The Financial Authority of Singapore (MAS) has responded to issues relating to Allianz‘s proposed acquisition of a majority stake in Revenue Insurance coverage.
The Singapore regulator emphasised that the S$2.2bn (round $1.6bn) deal isn’t anticipated to hinder competitors throughout the insurance coverage sector.
Allianz, a European insurance coverage large, intends to buy at the very least 51% of Revenue Insurance coverage from NTUC Enterprise Co-operative, aiming to bolster its footprint in Asia.
Based on Bloomberg, the transaction has sparked vital debate since its announcement, drawing feedback from figures resembling Singaporean diplomat Tommy Koh and former Revenue Insurance coverage and NTUC Enterprise CEO Tan Suee Chieh.
Addressing the Singapore parliament, MAS board member Chee Hong Tat said that sustaining a aggressive insurance coverage market with sturdy monetary gamers is essential to MAS’ technique for a sustainable business that serves the general public successfully.
He assured that Allianz could be held accountable for its commitments post-acquisition.
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Allianz Insurance coverage Singapore at the moment holds a modest place within the retail and small and medium-sized enterprise insurance coverage market, occupying the 14th rank normally insurance coverage with a 2% market share primarily based on written premiums, Tat mentioned.
He famous that there’s minimal overlap between the companies of Revenue and Allianz in Singapore, mitigating issues over the deal’s affect on market competitors.
Tat added that the insurance coverage panorama in Singapore is notably aggressive, with greater than 50 direct insurers offering a various array of merchandise for people and companies.
Revenue Insurance coverage, established in 1970 as a cooperative society, is one in all Singapore’s 4 systemically essential insurers, serving round 1.7 million prospects with life, well being and common insurance coverage choices.
Regardless of Revenue’s market shares being underneath 10% for all times and common insurance coverage, it’s not all the time essentially the most cost-effective choice, MAS board member mentioned.
NTUC Enterprise, with pursuits spanning meals, well being and schooling sectors, held a 72.8% stake in Revenue Insurance coverage as of the top of 2023.
Topic to regulatory clearance, the acquisition is due for completion by the primary quarter of the next 12 months.
Critics of the deal argue that it permits NTUC Enterprise and different stakeholders to understand vital monetary returns.
In a Fb put up on 30 July, Koh, Singapore’s former everlasting consultant to the UN, mentioned: “I really feel unhappy that for a lot of youthful Singaporeans nothing is sacred and every thing is on the market.”
In the meantime, Chieh acknowledged the essential function performed by cooperatives like Revenue Insurance coverage, however famous that the insurer’s capital reserves have been strained because of elevated competitors.
“The easiest way to maintain costs reasonably priced is to facilitate competitors, guarantee choices for patrons and put in place a sound regulatory framework,” Chieh added.
