The much-debated deal between German insurer Allianz and Income Insurance has been called off by the Singapore Government on concerns over the deal structure and the ability of the local insurer to continue its social mission.
The scrapping of the deal was announced in Parliament on Oct 14 by Mr Edwin Tong, who is Minister for Culture, Community and Youth and Second Minister for Law.
"The Government has assessed the proposed transaction and has decided that it would not be in the public interest for the transaction, in its current form, to proceed," he said.
The Insurance Act will be amended on an urgent basis to allow the approval of the deal to be withheld. This will pave the way for the Monetary Authority of Singapore (MAS) to consider the views of the Ministry of Culture, Community and Youth (MCCY) in future applications related to insurers that are cooperatives or are linked to cooperatives. Mr Tong said the Government does not have concerns over Allianz's standing or suitability to acquire a majority stake in Income. The concerns lie in the terms and structure of this specific transaction, particularly in the context of Income's corporatisation exercise. Mr Tong added that the Government is open to future new proposals, if the concerns are addressed. The latest move comes three months after Allianz on July 17 made an offer to buy a controlling stake of at least 51 per cent in In-come, in a deal that was valued at $2.2 billion.
The issue was then debated at a Parliament sitting on Aug 6.
After the sitting, MAS provided MCCY with new information submitted by Allianz, Income and Income's parent NTUC Enterprise about optimising the capital of Income after the deal is completed.
The plan was for Income to run its insurance business more efficiently, without the need to hold as much capital as it currently does.
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