No guarantee Income deal will take place, discussions ongoing: Allianz

German insurer Allianz has said it is still figuring out the next steps, in reference to its now-stalled deal to buy a majority stake in local insurer Income Insurance.

The firm has had various discussions on amendments to the proposed deal in the past month and these are still ongoing, Allianz said in a statement posted on the Singapore Exchange (SGX) on Nov 14.

“There is no guarantee that any transaction will take place” and further announcements will be made when appropriate, it added.

Allianz has until mid-April 2025 to come back with a new proposal before its planned move to buy a major stake in Income lapses under transaction rules.

Income also issued a statement on SGX, making similar points.

The statements on SGX come a month after the two insurers and Income’s key shareholder NTUC Enterprise were caught by surprise when they were sent back to the drawing board by the Singapore Government.

Mr Edwin Tong, who is Minister for Culture, Community and Youth and Second Minister for Law, had on Oct 14 told Parliament that the deal was off the table as it was not “in the public interest”.

He said there were concerns over the deal structure and the ability of Income to continue its social obligations.

Mr Tong said the concerns lie in the terms and structure of this specific transaction, particularly in the context of Income’s corporatisation exercise.

He added that Allianz’s standing and suitability were not an issue.

Following the speech, the Government amended the Insurance Act to allow approval of the deal to be withheld.

This was to allow the Monetary Authority of Singapore to consider the views of the Ministry of Culture, Community and Youth in future applications related to insurers that are cooperatives or are linked to cooperatives.

The Allianz-Income deal has been hotly debated since the proposal was made public.

On July 17, Allianz made an offer to buy a controlling stake of at least 51 per cent in Income in a deal that was valued at $2.2 billion.

The plan then provoked a public outcry led by former Income chief executive and ex-group chief of NTUC Enterprise Tan Suee Chieh; another former Income chief, Mr Tan Kin Lian; and Ambassador-at-Large Tommy Koh.

A key worry was that the deal would make Income profit-driven and that the insurer would abandon its social mission.

At the centre of the saga was the perception that the deal was a way for NTUC Enterprise and Allianz to cash out with huge gains.

This has to do with a $2 billion surplus that the Government allowed Income to keep after it turned from a co-operative into a corporate entity in 2022.

Under the original proposed deal, there was a plan by Allianz to decrease the capital held by Income by returning about $1.85 billion to shareholders within three years.

The Government found the proposed capital reduction to be too soon after the transaction and that it “runs counter” to the premise for why Income was allowed to keep the surplus in the first instance.

Under the Co-operative Societies Act, any surplus funds would have to be transferred to the Co-operative Societies Liquidation Account that would benefit the co-op sector here.

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