Income Insurance should 'never be sold', says Tommy Koh of potential sale to German insurer

Days after a German insurance company expressed its interest in buying a majority stake in Income Insurance, Tommy Koh has come out to voice his reservations on social media.

The former diplomat, who is Singapore's Ambassador-at-Large, said in a Jul. 23 Facebook post that he "[doesn't] think it's a good idea" to sell the Singapore-based insurer.

He explained that Income was founded to serve a social purpose, offering insurance at affordable rates — an aim which remains valid today.

"Income started life as a cooperative of NTUC like Fairprice...Now we are told that it may be sold to a German insurance company," he said.

"I wish to argue that Income and Fairprice should never be sold."

Background info

On Jul. 17, Allianz — a German insurance company — announced its intent to make a pre-conditional offer to acquire at least 51 per cent of the shares of Income Insurance.

This deal, which would be worth approximately S$2.2 billion, would be part of Allianz's move to "expand and strengthen its presence in Singapore", it said in a media release.

The Straits Times (ST) noted in a report the same day that NTUC Enterprise Co-operative, which has a 72.8 per cent stake in Income, has given an irrevocable undertaking to accept the offer.

Income also said it would appoint an independent financial advisor to advise them on the offer, and that the views of the advisor and its directors would then be set out in a document that would be dispatched to shareholders in the event of a formal offer.

If it accepts the offer, NTUC Enterprise would retain a stake of between 21.8 per cent and 49 per cent stake in Income, ST reported.

Some have concerns

However, the offer has raised concerns among some, who share Koh's concerns that the sale if Income to the German company would compromise Income's original social values and mission.

Tan Suee Chieh, president of the Institute and Faculty of Actuaries, wrote in a Facebook post that Income aims not to maximise profits, but rather social impact.

Tan, who is the former Group CEO of NTUC Enterprise and CEO of NTUC Income, highlighted a comment by Oliver Baete, Group CEO of Allianz, who said Allianz wants to build a "resoundingly profitable" business.

"I believe the values of NTUC Income when Mr Tan Kin Lian and I were running it as a cooperative were diametrically opposite to what Oliver Baete said here," Tan said.

Former GIC economist Yeoh Lam Keong concurred in a separate Facebook post that Income could be "strategically key" in controlling healthcare insurance costs in the public's interest.

"To sell off controlling interest to Allianz, a profit-maximising international financial firm...after decades of competent local trade union and government-linked ownership, is in my humble opinion a strategic policy error that needs serious reconsideration," he said.

Former CEO of NTUC Income Tan Kin Lian also posted about the offer, and said that minority shareholders would not be "left out" in the sale.

About Income

Income Insurance was established in September 1970 as a cooperative under NTUC, as "NTUC Income".

It aimed to provide low-income workers with affordable premium insurance coverage, and gradually expanded its mission to providing affordable insurance for the masses.

In September 2022, NTUC Income was corporatised and renamed "Income Insurance".

However, it has continued to retain its social mission.

In January 2022, before its corporatisation, chief executive Andrew Yeo emphasised that Income "remains committed to driving financial inclusion via more comprehensive and accessible insurance innovations".

Top image from Alan Yeo/Google Maps and Allianz's website