Tommy Koh 'not convinced' by Income Insurance's reasons for sale to German insurer

"Income is not a loss making company in need of rescue," he said.


Ilyda Chua

August 01, 2024

Tommy Koh said that while he is a "friend and admirer" of NTUC Enterprise chief Lim Boon Heng, he was "not convinced" by Lim's press conference outlining the reasons for the sale of Income Insurance.

In a Jul. 30 statement, NTUC Enterprise said that in the highly competitive Singapore insurance market, a social enterprise model alone "cannot shoulder" the growth of an insurance company.

It added that Income Insurance had lost contracts because it was not competitive enough, and that the deal with German insurer Allianz would help the company tap on more expertise and offer better prices to consumers.

Recalling the social mission

The former Permanent Representative to the United Nations subsequently reiterated Income's original social mission in a Jul. 31 Facebook post following the statement.

Koh, who is also Singapore's Ambassador-at-Large, had previously posted on Jul. 23 about his belief that Income — in view of its beginnings as a cooperative of NTUC — should "never be sold".

Lim had defended the sale, saying that social enterprises and co-operatives are no longer unique in doing good as more businesses embrace stakeholder capitalism in their corporate purposes.

Furthermore, the deal with Allianz would help Income be better placed to offer competitive and affordable products, including those for the masses and lower-income groups.

However, Koh noted several of Income's initiatives in the 2010s, such as launching a free insurance scheme for low-income families with young children, and becoming the first insurance company to provide insurance coverage for children with autism.

"I don’t think a foreign insurance company would have launched such products," Koh said.

Making profits

On NTUC Enterprise's claim that a "social enterprise model alone cannot shoulder" the growth of an insurance company in Singapore's current environment, Koh pointed out that Income has been profit-making throughout its 54-year history.

"Income is not a loss making company in need of rescue," he said.

"In view of this fact why does NTUC Enterprise wish to sell Income? Is it because it will make a profit of S$1 billion?"

Former Group CEO of NTUC Enterprise and former CEO of NTUC Income Tan Suee Chieh also chimed in on Income's success, noting that it is an "independent social enterprise" that can thrive in Singapore.

"We need more imagination and courage on what is possible," he said.

He also opined that Allianz's expertise — which NTUC Enterprise had said would help elevate Income — was "overstated".

"Access to expertise can be obtained through other means such as reinsurance, consulting firms, and mutuals in Europe, all willing to collaborate," he pointed out.

"We do not need to sell our heritage to gain access to such expertise," Tan added.

Background

On Jul. 17, Allianz — a German insurance company — announced its intent to make a pre-conditional offer to acquire at least 51 per cent of the shares of Income Insurance.

This deal, which would be worth approximately S$2.2 billion, would be part of Allianz's move to "expand and strengthen its presence in Singapore", it said in a media release.

However, these raised concerns about the sale compromising Income's original social values and mission.

In response, Lim said that Income Insurance would continue to offer affordable insurance to its lower-income customers.

"NTUC Enterprise will also continue as an active shareholder of Income Insurance to keep it to its purpose and deliver social commitments to its policyholders," he added.

[Edit 8 Aug 2024: Videos from Parliamentary Questions on the issue:

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