Former NTUC Income CEO Tan Kin Lian voices concerns over proposed sale to Allianz

In a detailed Facebook post on Thursday, Mr Tan Kin Lian, former CEO of NTUC Income, reflected on his 30-year tenure leading NTUC Income until 2007 and voiced skepticism about the proposed sale of Income Insurance to German multinational Allianz alignment with the former cooperative’s social mission.

“I headed NTUC Income for 30 years until 2007. It had a market share of more than 20% in life insurance, and catered mainly to the needs of the workers and the common people,” Mr Tan Kin Lian wrote.

He highlighted that during his leadership, NTUC Income maintained a dedicated sales force and provided life insurance at affordable premiums, avoiding bank distribution channels and independent financial advisers to keep costs low and cater to the needs of its policyholders.

Mr Tan Kin Lian emphasized NTUC Income’s cooperative model, owned by trade unions and policyholders, which allowed it to operate differently from commercial companies and maintain policyholder loyalty. However, he noted a significant decline in market share and influence since his departure.

“I was disappointed to learn that the market share in life insurance had dropped below 10% and that NTUC Income had dropped below the top 5 positions,” he said.

Regarding the planned sale to Allianz, he shared the concerns of many who have voiced opposition to the deal.

Announced on 17 July 2024, the agreement involves Allianz acquiring a 51 per cent stake in Income Insurance for S$2.2 billion. 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, which holds a 72.8 per cent stake, has committed to accepting the offer, ensuring it will maintain a substantial shareholding post-transaction, albeit as a minority shareholder.

Mr Tan Kin Lian expressed doubt about the deal’s potential to help Income fulfil its social mission.

“I share the views of many people that the proposed partnership with Allianz, a foreign insurer, will not help NTUC Income to fulfill its social mission. Allianz will be in control, and their goal is to maximize the return for its shareholders,” he wrote.

In a separate statement, former NTUC Income CEO Tan Suee Chieh echoed these sentiments, stressing the importance of maintaining the organization’s “people before profits” principle.

He warned that the sale could compromise this core value and suggested that NTUC Income could explore alternative strategies to maintain its independence and social impact.

Mr Tan Suee Chieh called for more imagination and courage in finding solutions that align with Income’s mission.

He argued that the life savings insurance business, which requires significant capital, might be better suited to ETFs and mutual funds, and suggested avoiding high-cost bancassurance deals. He emphasized that Income’s role should not be about chasing market share for its own sake but rather about serving Singaporeans effectively.

Mr Tan Suee Chieh also criticized the deal for not providing additional capital resources to Income and accused NTUC Enterprise of using the social mission argument insincerely.

He argued that the sale prioritizes capital extraction over Income’s social mission and questioned the integrity of commitments made by NTUC Enterprise in previous years.

“Commitments made two years ago as a 70% shareholder are not kept, how can we trust new commitments made as a minority shareholder?” he asked.

NTUC Income, Singapore’s one and only insurance co-operative, was corporatised in 2022 into Income Insurance Limited “to achieve operational flexibility and gain access to strategic growth options to compete on an equal footing with other insurers locally and regionally”.

Shareholders were assured at the 2022 annual general meeting that NTUC Enterprise will continue to be the majority shareholder of the new company post-corporatisation.

Mr Tan Suee Chieh reiterated that Income’s primary role is to serve the people of Singapore, not the shareholders of Allianz Europe BV, and urged NTUC Enterprise to honour its fundamental principle of “people before profits.”