Singapore ministers addressed considerations about Allianz SE’s plan to purchase a majority stake in Revenue Insurance coverage Ltd., saying it will be held to account on its commitments and that the potential deal isn’t anticipated to adversely impression competitors within the sector.
Europe’s greatest insurer plans to purchase no less than 51% of Revenue Insurance coverage from NTUC Enterprise Co-operative Ltd. to strengthen its presence in Asia. The proposed S$2.2 billion ($1.7 billion) transaction has drawn a firestorm of feedback because it was introduced final month, together with from veteran Singaporean diplomat Tommy Koh and the previous chief government officer of each Revenue Insurance coverage and NTUC Enterprise, Tan Suee Chieh.
In response to questions in parliament on the deal Tuesday, Minister for Transport and Financial Authority of Singapore board member Chee Hong Tat stated the central financial institution was happy with the method round Revenue Insurance coverage coming into the take care of Allianz.
Allianz Makes $1.6 Billion Offer for 51% of Singapore’s Income Insurance
“Fostering a aggressive insurance coverage market with financially sturdy insurers is a key a part of MAS’ strategy to making sure that insurers function sustainably and serve the general public nicely,” he stated. “There isn’t a important overlap between Revenue and Allianz’s total insurance coverage enterprise in Singapore, and therefore there is no such thing as a concern about adversarial impression of the proposed deal on competitors.”
Chee added that Revenue Insurance coverage has a market share of lower than 10% in each life and normal insurance coverage in Singapore, primarily based on written premium, and that it doesn’t at all times supply the bottom costs.
Based in 1970 as a co-op society to supply inexpensive insurance coverage to employees and households, Revenue Insurance coverage is designated as one in every of Singapore’s 4 systemically necessary insurers. It serves about 1.7 million clients within the nation with life, well being and normal insurance coverage, its website shows. NTUC Enterprise, which additionally runs companies throughout meals, well being and schooling, managed 72.8% of the corporate as of the end of 2023.
“That is an emotive subject,” Minister of State for Tradition, Group and Youth Alvin Tan stated individually in response to queries in parliament on Tuesday. “That is one thing that we care about and care about deeply.”
Whereas acknowledging the function cooperatives resembling Revenue Insurance coverage play, the truth is that the insurer’s capital buffers have come beneath strain as a result of larger competitors, Tan stated.
NTUC’s choice was to retain a majority stake and native possession within the insurer, however it was unable to discover a accomplice, Tan stated. The take care of Allianz was the “greatest alignment of pursuits,” he stated.
The deal, which is topic to regulatory approval, is anticipated to shut by the primary quarter of subsequent 12 months.
Opponents say it permits NTUC Enterprise and different shareholders to money out with substantial positive factors.
“I really feel unhappy that for a lot of youthful Singaporeans nothing is sacred and all the pieces is on the market,” Koh, who was Singapore’s everlasting consultant to the United Nations, wrote in a Facebook post on July 30.
Former CEO Tan had urged regulators to step in and scrutinize the transaction. “At coronary heart, it’s in regards to the integrity of commitments given by establishments on which we rely to safeguard our nation’s financial well-being and residents’ curiosity,” he wrote in an Aug. 2 open letter to MAS.
NTUC Enterprise and Revenue Insurance coverage have stated the deal is in the perfect pursuits of the corporate and would assist it meet long-term commitments to coverage holders. In an Aug. 4 joint statement, they stated Allianz indicated that it intends for the agency to proceed collaborating in nationwide insurance coverage packages, in addition to keep a pledge of S$100 million in neighborhood investments.
“MAS will maintain Revenue and Allianz to account to those commitments,” Chee stated.
{Photograph}: The Financial Authority of Singapore. Photograph credit score: Edwin Koo/Bloomberg
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