GERMAN financial services giant Allianz is making an offer to acquire 51 per cent of Singapore-based insurer Income Insurance for S$40.58 per share. The deal amounts to some 1.5 billion euros (S$2.2 billion), Allianz announced on Wednesday (Jul 17).
NTUC Enterprise Co-operative Limited currently owns around 72.8 per cent of the insurer, represented by around 78 million shares out of the total 107.2 million shares as at Dec 31, 2023 based on Income Insurance’s annual report. The balance is mainly held by retail investors.
The cooperative will continue to “retain a substantial stake in Income Insurance” after the deal is completed, the announcement said.
The deal comes as Allianz seeks to expand and strengthen its presence in Singapore. Through its continued partnership with NTUC Enterprise Co-operative, it aims to focus on life and health, and property and casualty insurance in Singapore.
The insurer said it intends for Income Insurance to continue participating in national insurance programmes. It also will ensure a “seamless transition” for policyholders of Income Insurance and honour the existing policies underwritten by Income Insurance.
Allianz is one of the world’s largest global financial services groups and achieved an operating profit of 14.7 billion euros in 2023. It has a presence in Asia across nine markets and serving 9 million customers through a network of 80,000 distributors and 35 distribution partners.
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Anusha Thavarajah, Asia-Pacific regional chief executive of Allianz said: “Asia holds great strategic importance for Allianz, and we are committed to investing in Singapore by partnering with a well-respected local institution.”
“By integrating Income Insurance’s capabilities in distribution, partnerships, products, people and Allianz Group’s global and regional resources and expertise, we look forward to taking the insurance landscape of Singapore and Southeast Asia to the next level,” she added.
Income Insurance and retail shareholders
Income Insurance is the corporatised entity that was formerly the insurance cooperative NTUC Income. The corporatisation exercise, announced in January 2022, was completed in September 2022, when the insurance business under the NTUC Income Insurance Co-operative Limited was transferred to Income Insurance.
At the time of the cooperation, Income Insurance had said that the time that the exercise was done to “achieve operational flexibility and gain access to strategic growth options to compete on an equal footing with other insurers locally and regionally”.
It is now a public non-listed company limited by shares. It has been deemed “systemically important” by the Monetary Authority of Singapore, alongside AIA Singapore, Prudential Assurance and Great Eastern Life Assurance.
Income’s shares were in the spotlight recently when The Straits Times reported on the complexity faced by retail shareholders in trading the public non-listed company’s shares.
Based on Income’s latest annual report, 15,835 individual shareholders held 28.1 million Income shares as at Dec 31, 2023. Institutional shareholders held 79 million shares.
Under Income Insurance’s previous cooperative structure, shareholders could redeem their shares at par value of $10 each. After the coporatisation exercise, co-op shareholders received an equivalent number of Income shares on a one-for-one basis, but there was no more option to redeem them.
Earlier this year, shareholders were given the option to sell shares through the Income Insurance Share Liquidity Program, a partnership between PhillipCapital and digital securities exchange Alta.
Shares for sale were held in custody by PhillipCapital’s brokerage arm Phillip Securities. These shares are then listed on Alta Exchange, which serves global institutional and accredited investors.
However, the drawback is that only accredited investors are allowed to trade on the Alta Exchange. To qualify, an individual must meet any of the following requirements – have a minimum income of S$300,000 in the last 12 months; have net personal assets exceeding S$2 million, of which the net value of his or her main place of residence can contribute up to only $1 million; or have net financial assets exceeding S$1 million.
ST reported that the potential bids received on Alta ranged from $15 to $25 a share, with the shares having traded at $19.
Insurance industry consolidation
If the Allianz deal – which requires regulatory approval – does go through, it will be latest in a recent round of M&A activity.
In March, Singapore Life Holdings (Singlife) became a fully-owned subsidiary of Japanese insurer Sumitomo Life, in a deal valuing Singlife at S$4.6 billion.
British insurer Aviva also said it had completed the sale of its 25.9 per cent stake in Singlife and two debt instruments to Sumitomo Life for £937 million (S$1.6 billion).
In May, OCBC made a voluntary unconditional general offer of S$1.4 billion for the remaining 11.56 per cent stake it did not own in its insurance subsidiary Great Eastern, with an aim to delist the insurer.
At the offer’s close on Jul 12, the bank had garnered 92.52 per cent of all Great Eastern shares, falling short of the threshold of being able to compulsorily acquire the remaining shares that it does not already own.
