Parliament passes Bill enabling Govt to block Allianz-Income deal

The minister in charge of Singapore’s financial regulator will have powers to block deals involving insurers that are run or substantially owned by cooperatives after Parliament passed new laws on Oct 16.

After about four hours of debate, the House passed the Insurance (Amendment) Bill, which will allow the Government to halt German insurer Allianz’s planned offer to take a controlling stake in Income Insurance. Income’s majority shareholder – NTUC Enterprise – is a cooperative.

The move paves the way for the Monetary Authority of Singapore (MAS) to consider the views of the Ministry of Culture, Community and Youth (MCCY) when an application for regulatory approval involves an insurer that is either a cooperative or linked to one.

There is currently no legal provision for the authority to do so in such cases.

Income had taken on the assets of Income Co-operative when it became a company in 2022, and NTUC Enterprise has a 72.8 per cent stake in the insurer.

The changes will allow the minister in charge of MAS to withhold approval of applications involving insurers like Income if he considers that it is in the public interest to do so. There will be no avenue for appeals when this happens.

Presenting the Bill for debate on Oct 16, MAS deputy chairman and Second Minister for Finance Chee Hong Tat said: “We are making the amendments on an urgent basis because the proposed transaction is under active consideration by Income’s shareholders.”

Mr Chee noted that Income is now a corporate entity, and no longer subject to regulations that govern cooperatives.

Sixteen backbench MPs spoke on the Bill, with many – including Mr Liang Eng Hwa (Bukit Panjang), Mr Yip Hon Weng (Yio Chu Kang) and Nominated MP Mark Lee – raising concerns about whether blocking the Allianz-Income deal would damage Singapore’s reputation as a global centre that is pro-business and welcomes foreign investments.

In response, Mr Chee said: “I would like to assure the House that Singapore remains committed to upholding our status as an open, rules-based and pro-enterprise business hub. The same applies to MAS as the financial sector regulator. There is no change in this regard.”

He added that the Bill is “tightly scoped” to cooperative insurers, and does not affect any other insurer or the financial industry at large.

Minister for Culture, Community and Youth Edwin Tong said the Government’s decision to halt the deal was made after careful and deliberate consideration.

This was the most transparent and above-board way to handle the matter, Mr Tong said, adding that it will “uphold, rather than diminish, Singapore’s reputation as a hub for businesses that is open, transparent and rules-based”.

Mr Chee had introduced the Bill in Parliament on Oct 14, the same day the Government blocked Allianz’s offer in its current form over concerns about the deal structure and Income’s ability to continue its social mission. The Bill had a certificate of urgency, which allowed it to be debated and passed in the same Parliament sitting.

In July, Allianz said it planned to buy at least 51 per cent of Income from NTUC Enterprise Co-operative in a cash deal worth $2.2 billion.

The planned deal ignited public criticism, and raised concerns that it could lead to higher insurance premiums and run counter to Income’s “social mission” roots of helping lower-income workers. The matter was subsequently raised in Parliament on Aug 6.

In a ministerial statement on Oct 14, Mr Tong said MAS provided further details on the proposed transaction after the Parliament sitting in August.

This included the fact that Allianz’s proposal included a substantial capital reduction exercise, which would entail Income returning $1.85 billion in cash to shareholders within three years after the deal is completed. 

While such capital reduction exercises are common in corporate mergers and acquisitions, Mr Tong said then that MCCY was not confident the proposed transaction would not affect Income’s ability to carry out its social mission.

During the debate on Oct 16, Workers’ Party MP Jamus Lim (Sengkang GRC) and Progress Singapore Party Non-Constituency MP Leong Mun Wai questioned why MAS shared further details of the proposed transaction and Income’s capital reduction plan with MCCY only after the Aug 6 sitting.

Associate Professor Lim flagged what he said appeared to be “multiple breakdowns of communication between different governmental entities”, and asked if the civil service had become siloed.

Mr Leong also asked why the NTUC central committee decided to support NTUC Enterprise’s consideration of Allianz’s offer and said it was good for Income and its policyholders, given MCCY’s concern and the capital reduction plan – which the NCMP termed as an “asset stripping exercise”.

He queried if the central committee knew the full details of the deal, and said the leaders of NTUC, NTUC Enterprise and Income owe the public a more substantial explanation.

In response, Mr Chee said there is a balance to be struck between effective government functioning through information sharing, and preserving commercial confidentiality to maintain investor confidence.

The information provided to MAS as part of its supervisory dealings with financial institutions, including Income and Allianz, is confidential and not normally shared with other government agencies, he added. 

After the Aug 6 sitting, MAS saw that Income’s planned capital optimisation and cash remittance could be relevant to MCCY’s views on the proposed transaction, and shared the information with the ministry, he said.

Questioning why it was necessary for the opposition MPs to “throw our public officers under the bus”, Mr Chee said: “I hope Mr Leong and Associate Professor Lim could give our officers some credit. They were trying their very best to do their work. And when they saw that there was a link, they shared the information, they surfaced it to the (MAS) board, and then we shared the information with MCCY.”

Mr Chee also objected to Mr Leong’s “unkind” remarks on NTUC. He stressed that the labour movement’s leaders had acted in good faith, wanting to strengthen Income so that it could serve its policyholders and fulfil its social mission.

Joining the debate, NTUC deputy secretary-general Desmond Tan said the central committee did not know of the capital reduction plan before it was mentioned in Parliament on Oct 14. Income Insurance and NTUC Enterprise had briefed the committee on the strategic imperatives of the deal, but did not highlight the capital reduction plan, he added.

Mr Tan noted that as a non-listed public company, Income would have to “comply with the legal responsibility of nondisclosure of commercially sensitive information on Allianz’s plans post-acquisition”.

MPs also raised concerns over the Government blocking the Allianz-Income deal on grounds of “public interest”, and sought clarity on this. They asked how a balance would be struck between regulations to protect public interest and maintaining investor confidence.

NMP Lee said that without a clear definition of public interest, businesses face uncertainty about what actions may trigger government intervention, introducing commercial risks into regulatory process.

He said there remains uncertainty around the Government’s expectation regarding Income’s social mission, making it difficult for any organisation to construct a deal that aligns with both financial and social responsibilities.

“When these boundaries are not well-defined, businesses face unpredictability, complicating long-term planning and strategic decision making,” he said.

Responding, Mr Chee said he agreed that businesses should be given an opportunity to address and correct draft plans before final decisions or interventions are made.

The Government is open to NTUC Enterprise working out a new deal, whether with Allianz or another entity, which can address MCCY’s concerns, he added.

The seven WP MPs in the House abstained as Parliament voted to pass the Bill.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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