Allianz calls off Income deal after S'pore government opposes decision

German insurance company Allianz has withdrawn its offer to acquire a majority stake in homegrown insurer Income Insurance after the Singapore government opposed the decision.

In a Dec. 16 statement, Allianz said that the decision was made in light of the Singapore government's announcement to call off the proposed deal in an Oct. 14 parliamentary sitting.

The Singapore government had two key concerns regarding the deal.

Income would have a "substantial capital reduction" under the new arrangement.

In addition, there were no provisions to ensure that Income would be able to continue fulfilling its social mission.

After assessing the deal, the government decided that "it would not be in the public interest" for the transaction in its current form to proceed.

We respect the S'pore government's decision: Allianz

“We respect the Singapore government’s decision,” said Renate Wagner, a member of the Board of Management of Allianz SE who is responsible for the Asia-Pacific region.

Allianz will withdraw the pre-conditional voluntary cash general offer to acquire at least 51 percent of the shares in Income, which was first announced on Jul. 17, 2024.

Nevertheless, the German insurer said it "remains convinced" that it is the right partner to support Income's continued growth and its strategic mission to benefit Singapore’s people.

At this time, however, the decision to withdraw its offer "underscores Allianz’s financial discipline".

It added that the extensive discussions between the Allianz and Income over the last few months highlighted the shared values between the two groups.

Wagner added that the Asia-Pacific region is a strategically important growth area for Allianz, and it continues to regard Singapore as an important market given it is the regional financial services hub of Southeast Asia:

“We still believe the combination of Allianz and Income Insurance would result in two strong businesses being brought together for the benefit of Income Insurance’s policyholders and a growing portion of Singapore’s customers. We regret having to make this decision but we will, without question, carry on supporting the Singapore insurance market’s continued growth and success.”

We have consistently acted in the interests of stakeholders: Income

Income Insurance acknowledged Allianz's decision in its own statement on Dec. 16, adding that business will continue as usual with no impact on policyholders.

The local insurer said it has consistently acted in good faith to safeguard the interests of its stakeholders, including policyholders and shareholders.

"The proposed transaction by Allianz to acquire at least 51 per cent of the shares in Income Insurance would have further enhanced Income Insurance’s financial resilience, as the backing of two institutional shareholders would enable Income Insurance to call on additional capital support in the future in the event of any future financial crises."

It noted that minority shareholders "may be disappointed" that the offer is withdrawn, as it would have provided them the opportunity to fully realise their investment in their shares.

Preliminary business plan was not subject to board's approval: Income

Income noted that if it was formally launched, that the material information relating to Allianz's offer would have been disclosed publicly.

"Allianz’s submission of its preliminary business plan to the Monetary Authority of Singapore (containing information relating to the proposed capital reduction) was part of the required process for Allianz to obtain regulatory approvals, which was the pre-condition of the offer. The preliminary business plan was not subject to approval from the current board of Income Insurance."

Income noted that if the deal had gone through, all shareholders would have been informed about the details, including the possibility of a proposed capital reduction, in a publicly available document.

Need to strive for sustained growth: Income Insurance

Noting that the Singapore insurance market has grown significantly, with more than 40 direct insurers today, Income said that as the needs of society change, the role that it plays in society must also evolve.

"No single insurer dominates in terms of providing the most affordable or innovative insurance products. In this increasingly competitive industry, Income Insurance needs to strive for sustained growth to fulfil its mission of supporting the vulnerable segments of society."

Income acknowledged the Ministry of Culture, Community & Youth’s (MCCY) concerns about how it would use the accumulated surplus in fulfilling its social mission.

It said it will work with MCCY to address relevant concerns for such transactions in future.

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