Allianz yesterday - through its wholly owned subsidiary Allianz Europe BV - announced it has withdrawn its pre-conditional voluntary cash general offer to acquire at least 51% of the shares in Income Insurance. The announcement followed a report by Bloomberg over the weekend that Allianz was close to scrapping the proposed S$2.2bn ($1.63bn) acquisition of a 51% stake in Income Insurance following public backlash to the deal.
Allianz’s offer was announced on 17 July 2024.
Allianz said that it was withdrawing from the offer in light of the Singapore Government’s announcement during the Parliament sitting on 14 October and subsequent changes to the Insurance Act.
Concerns
The government blocked the deal, citing concerns over the deal structure and Income's ability to maintain its social mission. Singapore’s minister for culture, community and youth and second minister for law Edwin Tong said that the government had no concerns over Allianz’s financial capacity to complete the deal.
However, a key sticking point was Allianz’s plan for capital optimisation, which included returning S$1.85bn to shareholders through a capital reduction within three years of the deal’s completion. The Ministry of Culture, Community, and Youth (MCCY) was concerned that the proposed transaction could undermine both the co-op movement and Income's ability to fulfil its social mission, Mr Tong said.
Prime minister Lawrence Wong said that Singapore remained open to a new deal if its concerns could be addressed. Allianz said at the time it would consider revising the deal. The government subsequently amended the insurance law, giving a clear statutory basis for MCCY’s views to be considered involving applications for approval of such deals.
Right partner
Allianz said yesterday that it remains convinced it is the right partner to support Income Insurance’s continued growth and its strategic mission for the benefit of Singapore’s people, but the decision to withdraw its offer at this time underscores Allianz’s financial discipline. The extensive discussions which Allianz and Income Insurance have had over the last months have further highlighted the shared values between the two groups.
“We respect the Singapore Government’s decision,” said Allianz SE member of the board of management Renate Wagner, who is also responsible for the Asia Pacific (APAC) region. “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.”
With EUR7.7bn ($8.1bn) in total business volume across its Property-Casualty and Life/Health retail insurance businesses in 2023, the APAC region is a strategically important growth area for Allianz and Singapore as the regional financial services hub of Southeast Asia will continue to remain an important market for Allianz.
“We have full confidence in the future strength and potential of our existing operations across the region, and we look forward to continuing to deliver exceptional value to our customers and partners across Asia-Pacific,” added Ms Wagner.