s initial plan to acquire at least 51% of Income would have positioned the German insurer as the fourth-largest composite insurer in Asia, up from ninth place. However, the announcement sparked criticism among Singaporeans worried that the acquisition could lead to increased insurance premiums and compromise Income’s founding mission to provide affordable coverage.
Bloomberg Intelligence analyst Steven Lam remarked, “Singapore’s life insurance market remains attractive. The question is whether Allianz will explore alternatives in Singapore or shift its focus to other operations in Asia.”
Future Plans and Implications
Allianz and Income Insurance have yet to comment on the latest developments. Allianz’s CEO, Oliver Baete, is approaching the conclusion of a three-year strategic plan aimed at sustainable growth and efficient capital management. He has been cautious about major acquisitions, favoring share buybacks and dividends, with new targets set to be unveiled at a capital markets day in December.
Founded in 1970 as a co-operative, Income Insurance has been dedicated to providing affordable insurance to Singapore’s workforce and families. Serving approximately 1.7 million customers, it stands as one of Singapore’s four systemically important insurers.
Tan Suee Chieh, former CEO of both Income Insurance and NTUC Enterprise, remarked, “This outcome underscores the importance of public engagement on matters of societal interest.”
Income Insurance reported a profit after tax of S$60.4 million for the 18 months leading up to December 2023. However, the company’s capital buffers have faced challenges during economic downturns, including the global financial crisis and the COVID-19 pandemic.
Minister Tong reassured that the government’s decision does not signal a reluctance to embrace foreign investment. “We’re not closing the door on partnerships with foreign entities,” he said. “This should not be interpreted as a rejection of Allianz or any other potential partner.”
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