Mr Speaker Sir,
The Progress Singapore Party (PSP) is heartened that the Government has intervened to stop the proposed deal to sell a majority stake in Income Insurance to Allianz. PSP had not been in favour of this deal. In July, Dr Tan Cheng Bock had written on his Facebook page asking for the reasons for breaking a promise, and in a Facebook post after the 6 August sitting, my colleague Mr Leong Mun Wai had expressed his hope that the deal would be restructured.
While we support the decision to stop this deal, we have concerns about the act of amending the Insurance Act in a hurry in order to block it. This approach sets a somewhat unsettling precedent.
Sir, as far as possible, the Government should rely on existing laws when assessing deals for regulatory approval. This provides confidence to investors, here and abroad, that our regulatory framework is stable. Even though the Bill we are debating today is tightly scoped, the fact that we are amending the law today so that a specific pending acquisition application can be blocked may be unsettling to investors.
Under existing law, Sections 26 and 27 of the Insurance Act 1966 require the approval of MAS for any application to obtain effective control or become a substantial shareholder of a licensed insurer. Some conditions were listed under which MAS may grant approval. As the words used in Sections 26 and 27 is “may approve” and not “shall approve”, it appears to us MAS already has the discretion not to approve the application.
Can the Government clarify why it is necessary to amend the Insurance Act to stop this transaction instead of relying on existing provisions?
On 14 Oct, during clarification time after the Ministerial Statement on this issue, Members were assured that we would have time for further debate on the sale of Income Insurance during the second reading of the Insurance (Amendment) Bill. I shall now proceed to do that.
I had during that session raised the point that communications on the reasons for the sale of Income Insurance to Allianz had been misleading. Minister Edwin Tong disagreed and said there was no misleading.
Let me explain why I felt it had been misleading.
In a Joint Statement from NTUC Enterprise and Income Insurance dated 4 Aug 2024 to explain the need for the sale of Income Insurance, para 7 and 8 of the executive summary stated that “In terms of NTUC Enterprise upholding Income Insurance’s social mission, capital resilience is necessary to provide affordable, inclusive insurance on a sustained basis… The circumstances between when Income Insurance was founded and today are vastly different. While the goal of providing affordable insurance remains, the competitive landscape has changed with more than 40 global, regional and local insurers vying for growth in a mature Singapore insurance market. This also makes strong and continuous capital resilience a pre-requisite for growth, which a social enterprise model alone cannot shoulder.”
Does this not create the perception that the sale is necessary due to the need of Income Insurance for more capital? How can we reconcile this statement with the fact that by the time this statement was issued on 4 Aug, an application had already been made to MAS in July to reduce capital by $1.85bn and distribute this amount to the shareholders? Wouldn’t this capital reduction reduce capital resilience?
At the Parliamentary Sitting on 6 Aug 2024, MOS Alvin Tan while answering Parliamentary Questions on this deal repeated the need for capital a few times.
He said “NTUC has explained the reasons for the deal with Allianz. Let me briefly reiterate the points that NTUC has made. The current situation for Income cannot be sustained and Income’s capital buffers have repeatedly come under pressure.”
In response to Mr Liang Eng Hwa’s SQ, he again said “I think if we take a step back, the reasons why Income has gone into this proposed deal is well laid out. There are realities on the ground – competitive, Government stepping in to provide that social assurance, as well as the capital requirements. The capital buffers, for example, were under pressure. So, that is the first principle.”
In response to Mr Leong Mun Wai’s SQ, he said “Time is the best judge, but let me again put it out very clearly, that number one, Income’s capital buffers have been under pressure. There is no doubt about this.”
He also said “Then, it also begs the question, could Income and NTUC Enterprise then have looked for other funding sources, which is the question on the ground. They have. In their statements, said that they have. They have looked at financial institutions and non-financial institutions, locally and foreign.”
All these statements contribute to the perception that the need for more capital is the number one reason for the sale of Income Insurance. However, the plan to reduce capital by $1.85bn totally contradicts this argument. MAS has assessed that even after this huge capital reduction, it is still meeting capital adequacy requirements.
Does this not show that the public and the government have been misled? If Minister Edwin Tong still feels that there has been no misleading, I think we will have to agree to disagree and let the public form their own opinion.
If, however, the government agrees that the communications have been misleading, I hope it will send a message that this is not acceptable by holding those responsible to account.
This episode has thrown up another issue of concern. The ties between NTUC and the PAP Government are very strong. In the past, many Secretary-Generals of NTUC were concurrently Cabinet Ministers. MOS Alvin Tan himself said so on 6 Aug, “many of us here are advisors to NTUC unions, we have worked very closely with them. I work very closely with my union’s Singapore Industrial and Services Employees’ Union (SISEU). I work very closely with the co-ops under SNCF. I meet them very regularly.”
This close relationship is a double-edged sword. While there are circumstances when this is an advantage, I believe this episode has reminded us to be careful lest the close relationship affect the Government in its regulatory role.
Mr Speaker, Mandarin please.
议长先生，
新加坡前进党对于政府阻止安联收购英康的交易感到欣慰。由始至终，前进党并不赞成这项交易。但是，我们对于临时修订法令以阻止这项交易的行为存有疑虑。这个做法开创了一个令人感到不安的先例。
我们认为，政府应尽可能利用现有的法律来评估一项交易能否获得批准，这样才能让国内外投资者相信我国的监管框架是稳定的。依我们所见，保险法令第26和27节条文已经给予金融管理局足够的酌情权，利用财务谨慎以外的因素来否决安联收购英康的交易。所以，前进党希望政府能更详细的解释今天这项法案的必要性。
In closing, PSP agrees with the Government that it would be in the public interest to stop the deal from proceeding in its current form. Therefore, despite our reservations about this urgent bill, we will support this Bill if it is necessary to stop the deal.
Thank you.