The government of Singapore is blocking a proposed deal by Munich-based Allianz SE to acquire a majority stake in Income Insurance over social concerns.

In July, Allianz SE announced that it was planning to purchase at least a 51 percent stake in Singapore-based Income Insurance from NTUC Enterprise for S$2.2 billion ($1.7 billion). The deal would have allowed the German firm to rise from being the ninth to the fourth largest composite insurer in Asia.

Upon review, the Singapore government said it would block the proposed deal as it «would not be in the public interest […] in its current form», said Edwin Tong, Minister for Culture, Community and Youth (MCCY) as well as Second Minister for Law in a statement.

Social Mission

Founded in 1970, Income was originally established as a so-called co-operative – an entity intended to act as a social institution to serve Singaporean workers – and designated as one of the city-state’s four systemically important insurers. Today, it serves about 1.7 million customers in the country.

According to Tong, there are two main issues for the government to intervene in the deal. Firstly, the government finds it difficult to «reconcile the proposed substantial capital reduction, soon after the transaction is completed» as Income had undergone corporatization in 2022 to change its form from being a co-op to a company, citing the requirement for a strong capital base to meet tightening regulations as a reason.

Secondly, there were also concerns about Income’s ability to continue fulfilling its social mission after the proposed transaction.

Amendment Bill

While the approval or rejection of the deal currently rests with the Monetary Authority of Singapore, existing rules do not require the financial regulator to consider the views of the MCCY. As such, the government intends to amend the Insurance Act.

«The amendments will be scoped specifically to only apply […] where the licensed insurer is a Co-operative, has acquired the business of a Co-op, or has a substantial shareholder or effective controller which is a Co-op,» Tong explained.

Allianz Response

In response, Allianz said that it respected the government’s position and would assess the situation with Income and NTUC Enterprise.

«We are convinced that partnering with Income Insurance, a company that shares Allianz’s values and commitment to customer excellence, will benefit Singapore’s customers and society,» it added in a statement.

«To be clear, the Government supports having a strong partner for Income, so as to strengthen its capital base and market position,» said Singapore Prime Minister Lawrence Wong in a social media post. «We have no concerns over Allianz's standing or suitability to acquire a majority stake in Income. Allianz is a major global insurance company and asset manager that can bring financial strength and expertise to Income.»