NCMP Leong Mun Wai addressed Parliament on the 16 October 2024 in regards to the Insurance (Amendment) Bill.
Mr Speaker Sir,
I will first declare my interest as an independent director of a life insurance company registered and operating in Singapore.
As my colleague Ms Hazel Poa has said, PSP will support the Bill if it is necessary to block the Allianz-Income deal. For the sake of Singapore and the 1.7m policyholders of Income, it is important that we stop this deal in its current form.
After we discussed the deal in this House on 6 August, I expressed my hope that this deal will be restructured so that NTUC Enterprise remains as the majority shareholder. I am personally very glad that the Government has listened to the concerns expressed by Mr Tommy Koh, the two former CEOs of Income Mr Tan Suee Chieh and Mr Tan Kin Lian, and many Income policyholders, and decided to block the deal.
I would like to acknowledge the efforts put in by MCCY and MAS to scrutinise the transaction and come out with this Bill.
However, I am seriously concerned at the process by which we arrived at the conclusion to block the deal.
The Problematic Disclosure Process
We learnt on Monday that MCCY had no prior knowledge of Allianz’s offer for Income before it was publicly announced in July. Furthermore, it was only after the 6 August parliamentary sitting that MAS shared the terms of the proposed transaction and Income’s capital reduction plan with MCCY. But why did MAS wait?
I accept that sometimes, because of market sensitive information, it may not be possible to publicly disclose the full details of a proposed transaction.
But in this case, we are talking about information being shared within the Government, between agencies. All the agencies knew that this issue would be debated in August because they receive notice of our Parliamentary Questions.
Why is information that is highly relevant to the proposed transaction being gatekept by different agencies within the Government? Throughout this whole affair, it seems that every gatekeeper is concerned only about the part of the process owned by them, and no one is keeping an eye on the overall outcome.
In our system, the buck stops with Cabinet. On a major financial transaction involving a national icon like Income that requires regulatory approval, it is Cabinet that must make a final decision.
Why does it seem like there was no coordination within Cabinet on the exchange of important information relevant to the transaction before the August sitting, so that the Government can take a more informed view, and we could have had a more productive discussion in August?
On Monday, Minister Chee Hong Tat said that at the time, the MAS team was still doing technical assessments and did not surface the details of the transaction to the MAS board before the 6 August parliament sitting. But Minister Chee Hong Tat and MOS Alvin Tan are both members of the MAS Board and would have been in a position to proactively question MAS officials and ask for the full details of the transaction, which would have included the capital reduction plan, before answering questions in this House on 6 August. Why was this not done?
On 6 August, the officeholders rehashed again and again how Income’s capital buffers have come under pressure. MOS Alvin Tan also emphasised how Allianz has committed to continue Income’s pledge of $100 million over 10 years from 2021 to provide social mobility among the lower-income and support the well-being of seniors.
But now we know that Income and Allianz were all along planning to return around $1.85 billion in cash to its shareholders within the first three years of completing the transaction. So, were all these discussions on Income’s social mission and capital buffers on 6 August meaningful?
Now with the knowledge of the capital extraction, we can see that this deal was essentially an asset stripping exercise in favour of the shareholders, especially NTUC Enterprise and Allianz with little consideration for the social mission and the interest of the 1.7m policyholders.
Had the deal gone through, NTUC Enterprise would have relinquished control over Income whilst unlocking hundreds of millions of dollars from the capital reduction exercise. In my view, this would have been another sad case of Singapore losing control over a key strategic company for cash instead of maintaining these companies for our economic development and security.
Since the Global Financial Crisis, capital adequacy standards have been increased significantly. In my view, a capital reduction exercise should have raised alarm bells in MAS even from a prudential standpoint, especially given that NTUC Enterprise has had to put in capital injections of about up to $630 million over the years.
I was therefore surprised to hear Minister Chee disclose on Monday that “based on the plans submitted, MAS did not have reason for concern as Income was projected to continue to meet regulatory capital requirements with a healthy margin even with the capital reduction”.
