government blocked Income Insurance has proposed a capital extraction of S$1.85 billion over three years, a key element of its deal with Allianz, citing inconsistencies with commitments it made when it incorporated and regulatory concerns. listed as a reason.
The decision was revealed in a parliamentary response to questions about Income’s financial advisers and the capital reduction exercise.
Deputy Prime Minister Gan Kim Yong explained that the proposed capital extraction is significantly different in scale and nature from NTUC Income’s regular annual dividends prior to its incorporation.
Following incorporation in 2022, NTUC Income’s retained earnings were converted into share capital as part of the transfer to the new corporation Income Insurance Ltd.
Mr Gan noted that a one-off capital reduction of approximately S$43 million in 2023 has been approved by the Monetary Authority of Singapore (MAS) to enable Income to continue making payments in line with previous practices. .
However, the S$1.85 billion offer was deemed excessive and inconsistent with representations made by NTUC Income to the Ministry of Culture, Community and Youth (MCCY) when it sought exemption under the Co-operative Societies Act. .
In response to this, the government Amend the insurance law The aim of the October Congress was to strengthen oversight of large-scale fiscal restructuring.
The amendment was widely supported, but Labor MPs abstained.
Mr. Gunn emphasized the importance of maintaining regulatory commitment and transparency in these transactions.
He also mentioned the role of Income’s financial advisor, Morgan Stanley, in assisting with structuring and negotiating the deal.
Mr Gunn clarified that this role is different from that of an independent financial advisor (IFA), which is subject to stricter standards set by the Securities Industry Council.
IFAs typically assess the fairness of transaction terms during a voluntary general offering (VGO) and provide recommendations to shareholders.
The Allianz-Income transaction is still in the preconditioned VGO stage, so these steps have not yet been triggered.
The government’s decision to block the deal in its current form is part of its efforts to ensure regulatory safeguards and business compliance with its obligations.
Any future amendments to the agreement will need to address these concerns before moving forward.
Featured image credit: Edited from freepic
