Troubled bid: Passengers at Singapore’s busy Changi Airport. A former CEO of NTUC Enterprise is criticising an offer by German insurer Allianz to buy a controlling stake in Income Insurance and called for it to be stopped. — AFP
SINGAPORE: NTUC Enterprise (NE) and Income Insurance on Sunday rebutted an open letter by former NTUC Income chief executive Tan Suee Chieh, in which he criticised and objected to an offer by German insurer Allianz to buy a controlling stake in Income Insurance and called on the government to stop it.
Referring to Tan’s Aug 2 letter to Monetary Authority of Singapore (MAS) chairman Gan Kim Yong, which was posted on social media, NE and Income noted that “in raising his objections, he has cast aspersions on the stakeholders with this proposed transaction. These aspersions are not well-founded and, indeed, unfair”.
On July 17, Allianz offered to purchase a controlling stake of at least 51% in Income, valuing a potential deal at S$2.2bil.
The offer price, at S$40.58 per share, represents a 37.3% premium over Income’s net asset value per share of S$29.55 as of December 31, 2023.
Should the deal go through, NE would retain a substantial stake of up to 49% in Income, depending on how minority shareholders tender their shares.
NE now holds a 72.8% stake in Income, while some 16,000 minority shareholders, including institutional investors, hold the remaining 27.2%.
Tan was NTUC Income chief executive officer (CEO) from 2007 to 2013 and NE Group CEO from 2013 to 2017.
In his letter on Aug 2, Tan said NE increased its stake in Income between 2015 and 2020, when the insurance provider was still a cooperative, with a series of capital injections totalling S$630mil at a par value of S$10 instead of at market value.
This diluted the share of minority shareholders.
NE and Income rebutted this, noting that as a cooperative at the time, Income’s shares were not traded in the open market.
Instead, we bought and redeemed the shares at a par value, or assigned fixed value, of S$10 per share, which did not have a market value.
According to NE and Income’s statements, the cooperative shares received a par value of S$10 when its ordinary members contributed capital to Income between 1995 and 2004, and when NE contributed S$630mil between 2015 and 2020.
Tan stated in his letter that NE had committed not to redeem its S$630mil worth of shares in Income in perpetuity, as this would safeguard the co-op’s long-term social mission of providing affordable insurance to low-income workers, among other things.
He added that NE’s commitment not to redeem its capital was fundamental to Income, allowing it to obtain its shares at par value, which were seen to be undervalued, and raising its stake in Income from 30% to 70%.
NE and Income noted that Tan’s claim is erroneous, adding that NE had committed in a 2012 letter to MAS to supporting Income so that it would always maintain a sound liquidity and financial position.
NE had also offered not to redeem its shares in Income as a solution to having its capital contributions counted towards Income’s capital adequacy requirements and solvency position.
It further stated that it had agreed not to redeem the capital injected into Income in order to keep it solvent for at least ten years. “It is clear from this statement that NE’s commitment was not for an indefinite period,” it said.
NE subsequently converted all its shares in Income to permanent shares in 2018 to support Income’s capital and solvency adequacy position.
NE and Income said since Income was corporatised in 2022, minority shareholders have benefitted from the conversion of their co-op shares to equity shares on a one-on-one basis, enabling them to realise the full value of their shares as opposed to them being capped at par value. — The Straits Times/ANN
