German insurer Allianz’s failed offer to buy a majority stake in Income Insurance disappointed many of Income’s minority shareholders, who simply want to cash out their shares in the public non-listed home-grown insurer.  

This sentiment was expressed by some of the 600 minority shareholders who attended Income’s annual general meeting (AGM) on June 24, many of whom were seen streaming into The Star Theatre in Buona Vista at around 4pm, more than an hour before the meeting started.

The AGM was helmed by Income’s outgoing chairman Ronald Ong and chief executive Andrew Yeo, who addressed questions from some 20 shareholders for about 3½ hours.

During his opening speech, Mr Ong assured shareholders that “we are keeping our options open and are continuing to explore different share liquidity options, which can include a share buyback programme”.

“We will update shareholders of any material development accordingly,” he added.

While the media was not allowed to attend the meeting, retail shareholders there told The Straits Times about their key concerns, including that of Income’s future.

One shareholder lamented that he was stuck with Income shares, which have a par value of $10 each but were once worth $40.58 a share – the price offered by Allianz when it sought to buy at least 51 per cent of Income in a $2.2 billion cash deal in July 2024.

The deal was blocked by the Government over concerns about its structure, which included a capital reduction plan where Income would return $1.85 billion in cash to shareholders within three years, and Income’s ability to continue its social mission.

As a result, Allianz withdrew its offer in December 2024.

Today, the market value of Income shares is unclear as they are not publicly traded.

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Shareholders’ main concern during the AGM was how to cash out of their Income shares, with several voicing their disappointment that the insurer’s deal with Allianz did not go through, according to lawyer Robson Lee who was among those present at the AGM.

Some asked if another deal with Allianz would be considered at the same offer price of around $40.

Others expressed gratitude to Income’s board for entering the proposed deal with Allianz, while criticising those who had opposed the German insurer’s offer, arguing that such voices did not represent the broader shareholder base.

Income has 15,510 individual shareholders who hold 27.4 million Income shares, according to its 2024 annual report.

They must now go through the tedious task of finding willing buyers themselves once again if they want to sell their shares. 

Some are hoping the insurer considers an initial public offering on the Singapore Exchange, but this drew a mixed reaction from the crowd, with worries that valuations could come in lower than the par value of Income shares.

Others were concerned about Income’s decreasing dividends.

“We just want our money,” an elderly couple who holds a combined 7,300 shares told ST before the AGM. 

“We are already so old,” said the wife, as she clutched her husband’s hand while they joined the snaking queue, surrounded by other elderly shareholders.

The couple said they have held on to Income shares as they have enjoyed healthy dividends in the past. But lately, this has shrunk. 

For the year ended Dec 31, 2024, Income’s board had proposed an ordinary dividend payment of 20.8 cents a share, compared with 33.4 cents a share in 2023.

To celebrate the company’s 55th anniversary, the board also recommended a special dividend of 20.8 cents a share, down from 31.3 cents a share in 2023.

Income generated a net profit of $44.8 million in 2024 compared with $15.3 million in a restated 18-month period from July 1, 2022, to Dec 31, 2023. Its net asset value per share, after excluding non-controlling interest, was $31.97, compared with $32.16 for 2023.

At the AGM, Income’s lead independent director Joy Tan was appointed its new chairwoman, replacing Mr Ong, who stepped down on June 24. Both received applause from shareholders in attendance.

Ms Tan was elected to the board of NTUC Income Insurance Co-operative as an independent non-executive director on May 26, 2017. She was appointed to the board of Income on Aug 1, 2022. 

Ms Tan works at WongPartnership, where she is the co-head of the commercial and corporate disputes practice, the corporate governance and compliance practice and the financial services regulatory practice.

The controversy surrounding the proposed Allianz transaction had been heightened by concerns over Mr Ong’s dual positions as chairman of Income and CEO for South-east Asia at Morgan Stanley.

This was despite Mr Ong having recused himself when the American bank was appointed as Income’s financial adviser for the proposed transaction.

The appointment of the financial adviser underwent a selection process, during which two financial advisers, including Morgan Stanley, were identified for consideration.

Morgan Stanley was selected for its strong record in the insurance space and in mergers and acquisitions, particularly in Asia, said Income’s Mr Yeo at the AGM. 

On his decision not to stand for re-election, Mr Ong said that it is the right time for him to take on additional responsibilities at NTUC Enterprise (NE) after serving as Income’s chairman for the last seven years – four years at the cooperative and three years at Income.

Mr Ong also touched on issues related to Income’s corporatisation and Allianz’s proposed offer.

He said the corporatisation of Income was “vital” for levelling the playing field, by enabling the company to achieve operational flexibility and gain access to strategic growth options to compete on an equal footing with other insurers here and abroad.

“More significantly, we must recognise that our success, thus far, would not have been possible without the numerous capital injections by NE over the years,” he said. 

NE holds about 78 million Income shares, representing close to 73 per cent of Income.

Mr Ong said the regular capital injections from NE, as Income’s only source of Tier-1 capital under the cooperative structure, was not a sustainable solution to capitalise the insurer in the long run.

“As such, we saw the urgency for Income Insurance to break out of the cooperative status quo, so that it could be better placed to potentially gain access to other capital sources if required,” he said. 

Corporatisation also enabled the insurer to potentially unlock equity value, he said.

“As a shareholder of Income Insurance, you are now participating in the company’s economic interest and its growth and will be able to participate in any liquidity event involving the shares of Income Insurance,” Mr Ong said.

On voting rights, all shareholders now have one vote a share, compared with ordinary shareholders having a “one man, one vote” system when the insurer was a cooperative.

“Minority shareholders now have more voting rights as their vote count has risen to more than 26 per cent compared with less than 1 per cent previously, when we were a co-op,” Mr Ong said.

He also addressed the surplus of around $2 billion that was carried over in 2022 from the cooperative NTUC Income to the corporatised entity Income Insurance, and what the money was used for.

This was “necessary and fundamental” in ensuring that Income remained solvent to discharge its legal and regulatory obligations and protect the interest of 1.4 million policyholders as it transitioned from a cooperative to a corporate entity, added Mr Ong.

Mr Yeo said Income will focus on growing its sales force in 2025 as it doubles down on investment-linked insurance policies.

The company is also prioritising higher-margin products and driving efficiencies such as repricing and claims management to enhance its business across its corporate business portfolios to ensure profitability, the CEO said.

During the AGM, all 14 resolutions tabled, including the re-election of Income’s board, received more than 99 per cent approval from shareholders.

It came after the Monetary Authority of Singapore (MAS) issued a statement on the night of June 23 about the regulatory oversight on Allianz’s offer.

The regulator had outlined key events and points in response to former NTUC Income chief executive Tan Suee Chieh’s open letters on the deal, which he had publicly opposed in 2024.

Among the points raised was that while Allianz and NTUC Enterprise had received its approval prior to Allianz’s preconditional voluntary cash general offer in 2024, the approval was to allow the two entities “to enter into an agreement or arrangement to act together to acquire an interest of 5 per cent or more of Income’s voting shares”.

It did not mean that MAS had approved the deal, said the regulator.

This article was first published in The Straits Times. Permission required for reproduction.