Dr Tommy Koh: “INCOME and Fairprice should never be sold”

A wave of concern has emerged over the planned sale of NTUC Income to German insurer Allianz, as notable Singaporean figures Dr Tommy Koh, Tan Kin Lian, and Tan Suee Chieh have expressed their reservations about the deal, arguing that the core values of NTUC Income and Fairprice should remain intact.

In a Facebook post on Tuesday, Dr Tommy Koh, Ambassador-At-Large at the Ministry of Foreign Affairs and Chairman of the Institute of Policy Studies, voiced his opposition to the proposed sale.

Dr Koh highlighted the origins of NTUC Income, stating, “INCOME started life as a cooperative of NTUC like Fairprice. The idea was to offer insurance to the people at affordable rates. A few years ago, it was made into a company and ceased to be a cooperative. Now we are told that it may be sold to a German insurance company.”

Dr Koh further emphasized the social mission of NTUC Income, saying, “I don’t think it’s a good idea to sell INCOME. It was founded to serve a social purpose and a social need. They remain valid today. I wish to argue that INCOME and Fairprice should never be sold.”

NTUC Income, established in 1970, was created to provide insurance protection to the masses at a time when life insurance was primarily accessible only to the higher income group.

In January 2022, NTUC Income announced plans to convert its legal structure from a co-operative to a company governed by the Companies Act, aiming to strengthen its position amidst growing industry competition. The corporatisation was intended to provide NTUC Income with greater flexibility to raise funds for expansion and to offer more competitive products. The corporatisation was completed on 1 September 2022.

On 17 July 2024, Allianz proposed a S$2.2 billion cash deal to acquire a 51 per cent stake in NTUC Income. The offer, priced at S$40.58 per share, represents a 37.3 per cent premium over NTUC Income’s net asset value per share as of 31 December 2023. If successful, the acquisition would elevate 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 deal is contingent on Allianz securing at least a 51 per cent stake, translating to approximately 54.6 million shares of NTUC Income.

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

The acquisition also offers nearly 16,000 minority shareholders, who hold 27.2 per cent of NTUC Income’s shares, an opportunity to cash out from the illiquid and unlisted insurer.

Allianz plans to conduct a strategic and operational review of NTUC 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, aiming to consolidate Allianz’s market position in property-casualty, health, and life insurance in Singapore. Allianz emphasized its commitment to continuing NTUC Income’s participation in national insurance programs and social commitments.

NTUC Income has submitted Allianz’s offer to purchase 51% of its shares at S$40.58 per share to the Monetary Authority of Singapore (MAS) for regulatory approval. If approved by MAS, the offer will be presented to all NTUC Income shareholders, who will be notified accordingly.

Former NTUC Income CEO Tan Kin Lian had earlier expressed his disappointment over the planned sale in a Facebook post, stating, “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.”

Mr Tan Kin Lian, who led NTUC Income from 1977 to 2007, claimed that the insurance firm’s assets increased by 600 times under his leadership, from S$28 million to S$17 billion.

Commenting on a response by a netizen that a local icon should not be sold to a foreign company, Mr Tan said, “Sadly, PAP leaders do not share the same value as ordinary people.”

Mr Tan Suee Chieh, the former CEO of NTUC Income from 2007 to 2013, also shared his concerns on Facebook.

He quoted Allianz Group CEO Oliver Bäte, who stated in a Business Times article, “We’re not in Asia to buy top line; we want to build a resoundingly profitable business.”

He contrasted this with the values of NTUC Income under his and Mr Tan Kin Lian’s leadership, stating, “We maximised value to policyholders, but they must be sustainable and make business sense. We wanted to have as much reach to Singaporeans, not to maximise profits but to maximise social impact.”

Mr Tan Suee Chieh urged Singaporeans to speak up, saying, “I hope our leaders are making sound decisions to benefit Singaporeans in the long term. I hope things may still change if there is a public outcry. So speak up now or forever hold your peace.”