SINGAPORE: NTUC Enterprise and Income Insurance have rebutted an open letter from former CEO Tan Suee Chieh, who publicly criticised the Income-Allianz deal.

In a joint statement published last night (4 Aug), both organisations accused Mr Tan of having “cast aspersions on the stakeholders in relation to this proposed transaction.”

They added, “These aspersions are not well-founded and, indeed, unfair. It is important that we set out the context and full facts accurately.”

The controversy stems from Allianz’s announcement last month that it plans to acquire a 51% stake in Income Insurance for approximately $1.6 billion.

Pending regulatory approval, NTUC Enterprise Co-operative Ltd will retain between 21.8% and 49% of shares, contingent on other shareholders’ decisions.

While the deal is expected to make Income Insurance the largest property and casualty insurer and the fifth-largest life insurer in Singapore, the acquisition has sparked concerns among Singaporeans about the impact of foreign ownership on Income Insurance’s foundational values, which have historically focused on serving the working population with affordable insurance solutions.

Mr Tan, who led NTUC Income Insurance Co-operative Limited from 2007 to 2013, has been a vocal critic of the deal. Calling the transaction a “breach of good faith,” in an interview with CNA last month, he said:

“This was what I had hoped would not happen. I did not expect the sale of majority shareholding to a very commercial European insurer to happen. My concern about the fair treatment of minority shareholders when the corporatisation happened remains.”

On his Facebook page, Mr Tan wrote that when he and Tan Kin Lian, who served as CEO of NTUC Income from 1977 to 2007, had run it as a cooperative, they wanted to “maximise social impact.”

This is opposed to what Oliver Baete, the Group CEO of Allianz, said in a Business Times piece earlier this week: “we want to build a resoundingly profitable business.”

“I hope our leaders are making sound decisions to benefit Singaporeans in the long term. I believe if there is a public outcry, things may still change. It is time to speak up or forever hold your peace,” he added.

On Friday (2 Aug), Mr Tan posted an open letter on Facebook addressed to the Monetary Authority of Singapore (MAS) chairman, Gan Kim Yong, urging regulatory intervention and criticizing various aspects of the deal.

Mr Tan highlighted that NTUC Enterprise injected S$630 million into NTUC Income between 2015 and 2020, acquiring shares at a par value of S$10 each rather than the true market value. This, he argued, diluted the shares of minority shareholders at the time.

In their rebuttal, NTUC Enterprise and Income clarified that co-operative shares are not equity shares and are purchased and redeemed at par value, which has consistently been S$10 per share.

They stressed that co-op shares are not traded on the open market and lack a “market value.” The organisations reiterated that NTUC Enterprise’s capital injections significantly bolstered NTUC Income’s financial stability.

The joint statement also addressed Mr Tan’s claim that NTUC Enterprise’s increased shareholding gave it greater moral authority to prevent mission drift by the social enterprise.

They pointed out that a 2012 letter of responsibility to MAS, issued when Mr Tan was CEO, ensured NTUC Income’s sound financial position.

Additionally, a 2014 board meeting minute, attended by Mr Tan, indicated NTUC Enterprise’s commitment not to redeem shares for at least 10 years, not indefinitely, both firms said.

The joint statement said that NTUC Enterprise later converted all shares to permanent shares following the 2018 introduction of a new class of irredeemable shares under the Co-operative Societies Act.

The conversion of minority shareholders’ co-op shares to equity shares on a one-to-one basis increased their voting rights significantly, from 0.3% to over 26%.

Mr Tan also expressed concerns about the corporatisation of NTUC Income in 2022 and the potential for NTUC Enterprise to divest its shares.

In response, NTUC Enterprise and Income noted that shareholders and policyholders were engaged and informed before the Extraordinary General Meeting (EGM), where the corporatisation resolutions were overwhelmingly approved.

Earlier on Sunday, Minister for Culture, Community and Youth Edwin Tong acknowledged questions about the corporatisation of Income in 2022.

Noting that this matter was raised previously to the Registry of Co-operative Societies (RCS) under the Ministry of Culture, Community and Youth (MCCY), Mr Tong said:

“The RCS had then advised all parties that this was a matter for NTUC Income and its members to collectively determine and resolve.

What was important was the need to be transparent about the arrangements and to allow Income’s members to decide whether or not to proceed with corporatisation.”

Sharing that NTUC Income had done so in 2022 and had worked closely with its members to provide clarifications on the process, Mr Tong said:

“Eventually, members voted overwhelmingly in favour of corporatisation. From a regulatory perspective, therefore, RCS is satisfied that due process was followed in that corporatisation exercise.”

The minister added that several parliamentary questions have been raised about the proposed Allianz deal – questions which would be answered when Parliament sits this week. /TISG