Allianz’s acquisition of NTUC Income Insurance: Founding CEO Tan Kin Lian expresses disappointment

In a significant move within the insurance industry, German insurer Allianz has proposed a S$2.2 billion cash deal to acquire a 51 per cent stake in Singapore’s home-grown Income Insurance.

The offer, priced at S$40.58 per share, represents a 37.3 per cent premium over Income’s net asset value per share as of 31 December 2023. If successful, this acquisition will propel Allianz from the ninth to the fourth-largest composite insurer in Asia.

“This proposed transaction brings two strong businesses together for the benefit of Singapore’s customers and solidifies Allianz’s leadership position in the region,” said Ms Renate Wagner, an Allianz board member responsible for the Asia-Pacific region.

The offer is contingent on Allianz securing at least a 51 per cent stake, which translates to approximately 54.6 million shares of Income Insurance.

NTUC Enterprise Co-operative, holding a 72.8 per cent stake in Income, has irrevocably committed to accepting the offer, ensuring that NTUC Enterprise will maintain a substantial shareholding post-transaction, ranging from 21.8 per cent to 49 per cent.

This deal also presents an opportunity for nearly 16,000 minority shareholders, holding 27.2 per cent of Income’s shares, to cash out from the illiquid and unlisted insurer.

Allianz plans to conduct a strategic and operational review of Income’s businesses to enhance capital efficiency and explore potential business model transformations. The transaction is anticipated to close in the fourth quarter of 2024 or the first quarter of 2025.

The acquisition aims to consolidate Allianz’s market position in the insurance sectors of property-casualty, health, and life in Singapore.

Allianz highlighted the synergy between its capabilities in underwriting, product development, and data analytics with Income’s strong market reach and distribution strengths.

Allianz also emphasized its commitment to continuing Income’s participation in national insurance programs and its social commitments.

Responding to the announcement, Mr Tan Kin Lian, the founding CEO of NTUC Income, expressed his disappointment on his Facebook page. “This is sad. But it reflects what has been happening in Singapore for the past three decades. We are following the bad practices of America. America is now in decay. Singapore may follow,” he wrote.

Mr Tan, who served as CEO of Income for 30 years from 1977 to 2007, previously claimed that the insurance firm’s assets increased by 600 times under his leadership—from S$28 million when he first joined to S$17 billion when he left in April 2007, a claim which has not been disputed by Income.

In another post, Mr Tan indicated his willingness to sell his shares at the offered price of S$40.58 by Allianz. He also mentioned a query from a shareholder about whether to sell or hold the shares, which they had purchased at S$10 each during his tenure as CEO.

The response from Mr Tan underscores a sentiment of regret over the sale, highlighting concerns about the direction in which such transactions might steer Singapore’s corporate landscape. His comments reflect a broader apprehension about adopting practices seen in American corporate culture, which he perceives as problematic.

This acquisition is poised to reshape the competitive landscape of Singapore’s insurance market, as competitors may need to re-evaluate their product offerings in light of this strategic partnership.