While we trust that MAS officers are highly professional and have conducted a thorough review of the deal from a prudential point of view, can the Minister further explain why MAS does not have any prudential concerns over the capital reduction plan, especially considering NTUC Enterprise’s history of having to inject capital into Income over the years.
Sir, earlier, my colleague Ms Hazel Poa had provided her view on why she felt that communications of the reasons for the sale of Income to Allianz had been misleading.
NTUC Enterprise and Income Insurance need to come out to explain why they agreed to a capital reduction plan when both parties had, in their Joint Statement on 4 August 2024, stated explicitly that “capital resilience is necessary to provide affordable, inclusive insurance on a sustained basis.”
Explanations are also needed from NTUC Secretary-General Ng Chee Meng for the joint statement he made with the President of NTUC on 5 August 2024, which said that “the NTUC Central Committee was briefed” and “after full and serious consideration, the NTUC Central Committee decided to support NTUC Enterprise’s consideration of the offer from Allianz”. They added that “we believe the offer is good for Income, good for its policyholders, and will enable us to fulfil our mission from a stronger position”.
But now we know that the proposed transaction includes a capital reduction plan, and MCCY is “not confident that the proposed transaction would not affect the ability of the co-op movement as a whole, or of Income itself, to carry out its social mission”.
So, when the NTUC Central Committee was briefed on the offer, were they briefed on the full details of the transaction, including the capital reduction plan? And if so, did the NTUC leaders believe, in good faith, that the offer would enable NTUC and Income to fulfill its social mission from a stronger position? And what were the reasons that led them to reach such a different conclusion from MCCY?
If the NTUC Central Committee did not know the full details, then why did NE and Income not brief them on the full details of the transaction?
And if NE had agreed so easily to relinquish control of Income to Allianz with so little assurance about the ability of Income to carry out its social mission, it is arguably justifiable for policyholders to be concerned whether in a future deal, there will be safeguards to protect the surpluses in the policy funds accruing to policyholders.
Hence, contrary to what the NTUC leaders have represented to Singaporeans, we can say that this transaction is “not good for Income, not good for its policyholders, will not allow Income to continue to fulfil its social mission”.
The leaders of NTUC, NE and Income owe the public a more substantial explanation on this.
Finally, before the Ministerial Statement on Monday, did MAS and MCCY explain to Allianz that this deal is against our public interest and if yes, I would like to ask what was Allianz’s response? Did Allianz offer to withdraw the current deal without having us to go through this debate today?
The Lessons Learnt from this Incident
Sir, we urge the Government to take lessons from this incident. We can do more to improve whole-of-government coordination when making major decisions that impact areas governed by multiple agencies.
The debate over the Income-Allianz deal this week has reminded me of another instance during this term of Government when we had to debate a Bill on a Certificate of Urgency in 2021, to restrict the use of TraceTogether and SafeEntry data to only serious crimes.
In June 2020, Minister Balakrishnan had assured the public that TraceTogether data would be used only for contact tracing. Then in January 2021, another agency, MHA, revealed something different – that the Police could access TraceTogether data under the Criminal Procedure Code.
Then, as it is now, the public has been left with the impression that our government agencies are siloed and coordination within the Government is poor, or to put it simply, “the left hand doesn’t know what the right hand is doing”.
It is the responsibility of Cabinet ministers to ensure that they are apprised of all relevant and important information, and to consider that fully before making decisions and public pronouncements.
We cannot fall into the trap of minding the process and missing out the outcome.
Mr Speaker, Sir,
PSP is raising all these questions with only one objective and that is so that we can ensure that our institutions and processes are always aligned and working well to protect the interest of Singapore and Singaporeans. We almost made a grave mistake here.
Fortunately, there is a silver lining in this whole saga. It has highlighted the important role played by Singaporeans in checking the decisions of our public institutions. In particular, we saw Singaporeans with expertise and social repute speaking out and helping the public understand complex issues. This has helped parliamentarians like myself to voice out more effectively for Singaporeans. We hope that they will continue to do so.
Majulah Singapura!