ALLIANZ said it has withdrawn its pre-conditional offer to buy at least 51 per cent of the shares in Income Insurance for 1.5 billion euros (S$2.1 billion).
“We respect the Singapore government’s decision,” Renate Wagner, the Allianz board member responsible for Asia-Pacific, said in a statement on Monday (Dec 16).
Singapore’s government announced at a Parliament sitting on Oct 14 reasons why the transaction could not proceed on its current terms, but remained open to a new deal if its concerns could be addressed. The German insurer had said at the time it would attempt to do so.
Allianz said it remains committed to Singapore in the long term, given its high conviction in the potential of the city-state’s insurance market.
Since Allianz announced its plan to buy the majority stake in Income at S$40.58 a share on Jul 17, the proposal has sparked a heated debate in Singapore.
Many criticised the offer, concerned a takeover would detract from Income’s mission to provide affordable insurance for lower-income workers.
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The deal would have lifted Allianz to the fourth-largest composite insurer in Asia, from ninth.
Singapore also expressed concern over Allianz’s proposed capital reduction exercise in Income after the takeover.
The Ministry of Culture, Community and Youth (MCCY) said in Parliament on Oct 14 that Allianz’s proposal to pay out S$1.85 billion to shareholders over three years was new information then, presented by the Monetary Authority of Singapore.
MCCY Minister Edwin Tong said then: “We find it difficult to reconcile the proposed substantial capital reduction, soon after the transaction is completed, with Income’s representations to MCCY during the corporatisation exercise, that it was aiming to build up capital resources and enhance its financial strength.”
In 2022, Income – which at the time was NTUC’s insurance cooperative – proposed to convert itself into a corporate entity, with the members of the co-op receiving pari passu distribution in specie of shares in the new entity.
To do this, it sought exemption from Section 88 of the Co-operative Societies Act, which stipulates that a co-op that is wound up will have to transfer any surplus funds – after paying its members their original share capital and unpaid dividends – to the Co-operative Societies Liquidation Account to be applied for the benefit of the sector generally.
At the time, Income had assured MCCY that its social mission would not change following the corporatisation exercise; it would be changing only its legal form from a co-op to a non-listed corporate identity.
The government accepted Income’s rationale for the corporatisation and granted the exemption, allowing it to carry over about S$2 billion in surplus to the new corporate entity.
In a statement on Monday, Income’s majority owner NTUC Enterprise said it acknowledged Allianz’s decision to withdraw its offer.
Income also issued a statement following Allianz’s announcement. It said it acknowledged MCCY’s “concerns around the use of the accumulated surplus in fulfilling its social mission and will work with MCCY to address the relevant concerns to facilitate any future transaction”.
It added that had Allianz launched a formal offer, all shareholders would have been informed about the potential for a proposed capital reduction.
It also said it would continue to explore liquidation options for shareholders, while continuing to honour all existing policies.
