Allianz has withdrawn its offer to acquire Income Insurance, two months after the Singapore Government blocked the deal.
In a media release on Monday (16 Dec), the German financial services company said it respected the Government’s decision.
Source: Rio Lecatompessy on Unsplash
Ms Renate Wagner, a member of Allianz’s Board of Management, said the company regretted having to withdraw its offer.
However, the decision was made in light of the Parliament sitting on 14 Oct, where Minister for Culture, Community, and Youth Edwin Tong said “it would not be in the public interest for the transaction, in its current form, to proceed”.
The Government also intends to amend the Insurance Act to “provide a clear statutory basis” for the ministry’s views to be considered in any approval involving such applications.
Despite the withdrawal, Allianz believes the deal would have resulted in “two strong businesses being brought together for the benefit of Income Insurance’s policyholders and a growing portion of Singapore’s customers”, it said, adding:
Allianz remains convinced it is the right partner to support Income Insurance’s continued growth and its strategic mission for the benefit of Singapore’s people.
The extensive discussions between the two companies over the last months have “further highlighted the shared values between the two groups”, Allianz noted.
Nonetheless, Singapore, as the regional financial services hub of Southeast Asia, will “continue to remain an important market for Allianz”, it said.
It pointed out that it had 7.7 billion euros (S$10.9 billion) in Total Business Volume across its Property-Casualty and Life/Health retail insurance businesses in the Asia-Pacific last year.
Thus, the company will “without question” continue supporting Singapore’s insurance market and has “full confidence” in the future strength and potential of its existing regional operations.
NTUC Enterprise, in a statement of its own on Monday (16 Dec), acknowledged the withdrawal of Allianz’s offer “in view of the legislative changes” that affected it.
It noted that the key reason for considering an additional strategic partner for Income was the fear that NTUC Enterprise alone might not be able to meet Income’s further financial needs if the Covid-19 pandemic had been prolonged.
Source: Google Maps
NTUC Enterprise injected S$100 million and had another S$300 million on standby to safeguard the solvency of Income Insurance during the pandemic, it said. Income also had to issue S$800 million in subordinated bonds.
NTUC Enterprise will now take time to study how to address the Government’s concerns.
More importantly, it will also “consider all strategic options that can further strengthen Income Insurance’s financial resilience on a sustained basis, and enable it to ride through any future crises”.
Allianz’s offer, which was announced on 17 July, proposed to acquire at least 51% of the shares in Income.
It raised eyebrows among observers, with former NTUC Income CEO Tan Suee Chieh telling Channel NewsAsia (CNA) that it was a “breach of good faith”.
He pointed out that it had been assured that NTUC Enterprise would remain as majority shareholder when concerns were raised about its corporatisation in 2022.
Diplomat Tommy Koh also voiced his objections to the potential sale on Facebook, saying Income “should never be sold” as “it was founded to serve a social purpose and a social need”.
Also read: Commentary: Income affair shows a S’pore that is out of touch
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Featured image adapted from Rio Lecatompessy on Unsplash and Google Maps.
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