NTUC Enterprise Chairman assures affordable insurance for lower-income customers amid Allianz deal concerns

SINGAPORE — Income Insurance will continue to provide affordable insurance for lower-income customers following the deal with Allianz, NTUC Enterprise chairman Lim Boon Heng stated in a statement on Thursday (25 July).

His comments come in response to concerns surrounding the German company’s acquisition of a majority stake in the Singapore co-operative.

“NTUC Enterprise will also continue as an active shareholder of Income Insurance to keep it to its purpose and deliver social commitments to its policyholders,” added Mr Lim, a former Minister of the People’s Action Party.

On 17 July, Allianz announced its plans to purchase a majority stake in Income Insurance for approximately US$1.6 billion. The offer includes S$40.58 per share for a transaction value of S$2.2 billion (US$1.64 billion) for 51 percent of the shares in Income Insurance.

NTUC Enterprise, currently holding a 72.8 percent stake in Income Insurance, will remain a substantial shareholder if the sale is finalized.

In his clarification on Thursday, Mr Lim assured that Income would continue to “price its products very competitively” and reiterated its commitment to participate in national insurance programmes in partnership with the CPF Board.

Bringing in a “global player with proven insurance and asset management capabilities” would help Income “compete more effectively,” Mr Lim stated, noting that Income Insurance’s life insurance market share has been less than 10 percent over the past decade.

“Allianz’s offer to be a majority shareholder will enable Income Insurance to be even more relevant and resilient over the long term, to serve families in Singapore, and fulfil its obligations to its policyholders,” he added. “Given that insurance has a long tail – people buy policies when they are young and depend on them when they are old – a strong, thriving and growing insurance company will ensure their expectations are met.”

Income Insurance, established in 1970 as the first co-operative society by Singapore’s labour movement, maintains a social mission to provide affordable insurance to workers and families. Formerly known as NTUC Income Insurance Co-operative, it remains the only insurance co-operative in Singapore, serving around 2 million customers with life, health, general insurance, and investment-linked products.

Concerns about the possible sale have been voiced by former CEO of NTUC Income Co-operative Tan Suee Chieh and Ambassador-at-large Professor Tommy Koh.

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 emphasized the social mission of NTUC Income, arguing, “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.”

In a Facebook post, Mr Tan cited Allianz’s Group CEO Oliver Baete’s remarks about building “a resoundingly profitable business,” suggesting this ethos was “diametrically opposite” to the co-operative’s aim.

“We wanted to have as much reach to Singaporeans (the top line), not to maximise profits but to maximise social impact,” Mr Tan said, urging opposition to the deal.

Mr Tan had also previously opposed the corporatisation of the insurance co-operative in 2022 and pointed out the reversal of the promise made by Income CEO Andrew Yeo that NTUC Enterprise would continue to hold majority shares in the new entity.

Public sentiment has also surfaced online. One Reddit commenter wrote, “Many customers, myself included, signed up when NTUC was still a cooperative. It was a selling point, as the agent mentioned that a cooperative means when they have excess investment returns, it goes to policy holders instead of shareholders. Customers signed 30-year policies on the back of that and we are held to the yearly payments. But we are no longer getting the excess investment returns that we were promised.”

There is growing public discomfort with the deal, as highlighted by Gerard L Pennefather, Chairman of Huntington Investments, in an open letter.

He emphasized that 2 million Singaporeans have entrusted their lives and possessions to Income Insurance for over 50 years and have every right to be concerned about the sale. Pennefather argued that the deal does not make economic or strategic sense, citing Income’s strong financial performance compared to Allianz’s substantial losses in Singapore over the past three years.

Over the years, the Singapore labour movement has provided capital to support Income’s business. Mr Lim noted a capital injection by NTUC Enterprise in 2020 to maintain solvency during the COVID-19 pandemic. “Insurance is a capital-intensive business and to grow, there is a need to tap the capital markets,” said Mr Lim, adding that Allianz’s financial strength would bolster Income Insurance as needed.

He mentioned that since Income became a public non-listed company in 2022, minority shareholders have sought share liquidity. “When the offer is launched, minority shareholders will have the opportunity to tender their shares ahead of NTUC Enterprise and can choose to tender all, any or none of their shares during the offer period,” Mr Lim explained.

The offer’s launch is subject to regulatory approval and is expected to close in the fourth quarter of this year or the first quarter of next year, Income said in a separate statement.