Germany-based global composite insurer Allianz SE's proposed acquisition of Singapore's Income Insurance should not materially change the competitive landscape in Singapore's insurance market, says Fitch Ratings.
The transaction will further strengthen Income Insurance’s market-leading position in the fragmented non-life sector, while Fitch expects the life sector to continue to be dominated by the current five biggest insurers, including Great Eastern Life Assurance and the subsidiaries of global insurance groups. Fitch expects the overall competitive dynamics to remain stable, as the acquisition consolidates rather than disrupts existing market positions.
On 17 July 2024, Allianz announced its intention to acquire a 51% majority stake in Income Insurance for about $1.6bn, which may lead to a name change for the Singapore insurer. The transaction is subject to regulatory approval and will result in NTUC Enterprise Co-operative Ltd retaining between 21.8% and 49% of the shares, depending on the acceptance status of other shareholders.
Income Insurance, one of the leading composite insurers in Singapore with over 50 years of operating history, stands to benefit from Allianz’s global expertise and potential synergies. The transaction is likely to enhance its business profile in Singapore, where it will become the largest property and casualty insurer and the fifth in life insurance.
Fitch expects the proposed acquisition will also strengthen Allianz’s presence in Asia, a region identified as strategically important for the group’s growth. It will elevate the global insurer from the ninth- to the fourth-largest composite insurer by insurance revenue in Asia, according to Allianz. The proposed acquisition aligns with Allianz’s strategic objective to grow inorganically in the non-life sector rather than the life insurance segment and to become a leader in its markets.
Allianz’s ‘AA’/Stable IFS Rating is unaffected, as the proposition transaction is small relative to the group’s operating scale. It is neutral to the group’s capitalisation, company profile, and financial performance.