NTUC only learned of capital extraction in Income-Allianz deal in parliament: Desmond Tan

The central committee of the National Trades Union Congress (NTUC) was not informed about the capital extraction plan in the proposed deal between Income Insurance and German insurer Allianz until it was publicly announced in Parliament, revealed Desmond Tan, NTUC Deputy Secretary-General, on Wednesday (16 Oct). On Monday (14 Oct), Edwin Tong, Minister for Culture, Community, and Youth, stated in Parliament that the government had blocked the proposed Income-Allianz deal, citing concerns that the transaction, as structured, would not be in the public interest. The deal, which was announced on 17 July 2024, faced significant public backlash, with many expressing fears that it might undermine Income’s long-standing social mission of providing affordable insurance, particularly to lower-income individuals. Speaking during the debate on the Insurance (Amendment) Bill, Tan noted that although NTUC is a significant shareholder of NTUC Enterprise, which holds a 72.8% stake in Income Insurance, it does not interfere in the day-to-day operations of the companies it oversees. According to Tan, while NTUC's central committee had been briefed on the broader strategic rationale behind the Income-Allianz transaction, they were not made aware of the specific capital extraction plan. The plan proposed returning S$1.85 billion in surplus cash to shareholders within three years. Tan added that he and the central committee only became aware of this aspect when it was mentioned in a ministerial statement earlier in the week. Tan clarified that Income, as a non-listed public company, must adhere to the Singapore Code on Takeovers and Mergers, which limits the disclosure of commercially sensitive information before certain stages of the process are reached. This requirement contributed to the non-disclosure of the capital extraction clause until the parliamentary announcement.

NTUC's commitment to social mission

Tan reiterated NTUC’s commitment to Income’s social mission, which includes offering affordable insurance and expanding NTUC’s involvement in areas such as eldercare and educational programmes. NTUC has expressed support for the government’s decision to block the deal, noting that it aligns with broader public interest objectives. However, Tan acknowledged that there may be some differences in the specifics of how Income's social goals are best achieved, particularly given the company’s corporatisation in 2022. NTUC had supported Income’s decision to corporatise, recognising the need for the organisation to access more capital to remain competitive. The corporatisation enabled Income to explore new partnerships and investment opportunities, such as the proposed transaction with Allianz. Tan also emphasised that NTUC and Income will continue working toward their shared social mission, even as they navigate the complexities of corporatisation and competitive market pressures. While the government has blocked the deal between Allianz and Income, it remains open to reconsidering the transaction or similar partnerships if key concerns about the public interest can be addressed.

Distinguishing earlier support for the deal

It is important to distinguish Tan's remarks made in Parliament from an earlier statement by NTUC on 5 August 2024, which expressed full support for the Income-Allianz deal. That earlier statement was issued by NTUC without knowledge of the capital extraction clause in the proposed transaction. In the August statement, NTUC President K Thanaletchimi and Secretary-General Ng Chee Meng pledged NTUC’s support for Income’s social mission and noted Allianz’s commitment to honouring Income’s policies, continuing its charitable initiatives, and investing S$100 million over ten years to promote social mobility. At the time, NTUC was unaware of the full details of the capital extraction plan, which proposed returning S$1.85 billion in surplus funds to shareholders. This lack of information casts the earlier endorsement in a different light, as NTUC was expressing support based on incomplete knowledge of the transaction's specifics. The central committee, including Tan, only learned of the capital extraction plan when it was disclosed in Parliament. Therefore, the August statement should be viewed as NTUC's endorsement of the deal without full awareness of the capital extraction clause.