Govt halts Income-Allianz deal in current form, remains open if public-interest concerns are addressed

The government will put a halt to the deal between Income and German insurer Allianz to protect public interest, said Minister for Culture, Community and Youth Edwin Tong.

In a ministerial statement in Parliament on Monday (Oct 14), he explained that the Ministry of Culture, Community and Youth (MCCY) had become concerned after it reviewed the information on the proposed transaction.

"We decided that there was sufficient basis for the government to intervene in the proposed transaction to protect the public interest, notwithstanding that the financial prudential requirements had been satisfied," said Tong.

"MCCY is not confident that the proposed transaction would not affect the ability of the co-operative society (co-op) movement as a whole, or of Income itself to carry out its social mission."

Income has played an important role in providing affordable insurance for workers and Singaporeans at large over the years, even after Income switched from a Co-Op to a corporate model in 2022, Tong added.

"Whilst we will not allow the proposed transaction to proceed, we are nonetheless open to any new arrangement which Income may wish to pursue, whether with Allianz or any other partners, so long as the concerns highlighted are fully addressed," he said.

Responding a question, Tong added that Allianz put forward a credible, sound proposal which "makes sense from a financial perspective".

"Let me make clear, there is no [financial] reason not to accept this arrangement. The representations that were made at the corporatisation exercise, the exemption that was granted, and the circumstances proposed for capital to be extracted, those are the reasons," he said.

Chief among the concerns was the return of $1.85b in cash to shareholders. This capital remittance would have been achieved through a series of measures to optimise and make efficient Income's business.

During Income's corporatisation in 2022, it had sought an exemption to carry over surplus, made as a co-operative, on the basis that it needed the capital to meet the changing demands of the insurance landscape.

The government will also table amendments to the Insurance Act this week.

These amendments will allow the Monetary Authority of Singapore, which oversees the law, to consider MCCY's views on applications by an insurer that is either a co-op or linked to a co-op.

Now a corporate entity, Income is no longer subject to the jurisdiction of the Registrar of Co-ops and any proposed transactions will rest under the Insurance Act.

In July, Allianz offered to buy a 51 per cent stake in Income in a deal that was valued at $2.2 billion.

This offer raised public concern regarding Income's ability to fulfil its social obligations that support the low-income and vulnerable with a foreign, private entity holding majority shares.

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bhavya.rawat@asiaone.com