SINGAPORE: German insurer Allianz introduced on Monday (Dec 16) that it has withdrawn its supply to acquire a majority stake in Income Insurance after the Singapore authorities raised considerations concerning the proposed transaction.
Underneath the proposed deal, Allianz would have acquired a 51 per cent stake in Revenue for about S$2.2 billion (US$1.6 billion). NTUC Enterprise, the father or mother firm of Revenue, mentioned on the time that it could stay a “substantial” shareholder if the sale went by.
Nevertheless, the association triggered a public outcry over whether or not Revenue would be capable to proceed its social mission.
The government stepped in on Oct 14 to block the transaction, with Tradition, Neighborhood and Youth Minister Edwin Tong telling parliament that the deal in its present type “wouldn’t be within the public curiosity”.
The federal government was, nevertheless, open to new preparations if the considerations highlighted had been totally addressed.
Allianz mentioned on the time that it would consider revising the deal.
On Monday, Allianz mentioned in a media launch that its transfer to scrap the deal was made in mild of the Singapore authorities’s Oct 14 choice.
“Allianz stays satisfied it’s the proper accomplice to help Revenue Insurance coverage’s continued progress and its strategic mission for the good thing about Singapore’s folks, however the choice to withdraw its supply at the moment underscores Allianz’s monetary self-discipline,” it mentioned.
“The in depth discussions which Allianz and Revenue Insurance coverage have had during the last months have additional highlighted the shared values between the 2 teams.”
Member of Allianz’s board of administration, Renate Wagner, mentioned the insurer respects the Singapore authorities’s choice.
“We nonetheless imagine the mixture of Allianz and Revenue Insurance coverage would lead to two robust companies being introduced collectively for the good thing about Revenue Insurance coverage’s policyholders and a rising portion of Singapore’s prospects. We remorse having to make this choice however we are going to, with out query, keep on supporting the Singapore insurance coverage market’s continued progress and success,” he added.
NTUC Enterprise mentioned in a separate media launch on Monday that it acknowledges Allianz’s choice to withdraw its supply in view of the legislative adjustments that affected the deal.
“The seek for a strategic accomplice for Revenue Insurance coverage was carried out to bolster its monetary resilience, particularly in instances of disaster. That implies that Revenue Insurance coverage first must be aggressive and earn its risk-adjusted price of capital and secondly, wants to satisfy regulatory capital adequacy necessities, particularly throughout unexpected shocks and crises,” it mentioned.
“That is essential with the intention to defend the pursuits of Revenue Insurance coverage’s policyholders over the long term and can be consistent with Revenue Insurance coverage’s function.
“Whereas Revenue Insurance coverage’s capital adequacy ratio is at the moment at a wholesome stage, NTUC Enterprise recognises the have to be ready for a extra turbulent and risky world given the potential of future financial crises and pandemics.”
Throughout the COVID-19 pandemic in 2020, for example, NTUC Enterprise needed to inject S$100 million and have one other S$300 million on standby to safeguard the solvency of Revenue Insurance coverage.
As well as, NTUC Enterprise mentioned Revenue Insurance coverage needed to problem S$800 million in subordinated bonds.
“If the COVID-19 pandemic had been extended, and extra capital had been wanted, NTUC Enterprise alone could not have been capable of meet Revenue Insurance coverage’s additional monetary wants. That was the important thing purpose for contemplating a further strategic accomplice for Revenue Insurance coverage.”
NTUC Enterprise added that it’ll take time to check the best way to tackle the federal government’s considerations, and to think about all strategic choices that may additional strengthen Revenue Insurance coverage’s monetary resilience.
