Singapore – The Monetary Authority of Singapore (MAS) has released a statement on the Allianz-Income Insurance deal following a recent parliamentary query on whether the organisation will be working alongside the Competition and Consumer Commission of Singapore (CCCS) regarding the acquisition deal. It is worth noting that this follows a slew of public outcry regarding the acquisition, stating how it will ‘commercialise’ a brand that Singaporeans trust in the insurance space.
The response, made by Chee Hong Tat, Minister for Transport and Second Minister for Finance, and Board Member of MAS, noted that MAS’ primary role as regulator is to promote a sound and progressive financial sector. For the insurance sector, they want insurers to manage their risks well so that policyholders are assured that their long-term policies are safe and will be adequately protected.
Moreover, Tat noted that when MAS assesses the application for a change in substantial shareholder in an insurer, they will consider a range of criteria, in particular, the applicant’s track record, financial soundness, reputation, as well as fitness and propriety.
“MAS had reviewed and was satisfied with the relevant processes Income’s Board had put in place to address conflicts of interest with respect to the appointment of its financial advisor on this proposed deal, and the decision to enter into the deal with Allianz. In the appointment of the financial advisor for the deal, the Chairman of Income’s Board had recused himself. The decision to enter into the deal was made by the Board, comprising a majority of independent directors,” he stated.
Moreover, Tat also highlighted that fostering a competitive insurance market with financially strong insurers is a key part of MAS’ approach to ensuring that insurers operate sustainably and serve the public well. They believe that a competitive market is the most effective way to meet the insurance needs of Singaporeans, and facilitate access to affordable insurance options and good service over the longer term.
“The insurance market in Singapore is highly competitive. There are currently more than 50 direct insurers in Singapore offering a wide range of insurance products to meet the insurance needs of individuals and businesses. In both life and general insurance, Income has market shares of less than 10% based on written premium. For many insurance products, Income does not always offer the lowest prices compared to other insurers,” he remarked.
Lastly, he stated that he understands the public concerns and even those in the government, assuring them that MAS has regulatory requirements and guidance in place for insurers to maintain sufficient capital reserves, put in place robust governance and risk management frameworks, and also to treat their customers fairly.
“Should the proposed deal be approved, there will be no change to the terms and conditions of existing insurance contracts. MAS expects Income to fulfil its obligations to all policyholders under the terms of its existing insurance contracts. I note that Allianz has also publicly stated its intent for Income to continue to honour the terms of the existing policies underwritten by Income and ensure a seamless transition with no impact to existing policyholders. MAS will hold Income and Allianz to account to these commitments”, he stated.
