Income Insurance, Allianz in talks on tie-up, seeking regulatory approval
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Income Insurance confirmed it is in talks with Allianz on a “transaction relating to the shares of Income Insurance”.
PHOTO: ST FILE
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SINGAPORE - Home-grown Income Insurance is in talks to enter a partnership with German insurer Allianz, with the latter expected to acquire a significant stake in Income, The Straits Times has learnt.
An application for the partnership has been filed with the Monetary Authority of Singapore (MAS) and the regulator has requested more information, sources with knowledge of the matter told ST.
When asked if the proposed partnership has been approved, a spokesman for MAS said it “does not comment on specific regulatory approvals”.
In a statement posted on its website on June 14, Income confirmed it is in talks with Allianz on a “transaction relating to the shares of Income Insurance”.
“Income Insurance wishes to emphasise that there is no assurance that any transaction will materialise, or that any definitive or binding agreement will be reached,” it added.
An Allianz spokesman said: “Allianz remains committed to the Singapore market, and we are not exiting Singapore.”
The firm has a composite licence from MAS to do both life and general insurance, but it has not sold any life insurance policies to date, ST understands.
Industry experts interviewed by ST said they expect Allianz to tap Income’s strong market presence and established customer base here to benefit from the proposed partnership.
Asked about the possible impact on policyholders, Mr Adrian Peh, chief executive of financial advisory firm Synergy Financial Advisers, expressed trust in MAS, saying that regulators always prioritise clients’ interests in business mergers and acquisitions.
He added that even though Allianz does not operate in the life insurance space in Singapore, it is a major player in general insurance globally.
In contrast, Income has a strong presence in the Singapore insurance market.
Mr Peh said it would be advantageous for both companies to combine Allianz’s global expertise, especially in underwriting standards and the digital realm, with Income’s deep understanding of the Singapore market.
With the number of general insurance companies operating in Singapore, Mr Peh said he does not expect a partnership between Income and Allianz to have a significant impact on the market.
An insurance industry veteran, who spoke to ST on condition of anonymity, noted that such a partnership could result in duplicate roles and functions across both companies and the parties pursuing operational and cost efficiencies.
“Staff turnover from retrenchments and resignations would be logical,” the industry veteran said. “It’s usual for the purchasing company to close down non-essential operations, in order to recover the immense purchase value via stringent cost-cutting.”
As at Dec 31, 2023, Allianz had 129 full-time employees in Singapore, according to General Insurance Association of Singapore (GIA) industry data. Income employs about 2,000 full-time staff.
Income serves more than 1.7 million Singaporeans and permanent residents with its insurance products, including those for life, general and health insurance.
Based on GIA’s overall industry ranking statistics circulated to some members and seen by ST, Income retained its No. 1 ranking in 2023 in general insurance, with gross written premiums totalling $492 million. This represents a market share of about 9.5 per cent.
Written premiums are the chief revenue source for insurers.
American insurer Cigna was second, at $428 million, with a market share of about 8.2 per cent, followed by the US-headquartered AIG at $405 million and a market share of 7.8 per cent.
Based on the GIA rankings, Allianz climbed from 22nd position in 2022 to 16th in 2023 in terms of gross written premiums, with a market share of about 2.1 per cent.
GIA’s data also showed Allianz Insurance Singapore bled the most among 40 insurers, with underwriting losses totalling about $21.7 million in 2023, while Income posted an underwriting profit of about $69 million that year.
Between July 1, 2022, and Dec 31, 2023, Income recorded a profit after tax of $60.4 million, and $4.9 billion in gross premiums, according to its annual report.
Life and health insurance generated $4.2 billion in gross premiums for Income, forming nearly 90 per cent of its total portfolio.
The Allianz Group is one of the world’s leading insurers and asset managers, with about 125 million private and corporate customers in nearly 70 countries.
