Income Insurance’s social model alone ‘cannot shoulder’ growth in competitive environment: NTUC Enterprise

SINGAPORE: A social enterprise model alone “cannot shoulder” growth in Singapore’s competitive insurance environment, NTUC Enterprise said in a statement on Tuesday (Jul 30). 
More than 40 global, regional and local insurers are fighting for growth in Singapore, said the majority shareholder in Income Insurance, which received an offer from German insurer Allianz for 51 per cent of its shares.
“Despite putting in very competitive bids, Income Insurance lost out on several key contracts to its global and regional competitors, such as in bancassurance, the Dependants’ Protection Scheme and group insurance for a large public organisation,” said NTUC Enterprise, which currently holds 72.8 per cent of Income Insurance’s shares.
This proves that “strong and continuous capital support and resilience” are needed for growth, it added.
And the proposed deal with Allianz would allow Income Insurance to tap the global company’s expertise in asset management and technology and product development, the statement said.
“This will strengthen the future competitiveness of Income Insurance vis-a-vis the global and regional insurers operating in a highly competitive and open Singapore market,” said NTUC Enterprise.
Its chairman, Mr Lim Boon Heng, said a stronger Income Insurance, to be anchored by both Allianz and NTUC Enterprise as institutional shareholders, would be able to better offer competitive and affordable products, including for the masses and lower income groups.
NTUC Enterprise’s statement comes after members of the public and experts raised concerns about Allianz’s plan to buy a majority stake in Income Insurance. 
Last week, a former CEO of NTUC Income Co-operative – the predecessor to Income Insurance – and ambassador-at-large Tommy Koh publicly objected to the deal in separate Facebook posts. 
Experts told CNA that Singaporeans have a historical attachment to Income Insurance and still think of it as a co-operative of NTUC, even though it became a corporate entity in 2022.
They added that the fears of Singaporeans were valid because Allianz may not fully align with the original mission of Income Insurance – to provide essential, affordable insurance to underserved workers. 
To provide “further context” to the questions raised, NTUC Enterprise gave examples in its Tuesday statement of how it protected the interests of Income Insurance policyholders over the years. 
NTUC Enterprise said it issued a letter of responsibility for Income Insurance to the Monetary Authority of Singapore in 2012, and converted its shares to irredeemable ones so that they could count towards Income Insurance’s capital adequacy ratio.
The majority shareholder also injected around S$630 million (US$469 million) into Income Insurance during economic downturns such as financial crises and the COVID-19 pandemic. 
Supporting corporatisation was also in line with the goal of providing flexibility to Income Insurance and strengthening its long-term competitiveness.
“NTUC Enterprise remained a majority shareholder of Income Insurance, cognisant that corporatisation would provide the company flexibility to consider strategic options that could support the long-term growth of Income Insurance,” the statement said. 
While the circumstances in which Income Insurance was founded in 1970 are “vastly different” from the landscape today, Mr Lim said the company remained committed to protecting families financially against key risks in life.
He said the co-operative model is no long effective given Income’s competitive ambition and growth plans, but NTUC Enterprise will remain a substantial shareholder to provide direction towards the social outcomes, in line with the principle of doing good and doing well.
“This social objective remains unchanged,” he said.
Social enterprises and co-operatives are no longer unique in doing good – more businesses are embracing stakeholder capitalism in their corporate purposes, said Mr Lim. 
“Going forward, NTUC Enterprise intends for Income Insurance to continue to be an important financially sustainable and socially responsible business, in line with its enduring purpose of empowering financial well-being for all,” he said.
NTUC Enterprise said Allianz and Income Insurance share common values and an ambition to grow and serve Singapore. It is convinced that the deal is in the best interests of policyholders and shareholders.
Income Insurance needed not just a financial investor, but an experienced global player who can help it thrive, NTUC Enterprise said.
The combination of Income Insurance’s strengths and Allianz’s global capabilities can create a “highly competitive composite insurer”, the statement reiterated.
“These capabilities and expertise have convinced NTUC Enterprise to cede a majority stake to Allianz.”