The National Trades Union Congress (NTUC) issued a statement on Aug. 5 to reaffirm its social mission, emphasising that it remains "unwavering in its commitment to remain alongside every worker".

This follows the news and public discussions of German insurance company Allianz's plans to acquire at least 51 per cent of Income Insurance's shares.

The statement read:

"Since its founding in 1961, NTUC has protected and uplifted workers’ lives and livelihoods.

We remain unwavering in our commitment to remain alongside every worker.

Workers will always be at the core of all we do."

Losing majority stake a tough decision to make: NTUC

The statement reiterated NTUC Enterprise's commitment to support Income Insurance but noted that it cannot do so alone.

"Retaining majority shareholding and keeping Income locally owned would have been ideal, but unfortunately, there was no alignment of interests," said NTUC.

NTUC added that NTUC Enterprise needed to make a choice that was in the best interest of Income Insurance's longevity for the sake of policyholders.

"It was a hard decision. We took comfort in knowing that the partnership would enable Income to sustain its social mission for the longer term."

The statement said that the NTUC Central Committee was briefed, and they fully appreciate the concerns and feelings shared by many members of the public.

"In fact, our union leaders have an even stronger emotional attachment to Income."

Social landscape changed over the last 55 years

However, the statement explained that the social landscape has changed over the last 55 years and that "Singaporeans’ needs and the insurance industry have both evolved in ways the pioneers could not have imagined".

"Singaporeans today, including lower-income workers, are well served by our national insurance programmes and our competitive and well-regulated insurance industry.

It said in the past 10 years, Income Insurance’s market share in the life insurance segment has fallen to less than 10 per cent by value (based on data from the Life Insurance Association), despite "strenuous efforts".

It also noted that in a fiercely competitive environment, it became apparent that Income Insurance could only continue to fulfil its social mission if it had access to additional resources and the ability to scale.

"Income can meet its long-term commitments to policyholders only if it is sufficiently capitalised, not just for now but well into the future. The offer from Allianz will help to secure this.

That is why, after full and serious consideration, the NTUC Central Committee decided to support NTUC Enterprise's consideration of the offer from Allianz.

We believe that the offer is good for Income, good for its policyholders, and will enable us to fulfil our mission from a stronger position."

Upholding social mission

NTUC Enterprise will continue to retain a substantial stake in Income Insurance.

The statement reiterated that Allianz also has committed to honouring Income Insurance's existing policies, participating in national insurance programmes, and continuing its charity commitments.

NTUC said this includes the pledge of S$100 million over 10 years from 2021 to promote social mobility among the lower-income and support the well-being of seniors.

Income Insurance has also reassured NTUC that it will continue with two low-cost schemes (NTUC GIFT and Income Insurance LUV life insurance) for union members and keep the premiums affordable for policyholders.

"NTUC’s social mission will not change.

Our portfolio of enterprises — be it in insurance, childcare, eldercare, supermarket or skills training — will continue to provide affordable and quality essential goods and services to Singaporeans.

They will also continue to provide choices to customers within the competitive marketplaces in which they operate.

We will continue to work tirelessly, with compassion and dedication, so all our workers can have better lives and livelihoods.

That is our unwavering pledge."

Income Insurance being bought by Allianz

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 provide 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.

On Jul. 17, Allianz announced its intent to make a preconditional offer to acquire at least 51 per cent of Income Insurance's shares.

The deal, worth approximately S$2.2 billion, would be part of Allianz's move to "expand and strengthen its presences in Singapore."

After the proposed sale, NTUC Enterprise will remain a substantial shareholder, as it currently has a 72.8 per cent stake in Income Insurance.

On Jul. 23, former diplomat Tommy Koh voiced his reservation on social media.

Koh stated he "[doesn't] think it's a good idea" to sell Income Insurance.

He explained that Income Insurance was founded to serve a social purpose, offering insurance at affordable rates.

"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."

Tan Suee Chieh, former Group CEO of NTUC Enterprise and CEO of NTUC Income, wrote in a Facebook post that Income Insurance aims not to maximise profits but rather social impact.

Tan highlighted a comment by Oliver Baete, Allianz's Group CEO, 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 added that Insurance 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.

In response, NTUC Enterprise chairman Lim Boon Heng assured the public that Income Insurance will continue to offer affordable insurance to its lower-income customers.

Lim said: "NTUC Enterprise will also continue as an active shareholder of Income Insurance to keep it to its purpose and deliver social commitments to its policyholders."

He added that Income Insurance will continue to "price its products very competitively".

Former Nominated Member of Parliament Calvin Cheng stated while Income Insurance has retained its social mission, he pointed out that it is "no longer always the cheapest, most affordable insurance".

Tan also penned an open letter to the chairman of the Singapore Monetary Authority, Gan Kim Yong.

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

Top photos via Allianz/Facebook & Google Maps