THE Monetary Authority of Singapore (MAS) will prioritise the interest of policyholders when assessing Allianz’s proposed acquisition of a majority stake in Income Insurance, said Second Minister for Finance Chee Hong Tat in Parliament on Tuesday (Aug 6).
This means that MAS will ensure that the deal, if approved, will not change the terms and conditions of existing contracts.
MAS sees a competitive insurance industry as the “most effective way” to meet the insurance needs of Singaporeans, Chee said in response to questions from four Members of Parliament on the deal.
“For MAS, our belief is that the best way to protect our policyholders – whether existing or future – is to have a competitive insurance industry and insurers that are well run, which will then provide stability over the longer term and offer choice, options and competitive rates to policyholders,” Chee said.
Insurance is a business that has a long tail, Chee said. “So whether Income would in the future continue to be able to remain competitive and meet its obligations, I think those are the questions that are also important.”
Ensuring commitments
MPs asked whether MAS had assessed the planned deal’s impact on Income’s mission to provide affordable insurance to Singaporeans.
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On Jul 17, Allianz said it plans to acquire 51 per cent of Income Insurance at S$40.58 per share, in a deal valued at 1.5 billion euros (S$2.2 billion).
The deal has faced public scrutiny and sparked unhappiness, with worries over whether it would erode Income’s social mission.
On Tuesday, Chee said MAS expects Income to fulfil its obligations to all policyholders under the terms of its existing insurance contracts. MAS will also hold Income and Allianz accountable for its commitments on existing policies.
He noted that Allianz has publicly stated its intent for Income to honour the terms of its existing policies, and ensure a seamless transition for existing policyholders.
MP for West Coast GRC Foo Mee Har asked what regulatory powers MAS will have to ensure this, while Leader of the Opposition Pritam Singh asked if MAS has queried NTUC on the basis of its commitments, given that NTUC Enterprise will hold only a minority share.
Chee did not directly state what powers MAS has, but said that MAS’ focus is to make sure that the interests of policyholders are protected.
For NTUC, he said he was “glad”, from a regulatory point of view, that it had provided such assurance. He repeated that MAS will make sure terms and conditions of the existing policies will not change as part of regulatory approval.
Maintaining its social mission
Fielding four other questions on Income’s continued social commitment was Minister of State for Culture, Community and Youth Alvin Tan, who said the Allianz deal was the option that best aligned with Income’s interests.
Income had preferred a deal with a local partner that would allow it to keep a majority stake, but could not find a willing partner, Tan said.
Echoing a statement by labour leaders on Monday evening, he noted that compared to when Income was founded in 1970, the insurance industry is now very competitive and the government has significantly strengthened its social support system.
Meanwhile, Income’s capital buffers have repeatedly come under pressure. While NTUC Enterprise has and will continue to support Income with capital injections, it cannot do this on its own, Tan said.
He noted that in Monday’s statement, NTUC reaffirmed its commitment to its social mission, promising to retain two low-cost schemes for union members, and keep premiums affordable, especially for the lower-income.
Tan also noted Allianz’s commitment to honour Income’s existing policies, participate in national insurance programmes and continue its charity commitments.
Asked by Non-Constituency MP Leong Mun Wai whether Allianz had made commitments in writing, however, Tan did not directly confirm that, saying only that NTUC, Income and Allianz have made assurances to fulfil Income’s social mission.
Meanwhile, Singh asked for MAS’s response to two open letters from former Income and NTUC Enterprise CEO Tan Suee Chieh regarding the deal.
In his letters, Tan asked MAS to step in and reject the sale, and asked NTUC Enterprise and Income to produce all relevant board meetings and board papers so that MAS and the public can “judge the matter for themselves”.
Chee said MAS will do some further work to establish what are the facts before it assesses its position and next steps.
