Prof Tommy Koh challenges Lim Boon Heng’s justification for selling majority stake in Income

In a rare public disagreement, Professor Tommy Koh has openly challenged the rationale provided by Mr Lim Boon Heng, chairman of NTUC Enterprise, for selling a majority stake in Income Insurance to German insurer Allianz.

Prof Koh’s response, posted on his Facebook page on Wednesday (31 July), raises critical questions about the decision’s impact on Income’s mission and legacy.

“I am a friend and admirer of Lim Boon Heng, the chairman of NTUC Enterprise. I hope he will not be offended if I say that I am not convinced by his press conference on the reasons why Enterprise is willing to sell a majority stake in INCOME to a German insurance company,” wrote Prof Koh, Singapore’s Ambassador-at-Large at the Ministry of Foreign Affairs and Chairman of the Institute of Policy Studies.

He emphasized Income’s founding mission, stating, “INCOME was established as a cooperative by none other than the legendary Dr Goh Keng Swee. Its mission was to make insurance accessible and affordable to the ordinary people of Singapore. For the past 54 years, it has fulfilled its mission and looked after the insurance needs of 2 million customers.”

Prof Koh highlighted several key initiatives by Income, including the Family Micro-Insurance and Savings Scheme for low-income families and insurance coverage for children with autism.

He questioned whether a foreign company would have launched such socially responsible products, expressing concern that these initiatives might not continue under Allianz’s ownership.

Addressing the financial health of Income, Prof Koh pointed out that it has always been profitable, posing the question: “In view of this fact why does NTUC Enterprise wish to sell INCOME? Is it because it will make a profit of $1 billion?”

He concluded with a reflection on changing values in Singapore, citing the warning by Singapore’s first foreign minister, S Rajaratnam, against becoming “a nation of people who know the price of everything but the value of nothing.”

Prof Koh’s comments were in response to Mr Lim’s statement during an exclusive interview with The Straits Times on 29 July.

Mr Lim, who was a former Minister of the People’s Action Party, argued that selling the stake would strengthen Income, making it more competitive and able to offer better prices to consumers.

He noted that NTUC Enterprise would receive about S$1 billion from the deal, which could be invested in ventures related to education and health services for the elderly.

On 17 July 2024, Allianz proposed a S$2.2 billion cash deal to acquire a 51 per cent stake in Income.

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. 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.

Mr Lim addressed several concerns during the ST interview, acknowledging that some Singaporeans might feel emotionally attached to the cooperative model of Income.

However, he stressed the importance of ensuring Income’s long-term sustainability and ability to fulfill its obligations to policyholders. He pointed out that customers buy insurance when they are young and expect payouts when they are old, which requires insurers to have a “very long tail responsibility.”

He also mentioned the challenges Income has faced in maintaining its capital adequacy ratio (CAR) during economic downturns and highlighted the need for the insurer to be able to tap into capital markets for future growth. This led to the decision to corporatize INCOME, allowing it access to mergers, acquisitions, joint ventures, or an initial public offering to raise funds for expansion.

Mr Lim explained that the proposed deal with Allianz would enable Income to leverage Allianz’s global expertise and financial strength, thus enhancing its competitiveness and ability to offer better prices and products to consumers.

He emphasized that while the partnership would introduce a new dynamic, the foundational values and mission of Income should continue to be upheld, and trust would need to be earned through future actions.

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