The Monetary Authority of Singapore (MAS) encourages all insurers, both local and foreign, to continually innovate, adopt best practices and ensure robust risk management. This will foster a competitive insurance market that offers choice, value and stability to protect the interests of policyholders.
Mr Chee Hong Tat, Minister for Transport and Second Minister for Finance, and MAS board member, said this yesterday in Parliament on behalf of Mr Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and chairman of MAS.
He was replying to questions from lawmakers about the proposed deal between Income Insurance and Allianz Europe, and gave MAS’s views on the deal which has attracted vocal opposition over the possible weakening of Income’s social mission. Allianz announced on 17 July that it was planning to acquire a stake of at least 51% in Income Insurance for about S$2.2bn ($1.6bn). NTUC Enterprise now holds a 72.8% stake in Income. NTUC Enterprise acts as the holding entity of a portfolio of businesses on behalf of the National Trade Union Congress (NTUC), NTUC Foundation, SLF (Singapore Labour Foundation), and affiliated unions.
MAS’s assessment
Market share
Mr Chee pointed out that Allianz Insurance Singapore is ranked 14th in general insurance in the city state with a market share of 2% based on written premiums. He said, “There is no significant overlap between Income and Allianz’s overall insurance business in Singapore, and hence there is no concern about adverse impact of the proposed deal on competition in the sector.
“The insurance market in Singapore is highly competitive. There are currently more than 50 direct insurers in Singapore offering a wide range of insurance products to meet the insurance needs of individuals and businesses.
“In both life and general insurance, Income has market shares of less than 10% based on written premium. For many insurance products, Income does not always offer the lowest prices compared to other insurers.
“Take life insurance as an example. A check on CompareFirst, an online portal that allows consumers to compare life insurance products from various insurers, shows that the most competitive rates for Direct Purchase Insurance Term and Whole Life products include a mix of local and foreign insurers.
Mr Chee said, “We believe that a competitive market is the most effective way to meet the insurance needs of Singaporeans, and facilitate access to affordable insurance options and good service over the longer term.”
He added, “Should the proposed deal be approved, there will be no change to the terms and conditions of existing insurance contracts. MAS expects Income to fulfil its obligations to all policyholders under the terms of its existing insurance contracts. I note that Allianz has also publicly stated its intent for Income to continue to honour the terms of the existing policies underwritten by Income and ensure a seamless transition with no impact on existing policyholders. MAS will hold Income and Allianz to account for these commitments.”
Appointment of financial advisor
Mr Chee said that MAS had reviewed and was satisfied with the relevant processes Income’s board had put in place to address conflicts of interest with respect to the appointment of its financial advisor on this proposed deal, and the decision to enter into the deal with Allianz. In the appointment of the financial advisor for the deal, the chairman of Income’s board, Mr Ronald Ong, had recused himself. The decision to enter into the deal was made by the board, comprising a majority of independent directors.
Morgan Stanley was appointed by Income as its financial adviser for the deal with Allianz. Mr Ong was appointed as Income’s chairman in December 2018 and had been working at Morgan Stanley for 20 years at the time. In February 2023, he was appointed chairman of the bank’s Southeast Asia business.
Social enterprises must be sustainable financially
Mr Alvin Tan, Minister of State for Culture, Community and Youth, also replied to lawmakers’ questions at the sitting. He pointed out NTUC has a track record of caring for workers and fulfilling its social mission "time and time and time and time again".
But he added that social enterprises must be sustainable financially.
"If a social enterprise cannot sustain itself financially and government subsidy is needed to prop up the entity, then we will have to consider whether such a service ought to be provided by the government.”
NTUC Enterprise previously said a social enterprise model alone cannot shoulder growth in Singapore's insurance environment, and that Income lost out on several key contracts to global and regional competitors.