SINGAPORE – NTUC Enterprise (NE) and Income Insurance late on August 4 rebutted an open letter by former NTUC Income chief executive Tan Suee Chieh, in which he had 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 Mr 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 in relation to this proposed transaction. These aspersions are not well-founded and, indeed, unfair”.
Allianz on July 17 offered to buy a controlling stake of at least 51 per cent in Income, valuing a potential deal at $2.2 billion. At $40.58 a share, the offer price represents a 37.3 per cent premium over Income’s net asset value per share of $29.55 as at Dec 31, 2023.
Should the deal go through, NE will retain a substantial stake of up to 49 per cent in Income, depending on how minority shareholders tender their shares.
NE now holds a 72.8 per cent stake in Income while some 16,000 minority shareholders, including institutional investors, hold the remaining 27.2 per cent.
Mr Tan was NTUC Income CEO from 2007 to 2013 and NE Group CEO from 2013 to 2017.
In his letter on Aug 2, Mr Tan said that NE increased its stake in Income between 2015 and 2020, when the insurance provider was still a co-operative, with a series of capital injections totalling $630 million at a par value of $10 instead of at market value. This diluted the share of minority shareholders.
NE and Income rebutted this, noting that as a co-operative at the time, Income’s shares were not traded in the open market. Instead, the shares were bought and redeemed at a par value, or assigned fixed value, of $10 per share, and did not have a market value.
The value of the co-operative shares were given a par value of $10 when its ordinary members infused capital into Income between 1995 and 2004 and also when NE injected $630 million into Income between 2015 and 2020, NE and Income said in their statement.
Mr Tan said in his letter that NE had committed not to redeem its $630 million worth of shares in Income in perpetuity, as this would safeguard the co-op’s social mission of providing affordable insurance to low-income workers in the long term, among others.
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 per cent to 70 per cent.
