SINGAPORE: German insurer Allianz’s failed offer to buy a majority stake in Income Insurance disappointed many of Income’s minority shareholders, who simply want to cash out their shares in the public non-listed home-grown insurer.
This sentiment was expressed by some of the 600 minority shareholders who attended Income’s AGM on Tuesday, many of whom were seen streaming into The Star Theatre in Buona Vista at around 4pm, more than an hour before the meeting started.
The AGM was helmed by Income’s outgoing chairman Ronald Ong and chief executive Andrew Yeo, who addressed questions from some 20 shareholders for about three-and-a-half hours.
During his opening speech, Ong assured shareholders that “we are keeping our options open and are continuing to explore different share liquidity options, which can include a share buyback programme”.
“We will update shareholders of any material development accordingly,” he added.
While the media was not allowed to attend the meeting, retail shareholders there told The Straits Times about their key concerns, including that of Income’s future.
One shareholder lamented that he was stuck with Income shares, which have a par value of S$10 each but were once worth S$40.58 a share – the price offered by Allianz when it sought to buy at least 51% of Income in a S$2.2bil cash deal in July last year.
The deal was blocked by the government over concerns about its structure, which included a capital reduction plan where Income would return S$1.85bil in cash to shareholders within three years, and Income’s ability to continue its social mission.
As a result, Allianz withdrew its offer last December.
Today, the market value of Income shares is unclear as they are not publicly traded.
Shareholders’ main concern during the AGM was how to cash out of their Income shares, with several voicing their disappointment that the insurer’s deal with Allianz did not go through, according to lawyer Robson Lee who was among those present at the AGM.
Some asked if another deal with Allianz would be considered at the same offer price of around S$40.
Others expressed gratitude to Income’s board for entering the proposed deal with Allianz, while criticising those who had opposed the German insurer’s offer, arguing that such voices did not represent the broader shareholder base.
Income has 15,510 individual shareholders who hold 27.4 million Income shares, according to its annual report for last year.
They must now go through the tedious task of finding willing buyers themselves once again if they want to sell their shares.
Some are hoping the insurer considers an initial public offering on the Singapore Exchange, but this drew a mixed reaction from the crowd, with worries that valuations could come in lower than the par value of Income shares.
Others were concerned about Income’s decreasing dividends.
“We just want our money,” an elderly couple who holds a combined 7,300 shares told Straits Times before the AGM.
“We are already so old,” said the wife, as she clutched her husband’s hand while they joined the snaking queue, surrounded by other elderly shareholders.
The couple said they have held on to Income shares as they have enjoyed healthy dividends in the past. But lately, this has shrunk.
For the year ended Dec 31, 2024, Income’s board had proposed an ordinary dividend payment of 20.8 cents a share, compared with 33.4 cents a share in 2023.
To celebrate the company’s 55th anniversary, the board also recommended a special dividend of 20.8 cents a share, down from 31.3 cents a share in 2023.
Income generated a net profit of S$44.8mil last year compared with S$15.3mil in a restated 18-month period from July 1, 2022, to Dec 31, 2023.
Its net asset value per share, after excluding non-controlling interest, was S$31.97, compared with S$32.16 for 2023.
At the AGM, Income’s lead independent director Joy Tan was appointed its new chairwoman, replacing Ong, who stepped down on Tuesday. Both received applause from shareholders in attendance.
Tan was elected to the board of NTUC Income Insurance Co-operative as an independent non-executive director on May 26, 2017. She was appointed to the board of Income on Aug 1, 2022.
Tan works at law firm WongPartnership LLP, where she is the co-head of the commercial and corporate disputes practice, the corporate governance and compliance practice and the financial services regulatory practice.
The controversy surrounding the proposed Allianz transaction had been heightened by concerns over Ong’s dual positions as chairman of Income and chief executive for South-East Asia at Morgan Stanley.
This was despite Ong having recused himself when the American bank was appointed as Income’s financial adviser for the proposed transaction. The appointment of the financial adviser underwent a selection process, during which two financial advisers, including Morgan Stanley, were identified for consideration.
Morgan Stanley was selected for its strong record in the insurance space and in mergers and acquisitions, particularly in Asia, said Income’s Yeo at the AGM.
On his decision not to stand for re-election, Ong said that it is the right time for him to take on additional responsibilities at NTUC Enterprise (NE) after serving as Income’s chairman for the last seven years – four years at the cooperative and three years at Income.
Ong also touched on issues related to Income’s corporatisation and Allianz’s proposed offer.
He said the corporatisation of Income was “vital” for levelling the playing field, by enabling the company to achieve operational flexibility and gain access to strategic growth options to compete on an equal footing with other insurers here and abroad.
“More significantly, we must recognise that our success, thus far, would not have been possible without the numerous capital injections by NE over the years,” he said.
NE holds about 78 million Income shares, representing close to 73% of Income.
Ong said the regular capital injections from NE, as Income’s only source of Tier-1 capital under the cooperative structure, was not a sustainable solution to capitalise the insurer in the long run.
“As such, we saw the urgency for Income Insurance to break out of the cooperative status quo, so that it could be better placed to potentially gain access to other capital sources if required,” he said.
Corporatisation also enabled the insurer to potentially unlock equity value, he said.
“As a shareholder of Income Insurance, you are now participating in the company’s economic interest and its growth and will be able to participate in any liquidity event involving the shares of Income Insurance,” Ong said. — The Straits Times/ANN
