Income Insurance and Allianz say their deal is still alive despite government veto

INCOME Insurance and Allianz announced in a bourse filing on Thursday (Nov 14) that discussions over a deal to acquire a majority stake in the local insurer are still ongoing after the Singapore government veto as part of their required disclosures to the market.

The deal was called off on Oct 14 in a ministerial statement by the government. This was after new information was received about Allianz’s proposed bid to acquire Income, which raised doubts over whether the local insurer’s social mission could continue to be fulfilled.

“Our concern is only over the terms and structure of this specific transaction, particularly in the context of the preceding corporatisation exercise,” said Minister for Culture, Community and Youth Edwin Tong in the ministerial statement.

Income had sought exemption to transfer any surplus funds to the Co-operative Societies Liquidation Account after its corporatisation exercise in 2022. The insurance provider had assured the Ministry of Culture, Community and Youth (MCCY) that its social mission would not change.

Concerns were raised after the deal with Allianz was announced and proposed initiatives for capital optimisation of Income were submitted to the Monetary Authority of Singapore (MAS). Allianz had proposed to reduce its existing share structure and return capital to shareholders to the tune of about S$1.85 billion.

MCCY was not confident that these proposals would not affect the ability of the co-op movement as a whole, or of Income itself, to carry out its social mission.

Subsequently, the Insurance Act was amended, paving the way for MAS to consider the views of MCCY in cases related to an insurer that is either a cooperative or linked to one.

The original deal back in July was for Allianz to acquire 51 per cent of Income at S$40.58 per share for a total of about 1.5 billion euros (S$2.2 billion). At that time, Income said that it would remain a “substantial shareholder” after the deal went through.

Both Allianz and Income, and their advisers, have studied the implications of the concerns raised in the ministerial statement, and the amendment to the Insurance Act, their statement noted. The discussion around the deal is still ongoing, and there is no guarantee that any transaction will take place, said both parties.