NTUC Enterprise and Income Insurance issued a joint statement late on Sunday night, Aug. 4 to respond to points raised in a four-page open letter voicing concerns over the sale of a homegrown insurer to Allianz.

The open letter, by Tan Suee Chieh, who previously served as chief executive officer (CEO) at Income and subsequently NTUC Enterprise, was sent two days ago to Monetary Authority of Singapore chairman Gan Kim Yong.

It called for government regulators to "step in and carefully review" the sale between Income Insurance and Allianz.

"At heart, it is about the integrity of commitments given by institutions on which we rely to safeguard our nation's economic well-being and citzens' interest," Tan wrote.

In response, NTUC Enterprise and Income Insurance said that in raising objections, Tan cast aspersions on the stakeholders about the transaction, which are "not well-founded" and "unfair".

Open letter

In his open letter, Tan claimed that between 2015 and 2020, NTUC Enterprise injected S$630 million into Income Insurance in return for shares at par value rather than the true or market value, which was much higher.

This increased NTUC Enterprise's shareholding in NTUC Income from 30 to 70 per cent.

Tan added that he was NTUC Enterprise's group CEO at the time.

NTUC Enterprise's increased shareholding in Income Insurance meant that NTUC Enterprise would have "greater moral authority to prevent mission drift by social enterprise".

"Now, just less than two years later, NE (NTUC Enterprise) is selling those shares to Allianz for a huge profit- with Allianz becoming the majority shareholder. The sale to Allianz will fundamentally erode the social mission of NTUC Income. Allianz is a commercial enterprise focused on pursuing profit. There is no reason to believe that Allianz will prioritse NTUC's social mission above its own profits."

Tan urged MAS to "comprehensively scrutinise the proposed sale".

NTUC Enterprise and Income Insurance statement

NTUC Enterprise and Income Insurance said in response that Allianz intends to honour Income Insurance's social mission to provide affordable, inclusive insurance to all Singaporeans.

The statement also refuted claims made by Tan, calling them "untrue" and "erroneous".

Tan claimed that NTUC Enterprise increased its stake in Income Insurance with a series of capital injections at a par value of S$10 per share instead of "market value" and, as a result, diluted the shares of minority shareholders.

However, NTUC Enterprise and Income Insurance said Tan's claims are inaccurate.

NTUC Enterprise and Income Insurance explained that cooperative shares issued and redeemed at their par value were not equity shares and were not traded in the open market.

As such, they do not hold a "market value".

On upholding Income Insurance's social mission, the statement pointed out that capital resilience is necessary to provide affordable, inclusive insurance on a sustained basis.

It noted that the circumstances between when income Insurance was founded and today are vastly different:

"While the goal of providing affordable insurance remains, the competitive landscape has changed with more than 40 global, regional and local insurers vying for growth in a mature Singapore insurance market. This also makes strong and continuous capital resilience a pre-requisite for growth, which a social enterprise model alone cannot shoulder."

The statement added that Allianz is one of the world's largest global financial services groups.

As it boasts financial strength and global capabilities, it will create a highly competitive composite insurance powerhouse in Singapore with NTUC Enterprise, the statement added:

"With Allianz and NTUC Enterprise as shareholders, policyholders can take comfort in not one, but two strong institutional investors behind Income Insurance, allowing it to continue its social mission for the years to come."

Moreover, minority shareholders will stand to reap annualised return, inclusive of dividends and bonus issues, of between 10 and 39 per cent over their holding period, or 3.3 to 28 times their original investment, according to the joint statement.

They would be accorded priority to tender their shares ahead of NTUC Enterprise,

The 30-year annualised return of the Straits Times Index was 4.3 per cent in comparison, the statement pointed out.

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