The PAP Government intervened in the proposed deal between Income Insurance and the German insurer Allianz, with the Monetary Authority of Singapore (MAS) fulfilling its institutional role as the regulator.
Second Minister for Finance Chee Hong Tat stressed that the central bank always seeks to ensure it regulates in an “even-handed” and open manner, working with other ministries in a coordinated way for the benefit of Singapore and Singaporeans.
“MAS takes its international reputation very seriously. This is the reason why we want to handle this matter in an open and transparent manner, coming to parliament to pass the amendments to the Insurance Act, and to do so with such urgency,” he said.
Mr Chee was responding to a question from Workers’ Party MP Jamus Lim in Parliament on 14 October after Culture, Community and Youth Minister Edwin Tong announced that the Government had blocked a proposed deal between Income and Allianz.
The move came after MAS gave the Ministry of Culture, Community and Youth (MCCY) new information following a Parliament sitting on August 6 during which the issue was debated.
This new information included details on possible deployment of capital, which Allianz, Income and NTUC Enterprise (NE) had submitted to MAS about the proposed deal.
The MAS team initially reviewed the proposed transaction based on prudential grounds but then recognised that Income’s planned capital optimisation could be relevant to MCCY, Mr Chee said.
“This is how we work as a government. We work across different ministries and departments for the benefit of Singapore and Singaporeans,” he said.
“Initially, there was an information gap, but once we share the information, we work closely together in a coordinated manner.”
Mr Tong said 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.
As a result, the Government will be amending the Insurance Act on an urgent basis to allow the approval of the deal to be withheld.
Currently, the MAS is not required to consider MCCY’s views on the matter. The amended Act will provide “clear statutory basis” for MCCY’s views to be considered for insurance applications involving co-operatives or related entities, said Mr Tong.
No information is being withheld from Parliament or S’poreans: Edwin Tong
Mr Tong also refuted NCMP Leong Mun Wai’s accusation, stressing that there is no question of any information being withheld from Parliament or Singaporeans.
“[At] the first available opportunity, we’ve come to Parliament, explained it in a ministerial statement, the background, as well as the steps moving forward and then tabling a bill,” he said, noting that the government has studied the information carefully and thoroughly.
“Mr Leong shouldn’t mischaracterise what happened.”
“After coming to a view that it would not be in the public interest for this to proceed, we had to decide what’s the best way to deal with this.”
Mr Tong had earlier told Parliament that when Income corporatised in 2022, it sought exemption from Section 88 of the Co-operative Societies Act and carried over approximately $2 billion in surplus to the new corporate entity. The proposed capital reduction runs counter to the premise on which the exemption was given.
MCCY is not satisfied that Income will be able to continue fulfilling its social mission after the proposed transaction, Mr Tong added.
These factors, together with the fact that Income’s parent company NE would become a minority shareholder after the deal, cumulatively posed risks that MCCY “judges not to be acceptable”, he said.
Government remains open to a new deal that Income may pursue so long as concerns are addressed: Edwin Tong
Mr Tong also clarified that that the Government does not have concerns about Allianz’s standing or suitability to acquire a majority stake in Income.
The Government’s concerns relate specifically to the terms and structure of this particular transaction, especially in the context of the preceding corporatisation exercise.
Mr Tong said the assessment of the transaction must go beyond just prudential considerations, adding that the Government remains open to any new arrangement that Income may pursue with Allianz or other partners, so long as its concerns are fully addressed.
Prime Minister Lawrence Wong, in a Facebook post, also reiterated that the Government supports having a strong partner for Income, so as to strengthen its capital base and market position.
Mr Chee then tabled an amendment to the Insurance Act to allow MAS to withhold approval of the sale on the grounds of public interest when it involves a current or former cooperative insurer. The Bill will be read a second and third time on Wednesday.
