Ministerial statement: Edwin Tong on blocking of Income-Allianz deal
The Singapore Government has intervened to stop the proposed deal between NTUC Income and German insurer Allianz, under which Allianz would have acquired a majority stake in Income. The announcement of the deal had earlier sparked a public outcry amid concerns about whether Income would maintain its social mission. In Parliament on Monday (Oct 14), Culture, Community and Youth Minister Edwin Tong said the Government had assessed the proposed transaction and decided “it would not be in the public interest” for the deal - in its current form - to proceed. However, the Government is open to new arrangements if its concerns are fully addressed. In his ministerial statement, Mr Tong explained that after receiving more information on the deal from the Monetary Authority of Singapore (MAS), his ministry (MCCY) could not reconcile a proposed substantial capital reduction, soon after the transaction is completed, with Income’s representations during its corporatisation exercise that it was aiming to build up capital resources and enhance its financial strength. Income had sought - and been granted - exemption from Section 88 of the Co-operative Societies Act, allowing it to carry over about S$2 billion in surplus to the new corporate entity. The proposed capital reduction in the Income-Allianz deal “runs counter” to the premise for why the exemption was given, Mr Tong said. He also noted that there are no clear binding provisions or structural protections in the deal to ensure that Income’s social mission will be discharged. While MCCY accepts that NTUC Enterprise (NE) has committed “in good faith” to maintaining Income’s social mission, it is not confident NE’s intentions or assurances can be upheld, Mr Tong said. The minister emphasised that the Government supports Income’s efforts to find a strong partner to strengthen its capital base and market position and that Allianz is a partner that could offer financial strength and expertise. The Government is open to any new arrangement Income might wish to pursue - with Allianz or others - “so long as the concerns highlighted are fully addressed”. Mr Tong also said the Government is moving to urgently amend the Insurance Act, to provide a clear statutory basis for MCCY’s views to be considered in any approval by MAS involving an application relating to an insurer that is either a co-op or linked to a co-op.
The Singapore Government has intervened to stop the proposed deal between NTUC Income and German insurer Allianz, under which Allianz would have acquired a majority stake in Income. The announcement of the deal had earlier sparked a public outcry amid concerns about whether Income would maintain its social mission. In Parliament on Monday (Oct 14), Culture, Community and Youth Minister Edwin Tong said the Government had assessed the proposed transaction and decided “it would not be in the public interest” for the deal - in its current form - to proceed. However, the Government is open to new arrangements if its concerns are fully addressed. In his ministerial statement, Mr Tong explained that after receiving more information on the deal from the Monetary Authority of Singapore (MAS), his ministry (MCCY) could not reconcile a proposed substantial capital reduction, soon after the transaction is completed, with Income’s representations during its corporatisation exercise that it was aiming to build up capital resources and enhance its financial strength. Income had sought - and been granted - exemption from Section 88 of the Co-operative Societies Act, allowing it to carry over about S$2 billion in surplus to the new corporate entity. The proposed capital reduction in the Income-Allianz deal “runs counter” to the premise for why the exemption was given, Mr Tong said. He also noted that there are no clear binding provisions or structural protections in the deal to ensure that Income’s social mission will be discharged. While MCCY accepts that NTUC Enterprise (NE) has committed “in good faith” to maintaining Income’s social mission, it is not confident NE’s intentions or assurances can be upheld, Mr Tong said. The minister emphasised that the Government supports Income’s efforts to find a strong partner to strengthen its capital base and market position and that Allianz is a partner that could offer financial strength and expertise. The Government is open to any new arrangement Income might wish to pursue - with Allianz or others - “so long as the concerns highlighted are fully addressed”. Mr Tong also said the Government is moving to urgently amend the Insurance Act, to provide a clear statutory basis for MCCY’s views to be considered in any approval by MAS involving an application relating to an insurer that is either a co-op or linked to a co-op.
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