Allianz offers to buy at least 51% of Income Insurance at $40.58 a share in cash

SINGAPORE – Allianz has offered to buy a stake of at least 51 per cent in home-grown Income Insurance at $40.58 a share in a $2.2 billion cash deal that will catapult the German insurer from the ninth to the fourth-largest composite insurer in Asia.

“This proposed transaction brings two strong businesses together for the benefit of Singapore’s customers and solidifies Allianz’s leadership position in the region,” said Ms Renate Wagner, an Allianz board member who is responsible for the Asia-Pacific region.

At $40.58 a share, the offer price represents a 37.3 per cent premium over Income’s net asset value per share of $29.55 as at Dec 31, 2023.

The offer is conditional on Allianz getting a 51 per cent stake, representing some 54.6 million Income shares.

NTUC Enterprise Co-operative, which holds close to 78 million Income shares, representing a 72.8 per cent stake, has given an irrevocable undertaking to accept the offer.

This means at the close of the offer, NTUC Enterprise will retain a substantial stake of between 21.8 per cent and 49 per cent in Income, depending on how minority shareholders tender their shares.

The offer also means that the nearly 16,000 minority shareholders holding a 27.2 per cent stake in Income will get a chance to cash out from the illiquid and unlisted public insurer’s shares.

“If shareholders do not accept the offer, there is no guarantee that another opportunity will arise in the future for them to realise the value of their shares,” the offer document said.

An extraordinary general meeting on the offer may be convened.

Allianz plans to undertake a strategic and operational review of Income’s existing businesses after the offer closes to achieve greater capital efficiency and consider possible business model transformation opportunities.  

The transaction is expected to generate a double-digit return on investment for Allianz in the mid-term. Closing is expected in the fourth quarter of 2024 or in the first quarter of 2025. 

The acquisition would propel Allianz to the top position in the insurance segments of property-casualty, health and life in Singapore, where Income is a trusted household name, serving about two million policyholders with a full range of insurance products distributed through agents, financial advisers, bancassurance and direct channels.

It also leverages Allianz’s capabilities in underwriting, product development and data analytics with Income’s market reach and strengths in distribution, partnerships and people, the European insurer said. 

The Asia-Pacific is a strategically important growth region for Allianz, having generated almost €7.7 billion (S$11.3 billion) in total business volume across its property-casualty and life-health businesses in 2023.

Allianz said it has more than 32,000 staff in the region, serving the needs of more than 18 million customers across multiple distribution channels and digital platforms.

The German insurer intends for Income to continue its participation in national insurance programmes.

It also intends for Income to continue its social commitment and existing pledge of $100 million over 10 years from 2021 to promote social mobility among the low-income, support the well-being of seniors, and champion environmental causes.

Allianz intends to ensure a seamless transition for policyholders, continuing to honour the terms of the existing policies underwritten by Income. 

Allianz also wants Income to continue to recognise the union, and uphold the principles of good labour-management relations as advocated by the tripartite partners in Singapore.  

The Securities Industry Council has no objections to the precondition of the offer and shareholder approval condition.

It also confirmed that NTUC Enterprise would not be regarded to be a party acting in concert with Allianz.

GlobalData said Income’s local market presence would benefit from Allianz’s global expertise, resulting in an enhanced range of offerings for customers.

According to its data, Income was Singapore’s third-largest general insurer and sixth-largest life insurer in 2022. Allianz is 17th among the general insurance market players in Singapore and does not feature in the top 20 for life insurance.

The transaction could lead to enhanced offerings and services for Income’s 1.7 million customers across the life, general and health insurance segments, it added.

“Competitors in the market will face increased pressure influenced by this strategic partnership, meaning other insurers may need to rethink their product offerings,” the data analytics firm said.

Allianz has appointed J.P. Morgan Securities Asia as its financial adviser for the offer.